Published by Manz, Vienna: 1986. Reproduced with their permission.

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2. Avoidance Based on Anticipatory Breach (Article 72)

Anticipatory breach as a basis for avoiding a contract before performance is due, was, in principle, retained (Article 72(1) = Article 63 of the 1978 Draft Convention), but was restricted in accordance with the tendency to limit avoidance as a remedy of last resort. The restriction took into account the desire expressed by the developing countries to permit the party whose breach is presumed to provide assurances and thereby to prevent the avoidance (Article 72(2)).[388] The other prerequisites, under Article 72(2) for avoiding the contract on the basis of anticipatory breach are not terribly important since they have been weakened by exceptions. Notice of the intent to avoid is unnecessary in those situations - practically speaking, the most important - in which the other party has already declared that he will not perform the contract (Article 72(3)). Since this exception also covers the frequent cases in which a demand for new terms or alleged contract violations by the other side are used as a pretext for not performing one's own obligations, immediate avoidance still remains an option in most cases. However, Article 72(2) should apply primarily to situations where performance by a willing party is jeopardized by objective circumstances.[389] In those cases where there is no time to notify, where the delivery date is so near that assurances could not be procured in time, there is again no need to notify the other party. The notice requirement must also be "reasonable" in other respects as well.

Where there is little chance that the other party can still provide security - for example, where a delivery cannot be made because of war - notice will often be unnecessary.

As with Article 71, great difficulty arose in connection with the question of when a particular act or occurrence justifies the conclusion that a fundamental breach is to be expected. The debate over whether the formulation "it is clear" ("il est manifeste") means or should mean a higher degree of certainty than the formulation in Article 71(1) "it becomes apparent" ("il apparait") played a major role in the discussion. The discussion also suffered from the difficulties of translation.[390] To some extent, differences in the standards of certainty were accepted and justified on the grounds that the remedy in Article 71(1) differs in seriousness from the remedy in Article 72(1). Under Article 71(1), the suspension applies only to obligations still to be performed and leaves the contract intact,[page 95] whereas, under Article 72(1), an avoidance of the contract is possible.[391] In my opinion, the different formulations do not require different degrees of certainty - such a requirement would hardly be practicable anyway.[391a] In Article 73(2), the same wording originally used in Article 71(1) - "good grounds to conclude" - was retained for the case where a fundamental breach is anticipated with regard to instalment contracts. The decisive factor in all three provisions - Articles 71(1), 72(1) and 73(2) - is whether a reasonable person would be convinced that a breach of contract is certain to occur. Moreover, another reason for not requiring a higher degree of certainty under Article 72(1) is that otherwise, a serious refusal to perform would never be "certain" enough under Article 72(3) since an obligor can always change his intentions until the time for performance. On the other hand, the refusal of the obligor to provide "adequate assurance" following a notice under Article 71(3) should not in itself be regarded as "clear" evidence of an impending breach of contract.[391b] [page 96]

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FOOTNOTES

* The author of this book participated at the Conference as a member of the delegation from the Federal Republic of Germany. The views expressed here are personal to the author and do not necessarily represent the position of the F.R.G. or its delegation.

388. Article 63 of the 1978 Draft Convention passed the First Committee without difficulties, but then became controversial on the basis of the Egyptian proposals to link suspension of performance with avoidance of the contract due to an anticipatory breach. See supra at VI.E.1. In the end, however the separation of the two remedies was maintained. The decisive proposal came from a working group that was appointed after the Egyptian proposal had been rejected.

389. See the examples in the Secretariat's Commentary: The seller's factory burns down; an embargo is imposed; currency exchange laws prevent payment. Secretariat's Commentary at 164 § 2.

390. See A/Conf. 97/C.1/SR.37 at 11-12 (= O.R. 431); A/Conf. 97/SR.9 at 7 et seq. (= O.R. 216) (Plenary).

391. See A/Conf. 97/C.1/SR.37 at 12 et seq. §§ 104, 105 (= O.R. 432) (U.S. and Norwegian arguments).

391a. See Ziegel, Remedial Provisions at 9-34; ("surely [a] minor verbal issue".).

391b. See Ziegel, Remedial Provisions at 9-35; contra Honnold Commentary § 394.

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