art82-73.html

ARTICLE 82 [became CISG article 70 ]

A. UNCITRAL text

1. The text of the [1978 draft of the ] United Nations Commission on International Trade Law provided as follows:

"Article 82 [became CISG article 70 ]

"If the seller has committed a fundamental breach of contract, the provisions of articles 79, 80 and 81 [became CISG article 67 , CISG article 68 and CISG article 69 ] do not impair the remedies available to the buyer on account of such breach."

[Go to Secretariat Commentary on the above text]

B. Amendments

2. An amendment was submitted to article 82 [became CISG article 70 ] by the United States of America (A/CONF.97/C.1/L.229/Rev.l).

3. The amendment was to the following effect:

United States of America (A/CONF.97/C.1/L.229/Rev.1):

Revise article 82 [became CISG article 70 ] to read as follows:

If the seller commits a breach of contract that gives the buyer the right to declare the contract avoided under article 45 [became CISG article 49 ], the risk of loss does not pass to the buyer as long as he may exercise this right."

[Rejected: see Consideration, 5, below.]

C. Proceedings in the First Committee

(i) Meetings

4. The First Committee considered article 82 [became CISG article 70 ] at its 32nd meeting on 1 April 1980.

(ii) Consideration

5. At the 32nd meeting, the amendment by the United States of America (A/CONF.97/C.1/L.229/Rev.1) was rejected, and the UNCITRAL text adopted.

ARTICLE 62 [became CISG article 71 ]

A. UNCITRAL text

1. The text of the [1978 draft of the ] United Nations Commission on International Trade Law provided as follows:

"Article 62 [became CISG article 71 ]

"(1) A party may suspend the performance of his obligations if it is reasonable to do so because, after the conclusion of the contract, a serious deterioration in the ability to perform or in the creditworthiness of the other party or his conduct in preparing to perform or in actually performing the contract gives good grounds to conclude that the other party will not perform a substantial part of his obligations.

"(2) If the seller has already dispatched the goods before the grounds described in paragraph (1) of this article become evident, he may prevent the handing over of the goods to the buyer even though the buyer holds a document which entitles him to obtain them. This paragraph relates only to the rights in the goods as between the buyer and the seller.

"(3) A party suspending performance, whether before or after dispatch of the goods, must immediately give notice to the other party thereof and must continue with performance if the other party provides adequate assurance of his performance."

[Go to Secretariat Commentary on the above text]

B. Amendments

2. Amendments were submitted to article 62 [became CISG article 71 ] by the Federal Republic of Germany (A/CONF.97/C.1/L.187), and Canada and Australia (A/CONF.97/C.1/L.224) prior to the 27th meeting.

3. These amendments were to the following effect:

Paragraph (1).

Federal Republic of Germany (A/CONF.97/C.1/L.187):

Revise paragraph (1) of article 62 [became CISG article 71 ] to read as follows:

"(1) A party may suspend the performance of his obligations if it is reasonable to do so because, after the conclusion of the contract, it becomes apparent that a serious deficiency in the ability to perform or in the creditworthiness of the other party or his conduct in preparing to perform or in actually performing the contract gives good grounds to conclude that the other party will not perform a substantial part of his obligations."

[Adopted: see Consideration, 5, below.]

Paragraph (3).

Federal Republic of Germany (A/CONF.97/C.1/L.187):

Revise paragraph (3) of article 62 [became CISG article 71 ] to read as follows:

"(3) A party suspending performance, whether before or after dispatch of the goods, must immediately give notice to the other party thereof and must continue with performance if the other party, by guarantee, documentary credit or otherwise, provides adequate assurance of his performance."

[Rejected: see Consideration, 7, below.]

New article 62 bis.

Canada and Australia (A/CONF.97/C.1/L.224):

Add a new article 62 bis to read as follows:

"Failure by the other party to provide adequate assurance of performance within a reasonable period of time shall entitle the party requesting the assurance to avoid the contract."

[Rejected: see Consideration, 8, below.]

C. Proceedings in the First Committee

(i) Meetings

4. The First Committee considered article 62 [became CISG article 71 ] at its 26th, 27th, 34th and 35th meetings on 27th and 28th March and 3rd and 4th April 1980 respectively, and at its 37th and 38th meetings on 7 April 1980.

(ii) Consideration

Paragraph (1).

