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CISG
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LEGISLATIVE HISTORY
1980 Vienna Diplomatic Conference

Summary Records of Meetings of the First Committee

12th meeting

Wednesday, 19 March 1980, at 10 a.m.

Chairman: Mr. LOEWE (Austria)

The meeting was called to order at 10.05 a.m.

CONSIDERATION OF ARTICLES 1-82 OF THE DRAFT CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS AND OF DRAFT ARTICLE "DECLARATIONS RELATING TO CONTRACTS IN WRITING" IN THE DRAFT PROVISIONS PREPARED BY THE SECRETARY-GENERAL CONCERNING IMPLEMENTATION, DECLARATIONS, RESERVATIONS AND OTHER FINAL CLAUSES FOR THE DRAFT CONVENTION (agenda item 3) (A/CONF.97/5) (continued)

25
Article 23 [became CISG article 25 ]
(A/CONF.97/C.1/L.63, L.81, L.99, L.104, L.106, L.121 and L.126)

1. The CHAIRMAN drew attention to the fact that the existing text of article 23 [became CISG article 25 ] was considerably different to the text of the Convention relating to a Uniform Law on the International Sale of Goods, which linked the idea of fundamental breach to the fact that the party in breach knew, or ought to have known, at the time of the conclusion of the contract, that a reasonable person in the same situation as the other party would not have entered into the contract if he had foreseen the breach and its effects (ULIS, article 10). In the existing text of article 23 [became CISG article 25 ], the definition of fundamental breach was based on the concept of substantial detriment to the other party.

2. He invited members of the Committee to consider the proposed amendments, starting with those which were furthest from the text of the draft Convention and closest to the ULIS text, i.e., those of Egypt (A/CONF.97/C.1/L.106) and Czechoslovakia (A/CONF.97/C.1/L.81).

3. Mr. SHAFIK (Egypt), introducing his delegations amendment (A/CONF.97/C.1/L.106), said that the criterion given to define fundamental breach in the existing text was too subjective in nature: the circumstances of the party in breach were taken as a basis of appreciation when the party stated that it had not foreseen and had no reason to foresee that substantial detriment to the other party would result. The Egyptian amendment was an attempt to introduce a more objective principle by indicating that the party in breach ought to provide proof that it had not foreseen such a result and that a reasonable person of the same kind in the same circumstances would not have foreseen it. In other words, the effect of the amendment was to place the burden of proof on the party in breach.

4. Mr. KOPAC (Czechoslovakia), explaining the reasons for his delegation's proposal (A/CONF.97/C.1/L.81), noted that article 10 of ULIS had given rise to many discussions in the UNCITRAL Working Group and that it had been felt that the criterion on which it was based was too subjective. It was in response to such criticism that the existing text had been drawn up and that fundamental breach had been defined in terms of the detriment resulting to the injured party. In his opinion, however, that text was not entirely satisfactory. On the one hand, the concept of substantial detriment was vague and required a more precise definition. On the other, the question of the foreseeability of detriment introduced a subjective element which could create difficulties, particularly in the case provided for in article 42(2) [became CISG article 46(2) ] (buyer's right to require performance), where it was important to have objective criteria to define fundamental breach. That was what in effect determined the buyer's right to require performance of the contract on the part of the seller. That right was aimed at foreseeing the loss which might otherwise result from a breach of contract. If the existing definition of fundamental breach given in article 23 [became CISG article 25 ] were accepted, the buyer would have to wait until he had suffered substantial detriment in order to avail himself of the right, and that was contrary to the requirements of international trade. That was quite apart from the fact that, in most cases, a certain amount of time would have to elapse before the buyer would be able to assess the extent of the detriment he had suffered. Consequently, the definition was not adapted to the remedy provided for in the draft Convention, and it was to be feared that it might lead to numerous difficulties, particularly with regard to the application of articles 43, 44, 45 and 47 [became CISG article 47, CISG article 48, CISG article 49 and CISG article 51 ]. His delegation's amendment was an attempt to remedy those difficulties and to bring the definition of fundamental breach into line with the systems of remedy provided in the draft Convention for the party having the right to require performance of contract.

5. The text of his delegation's amendment could certainly be improved and he saw nothing against the Committee establishing a working group for that purpose, provided that the principle contained in the amendment was retained.

