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Presented in "Celebrating Success: 25 Years United Nations Convention on Contracts for the International Sale of Goods" (Collation of Papers at UNCITRAL -- SIAC Conference 22-23 September 2005, Singapore), published and copyright by the Singapore International Arbitration Centre at 89-102. Reproduced with permission of the SIAC.

The Nachfrist Remedy

Pilar Perales Viscasillas [*]

  1. Introduction
  2. Nachfrist and Its Relationship with Other Remedies:
    Specific Performance and Avoidance of the Contract
    1. Nachfrist and specific performance
    2. Nachfrist and the avoidance of the contract
  3. The Type of Breaches Subject to the Nachfrist Remedy
  4. The Nachfrist Notice: Fixing an Additional Period of
    Time of Reasonable Length for the Performance of the
    Obligations (Articles 47(1) and 63(1) of the CISG)
    1. The form of the Nachfrist notice, and its effectiveness
    2. The demand of performance
    3. Express determination of the additional period of time
    4. The 'reasonable' length of the Nachfrist
  5. Effect of Fixing an Additional Period of Time
    (Articles 47(2) and 63(2) of the CISG)

I.  INTRODUCTION

Articles 47 and 63 of the United Nations Convention on Contracts for the International Sale of Goods ('CISG') [1] entitle the party who is not in breach of the contract to fix an additional period of time of reasonable length for performance of the obligations of the party in breach.[2] This kind of remedy is usually known under its German name, Nachfrist.[3] This is a rule addressed to the parties and not to the judges or arbitrators, who, on the contrary, cannot grant to any of the parties a period of grace (Articles 45(3) and 61(3) of the CISG). [page 89]

II.  NACHFRIST AND ITS RELATIONSHIP WITH OTHER REMEDIES: SPECIFIC PERFORMANCE AND AVOIDANCE OF THE CONTRACT

Frequently, the Nachfrist is considered a 'companion' or a provision that 'complements' other rules of the Convention, particularly specific performance and avoidance.[4]

1. Nachfrist and specific performance

The right of the aggrieved party to grant an additional period of time to the defaulting party for the performance of its obligations (Articles 47(1) and 63(1) of the CISG) seems to be equivalent to the remedy of specific performance as envisaged in Articles 46 and 62 of the CISG. In that regard, the Nachfrist might be considered a subtype of the extrajudicial right to require specific performance.

It is true that the Nachfrist is dependent upon the specific performance remedy, since, as it will be shown, for the validity of the Nachfrist notice, the demand of performance is an essential requisite. However, the Nachfrist remedy must be considered a separate remedy from specific performance.

First, from a systematic point of view, specific performance and Nachfrist are contained in two separate provisions.[5] Second, while Articles 46 and 62 of the CISG empower the aggrieved party to seek the remedy of specific performance, judicial or extrajudicial,[6] the Nachfrist remedy is only an extrajudicial remedy. Third, and from a practical perspective, the remedy of specific performance is not subject to the conditions set forth in Articles 47 and 63 of the CISG, mainly the need for an express determination of an additional period of time for the performance of the breached obligations.[7] [page 90]

2. Nachfrist and the avoidance of the contract

The Nachfrist remedy is particularly useful when the buyer or the seller has certain doubts on whether the breach of the other party constitutes a fundamental breach, a condition necessary for the avoidance of the contract under the CISG (Articles 49(1)(a) and 25). In order to understand the practical effect of the Nachfrist remedy, it is necessary to explain that under the CISG the avoidance of the contract is only possible in two situations: (a) when the breach is considered to be fundamental, and (b) when the additional period of time granted is not complied with. It is thus clear that by way of the breach of a Nachfrist, the party who wants to avoid the contract is sure that the initial breach -- fundamental or not at that time -- is now fundamental, and therefore entitles that party to avoid the contract.[8]

An example would be useful in order to understand the situation. If the contract states that the delivery date is 20 January, the buyer who, on 21 January, has not received the goods might have certain doubts of whether that delay is fundamental (probably a delay of one day would not be considered fundamental, unless from the contract this is so considered,[9] or if the timely delivery is considered to be essential for the buyer and this was so foreseen by the seller at the conclusion of the contract).[10] In this situation, the safest position for the buyer is to grant the [page 91] seller a Nachfrist.[11] If the buyer avoids the contract on 21 January and the delay is not considered to be a fundamental breach, then it would be the buyer who would be considered in breach of the contract, since he would have resorted to a remedy that he was not entitled to.

The concession of a Nachfrist is even more convenient if the line of reasoning on the case law that considers that the Nachfrist is an essential precondition, and thus an obligation, for the avoidance of the contract is followed.[12] This kind of interpretation is not, however, in line with the text of the Convention but rather based on the interpretation of the German domestic Nachfrist.[13]

Accordingly, the non-delivery of the goods by the seller, if time is of the essence, amounts to a fundamental breach that entitles the buyer to declare the contract avoided. If there is no fundamental breach, the non-delivery would only give the buyer the right to declare the contract avoided if the lapse of the Nachfrist occurs without performance by the seller[14] or if, within the period granted in the Nachfrist notice, the seller declares that it will not perform. In any of the situations described, nothing prevents the buyer from giving a second, or even [page 92] a third Nachfrist before the notice of avoidance; even if the time was considered to be of the essence under the contract, the buyer might still be interested in the late performance by the seller. In this regard, the Nachfrist would be final to the seller but not to the buyer, who is not obliged to avoid the contract after the lapse of the Nachfrist.[15]