5. At the 26th meeting, the amendment by the Federal Republic of Germany (A/CONF.97/C.1/L.187) was adopted by 18 votes in favour and 15 against, and the UNCITRAL text adopted, subject to the amendment.

Paragraph (2).

6. At the 26th meeting the UNCITRAL text was adopted.

Paragraph (3).

7. At the 26th meeting, the amendment by the Federal Republic of Germany (A/CONF.97/C.1/L.187) was rejected, and the UNCITRAL text adopted.

New article 62 bis.

8. At the 27th meeting, the amendment by Canada and Australia (A/CONF.97/C.1/L.224) was rejected.

9. At the 34th meeting, the Committee, by 27 votes in favour and 6 against, adopted a motion to consider an amendment by Egypt (A/CONF.97/C.1/L.249) submitted after the close of the deliberations on article 62 [became CISG article 71 ].

10. This amendment was to the following effect:

Egypt (A/CONF.97/C.1/L.249):

Replace article 62 [became CISG article 71 ] by the following text:

"(1) If, prior to the date for performance of the contract, it becomes apparent that one of the parties will commit a fundamental breach of contract, the other party may notify him of his intention to suspend performance of his obligations if the first party fails to provide adequate assurances, within a reasonable period of time, of properly performing his obligations.

"(2) If the party which has been notified fails to provide the assurances described under paragraph (1) of this article, the other party may declare the contract avoided."

11. An amendment was also submitted by Italy (A/CONF.97/C.1/L.251) which was to the following effect:

Italy (A/CONF.97/C.1/L.251):

Revise paragraph (1) of article 62 [became CISG article 71 ] to read as follows:

"(1) A party may suspend the performance of his obligations if it is reasonable to do so because, after the conclusion of the contract, a serious deterioration in the ability to perform or in the creditworthiness of the other party or his conduct in preparing to perform or in actually performing the contract gives good grounds to conclude that the other party will not perform a substantial part of his obligations."

12. At the 35th meeting, the Committee considered together the amendments by Egypt to articles 62 and 63 [became CISG article 71 and CISG article 72 ] (A/CONF.97/C.1/L.249 and L.250). The amendments were rejected by 19 votes in favour and 19 against.

13. At the 35th meeting, the Committee established an ad hoc working group composed of the representatives of Argentina, Egypt, Finland, France, German Democratic Republic, Germany, Federal Republic of, Iraq, Mexico, Republic of Korea and United States of America to consider articles 62 and 63 [became CISG article 71 and CISG article 72 ] and submit a proposed text of these articles to the Committee.

14. At the 37th meeting, the ad hoc working group submitted the following text for article 62 [became CISG article 71 ] (A/CONF.97/C.1/L.252):

Replace paragraph (1) by the following:

"(1) A party may, if it is reasonable to do so, suspend the performance of his obligations when, after the conclusion of the contract, it appears that the other party will not perform a substantial part of his obligations as a result of:

"(a) a serious deficiency in his ability to perform or in his creditworthiness, or

"(b) his conduct in preparing to perform or in performing the contract."

15. At the 38th meeting, an oral amendment to delete from the text submitted by the ad hoc working group the words "if it is reasonable to do so" was adopted by 17 votes in favour and 13 against. A further oral amendment to replace the phrase "when, after the conclusion of the contract" by "if, after the conclusion of the contract" was adopted. A further oral amendment to replace the phrase "it appears" by the phrase "it becomes apparent" was adopted by 20 votes in favour and 5 against. The text submitted by the ad hoc working group, subject to the amendments adopted as noted above, was adopted by 31 votes in favour and 4 against. The amendment by Italy (A/CONF.97/C.1/L.251) was withdrawn.

16. At the 38th meeting, paragraphs (2) and (3) of the UNCITRAL text were adopted.

17. At the 38th meeting, articles 62 and 63 [became CISG article 71 and CISG article 72 ], as amended, were together adopted by 35 votes in favour and none against.

ARTICLE 63 [became CISG article 72 ]

A. UNCITRAL text

1. The text of the [1978 draft of the ] United Nations Commission on International Trade Law provided as follows:

"Article 63 [became CISG article 72 ]

"If prior to the date for performance of the contract it is clear that one of the parties will commit a fundamental breach, the other party may declare the contract avoided."

[Go to Secretariat Commentary on the above text]

B. Amendments

2. No amendments were submitted to article 63 [became CISG article 72 ] prior to the 27th meeting.

C. Proceedings in the First Committee

(i) Meetings

3. The First Committee considered this article at its 27th, 34th and 35th meetings on 28 March and 3 and 4 April 1980 respectively, and its 37th and 38th meetings on 7 April 1980.