6. Mr. REISHOFER (Austria) said that he would be able to accept the Czechoslovak amendment but preferred the Egyptian one, which gave more objective criteria for defining fundamental breach.

7. Mr. FRANCHINI-NETTO (Brazil) said that article 23 [became CISG article 25 ] was related to article 70 [became CISG article 74 ], which established a general rule for the calculation of damages. The existing text awarded the party in breach certain privileges which had no legal basis by making it possible for that party to refer to purely personal criteria and to evade the liability incumbent upon him under article 70 [became CISG article 74 ] to remedy the resulting detriment. Consequently, he found it impossible to approve such a rule and reserved the right to take the floor again during consideration of article 70 [became CISG article 74 ]. He also pointed out that none of the amendments submitted met the criteria for remedy established in article 70 [became CISG article 74 ].

8. The CHAIRMAN said that it would be possible for delegations to revert to certain articles in plenary, but that that was not possible in the First Committee.

9. Mr. ROGNLIEN (Norway) said, in connection with the Egyptian amendment, that he could not accept the introduction of a provision on the burden of proof in that connection. However, he felt that the idea of taking as a criterion what a reasonable person of the same kind in the same circumstances could have foreseen introduced a useful point of precision as compared with the existing text, which took solely the point of view of the party in breach. It might be possible to delete the word "reasonable", if it met objections, but it was important to keep the reference to a person of the same kind in the same circumstances. He pointed to certain weaknesses in the drafting of the English text of the proposal as compared with the original French text. Thus, the expression "of the same kind" seemed insufficient as a translation for the French expression "de sa qualité".

10. The Egyptian amendment would be acceptable if all reference to proof were deleted and if it was merely specified that a reasonable person of the same occupation (in the same trade) and in the same circumstances would not have had any reason to foresee the detriment.

11. If delegations had many changes of a drafting nature to propose it would perhaps be of interest to form a working group for the Egyptian amendment.

12. Mr. MANTILLA-MOLINA (Mexico) said he would be able to accept the Egyptian amendments with the changes suggested by the Norwegian representative. However, the Czechoslovak proposal seemed to him to restrict the concept of fundamental breach excessively by specifying that the party in breach ought to have known "that the other party would not be interested in performance in case of such a breach". The criterion introduced by the Egyptian proposal seemed to him to be better adapted to the objectives of the Convention. Nonetheless, as the Norwegian representative had said, it would be better not to mention the burden of proof, since the objectives of the Convention were concerned more with the essential duties of the parties than with questions of judicial procedure. It was sufficient to retain the reference to a reasonable person of the same kind and in the same circumstances.

13. Mr. KRISPIS (Greece) said that the existing text already contained objective elements, but the Egyptian proposal made it clearer. He felt, however, that there was no reason to introduce the matter of burden of proof and that it was preferable to concentrate on matters of substance and not to refer to matters of procedure unless it were absolutely necessary, as was the case in article 10 [became CISG article 11 ]. Concerning the expression "reasonable person", he noted that the word "reasonable" had already been used many times in the draft Convention and that it would be sufficient to refer to a person of the same kind in the same circumstances. Finally, the word "and" should be replaced by "or" in the Egyptian amendment.

14. Mr. WAGNER (German Democratic Republic) said that too much time should not be spent in trying to improve the existing text, since it was not easy to find a more satisfactory formula. The many draft amendments which had been submitted showed that fundamental breach could be defined only in vague terms. However, if the article had to be changed, he would prefer the Czechoslovak text although, in his opinion, it was not desirable to specify at what stage breach of contract entailed consequences for the other party.

15. Mr. HJERNER (Sweden) said he shared the views of the representative of the German Democratic Republic. Even if the definition of fundamental breach given in the existing text was not entirely satisfactory, it nonetheless represented a great improvement on the ULIS text.