III.  THE TYPE OF BREACHES SUBJECT TO THE NACHFRIST REMEDY

The Nachfrist remedy is in principle available for any breach of the seller or the buyer.[16] The literal wording of Articles 47(1) and 63(1) of the CISG leads to that conclusion. A different issue is the consequences derived from the lapse of the Nachfrist or the notice of the buyer or the seller declaring that the obligation would not be performed within the Nachfrist. Apart from the clear consequences established in paragraph 2 of the cited provisions (it is not possible to resort to any remedy for breach of contract), it is now that a narrow reading of Articles 47 and 63 of the CISG is reached. This narrow reading derives from the wording of Articles 49(1)(b) and 64(1)(b) of the CISG.

Article 49(1) of the CISG states the grounds upon which the buyer may declare the avoidance of the contract: (a) when the breach of the seller amounts to a fundamental one; and (b) in case of non-delivery of the goods, where the seller does not deliver within the Nachfrist period. Thus, the granting of the Nachfrist by the buyer opens the door to the avoidance of the contract only in cases of non-delivery when time is not of the essence, but not in the case of other breaches, which are subject to the general rule under Article 49(1)(a), i.e. for the avoidance of the contract, a fundamental breach is required. This clear consequence does not mean that the Nachfrist is restricted only to non-delivery situations, or that the practical application of that provision is restricted to cases involving non-delivery.[17] [page 93]

On the contrary, the Nachfrist remedy is useful not only in cases in which there is a breach of the timely delivery of the goods, but also in other cases: when the seller has breached its obligation to deliver the goods to the agreed place, or in the case of the breach of the obligation to hand over documents relating to the goods at the time or place or in the form required by the contract or the applicable law or rules.

It would seem that the remedy is useful despite the fact that the avoidance is only applied in cases of non-delivery.[18] This is so, because the buyer who is still interested in the performance by the seller, by way of the Nachfrist, is sure about its intention to perform. The lapse of the Nachfrist would give certainty to the buyer on the course of action to take.[19] Besides, as a voluntary remedy, nothing prevents the buyer from granting a Nachfrist even in cases of fundamental breach.[20] As Professor Will states, in cases of repair, persistent refusal of the seller to respect additional time limits may finally open the way to avoidance under Article 49(1)(a), but never under Article 49(1)(b) of the CISG.[21] As pointed out by Müller-Chen:[22]

'Certainly, doing so does not grant him any right to avoid the contract if this period passes without success; however, when assessing the fundamental nature of the breach of contract, the circumstance can be taken into account that the seller did not perform an obligation that is important to the buyer despite a demand for performance and the fixing of an additional period of time.' [page 94]

Also, some authors [23] have considered that in situations where the seller supplies useless goods and the buyer requires him to deliver substitute goods, the buyer runs the risk of the expiration of the period of avoidance laid down by Article 49(2)(b)(1) of the CISG if the seller does not deliver. In the opinion of those authors, the buyer is well advised to fix a period for the delivery of substitute goods so as to be able to declare the contract avoided, in case the seller eventually does not deliver. It is not, however, entirely clear in that situation whether the Nachfrist in itself would open the door for the avoidance, since Article 49(1)(b) of the CISG applies in cases 'originally' of non-delivery and not as supported by those authors and some cases,[24] in cases of non-conforming goods, which are also coupled with a further breach of non-delivery. It would appear more a case of a fundamental breach subject to Article 49(1)(a) of the CISG, since the seller has not delivered the substitute goods, time being of essence in the contract (Article 49(2)(a) of the CISG). Furthermore, the expiration of the avoidance time under Article 49(2)(b)(1) of the CISG as considered by those commentators is also not clear. One has just to remember that in accordance with Article 46(1) of the CISG, the buyer, while requiring specific performance, cannot resort to a remedy, as avoidance, which is inconsistent with the right to require specific performance. Therefore, the right to avoid the contract would be considered 'suspended' while the buyer gives the seller a second chance to perform, and if the seller fails then the avoidance would still be open for fundamental breach (Article 49(1)(a) of the CISG).

Besides, the basic principle of the Convention that only a fundamental breach opens the door for the avoidance is kept by the interplay between the Nachfrist rule (Article 47) and the avoidance provision under Article 49 of the CISG. If the seller delivers non-conforming goods and the breach is not fundamental, and whether or not the buyer has granted an additional period of time to the seller, the buyer would have to keep the goods. Of course, the buyer might resort to any of the other available remedies under the CISG, such as the reduction of the price, or damages. As said, in the case of non-conforming goods, the basic philosophy of the Convention is achieved: the design of the avoidance of the contract as the last remedy, and only as a last remedy that is available if the breach is fundamental. Thus, where defects in the goods are minimal or not important enough as to be considered fundamental, the breach cannot be transformed into a fundamental one, opening the door to the avoidance of the contract, by way of the granting of a Nachfrist period.[25] [page 95]

In regard to the buyer's breach, also a narrow reading as regards the consequences of the Nachfrist ought to be considered (Articles 63 and 64(1)(b) of the CISG). Despite the fact that the seller may grant a Nachfrist to the buyer for any breach of his obligations, only the breach of his obligation to pay the price or take delivery of the goods would open the door for the avoidance.[26] As to the meaning of those obligations, payment of the price, and taking delivery of the goods, the guide in Articles 54 and 60 of the CISG respectively, assists in the interpretation.