(ii) Consideration

4. At the 27th meeting, the UNCITRAL text was adopted.

5. At the 34th meeting, the Committee, by 27 votes in favour and 6 against, adopted a motion to consider an amendment by Egypt (A/CONF.97/C.1/L.250) submitted after the close of the deliberations on article 63 [became CISG article 72 ].

6. This amendment was to the following effect:

Egypt (A/CONF.97/C.1/L.250):

Replace article 63 [became CISG article 72 ] by the following text:

"(1) If the seller has already dispatched the goods before the grounds described in paragraph (1) of article 62 [became CISG article 72 ] become evident, he may prevent the handing over of the goods to the buyer even though the buyer holds a document which entitles him to obtain them. This paragraph relates only to the rights in the goods as between the buyer and the seller.

"(2) The seller who prevents the handing over of the goods to the buyer under paragraph (1) of this article must immediately give notice to the buyer of his intention to declare the contract avoided should the buyer fail, within a reasonable time, to provide adequate assurances of properly performing his obligations."

7. At the 35th meeting, the Committee considered together the amendments by Egypt to articles 62 and 63 [became CISG article 71 and CISG article 72 ] (A/CONF.97/C.1/L.249 and L.250). The amendments were rejected by 19 votes in favour and 19 against.

8. At the 35th meeting, the Committee established an ad hoc working group composed of the representatives of Argentina, Egypt, Finland, France, German Democratic Republic, Germany, Federal Republic of, Mexico, Republic of Korea and United States of America to consider articles 62 and 63 [became CISG article 71 and CISG article 72 ] and submit a proposed text of these articles to the Committee.

9. At the 37th meeting, the ad hoc working group submitted the following text for article 63 [became CISG article 72 ] (A/CONF.97/C.1/L.253):

Add new paragraphs (2) and (3) as follows:

"(2) If time allows, the party intending to declare the contract avoided must give notice reasonably in advance to the other party in order to permit him to provide adequate assurance of his performance.

"(3) The requirements of the preceding paragraph do not apply if the other party has declared that he will not perform his obligations."

10. At the 38th meeting an oral amendment to delete from the text submitted by the ad hoc working group the words "if time allows" was rejected by 17 votes in favour and 18 against. A further oral amendment to replace the phrase "give notice reasonably in advance" by the phrase "give reasonable notice" was adopted.

11. At the 38th meeting, the UNCITRAL text of paragraph (1) of article 63 [became CISG article 72 ] was adopted.

12. At the 38th meeting, articles 62 and 63 [became CISG article 71 and CISG article 72 ], as amended, were together adopted by 35 votes in favour and none against.

ARTICLE 64 [became CISG article 73 ]

A. UNCITRAL text

1. The text of the 1978 draft of the ] United Nations Commission on International Trade Law provided as follows:

"Article 64 [became CISG article 73 ]

"(1) In the case of a contract for delivery of goods by instalments, if the failure of one party to perform any of his obligations in respect of any instalment constitutes a fundamental breach with respect to that instalment, the other party may declare the contract avoided with respect to that instalment.

"(2) If one party's failure to perform any of his obligations in respect of any instalment gives the other party good grounds to conclude that a fundamental breach will occur with respect to future instalments, he may declare the contract avoided for the future, provided that he does so within a reasonable time.

"(3) A buyer, avoiding the contract in respect of any delivery, may, at the same time, declare the contract avoided in respect of deliveries already made or of future deliveries if, by reason of their interdependence, those deliveries could not be used for the purpose contemplated by the parties at the time of the conclusion of the contract."

[Go to Secretariat Commentary on the above text]

B. Amendments

2. No amendments were submitted to article 64 [became CISG article 73 ].

C. Proceedings in the First Committee

(i) Meetings

3. The First Committee considered this article at its 27th meeting on 28 March 1980.

(ii) Consideration

4. At the 27th meeting, the UNCITRAL text was adopted.

ARTICLE 70 [became CISG article 74 ]

A. UNCITRAL text

1. The text of the [1978 draft of the ] United Nations Commission on International Trade Law provided as follows:

"Article 70 [became CISG article 74 ]

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

[Go to Secretariat Commentary on the above text]

B. Amendments

2. Amendments were submitted to article 70 [became CISG article 74 ] by Norway (A/CONF.97/C.1/L.230) and Pakistan (A/CONF.97/C.1/L.235).