16. The concept of "substantial detriment" introduced a concrete element and the subjective nature for which the text had been reproached was justified on the assumption that it was appropriate to take into account the circumstances having led the party in breach to commit a breach of the contract. There could be no fundamental breach if the party in breach was unaware of certain circumstances of which the buyer had not informed him. For example, if the contract mentioned a specific delivery date such as 1 December, because it was important for the buyer to have the goods available for Christmas, the seller should be informed of the fact. If not, in the event of late delivery, he could not know that substantial detriment had resulted for the buyer and could not be considered to have committed a fundamental breach of the contract. The same applied to the quality of goods; the contract might specify the dimensions of the goods, to which the seller might not attach importance, whereas those specifications were essential to the buyer; in such a case it was incumbent upon the latter so to inform the seller. That concept was entirely in accordance with the provision of the second sentence of article 70 [became CISG article 74 ], according to which damages might 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 which he then knew or ought to have known, as a possible consequence of a breach of contract.

17. It would be preferable not to take up the question of burden of proof in the Convention since that was rather a matter of procedural law.

18. In short, he was in favour of retaining the existing text of article 23 [became CISG article 25 ] without any change.

19. Mr. STALEV (Bulgaria) said that article 23 [became CISG article 25 ] was one of the pillars of the Convention because the various sanctions available to the buyer and the seller as well as certain aspects of passing of risk depended on the definition of fundamental breach. The draft article had the merit of providing an objective criterion for that definition by specifying that a breach was fundamental when it caused substantial detriment to the injured party. However, that criterion would further an application for recovery of damages rather than avoidance of the contract. To take the case, for example, of a sale with a specific delivery date, if the goods were not delivered on that date and if prices dropped sharply after that date, it would be in the interest of the buyer that the contract should not be performed. The question which then arose would be whether the buyer had the right to abrogate the contract. The existing text left certain doubts on the point. His delegation therefore preferred the definition proposed by the Czechoslovak delegation (A/CONF.97/C.1/L.81), whereby what made a breach fundamental was the fact that the other party was no longer interested in having the contract performed.

20. It was also very important to know at what time the party in breach might foresee the consequences of the breach. If that question was not settled by the Convention, as was currently the case, there was the risk that a party might take some unilateral action to render more serious a breach on the part of the other party by, for example, turning into a contract of sale with a specified delivery date a contract which had not previously had such a condition attached.

21. Mr. TRÖNNING (Denmark) said that he approved the main elements of the Egyptian amendment, which had the merit of introducing more objective criteria of appreciation. He felt, however, that the question of the burden of proof should not be tackled in that article.

22. The Czechoslovak amendment did not seem to him to be acceptable, because the criteria it proposed were very difficult to apply.

23. He thought that it was not appropriate to establish a rule on the subject of deciding from what time the party in breach could foresee the consequences of the breach, and that it was preferable to leave the decision to the judge.

24. Mr. BONELL (Italy) said that his delegation preferred the definition of fundamental breach which was given in ULIS to that given in the draft text under consideration. There seemed to him to be two criticisms that could be levelled against the existing wording of article 23 [became CISG article 25 ]: on the one hand, there was no indication of the time from which the party in breach ought to have seen the consequences of the breach and, on the other, the concept of substantial detriment was not sufficiently clear to constitute an objective criterion.

25. His delegation was inclined to favour the Czechoslovak amendment since, if it were adopted, it would settle the two above-mentioned points. It approved the last part of the amendment in particular which linked the definition of fundamental breach to the injured party's interest in performance, which was a more objective and precise criterion than that of the existing article 23 [became CISG article 25 ].

26. Mr. KHOO (Singapore) reminded the meeting that, at the time of the 1977 UNCITRAL Conference, a definition of fundamental breach had been reached only after difficult negotiations, in spite of which the text had not satisfied everybody. The second part of the definition in particular, which had been adopted in order to introduce the question of the burden of proof, had been the subject of reservations, which had again been expressed during the current meeting. For his part, he considered that the second part brought in some rather subjective elements and that it was not necessary to establish in the Convention a rule on the burden of proof. Nonetheless, if the majority of the members of the Committee were prepared to accept the existing text of the draft, he would do likewise.

27. As for the Egyptian amendment, he would be able to accept it provided that the words "of the same kind" were deleted, as they seemed to him to be redundant. It could also agree to the Indian amendment (A/CONF.97/C.1/L.126).

28. Mr. BENNETT (Australia) said he agreed that article 23 [became CISG article 25 ] was a fundamental one, but he did not believe that perfection could be attained and considered that the existing text was without doubt preferable to all the amendments proposed.