IV.  THE NACHFRIST NOTICE: FIXING AN ADDITIONAL PERIOD OF TIME OF REASONABLE LENGTH FOR THE PERFORMANCE OF THE OBLIGATIONS (ARTICLES 47(1) AND 63(1) OF THE CISG)

From the literal wording of Articles 47 and 63 of the CISG, it is derived that in order to benefit from the Nachfrist provision, a notice, in which a demand of payment is clearly established and where an additional period of time of 'reasonable length' is fixed, ought to be sent. The analysis of these conditions as well as the consequences for their breach will be considered next.

1. The form of the Nachfrist notice, and its effectiveness

The general rules of the Convention apply to the form and effectiveness of the notice. Therefore, in accordance to the principle of freedom of form (Article 11), the communication might be made orally or in writing.

Also, the Nachfrist notice would be effective once it is sent (Article 27 of the CISG).[27] This means that the burden of proof is on the buyer to show that he has dispatched the notice and not that it has also reached the seller.[28] [page 96]

2. The demand of performance

In regard to the content, apart from the two other requirements of notice that will be examined in the next two sections, the will of the seller or the buyer will be referred to as unequivocal as to the demand for performance[29] and the determination of a deadline.[30] Further, if the Nachfrist entitles future avoidance, as in the cases of non-delivery of goods, the consequences of the expiration of the deadline, i.e. that the Nachfrist means the final deadline for the seller to deliver.[31] Mere expressions of wishes ought not to be considered enough to fulfil the certainty required by the Convention. Thus, expressions like 'I need the goods' are not sufficient.[32]

Thus, if the seller or the buyer declares that 'we hope very much that performance can be made by July 1', this would not be considered a Nachfrist notice under the Convention.[33] The situation in accordance with Professor Müller-Chen,[34] is open for an interpretation of a postponement of delivery or a deferral where damages due to delay cannot be demanded and the avoidance of the contract before the expiration of the time cannot be made.

However, in certain circumstances, an implicit demand of performance would suffice, for example, if the buyer has not fulfilled his obligation to pay on time, a later payment date in the invoice sent by the seller would be understood as a Nachfrist notice, if the invoice was sent concurrently with the shipment of the merchandise to the buyer, and not at a time after its receipt.[35]

3. Express determination of the additional period of time

The literal wording of Articles 47 and 63 of the CISG makes clear that the buyer or the seller has to fix an additional period of time, and thus provide expressly [page 97] for a specific date, i.e. 13 March,[36] or a date that is sufficiently determinable, i.e. there is a means for determining the final date, for example, 'two weeks after the reaching of the Nachfrist notice'. The reason for that is to be found in the very same structure of the CISG's remedies: if the non-fundamental breach is to be transformed into a fundamental one that allows the avoidance of the contract, certainty is required as to the moment in which the avoidance would be possible. In this way, the requirements of Articles 47 and 63 of the CISG would not be fulfilled either by an undetermined language ('pay as soon as possible' or 'deliver as soon as possible') [37] or impliedly (for example, by the mere lapse of some months after the breach).[38]

As it is clear from the mentioned example, a demand of performance is fixed but not a fixed date to perform. In the author's opinion, this renders the notice insufficient to be a Nachfrist notice under the CISG. However, it would be considered a valid communication for specific performance under the general principle of Article 46 of the CISG.[39] Therefore, if a notice demanding an immediate performance is sent and still there is no delivery of the goods, the buyer would be in the position to resort to the avoidance of the contract under Article 49(1)(a) of the CISG, but not under Article 49(1)(b) of the CISG. Of course in this situation, the court or arbitral tribunal would need to assess whether there is a fundamental breach (Article 25 of the CISG). [page 98]

Also, although even in cases in which the Nachfrist notice is linked with the avoidance of the contract, the notice does not need to be combined with the necessary notice of avoidance (Article 26 of the CISG).[40] Thus, the declaration of avoidance might be independent or combined with the Nachfrist notice. The merger of the avoidance notice into the Nachfrist would mean, as stated by Article [7.1.5(3)] of the UPIC, that 'The aggrieved party may in its notice provide that if the other party fails to perform within the period allowed by the notice the contract shall automatically terminate'.[41]

4. The 'reasonable' length of the Nachfrist

The reasonableness of the length of the additional period of time granted by the buyer or the seller would depend upon the circumstances of each particular case,[42] and the kind of breach. If, for example, the goods have not yet been delivered, in order for the Nachfrist period to be of reasonable length it would have to consist, as a minimum, of the time needed for the transportation of the goods from the seller's facilities to the delivery point.[43]

An issue of interpretation arises in regard to the computation of the reasonableness of the additional period of time when the seller or the buyer in the Nachfrist notice has not sufficiently specified the dies a quo or the dies ad quem, i.e. the initial or the final date. Some authors have proposed that it should be measured from the time at which the seller receives the notice fixing the period.[44] The author concurs with that opinion by the analogous application of paragraph 1, Article 20 of the CISG. For the same reason, paragraph 2 of Article 20 of the CISG also applies.[45] Only in cases in which there is a need to assess the reasonableness of the time, the combination of the dispatch rule, that applies to the Nachfrist notice, and [page 99] the reception principle, that applies to the computation of the period of time, has the practical effect of precluding the effectiveness of a Nachfrist notice that, despite the dispatch, never reaches the addressee.[46]

