Article 80. Failure of Performance Caused by Other Party

• Text of Article 80
• Outline of issues
• Descriptors
• Coded case annotations
  -  Guide to case codes
• UNCITRAL case digest
• Annotated comparatives
  -  UNIDROIT Principles
  -  PECL Comparative

TEXT OF ARTICLE 80

A party may not rely on a failure of the other party to perform, to the extent that such failure was caused by the first party's act or omission.

OUTLINE OF ISSUES

Reproduced with permission of UNCITRAL

80A Party causing non-performance: loss of rights

DESCRIPTORS

Estoppel

CASE ANNOTATIONS: UNCITRAL DIGEST CASES PLUS ADDED CASES

Germany 25 January 2008 Oberlandesgericht [Appellate Court] Hamburg (Café inventory case) [translation available]
 

China October 2007 CIETAC Arbitration Award [CISG 2007/03] (CD-R and DVD-R production line systems case) 80A [translation available]

China 30 June 2007 CIETAC Arbitration Award [CISG 2007/04] (Color concrete block production line case) 80A [translation available]

Poland 11 May 2007 Supreme Court (Shoe leather case) 80A [translation available]

China 14 February 2007 CIETAC Arbitration Award [CISG 2007/02] (Bellows forming machine case) 80A [translation available]
 

China September 2006 CIETAC Arbitration Award [CISG 2006/10] (Printing machine case) 80A [translation available]

Belgium 24 April 2006 Hof van Beroep [Appellate Court] Antwerpen (GmbH Lothringer Gunther Grosshandelsgesellschaft für Bauelemente und Holzwerkstoffe v. NV Fepco International) [translation available]

Ukraine 15 February 2006 Arbitration Award (Coal case) 80A [translation available]

Russia 26 January 2006 Arbitration Award 53/2005
 

Russia 28 December 2005 Arbitration Award 82/2005

China 7 December 2005 CIETAC Arbitration Award [CISG/2005/05] (Heaters case) 80A [translation available]

China 21 October 2005 CIETAC Arbitration Award [CISG 2005/19] (FFS production line case) 80A [translation available]

China October 2005 CIETAC Arbitration Award [CISG 2005/24] (Filling and sealing machine case) 80A [translation available]

China 25 May 2005 CIETAC Arbitration Award [CISG 2005/09] (Iron ore case) 80A [translation available]

China 24 February 2005 CIETAC Arbitration Award [CISG 2005/07] (Pork case) 80A [translation available]

Belgium 25 January 2005 Rechtbank van Koophandel [District Court] Tongeren (Scaforn International BV & Orion Metal BVBA v. Exma CPI SA) 80A [translation available]
 

Russia 29 December 2004 Arbitration Award 189/2003 80A2 [translation available]

Russia 21 December 2004 Arbitration Award 39/2003

Russia 12 November 2004 Arbitration Award 174/2003

Ukraine 19 October 2004 Arbitration Award (Iron and steel castings case) [translation available]

Germany 6 October 2004 Oberlandesgericht [Appellate Court] Frankfurt 80A [translation available]

Ukraine 23 September 2004 Arbitration Award (Foodstuff) 80A [translation available]

Ukraine 15 April 2004 Tribunal of International Commercial Arbitration, Ukrainian Chamber of Commerce & Trade [translation available]
 

China 18 December 2003 CIETAC Arbitration Award [CISG/2003/12] (AOE and PECVD machines case) 80A [translation available]

China 6 October 2003 CIETAC Arbitration Award [CISG 2003/11] (Cutting machine case) 80A [translation available]

Netherlands 29 January 2003 Rechtbank [District Court] Zwolle

ICC 2003 International Court of Arbitration, Case 11849 (Fashion products case) 80A [English text]
 

China 27 December 2002 CIETAC Arbitration Award [CISG 2002/29] (Medicine manufacturing equipment case) 80A [translation available]

China 13 September 2002 CIETAC Arbitration Award [CISG 2002/07] (Velvet clothes case) 80A [translation available]

China 9 August 2002 CIETAC Arbitration Award [CISG 2002/21] (Yellow phosphorus case) 80A [translation available]

Germany 1 July 2002 Oberlandesgericht [Appellate Court] München 80A [translation available]

Ukraine 21 June 2002 Chamber of Commerce & Trade Arbitration proceeding 80A2 [translation available]

Germany 20 February 2002 Landgericht [District Court] München 80A [translation available]