29. The question in fact was to decide whether the nature of the conditions specified in contracts or the nature of any breaches should be considered. That matter had been resolved in different ways by different legal systems. The common law system attached great importance to the nature of the conditions of contracts but that was not the approach which had been adopted in the draft Convention, where greater importance was attached to the nature of the breach.

30. His delegation did not think that it was appropriate to impose strict rules to settle the problem of foreseeability of detriment.

31. Lastly, with respect to the Egyptian amendment, whereas the concept of the "reasonable person" was not unknown in the common law system, he had reservations about its introduction in the article under consideration.

32. Mr. GHESTIN (France) said that the Czechoslovak proposal was too restrictive and thought that it was going too far to require that the other party should lose interest in the contract as a result of the failure to perform before the contract could be terminated. The existing text seemed to him to allow for an essential margin of interpretation and contained an objective element concerning the possibility to foresee the result.

33. His delegation was favourably disposed to the Egyptian amendment, which provided more precise elements of appreciation, but considered the detail regarding the burden of proof superfluous and objected to the over-systematic recourse to the notion of a "reasonable person".

34. Mr. SZÁSZ (Hungary) said that it was impossible to find a really objective criterion for fundamental breach and that judicial practice should play an important role in the matter. Some fundamental elements of appreciation could however be identified such as the seriousness and foreseeability of the detriment. Those elements were already contained in the draft article. Anything that might be added could only complicate the judge's task without giving him more precise guidance.

35. With regard to the Egyptian amendment, his delegation did not think it would be prudent to introduce into the Convention provisions relating to the burden of proof. The purpose of the last part of that amendment was to provide additional elements of appreciation, but those elements would be interpreted in different ways by different courts.

36. Lastly, with respect to the time element, his delegation considered that care should be taken not to lay down excessively strict rules and to leave it to the court to decide at what time the party in breach should have foreseen the results of the breach.

37. Mr. SEVÓN (Finland) said that it was useless to try to make the text of that article more precise and that any amendment might well raise more problems than it solved. Article 10 of ULIS had already been severely criticized, and those criticisms could also be applied to the Czechoslovak amendment. On the other hand, it would be possible to retain some of the ideas contained in the Egyptian amendment, together with the changes proposed by the Norwegian delegation. However, he considered that the existing wording was satisfactory.

38. Mr. INAAMULLAH (Pakistan) said that he could accept draft article 23 [became CISG article 25 ], which linked the idea of fundamental breach with that of substantial detriment. However, he considered that the Egyptian amendment, combined with that of his own delegation (A/CONF.97/C.1/L.99), would improve the text.

39. The CHAIRMAN invited the Committee to vote on the Czechoslovak proposal (A/CONF.97/C.1/L.81).

40. The Czechoslovak proposal was rejected.

41. Mr. SHAFIK (Egypt) said that, after listening with much interest to the comments by the various delegations, he was prepared to delete from his amendment (A/CONF.97/C.1/L.106) the reference to proof and to amend the corresponding part of his text, which would then read: "unless the party in breach did not foresee such a result . . . ". On the other hand, he agreed with the representative of Sweden that no precision with respect to time should appear in the text; the existing text of article 23 [became CISG article 25 ] was right not to mention that question. Nor was he favourable to the idea of the representative of Greece that the word "and" should be replaced by the word "or" in the fourth line of his amendment because, in his opinion, the two elements of the provision were complementary and indivisible. Lastly, unlike the representative of Norway, he thought that the word "reasonable" should be maintained.

42. Moreover, he was not in a position to judge if the words "of the same kind" in the English text really corresponded to the words "de sa qualité" in the French text and, if his amendment was adopted, he would propose that it should be referred to the Drafting Committee for harmonization.

43. The CHAIRMAN invited the Committee to vote on the Egyptian amendment, as it had just been orally revised by its sponsor, with the proviso that it would be sent to the Drafting Committee and subject to any decisions taken on the other draft amendments.

44. The Egyptian draft amendment (A/CONF.97/C.1/L.106), as orally revised was adopted.

The meeting was suspended at 10.30 a.m. and resumed at l0.50 a.m.