Another issue of interpretation in regard to the reasonableness of the length of time is the kind of consequences derived from the setting by the aggrieved party of an unreasonable, i.e. short, Nachfrist. According to the majority view of scholars and case law, the unreasonable Nachfrist might be converted into a reasonable one. The 'transformation' is achieved by way of an automatic extension.[47] In this situation, it is not entirely clear how the reasonableness of the time is reached: when the sum of the unreasonable time fixed in the Nachfrist plus the time the aggrieved party took for the avoidance of the contract is considered to be reasonable;[48] or whether the former is excluded from the computation and thus the short Nachfrist does not count.[49]

In the author's opinion, an unreasonable period of time renders the notice a non-suitable Nachfrist notice under the Convention. However, what is important to consider is that the consequence of giving a short Nachfrist ought not to be harmful for the aggrieved party unless such party avoids the contract within the unreasonable time, in which case, it would have had wrongfully avoided the contract. It should not be forgotten that there is a party in breach that cannot obtain an advantage by a mere miscalculation by the aggrieved party of the extra time for performance.[50] Besides, implied in the requirement of the Convention that the time be reasonable is the fact that the time established has to allow a real and timely performance by the party in breach. Therefore, if one takes into account the purpose of the Nachfrist provision, i.e. to keep the contract alive by allowing one of the parties to voluntarily extend the time of performance, and [page 100] that the seller when receiving the notice is in the better position to assess the reasonableness of the time to perform, it might be concluded that the seller would be estopped from relying on the insufficient notice as a Nachfrist notice, if it does not demand or fix a counter-period in accordance with Article 48(2) and (3).[51] For those reasons, a short period of time should be considered extended to the point in time which is considered to be reasonably long enough to allow performance by the party in breach or the avoidance of the contract after the expiration of that time.

V.  EFFECT OF FIXING AN ADDITIONAL PERIOD OF TIME (ARTICLES 47(2) AND 63(2) OF THE CISG)

Paragraph 2, first sentence, of Articles 47 and 63 of the CISG states that: 'Unless the buyer (or the seller) has received a notice from the seller (or the buyer) that he will not perform within the period so fixed, the buyer (or the seller) may not, during that period, resort to any remedy for breach of contract.' It provides an example of the principle of estoppel or venire contra factum propium,[52] since the seller or the buyer, who is granting the Nachfrist, is not entitled to resort to any remedy for breach of the contract unless the other party notifies that he will not perform during the period so fixed. The notice is effective following the reception principle, and is subject to the principle of freedom of form (Article 11 of the CISG), as well as the general rules on interpretation of the statements made by the parties (Article 8 of the CISG).[53]

Paragraph 2, second sentence, of the same provision, states that: 'However, the buyer (or the seller) is not deprived thereby of any right he may have to claim damages for delay in performance.' The effect of that provision is not clear. It [page 101] might be that it would be interpreted as meaning that during the Nachfrist period, the buyer or the seller granting the Nachfrist keeps the possibility of requesting the damages caused by the delay in performance.[54] It might be also interpreted in the sense of emphasising the principle that despite the 'prorogation' of the performance time, the right to ask for damages caused by the delay is not lost. Both interpretations seem possible, and thus the seller or the buyer might combine the Nachfrist notice with a statement directed to request the damages caused by the delay or a future indication of the possible increase in the damages caused by future delays. Also, since Article 47(2) of the CISG is not to be understood as an offer of respite, the buyer retains the right to claim a penalty clause;[55] in this regard, the penalty clause for a delay functions as the right to request damages for that very same reason, and thus an application by analogy is allowed.

Although not mentioned by Articles 47(2) and 63(2) of the CISG, the buyer or the seller also maintains the right to require interest to be paid on any sum that is in arrears as provided in Article 78 of the CISG.[56] [page 102]


FOOTNOTES

* Pilar Perales Viscasillas is a Commercial Law Professor at the University Carlos III of Madrid (2000). She graduated from the Law School of the University Autonoma of Madrid (1991). She has a Doctorate in Law from the University Carlos III of Madrid (1996), with honours. She has published several books in Spanish: Formation of the Contracts in CISG (1996); Appraisal's Rights of Shareholders (2000); Appraisal's Rights in Corporations: A Comparative Study between the Spanish and the USA Legal Systems (2001); and International Commercial Law. She has also co-authored The Uniform Law (2003) with Professor Rafael Illescas Ortiz; and Arbitrability and Arbitration Agreement in Corporations (2005). Professor Perales is the Spanish Representative at UNCITRAL. She is a member of the Chartered Institute of Arbitrators; a member of the Spanish Bar Association; a member of the Young International Arbitration Group of the London Court of International Arbitration; a member of the International Academy of Commercial and Consumer Law. Since June 2003, she has also been a member of the CISG-AC (The International Sales Convention-Advisory Council), and since 2004, a Vice-Director of the Legal Study of the University Carlos III of Madrid. Professor Perales has also published several articles in Spanish and English on commercial law, including international sales contracts, arbitration, international payments, UNIDROIT Principles, standby letters of credit and corporations.

1. CISG, Article 47 states that:

'(1) The buyer may fix an additional period of time of reasonable length for performance by the seller of his obligations;

(2) Unless the buyer has received a notice from the seller that he will not perform within the period so fixed, the buyer may not, during that period, resort to any remedy for breach of contract. However, the buyer is not deprived thereby of any right he may have to claim damages for delay in performance.'

