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

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3. Instalment Contracts (Article 73)

Where there is a breach of a single delivery of an instalment contract, the contract may be avoided only with respect to the instalment that is defective or was not performed and to the obligation of the other party corresponding to that performance. Article 73(1) requires that the breach constitutes a fundamental breach of contract with regard to the instalment in question. A breach of one instalment may also indicate the probability of a breach of instalment obligations not yet due. In that case, the contract may be avoided with regard to the future instalments as well. According to Article 73(2), avoidance in regard to future obligations must be declared within a reasonable time so that the other party has sufficient time to consider the matter. If, due to the interdependence of the instalments, the defective or failed performance makes past or future instalments worthless, those instalments can be avoided as well. However, this is true only if the purpose of the entire contract was clear to both parties at the conclusion of the contract (Article 73(3)). The buyer's interest in receiving complete performance must, therefore, have been recognizable to the seller.[392]

This provision is concerned with successive deliveries, not instalment payments. By analogy, however, Article 73(2) can also apply to missed payments if they coincide with instalment deliveries. Otherwise, the entire contract may be avoided under Article 72. Article 73(2) is also applicable to other breaches by the buyer, such as not taking delivery of an instalment. [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.

392. Cases in which the buyer's intended use of the goods make the instalments interdependent on each other can be found not only in cases of technical integration, such as the delivery of a machine in individual parts, but also in economic circumstances, such as when the successive delivers of raw materials must all be of the same quality in order to fulfill the buyer's intended purposes. See the example in the Secretariat's Commentary at 168 § 8.

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