45. Mr. INAAMULLAH (Pakistan) said that he considered that the expression "substantial detriment" lacked precision; he had therefore replaced it in his amendment (A/CONF.97/C.1/L.99) by a more explicit term. He wished to emphasize the idea of precision and not the actual wording of his text, which he was prepared to revise if necessary.

46. Mr. POPESCU (Romania), Mr. KUCHIBHOTLA (India), Mr. KOPAC (Czechoslovakia) and Mr. SHAFIK (Egypt) supported the Pakistan amendment, which made the provision clearer and more precise.

47. Mr. HJERNER (Sweden) said that he did not think that the Pakistan amendment made the text any more precise. In particular, he did not understand the meaning of the words "terms of the transaction". They seemed to him to introduce a new idea which could give rise to many different interpretations. A similar idea existed in German and Scandinavian law, but it was very vague and its interpretation varied with the legal systems of the different countries. In the text, such an idea would be a source of confusion and his delegation could thus not support it.

48. Mr. KHOO (Singapore) said that it was necessary to clarify the idea of fundamental breach and, in his opinion, the Pakistan proposal was the one which came closest to what that idea was intended to mean in the Convention. If the Committee referred to article 45 (1)(a) of the Convention [became CISG article 49(1)(a) ], where failure to perform an obligation under the contract amounted to a fundamental breach, it would realize the importance of the proposal before it. Like the representative of Sweden, he hoped that the representative of Pakistan would specify what he understood by "terms of the transaction". Perhaps the word "terms" could be replaced by the word "nature", in which case he would unreservedly support the Pakistan draft amendment.

49. Mr. KRISPIS (Greece) said that he did not clearly understand what was meant by "basically change" and would thus prefer to retain the expression "substantial detriment". He regretted that he was unable to support the Pakistan draft amendment.

50. Mr. OLIVENCIA RUIZ (Spain) said that the existing text of article 23 [became CISG article 25 ] contained a subjective element which should not enter directly into the qualification of a breach as fundamental. As the representative of Brazil had pointed out, that subjective element could have serious consequences with respect to remedy and, consequently, the decision as to whether the breach was or was not fundamental. For that reason, his delegation supported the Pakistan draft amendment, because it introduced a much more objective element by referring to the basic terms of the contract on which the consent of the parties was founded.

51. Mr. LEBEDEV (Union of Soviet Socialist Republics) said that he was unable to support the Pakistan draft amendment because he did not consider that it made the idea of substantial detriment any more precise. On the contrary, it introduced an element of uncertainty, which would remain even if the expression "terms of the transaction" were replaced by "nature of the contract", as had been proposed. As the representative of Sweden had pointed out, a breach did not change the nature of the contract.

52. Mr. DATE-BAH (Ghana) said that he appreciated the effort made by the Pakistan delegation to improve the text, but did not find any solution to the problem in the draft amendment before the Committee. The terms of a contract could not be changed by a subsequent act. It might be possible to speak of the expectations, but, even in that case, he would not be satisfied and would prefer to retain the idea of substantial detriment, which must be left to the courts to define. He proposed that a small working party should be asked to find a better wording.

53. Mr. WANG Tian ming (China) supported the Pakistan proposal, because the existing text of article 23 [became CISG article 25 ] would present difficulties in the event of litigation.

54. Mr. SZÁSZ (Hungary) said he recognized that the idea of substantial detriment was not objective, but did not think that the Pakistan draft amendment provided any improvement in that respect. A fundamental breach did not necessarily lead to a basic change in the terms of a contract. The Pakistan draft amendment did not add any precision and even introduced elements which would present difficulties in practice. Although he was in favour of the idea of trying to find objective criteria, he did not think the Pakistan proposal achieved that aim.

55. Mr. FARNSWORTH (United States of America) said that he was unable to support the Pakistan draft amendment since it did not make the text any more precise and its wording was unsatisfactory. In particular, he had difficulty with the use of the word "basically" because, in United States law, it suggested an idea which was applied to exemption from liability in cases of frustration of a contract and the word basic implied a very important change. If the Pakistan amendment were accepted, the cases in which a basic change would lead to a fundamental breach would be very rare. The text would then lend itself to dangerous interpretations.

