88. The text of article 9 as adopted by the Working Group on the International Sale of Goods is as follows:
"A breach committed by one of the parties to the contract is fundamental if it results in substantial detriment to the other party and the party in breach foresaw or had reason to foresee such a result."
89. The view was expressed that the definition of fundamental breach in the proposed article was unsatisfactory in that one of the prerequisites of a fundamental breach was that the substantial detriment to the other party had been foreseen by the party in breach or that that party had reason to foresee such detriment. In cases of litigation, the burden of proof would thus be on the innocent party and this could not be considered a proper solution. In this connexion, the Committee considered and accepted the suggestion that the final phrase of the proposed article should read:
"unless the party in breach did not foresee and had no reason to foresee such a result."
90. It was noted that the proposed text did not deal with the point of time at which it was possible to foresee the result. It was pointed out that article 10 of ULIS referred to "the time of the conclusion of the contract." According to another view, it would be fairer to refer to the time at which the breach was actually committed rather than the time at which the contract was concluded. The Committee, after deliberation, did not consider it necessary to specify at what moment the party in breach should have foreseen or had reason to foresee the consequences of the breach.
91. The proposal was made that the criterion of fundamental breach should be a "loss of interest in the contract" on the part of the innocent party. This suggestion was opposed on the ground that it brought in the question of motive for entering into a contract and that this was too subjective an element. The Committee did not retain this proposal.
92. The Committee also did not retain a proposal that the text of foreseeability be deleted. It was pointed out in this connexion that article 9 was designed to avoid the cancellation of a contract for reasons which were not sufficient to warrant avoiding it.
Relationship to right of seller to cure [c]
c. See paras. 271 to 284 below.
93. During its consideration of article 29, the Committee considered a proposal that article 9 read as follows (new language in italics):
"A breach committed by one of the parties to the contract " is fundamental if, under all the circumstances, including a reasonable offer to cure, it results in substantial detriment to the other party and the party in breach foresaw or had reason to foresee such a result."
94. In support of this proposal, it was stated that the proposed addition to article 9 would protect against technical avoidance of the contract when there had been an offer to cure under article 29. However, under another view this change was unnecessary because the conditions governing an offer by the seller to cure were governed by article 29 and, if there was no offer to cure, the situation was governed by article 9. Accordingly, the proposal was superfluous. [page 31]
95. The Committee did not retain the proposal.
96. The Committee recommends that the Commission should adopt the following text of this article, now renumbered as article 8:
"A breach committed by one of the parties is fundamental if it results in substantial detriment to the other party unless the party in breach did not foresee and had no reason to foresee such a result." [page 32]
[...]Go to entire text of Report of the 1977 UNCITRAL Committee of the Whole I relating to draft Convention on International Sale of Goods