CISG, Article 63 states that:

'(1) The seller may fix an additional period of time of reasonable length for performance by the buyer of his obligations;

(2) Unless the seller has received a notice from the buyer that he will not perform within the period so fixed, the seller may not, during that period, resort to any remedy for breach of contract. However, the seller is not deprived thereby of any right he may have to claim damages for delay in performance.'

2. The 'term' Nachfrist comes from the parallel provision of the German Civil Code (former section 326 BGB), which was drafted in terms of an obligation. After the Reform of the Law of Obligations entered into force on the 1 January 2002, the remedies structure follows the CISG. However, sections 281 and 323 BGB still oblige the creditor to fix a Nachfrist if the performance is still possible, although there are some exceptions to that rule, i.e. when there are special circumstances or when there is a clear rejection of the debtor to fulfil its obligations. When there is an obligation by the creditor to grant the Nachfrist, only after the lapse of the Nachfrist, it might avoid the contract.

3. The Nachfrist provisions under the CISG have certain resemblances to the same institution under German Law (see previous footnote) or with the mise en demeure of French Law as stated by the Secretariat's commentary to the present CISG, Articles 47 and 63, para 8 (<http://www.cisg.law.pace.edu/cisg/ext/secomm/secomm-47.html>). For the common law precedents, see, Jacob S Ziegel, 'The Remedial Provisions in the Vienna Sales Convention: Some Common Law Perspectives', in Galston and Smit (Ed), International Sales: The United Nations Convention on Contracts for the International Sale of Goods, Matthew Bender (1984), Chapter 9, footnote 49. Similar 'Nachfrist provisions' to that of the CISG are found in Code Suisse of Obligations, Articles 107; 7.1.5 Unidroit Principles of International Commercial Contracts, 2004 (UPIC); 8:106 Principles of European Contract Law (PECL); 251 and 257 OHADA Uniform Act Relating to General Commercial Law. See a comparison of some of them: Maryellen DIPALMA, Nachfrist under National Law, the CISG, and the UNIDROIT and European Principles: A comparison. International Contract Adviser, 1999, Vol 5, para 1, 28 et seq.

4. The term 'companion' is used in para 2 of the Secretariat Commentary of Article 43 of the 1978 Draft CISG; and also in comment 2 of the present Article 63 of the CISG; Knapp, Article 63, in Bianca and Bonell, Commentary on the International Sales Law, Milano: Giuffrè (1987), para 2.2, stating also that: 'is its point of departure'; and Chengwei LIU, Additional period (Nachfrist) for Late Performance: Perspectives from the CISG, UNIDROIT Principles, PECL and Case Law (2nd ed), at <http://www.cisg.law.pace.edu/cisg/biblio/liu4.html>, 2. The verb 'complements' is used by Will, Article 47, in Bianca and Bonell, Commentary on the International Sales Law, Milano: Giuffrè (1987), para 1.1. Clear as the dependence of the Nachfrist from the specific performance: Müller-Chen, Article 47, in Schlechtriem and Schwenzer (Ed), Commentary on the UN Convention on the International Sale of Goods (CISG), Oxford University Press (2005, 2nd (English) ed), para 1, footnote 1: 'The possibility to fix an additional period of time thus requires the existence of a claim for performance according to Article 46; its enforceability according to Article 28, however, is irrelevant'.

5. See also both remedies under UPIC. Specific performance is in section 2, and Nachfrist in section 1 of Chapter 7 (non-performance) of the Principles.

6. See also the comment to UPIC, Article 7.2.1.

7. See below at part IV. 3 and 4.

8. Also Harry M Flechtner, 'Remedies Under the New International Sales Convention: The Perspective' Article 2 of the UCC Journal of Law and Commerce, 1988, para 8, at <http://www.cisg.law.pace.edu/cisg/text/flecht47,63.html>, p 1: 'The Nachfrist procedure, therefore, makes performance of basic contractual obligations within the period fixed in the notice 'of the essence' of the contract'. A somehow different view is found in Peter Schlechtriem, Uniform Sales Law. The UN-Convention on Contracts for the International Sale of Goods, Manz: Vienna (1986), 76: 'Of course, delay by the seller during the additional time period can turn his default into a fundamental breach, but this is the result of the passing of time and not of the fixing of an additional period.'

9. For cases in which the delivery time was considered of the essence and thus making possible the avoidance without the granting of a Nachfrist: OLG Düsseldorf, 21 April 2004 (Germany); Supreme Court, 15 September 2000 (Switzerland); Appellate Court of Milan, 20 March 1998 (Italy); Zürich Chamber of Commerce, 31 May 1996; and Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry, 1 December 1995. An opposite case is the arbitral award ICC 7645/1995.

10. According to the case law, for example, OLG Düsseldorf, 24 April 1997 (Germany); Supreme Court, 15 September 2000 (Switzerland), a fundamental breach is seen if the precise compliance with the delivery deadline is of particular interest to the buyer, i.e. the buyer prefers not to receive delivery at all than receiving delayed delivery and that this is apparent for the seller at the conclusion of contract. According to the same line of cases, the particular importance of the date of delivery can result from the contract itself, for example, when time is of the essence, as well as from the circumstances, for example in the case of delivery of seasonal items. See considering the delivery of seasonal products as fundamental: ICC 8786/1997, citing OLG Hamm, 8 December 1980 (Germany). The Supreme Court of Switzerland, 15 September 2000 also considered that a delay in delivery is fundamental if the goods have a market price that varies every day.