ICC 2002 International Court of Arbitration, Case 10377 (Textile product machines case) 80A [English text]
 

Germany 21 December 2001 Landgericht [District Court] Hamburg (Natural stones case) 80A [translation available]

Italy 28 September 2001 Milan Arbitration proceeding (Steel wire case) 80A [English text]

China 11 January 2001 Supreme Court of the People's Republic of China (Singapore Da Guang Group. v. Jiangsu Machines Import & Export Ltd.) 80A [translation available]
 

China 11 January 2000 CIETAC Arbitration Award [CISG/2000/07] (Aureomycin case) 80A [translation available]
 

China 10 August 1999 CIETAC Arbitration Award [CISG 1999/35] (Raincoat case) 80A [translation available]

Russia 10 June 1999 Arbitration award 55/1998 80A [translation available]

China 5 April 1999 CIETAC Arbitration Award [CISG/1999/19] (Air conditioner equipment case) 80A [translation available]

China 30 March 1999 CIETAC Arbitration Award [CISG/1999/16] (Flanges case) [translation available]

China 29 March 1999 CIETAC Arbitration Award [CISG/1999/14] (Flanges case) 80A [translation available]

Switzerland 10 February 1999 Handelsgericht [Commercial Court] Zürich [translation available]
 

* Germany 25 November 1998 Bundesgerichtshof [Federal Supreme Court] [translation available]

Russia 24 November 1998 Arbitration award 96/1998 80A [translation available]

Russia 11 September 1998 Arbitration award 407/1996 80A [translation available]

Russia 22 January 1998 Arbitration award 102/1997 80A [translation available]
 

China 16 December 1997 CIETAC Arbitration Award [CISG/1997/35] (Hot-dipped galvanized steel coils case) 80A [translation available]

China 15 December 1997 CIETAC Arbitration Award [CISG/1997/34] (Hot rolled coils case) 80A [translation available]

* ICC December 1997 International Court of Arbitration, Case 8817 80A [translation available]

* Germany 9 July 1997 Oberlandesgericht [Appellate Court] München [7 U 2070/97] 80A2 [translation available]

* Germany 25 June 1997 Oberlandesgericht [Appellate Court] Karlsruhe 80A2 [translation available]

Germany 24 April 1997 Oberlandesgericht [Appellate Court] Düsseldorf 80A [translation available]

* Germany 31 January 1997 Oberlandesgericht [Appellate Court] Koblenz 80A [translation available]

* Germany 8 January 1997 Oberlandesgericht [Appellate Court] Köln [translation available]
 

China 18 November 1996 CIETAC Arbitration Award [CISG/1996/53] (Steel channels case) 80A [translation available]

China 16 August 1996 CIETAC Arbitration Award [CISG/1996/39] (Dioctyl phthalate case) [translation available]

China 8 August 1996 CIETAC Arbitration Award [CISG/1996/36] (Diaper machine case) 80A2 [translation available]

* Switzerland 31 May 1996 Arbitration ZHK 273/1995 [Zürich Chamber of Commerce] 80A [English text]

Germany 19 April 1996 Landgericht [District Court] Aachen

* Germany 21 March 1996 Hamburg Arbitration award [translation available]

Russia 19 March 1996 Arbitration award 88/1995 [translation available]

China 15 February 1996 CIETAC Arbitration Award [CISG/1996/10] (Hot-rolled plates case) 80A [translation available]

* Austria 6 February 1996 Oberster Gerichtshof [Supreme Court] 80A [translation available]
 

Russia 1 December 1995 Arbitration award 22/1995 [translation available]

Belarus 5 October 1995 Belarusian Chamber of Commerce and Industry International Court of Arbitration Case No. 24/13-95 (ATT v.Armco) 80A2 [translation available]

Germany 21 September 1995 Landgericht [District Court] Kassel (Wooden poles case) 80A [translation available]

* Germany 23 June 1995 Amtsgericht [Lower Court] München 80A [translation available]

Switzerland 26 April 1995 Handelsgericht [Commercial Court] Zürich [translation available]

* Germany 15 February 1995 Bundesgerichtshof [Federal Supreme Court] [translation available]

* Germany 8 February 1995 Oberlandesgericht [Appellate Court] München [7 U 1720/94] 80A [translation available]
 

* Germany 18 November 1993 Oberlandesgericht [Appellate Court] Düsseldorf

* Israel 22 August 1993 Supreme Court (Examin v. Textile and Footware) [translation available]
 