3. These amendments were to the following effect:

Articles 70 to 73 [became CISG article 74 , CISG article 75 and CISG article 76 ].

Norway (A/CONF.97/C.1/L.230):

Section IV - Damages, chapter IV (arts. 70 to 73) [became CISG article 74 , CISG article 75 and CISG article 76 ] should be grouped together with section II - Exemptions (art. 65) [became CISG article 79 ] and placed in a separate chapter between present chapters III and IV.

[Referred to Drafting Committee: see Consideration, 5, below.]

Article 70 [became CISG article 74 ].

Pakistan (A/CONF.97/C.1/L.235):

The second sentence of article 70 [became CISG article 74 ] may be amended to read as follows:

"Such damages may not exceed the reasonable expectation of 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 the breach of contract."

[Rejected: see Consideration, 6, below.]

C. Proceedings in the first Committee

(i) Meetings

4. The First Committee considered article 70 [became CISG article 74 ] at its 30th meeting on 31 March 1980.

(ii) Consideration

Articles 70 to 73 [became CISG article 74 , CISG article 75 and CISG article 76 ].

5. At the 30th meeting, the amendment by Norway (A/CONF.97/C.1/L.230) was referred to the Drafting Committee.

Article 70.

6. At the 30th meeting, the amendment by Pakistan (A/CONF.97/C.1/L.235) was rejected, and the UNCITRAL text adopted.

ARTICLE 71 [became CISG article 75 ]

A. UNCITRAL text

1. The text of the [1978 draft of the ] United Nations Commission on International Trade Law provided as follows:

"Article 71 [became CISG article 75 ]

"If the contract is avoided and if, in a reasonable manner and within a reasonable time after avoidance, the buyer has bought goods in replacement or the seller has resold the goods, the party claiming damages may recover the difference between the contract price and the price in the substitute transaction and any further damages recoverable under the provisions of article 70 [became CISG article 74 ]."

[Go to Secretariat Commentary on the above text]

B. Amendments

2. An amendment was submitted to article 71 [became CISG article 75 ] by Norway (A/CONF.97/C.1/L.193).

3. This amendment was to the following effect:

Norway (A/CONF.97/C.1/L.193):

Revise article 71 to read as follows:

"If the contract is avoided and if, in a reasonable manner and within a reasonable time after avoidance, the buyer has bought goods in replacement or the seller has resold the goods, the party claiming damages may, as part of the damages referred to in article 70 [became CISG article 74 ], recover the difference between the contract price and the price in the substitute transaction."

[Referred to Drafting Committee: see Consideration, 5, below.]

C. Proceedings in the First Committee

(i) Meetings

4. The First Committee considered this article at its 30th meeting on 31 March 1980.

(ii) Consideration

5. At the 30th meeting, the amendment by Norway (A/CONF.97/C.1/L.193) was referred to the Drafting Committee, and the UNCITRAL text adopted.

ARTICLE 72 [became CISG article 76 ]

A. UNCITRAL text

1. The text of the [1978 draft of the ] United Nations Commission on lnternational Trade Law provided as follows:

"Article 72 [became CISG article 76 ]

"(1) If the contract is avoided and there is a current price for the goods, the party claiming damages may, if he has not made a purchase or resale under article 71 [became CISG article 75 ], recover the difference between the price fixed by the contract and the current price at the time he first had the right to declare the contract avoided and any further damages recoverable under the provisions of article 70 [became CISG article 74 ].

"(2) For the purposes of paragraph (1) of this article, the current price is the price prevailing at the place where delivery of the goods should have been made or, if there is no current price at that place, the price at another place which serves as a reasonable substitute, making due allowance for differences in the cost of transporting the goods."

[Go to Secretariat Commentary on the above text]

B. Amendments

2. Amendments were submitted to article 72 [became CISG article 76 ] by Norway (A/CONF.97/C.1/L.194) and jointly by Australia, Greece, Norway, Republic of Korea (A/CONF.97/C.1/L.245).

3. These amendments were to the following effect:

Paragraph (1).