11. See Will, Article 47, in Bianca and Bonell, para 2.1.2. An example is found in the Cour d`appel of Grenoble, 4 February 1999 (France), where the court considered that a delay of a few days in taking the goods (pure orange juice) was not a fundamental breach, and thus the Spanish seller ought to have granted the buyer a Nachfrist. Therefore, the avoidance was wrongfully done. See also: ICC 7465/1995.

12. ICC 8128/1995, which also adds: 'Le retard peut cependant constituer une contravention essentielle au contrat suivant les circonstances speciales chaque cas d'espece dont le vendeur doit avoir connaissance.' Thus, in the case at hand, the seller could not ignore that time was of the essence since the buyer indicated that it needed the goods in order to comply with other contracts. See also considering the Nachfrist a precondition for the avoidance: AG Oldenburg in Holstein, 24 April 1990 (Germany); OLG Frankfurt am Main, 18 January 1994 (Germany); OLG Köln, 22 February 1994 (Germany); BGH 15 February 1995 (Germany); LG Düsseldorf, 11 October 1995 (Germany) in a case of a partial avoidance under CISG, Article 51.2; OGH, 11 September 1997 (Austria); and LG Stendal, 12 October 2000 (Germany). Cf, see Landgericht Heilbronn, 15 September 1997 (Germany); OLG München, 1 July 2002 (Germany); and Tribunale di Padova, 25 February 2004 (Italy).

13. As stated by Knapp, Article 63, in Bianca and Bonell, para 2.7: 'Fixing an additional period of time under Article 63(1) is the seller's right, but not his obligation.' Also see Peter Schlechtriem, Internationales UN-Kaufrecht, Mohr, Siebeck (2005), para 189; UNCITRAL Digest of case law on the United Nations Convention on the International Sale of Goods, Article 47. A/CN.9/SER.C/DIGEST/CISG/47, para 4. The majority of the commentators are in agreement, see, Fritz Enderlein, 'Rights and Obligations of the Seller under the UN Convention on Contracts for the International Sale of Goods', in Petar Sarcevic and Paul Volken (Ed), International Sale of Goods, Drubrovnik Lectures, Oceana (1996), 192; Liu, 4; and Claude Witz, 'Beyond the Digest: Articles 53-65', in The Draft UNCITRAL Digest and Beyond: Cases, Analysis and Unresolved Issues in the UN Sales Convention, Franco Ferrari, Harry Flechtner, and Ronald A Brand (Ed), Sellier (2004), 437-438, criticising the case law, especially LG Göttingen, 20 September 2002.

14. See UPIC, Article 7.1.5(3): 'Where in a case of delay in performance which is not fundamental the aggrieved party has given notice allowing an additional period of time of reasonable length, it may terminate the contract at the end of that period.' And PECL, Article 8:106(3).

15. Will, Article 47, in Bianca and Bonell, para 2.1.1.

16. In agreement, Schlechtriem, Uniform Sales Law, p 76, for the buyer, and pp 83-84, for the seller, although in this case impliedly. With doubts, Ziegel, above, 9-16: 'it is very doubtful whether the provision applies to breaches other than those arising from the seller's delayed performance'. Interesting enough is that the Secretariat Commentary on Article 43 of the 1978 Draft CISG (CISG, Article 47) only refers to situations of late delivery of the goods.

17. As considered by Joseph Lookofsky, Article 47. 'Nachfrist Warning: Buyer Fixing an Additional Performance Period', in J Herbots (Ed) and R Blanpain (General Ed), International Encyclopedia of Laws Contracts, Suppl 29, Kluwer Law International: The Hague (2000), 119. Several commentators also point out the narrow practical effects of the combination of Articles 47 and 49(1)(b) of the CISG. See John O Honnold, Uniform Law for International Sales under the 1980 United Nations Convention, Kluwer Law International (1999, 3rd ed), para 288, pp 368-369; and Liu, 6. But, see, Alejandro Garro/Alberto Zuppi, Compraventa internacional de mercaderías, Buenos Aires: La Roca (1990), 178.

18. See comment B to Article 8:106 of the PECL: 'In other cases the notice procedure does not give the aggrieved party any additional rights but is nonetheless useful.' But see, Ziegel, 9-16; and Peter A Piliounis, 'The Remedies of Specific Performance, Price Reduction and Additional Time (Nachfrist) under the CISG: Are these worthwhile changes or additions to English Sales Law?', Pace International Law Review, 2000, para 12, at <http://www.cisg.law.pace.edu/cisg/biblio/piliounis.html>, p.11, considering more a burden to the buyer. Furthermore, some authors have rejected the idea of applying the provision by analogy to cases of non-conformity: Robert KOCH, 'Commentary on Whether the UNIDROIT Principles of International Commercial Contracts May be Used to Interpret or Supplement Articles 47 and 49 of the CISG', available at <http://www.cisg.law.pace.edu/cisg/principles/uni47,49.html>, 4. For the very same reason the provision of CISG, Article 49(1)(b) and the reference to the non-delivery cannot be applied to delivery of an aliud, which under the Convention are non-conformity cases (but see on the contrary OLG Düsseldorf, 10 February 1994 (Germany) applying Article 47 to a delivery of an aliud).