* Germany 9 July 1992 Landgericht [District Court] Düsseldorf 80A

UNCITRAL CASE DIGEST

DIGEST OF ARTICLE 80 CASE LAW

General

1. Article 80 strips a party of its right to rely on the other side's failure to perform to the extent that the second party's failure was caused by an "act or omission" of the first party. Article 80 operates to relieve a party of at least some of the legal consequences of a failure to perform. The broad equitable rule of article 80 that a party cannot claim legal redress for the other party's breach to the extent its own actions caused the breach has been cited as evidence that principles of good faith apply under the CISG.[1]

Purposes for which Article 80 applied

2. Article 80 has frequently been used as a tool for sorting out the parties' rights when both sides have allegedly failed to perform their obligations. Several decisions have involved attempts by the seller to cure non-conforming goods. In one such case, the seller had not fulfilled a promise to cure a delivery of non-conforming goods, and the buyer had set-off the costs of remedying the defects from the price. The seller argued that article 80 should block the buyer's right to set-off damages for the non-conformity because the buyer's own failure to ship the goods back to the seller prevented the seller from curing. The court rejected this argument, however, ruling that the failure to cure was attributable to the carrier designated to return the goods to the seller, and that the seller was responsible for the carrier's performance.[2] In another case, however, a seller successfully argued that the buyer had forfeited its rights to a remedy for a lack of conformity because it had unjustifiably rejected the seller's offer of cure.[3] Another decision involving a seller's agreement to take back and cure delivered goods also illustrates the use of article 80 to determine the effect of a buyer's non-payment of debts from other dealings with the seller. The buyer returned machinery to the seller, who promised to adjust the equipment and ship it back to the buyer in a short time. Thereafter, however, the seller refused to return the goods to the buyer until the buyer paid some other debts that the buyer owed. The trial court held that article 80 prevented the buyer from claiming damages for the late re-delivery because the buyer's own action of failing to pay the past debts caused the seller to withhold the goods. An appeals court reversed, holding that the seller had no right to insist on payment of the other debts before returning the goods as no such condition had been included in the re-delivery agreement.[4] Similarly, a court rejected a seller's article 80 defense that the buyer's failure to pay prior debts disabled the seller from supporting a troubled supplier, leading to the seller's failure to deliver the goods: the court found that an agreement under which the buyer prepaid for the delivery in question meant that the seller had assumed all risks relating to the supply of the goods.[5]

3. In a significant number of decisions article 80 has been applied to deny a remedy to a party whose own breach caused the other side to refuse to perform.[6] For example, a seller involved in a long term contract to supply aluminum ore announced that it would make no future deliveries. The seller's defense in the resulting lawsuit was that, after it announced it was stopping future deliveries, the buyer withheld payments for deliveries that had already been made. An arbitral panel rejected seller's defense on the basis of article 80, holding that the buyer's non-payment was caused by the seller's repudiation of its future delivery obligations.[7] Decisions applying article 80 to determine which party should be deemed in breach of contract can involve unusual or complex facts. In one such case, a seller contracted to sell a machine produced by a manufacturer with whom the seller had a distribution agreement, with title to the goods to be transferred to the buyer after payment of the final installment of the purchase price (which was due upon buyer's acceptance of the machine). Before the machine was delivered, however, the manufacturer terminated its distribution agreement with the seller and refused to ship the seller any more machines. Instead, the manufacturer shipped the goods directly to the buyer, who made no further payments to the seller (paying the manufacturer instead) and who tried to avoid the contract with the seller on the grounds that the seller could not fulfill its obligation to convey title to the machine. The trial court denied the buyer's right to avoid on the basis of article 80, ruling that the buyer's action of accepting the goods while it was still bound to a contract with the seller led the seller to believe that it had fulfilled its obligations; thus, the trial court reasoned, any subsequent non-performance by the seller was caused by the buyer's actions.[8] An intermediate appeals court affirmed this part of the decision, holding that the seller was not obliged to transfer title until the buyer had paid the price; thus article 80 prevented the buyer from avoiding because the buyer's own actions of withholding payment and failing to set an additional period of time under article 47(1) for the seller to transfer title after the price had been paid caused the seller's non-performance.[9] A higher appeals court affirmed the denial of the buyer's right to avoid on grounds that did not involve article 80.[10]

Requirement that the other party's failure to perform be due to an "act or omission" of the first party