56. Mr. POPESCU (Romania) said that the consequences of article 23 [became CISG article 25 ] were important because, on the one hand, the idea of detriment was allied to a possibility of action in remedy and, on the other, change in the contract affected its economic significance. Consideration should be given to the Pakistan proposal, which took account of the circumstances which could change the nature of the contract.

57. Mr. GHESTIN (France) said that he was unable to support the Pakistan proposal. He preferred the existing text of article 23 [became CISG article 25 ], in which the idea of substantial detriment provided a flexible and objective solution which corresponded to the practice of the courts. A party could not be bound by a contract when misconduct by the other party caused him substantial detriment. The Pakistan proposal was not without interest but provided no really useful precision, except by requiring that the change should be basic and that was too restrictive. Moreover, the replacement of the word "substantial" by a long periphrasis, such as that proposed by Pakistan, would lead to new problems of interpretation.

58. Mr. ROGNLIEN (Norway) said that the definition given in the existing text would be of little help to the parties or the courts in determining what was a fundamental breach. In its proposal, the Pakistan delegation intended to make that definition more precise by speaking of the terms of the transaction, which was an interesting idea, and one that he would support with some slight changes. It would be enough to replace "basically" by "substantially" and "the terms of the transaction" by "the other party's interests in the transaction".

59. Mr. WAITITU (Kenya) said that he had difficulty in understanding the meaning of the expression "substantial detriment" in the existing text, which was not of much help in defining the fundamental breach. He wished to be associated with the delegations that had supported the Pakistan proposal, which gave a better definition of the idea, but recognized that the wording was not very satisfactory. He would therefore support the proposal by the representative of Ghana to ask a small working party to find a more satisfactory wording along the lines of the Pakistan proposal.

60. Mr. PLUNKETT (Ireland) said that he was not entirely satisfied with article 23 [became CISG article 25 ] but the longer the discussion continued, the more he realized that the Committee ought to seek a solution not far removed from the existing wording. He was not in favour of the proposal to establish a working party, unless a specific solution was in sight. The statements by the preceding speakers revealed differences of views and the results achieved by a working group could only lead to controversy. He was unable to support the Pakistan draft amendment, but the idea of mentioning the terms of the transaction was a good one and could perhaps be incorporated into article 23 [became CISG article 25 ].

61. The CHAIRMAN asked the representative of Pakistan if he was prepared to revise his proposal.

62. Mr. INAAMULLAH (Pakistan) said that the important point for him was the basic idea of his proposal and not its wording. It was a matter of clearly defining a fundamental breach, and he was prepared to accept any drafting chances which might prove necessary. He himself proposed that the expression "the terms of the transaction" should be replaced by "the expectations of the contract". The best solution might, perhaps, be to establish a working group which would prepare a more satisfactory formula than the expression "substantial detriment".

63. The CHAIRMAN asked whether the members of the Committee were in favour of establishing a working group to produce a generally acceptable draft of article 23 [became CISG article 25 ] on the basis of the Pakistan proposal, which would then be submitted to the Committee.

64. The proposal to establish a working group to redraft 23 [became CISG article 25 ] on the basis of the Pakistan proposal was adopted.

65. The CHAIRMAN proposed that the working group should consist of the representatives of Argentina, Czechoslovakia, Federal Republic of Germany, Ghana, Hungary, Norway, Pakistan, Romania and Spain.

66. It was so decided.

67. The CHAIRMAN said that any interested delegation was free to join the working group. He invited the Committee to take up the amendment by the Federal Republic of Germany (A/CONF.97/C.1/L.63).

68. Mr. KLINGSPORN (Federal Republic of Germany) remarked that his amendment was not inconsistent with the Egyptian amendment already adopted, with the original text or with the Pakistan proposal. It was intended to elucidate the definition of fundamental breach. In his delegation's view, it was impossible to determine whether a breach was fundamental without referring to the terms of the contract. If, for example, a contract specified that the delivery date was of particular importance, failure to observe that date would amount to a fundamental breach, even though in other cases the delivery date would not have been particularly important. That interpretation of fundamental breach seemed, incidentally, to be consistent with the interpretation accepted in the common law countries, where a breach was considered to be fundamental if it affected the very foundations of the contract. It accordingly seemed desirable to specify that all the terms of a contract, express or implied, should be considered in determining whether a breach was fundamental.