19. See comment C to Article 8:106 of the PECL: 'serving a notice may still perform the useful functions of informing the debtor that the aggrieved party still wants proper performance and of giving the debtor a last chance before the aggrieved party seeks specific performance'.

20. See considering the remedy useful: Secretariat Commentary to Article 43 of the 1978 Draft CISG (Article 47 CISG), para 6; comment C to Article 8:106 of the PECL; Liu, 7; and Anette Gärtner, 'Britain and the CISG: The Case for Ratification -A Comparative Analysis with Special Reference to German Law', Pace Review of the Convention on Contracts for the International Sale of Goods (CISG), 2000-2001, at <http://www.cisg.law.pace.edu/cisg/biblio/gartner.html>, 5.

21. Will, Article 47, in Bianca and Bonell, para 2.2.1.

22. Müller-Chen, Article 47, para 16.

23. See Gärtner, 5; and Müller-Chen, Article 47, para 1 (but see, Article 49, para 37).

24. LG Stendal, 12 October 2000 (Germany); and LG Regensburg, 24 September 1998 (Germany).

25. The legislative history shows that this is the 'true' interpretation: see, Honnold, para 288, pp 368-369; and Will, Article 47, in Bianca and Bonell, para 1.2.

26. Also Knapp, Article 63, in Bianca and Bonell, para 3.1. And also at para 3.2, where he states: 'For example, the seller is free to extend the period for examination of the goods by the buyer under Article 38(1), but he has no right to declare the contract avoided merely for the buyer's failure to perform this obligation within the additional period of time, unless it constitutes a fundamental breach of contract.

27. See Will, Article 47, in Bianca and Bonell, para 2.1.3.1; Müller-Chen, Article 47, para 12; Hager, Article 63, in Schlechtriem and Schwenzer (Ed), Commentary on the UN Convention on the International Sale of Goods (CISG), Oxford University Press (2005, 2nd (English) ed), para 3; and Liu, 13. But see considering the notice effective following the reception principle: Knapp, Article 63, in Bianca and Bonell, para 2.8. However, neither the literal wording of the rules of the Convention, nor the legislative history brings us to that conclusion.

28. See Müller-Chen, Article 47, para 13.

29. Müller-Chen, Article 47, para 5; and Koch, 5. In the case law: OLG Düsseldorf, 24 April 1997 (Germany): 'such an extension of delay must contain a precise request for performance that is combined with the fixing of a specific deadline'.

30. See Will, Article 47, in Bianca and Bonell, para 2.1.3.1.

31. This distinction depending on the 'effect' of the Nachfrist notice upon the destiny of the contract is not clearly established by the scholars, who usually centre the debate on the Nachfrist as a remedy for non-delivery and reach the same conclusion as derived in the text. See, for example, Will, Article 47, in Bianca and Bonell, para 2.1.3.1.

32. See Will, Article 47, in Bianca and Bonell, para 2.1.3.1.

33. The example is found at comment D of Article 8:106 of the PECL. See the same example and the same conclusion in Müller-Chen, Article 47, para 5.

34. Müller-Chen, Article 47, para 5.

35. See Tribunale di Padova, 31 March 2004 (Italy).

36. In accordance with Honnold, para 289, p 370 and para 351, p 441; Will, Article 47, in Bianca and Bonell, para 2.1.3.1; Knapp, Article 63, in Bianca and Bonell, para 2.9; Hager, Article 63, para 3; Huber, in Peter Schlechtriem (Ed), Commentary on the UN Convention on the International Sale of Goods (CISG), Oxford: Clarendon Press (1998, 2nd ed), Article 47, para 6; Müller-Chen, Article 47, para 4; Liu, 10; Enderlein,193; Koch, 5; Zeller, 3; Rafael Illescas / Pilar Perales Viscasillas, Derecho Mercantil Internacional. El Derecho Uniforme, Madrid: Cerasa (2003), 208. The author is in agreement with Knapp, in Bianca and Bonell, para 2.10; Enderlein / Maskow, 182, and 238; and Müller-Chen, Article 47, para 5, when considering that it is not necessary to point out in the Nachfrist notice that after the lapse of the period of time, the avoidance of the contract might be declared.

37. Or 'perform promptly' as stated by the Secretariat Commentary of Articles 43 and 59 of the 1978 Draft CISG (Articles 47 and 63 of the CISG), para 7, which considers that a declaration like that is not a fixing of a period of time under Articles 47/63 of the CISG. See also Comment D to Article 8:106 of the PECL; and OLG Düsseldorf, 24 April 1997 (Germany). Neither would suffice a phrase like 'hope to receive the goods soon' (Will, Article 47, in Bianca and Bonell, para 2.1.3.2), or 'urgent demands like deliver at once, or as quickly as possible or immediately' (Müller-Chen, Article 47, para 4).

38. Against: ICC 7585/1992, which considers that the period between the inspection of the goods and the avoidance (more than gour months) has to be considered as a Nachfrist period in conformity with Articles 63(1) and 64(1)(b) of the CISG; and SAP Barcelona, 3 November 1997 (Spain): 'el comprador toleró sucesivas demoras en la entrega de las mercaderías -- lo que equivale a la concesión del 'plazo suplementario' previsto en el artículo 47 del Convenio': the buyer tolerated successive delays in the delivery of the goods, which was considered to be a concession of a Nachfrist.