(i) Norway (A/CONF.97/C. I /L.194):

Revise paragraph (1) of article 72 [became CISG article 76 ] to read as follows:

"(1) If the contract is avoided and there is a current price for the goods, the party claiming damages may, if he has not made a purchase or resale under article 71 [became CISG article 75 ], recover the difference between the price fixed by the contract and the current price at the time of delivery, or at the time of avoidance, whichever is the earlier. He may claim any further damages recoverable under article 70 [became CISG article 74 ]."

[Rejected: see Consideration, 5, below.]

(ii) Australia, Greece, Norway, Republic of Korea (A/CONF.97/C.1/L.245):

Revise paragraph (1) of article 72 [became CISG article 76 ] to read as follows:"(1) If the contract is avoided and there is a current price for goods, the party claiming damages may, if he has not made a purchase or resale under article 71 [became CISG article 75 ], recover the difference between the contract price and the current price at the time of avoidance and any further damages under article 70 [became CISG article 74 ]. If, however, the party claiming damages has avoided the contract after receiving the goods or the payment, as the case may be, the current price at the time of such receipt shall be applied instead of the current price at the time of avoidance.

[Not considered: see Consideration, 9, below.]

Paragraph (2).

(iii) Norway (A/C0NF.97/C.1/L.194):

In paragraph (2) of article 72 [became CISG article 76 ], replace the words "paragraph (1) of this article" by the words

"the preceding paragraph."

[Referred to Drafting Committee: see Consideration,10, below.]

C. Proceedings in the First Committee

(i) Meetings

4. The First Committee considered article 72 [became CISG article 76 ] at its 30th and 33rd meetings on 31 March and 2 April 1980 respectively.

(ii) Consideration

Paragraph (1).

5. At the 30th meeting, the amendment by Norway (A/CONF.97/C.1/L.194) was rejected by 12 votes in favour and 21 votes against.

6. At the 30th meeting, Canada submitted orally the following amendment:

"If the contract is avoided and there is a current price for the goods, the party claiming damages may, if he has not made a purchase or resale under article 71 [became CISG article 75 ], recover the difference between the price fixed by the contract and the current price at the time he declared the contract avoided and any further damages recoverable under the provisions of article 70 [became CISG article 74 ]."

The amendment by Canada was rejected by 13 votes in favour and 17 against.

7. At the 30th meeting, Australia submitted orally the following amendment:

"If the contract is avoided and there is a current price for the goods, the party claiming damages may, if he has not made a purchase or resale under article 71, recover the difference between the price fixed by the contract and the current price at the time of delivery, the time of payment of the price or at the time of avoidance, whichever is the earliest and any further damages recoverable under the provisions of article 70 [became CISG article 74 ]."

The amendment by Australia was rejected.

8. The UNCITRAL text was adopted.

9. At the 33rd meeting, a motion that the Committee should consider the amendment by Australia, Greece, Norway and Republic of Korea (A/CONF.97/C.1/L.245), which was submitted after the close of the deliberations on article 72 [became CISG article 76 ], was rejected by 14 votes in favour and 21 against.

Paragraph (2).

10. At the 30th meeting, the amendment by Norway (A/CONF.97/C.1/L.194) was referred to the Drafting Committee, and the UNCITRAL text adopted.

ARTICLE 73 [became CISG article 77 ]

A. UNCITRAL text

1. The text of the [1978 draft of the ] United Nations Commission on International Trade Law provided as follows:

"Article 73 [became CISG article 77 ]

"The party who relies on a breach of contract must take such measures as are reasonable in the circumstances to mitigate the loss, including loss of profit resulting from the breach. If he fails to take such measures, the party in breach may claim a reduction in the damages in the amount which should have been mitigated."

[Go to Secretariat Commentary on the above text]

B. Amendments

2. An amendment was submitted to article 73 [became CISG article 77 ] by the United States of America (A/CONF.97/C.1/L.228).

3. This amendment was to the following effect:

United States (A/CONF.97/C.1/L.228):

Revise the second sentence of article 73 [became CISG article 77 ] to read as follows:

"If he fails to take such measures, the party in breach may claim a reduction in the damages in the amount which should have been mitigated, or a corresponding modification or adjustment of any other remedy."

[Rejected: see Consideration, 5, below.]

C. Proceedings in the First Committee

(i) Meetings

4. The First Committee considered this article at its 30th meeting on 31 March 1980.

(ii) Consideration

5. At the 30th meeting, the amendment by the United States of America (A/CONF.97/C.1/L.228) was rejected by a vote of 8 in favour and 24 against, and the UNCITRAL text adopted.