69. Mr. DABIN (Belgium) supported the proposal by the Federal Republic of Germany. The important thing was to respect the will of the parties. The basis for determining whether a breach was fundamental must therefore be the contract itself.

70. Mr. FELTHAM (United Kingdom) regretted that he could not support the amendment, which would tend to limit the courts to examining the express and implied terms of the contract without allowing them to take into account the other circumstances of the case. If, for example, a party specified before the contract was concluded that the delivery date was particularly important, would a court have to confine itself to examining the terms of the contract and ignore the circumstances of the case, if the delivery date was not respected?

71. Mr. SEVÓN (Finland) was concerned at the proliferation of proposals purporting to define virtually every word used in the draft Convention. There were references to fundamental breaches in other articles of the Convention, among them articles 42, 47 and 60 [became CISG article 46, CISG article 51 and CISG article 64 ], dealing with the avoidance of contracts. He wondered whether the words it was proposed to add to the draft were likely really to help the courts to determine when a contract could be held to be avoided. Language had its limitations and increasing the number of words simply increased the possibilities of error. He accordingly supported the amendment by the Federal Republic of Germany.

72. Mr. BOGGIANO (Argentina) was also in favour of the amendment, which would provide a basis for defining the term "substantial detriment". Although the wording was not perfect, the main point was to specify that the fundamental consideration was the will of the parties.

73. Mr. KIM (Republic of Korea) wholeheartedly supported the amendment. He noted that it was similar to the provision in article 33(1)(b) [became CISG article 35(1)(b) ], which used the words "expressly or impliedly made known to the seller at the time of the conclusion of the contract".

74. Mr. BENNETT (Australia) was unable to support the amendment, despite the reference by the representative of the Federal Republic of Germany to the definition of fundamental breach used in the common law system. Article 23 [became CISG article 25 ] was based on the idea of substantial detriment, the existence of which could only be established after it had occurred and then only on a case-by-case basis. It was wrong therefore to say that the degree of detriment had to be determined in the light of the terms of the contract.

75. Mr. LEBEDEV (Union of Soviet Socialist Republics) wondered whether the amendment by the Federal Republic of Germany could be reconciled with the Egyptian amendment (A/CONF.97/C.1/L.106), which had already been adopted. If the new amendment was intended to underline the importance of the terms of a contract, it was redundant, since the Egyptian text meant that all the circumstances should be taken into account. If it was intended to base the definition of substantial detriment solely on the terms of the contract, it was not justified and seemed to be fundamentally inconsistent with the Egyptian text.

76. Mr. PLUNKETT (Ireland) considered that the proposal by the Federal Republic of Germany did not exclude the circumstances of the case. The Egyptian proposal had been adopted, but could still be modified, while the Pakistan proposal had been referred to a working group. The proposal by the Federal Republic of Germany was similar to the Pakistan draft and might be referred to the same working group.

77. Mr. HJERNER (Sweden) regretted that, having heard the United Kingdom representative's arguments, he could not support the proposal by the Federal Republic of Germany. In his view it was too restrictive, at least as it was currently worded. The wisest course would, in fact, be to refer the text to the working group set up to consider the Pakistan proposal.

78. Mr. HERBER (Federal Republic of Germany) said that he had not intended to restrict the definition of substantial detriment or to exclude the circumstances of the case. He could not agree with the Soviet representative's view that the proposal was inconsistent with the Egyptian amendment. The latter was concerned with the question of foreseeability, where as his proposal attempted to define the term "substantial detriment".

79. The CHAIRMAN proposed that the amendment by the Federal Republic of Germany should be referred to the working group set up to consider the Pakistan proposal. If the Committee agreed, the representative of the Federal Republic of Germany could join the working group.

80. It was so decided.

81. The CHAIRMAN pointed out that although the Egyptian proposal, which had been adopted, could not be substantively amended in the Drafting Committee, the position was different in the case of the other two proposals. The working group's formula would have to be the subject of a decision.

The meeting rose at 1.05 p.m.


Pace Law School Institute of International Commercial Law - Last updated January 29, 1999
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