39. See part II.1 above.

40. Knapp, Article 63, in Bianca and Bonell, para 2.10.

41. See also Article 8:106(3) of the PECL. Also in agreement: Müller-Chen, Article 49, para 22. The case law also considers that it is possible to merge within the Nachfrist notice a declaration of avoidance: see OLG Graz, 24 January 2002 (Austria).

42. See also Will, Article 47, in Bianca and Bonell, para 2.1.3.2, stating also that among the elements to take into account are: 'the nature, extent and consequences of the delay, the seller`s possibilities of and time needed for delivery, and the buyer`s special interest in speedy performance'; Müller-Chen, Article 47, para 6, citing several factors that should be taken into account. Knapp, Article 63, in Bianca and Bonell, para 2.11, insists on an objective evaluation based upon the commercial interests of both parties. See also Liu, 12-14.

43. See comment E to Article 8:106 of the PECL, including among the factors to be taken into account: the period of time originally set for performance; the need of the aggrieved party for quick performance; the nature of the goods, services or rights to be performed or conveyed; and the event which caused the delay.

44. Knapp, Article 63, in Bianca and Bonell, para 2.12, adding that: 'If, for instance, the additional period of time has been specified by the seller as «within one month from today», the reasonableness of the period so fixed will nevertheless be measured from the time at which the notice reached the buyer.

45. See the author's considerations: Pilar Perales Viscasillas, La formación del contrato de compraventa internacional de mercaderías, Valencia: Tirant lo blanch (1996), 591.

46. See Knapp, Article 63, in Bianca and Bonell, para 2.12: 'Hence, if the notice never reaches him, the additional period of time under Article 63 never starts to run'. But see Liu, 13: 'even if a Nachfrist notice never reached the addressee, the additional period of time fixed in that notice started to run since its dispatch.

47. A view which is confirmed by Article 7.1.5(3) of the UPIC: 'If the additional period allowed is not of reasonable length it shall be extended to a reasonable length'. See in this regard Illustration 2 of Article 7.1.5 of the UPIC.

48. In favour: Müller-Chen, Article 47, para 9. Impliedly also: Hager, Article 63, para 3a. In the case law: LG Elwangen, 21 August 1995 (Germany); OLG Celle, 24 May 1995 (Germany), where the avoidance was notified seven weeks after the Nachfrist; OLG Naumburg, 27 April 1999 (Germany). It seems that this solution would not be possible if the Nachfrist notice is combined with the avoidance. The case law follows Huber, Commentary, Article 47, paras 10, 11, and 12.

49. Liu, 14-15, seems to confuse both situations and adhere to the line of reasoning of the UPIC and PECL, i.e. to the second interpretation given in this text: if the period is too short, the aggrieved party may only avoid the contract after a reasonable period from the time of the notice.

50. In this regard, Bruno Zeller, Guide to Articles 47 and 49(1)(b). Comparison with Principles of European Contract Law (PECL), at <http://www.cisg.law.pace.edu/cisg/text/peclcomp47.html#er>, 3, considers, comparing the CISG with the PECL, that a court might reach the same solution under the CISG by applying the good faith principle, and thus could set a date which complies with the reasonable requirement; also Koch, 6. But see Henry Gabriel, 'General provisions, obligations of the seller, and remedies for breach of contract by the seller', in The Draft UNCITRAL Digest and Beyond: Cases, Analysis and Unresolved Issues in the UN Sales Convention, Franco Ferrari, Harry Flechtner, and Ronald A Brand (Ed), Sellier (2004), 355, questioning that these cases are consistent with the spirit of Article 47 of the CISG: 'Article 47 places upon the buyer specific obligations in order to be able to exercise the right of avoidance under Article 49. One of these obligations is to set a "reasonable" period of additional time for the seller's performance. To allow the buyer to exercise the right of avoidance without meeting the buyer's express obligation may be seen as punishing the seller by taking away from the seller the right to have the reasonable period set before being subject to the sanction of avoidance.'

51. See Müller-Chen, Article 47, para 9 and footnote 25.

52. Enderlein and Maskow, 182; Müller-Chen, Article 47, para 3; and Alison E Williams, 'Forecasting the Potential Impact of the Vienna Sales Convention on International Sales Law in the United Kingdom', Pace Review of the Convention on Contracts for the International Sale of Goods (CISG), 2000-2001, at <http://www.cisg.law.pace.edu/cisg/biblio/williams.html>, 15.

53. See also Knapp, Article 63, in Bianca and Bonell, paras 3.5, and 3.6, pointing out that also implied notices would suffice.

54. Doubtful: Will, Article 47, in Bianca and Bonell, para 2.2, but clearly in favour of the possibility of asking damages during the Nachfrist, at para 2.2.2. Also in agreement with the latter position: Knapp, Article 63, in Bianca and Bonell, para 2.13; and Liu, 16. The position is the same in Article 7.1.5(2) of the UPIC: 'During the additional period the aggrieved party may withhold performance of its own reciprocal obligations and may claim damages but may not resort to any other remedy', and the same wording in Article 8:106(2) of the PECL.

55. Müller-Chen, Article 47, para 20; and Hager, Article 63, para 6.

56. Following Knapp, Article 63, in Bianca and Bonell, para 2.5. In accord: Hager, Article 63, para 6.


Pace Law School Institute of International Commercial Law - Last updated May 26, 2006
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