4. Article 80 requires that a party's "act or omission" cause the other side's failure to perform. In cases involving the following acts or omissions, tribunals have found that the requirements of article 80 were satisfied: a buyer's breach of its obligation to pay the price and its failure to set a deadline for seller to perform under article 47(1)[11]; a buyer's failure to pay the price for delivered goods[12]; a buyer's failure to take delivery[13]; a seller's failure to perform its obligation to designate the port from which the goods would be shipped[14]; a seller's repudiation of future delivery obligations[15]; a buyer's unjustified refusal to accept the seller's offer to cure a lack of conformity in the goods.[16] In cases involving the following acts or omissions, tribunals have refused to apply article 80, although not necessarily because the act or omission requirement was not satisfied: a buyer's failure to ship goods back to the seller to permit cure (where the failure to ship was attributable to the carrier)[17]; a buyer's failure to pay debts arising from other dealings with the seller (where such payment had not been made a condition to the seller's duty to redeliver the goods to the buyer)[18]; a buyer's failure to pay for prior deliveries of goods (where the buyer had prepaid for the delivery in question and the seller bore all risks relating to the supply of the goods).[19]

Requirement that the other party's failure to perform be "caused by" the first party

5. Article 80 requires that a party's failure to perform be "caused by" the other side's act or omission. In one case, the application of article 80 focused on whether it was the actions of the buyer or a third party that caused the seller not to fulfill its obligations. The seller had agreed to take back non-conforming chemicals and reprocess them in order to remedy their defects, and it told the buyer which carrier should be used to return the goods. When the buyer discovered that the carrier had delayed forwarding the goods to the seller, the buyer arranged for the chemicals to be reprocessed in its own country in order to meet the time demands of its customers. The buyer set-off the costs of the reprocessing against the purchase price. The seller complained that it could have performed the remedial work much more cheaply itself, and that article 80 should prevent the buyer from recovering its higher reprocessing expenses because the buyer's own failure to ship the goods back to the seller prevented the seller from curing the defects. The court disagreed, holding that the delay of the carrier ultimately caused to the higher reprocessing costs, and that on these facts the carrier's performance was the seller's responsibility.[20] In other decisions involving allegations of the following causal sequences, tribunals have refused to apply article 80, although this result was not necessarily due to failure to satisfy the causation requirement: a buyer's failure to pay debts arising from other dealings with the seller causing the seller to refuse to redeliver the goods to the buyer[21]; and a buyer's failure to pay for prior deliveries of goods causing the seller to be unable to deliver because it could not financially support a distressed supplier.[22]

6. In cases involving allegations of the following causal sequences, tribunals have found that the requirements of article 80 were satisfied: a buyer's breach of its obligation to pay the price and its failure to set a deadline for seller to perform under article 47(1) causing the seller to be unable to arrange for the buyer to receive title to the goods[23]; a buyer's failure to pay the price for delivered goods causing the seller to fail to deliver other goods[24]; a buyer's failure to take delivery of the goods causing the seller's failure to make delivery[25]; a seller's failure to perform its obligation to designate the port from which the goods would be shipped causing the buyer's failure to open a letter of credit[26]; a seller's repudiation of future delivery obligations causing the buyer's failure to pay for some prior deliveries[27]; a buyer's unjustified refusal to accept the seller's offer to cure a non-conformity causing the seller's failure to cure.[28]

Consequences if Article 80 applies

7. Unlike article 79, which only prevents an aggrieved party from claiming damages for a failure to perform, article 80 by its terms strips an aggrieved party of its right to "rely" on the other party's non-performance. Thus while article 80 has been invoked to prevent a party from recovering damages,[29] it has also been used to block a party from avoiding the contract[30] and from using the other side's non-performance as a defense.[31]

Decision that appear to apply the principle underlying Article 80

8. Some decisions appear to invoke the principle of article 80, although it is not clear if the tribunal actually cited the provision. For example, where a buyer supplied the design for boots that the seller manufactured for the buyer, and after delivery it was determined that a symbol on the boot violated another company's trademark, the buyer was barred from claiming damages: although the court relied primarily on the fact that the buyer could not have been unaware of the infringement when the contract was concluded, which under article 42(2)(a) barred the buyer's claim, the court also noted that the buyer itself had caused the infringement by specifying a design that included the offending symbol.[32] This fact, it would appear, should have prevented the buyer from relying on the infringement under article 80. In another decision, the parties' contract included a clause allowing the seller to terminate the contract if there was a substantial change in the management of the buyer. The buyer dismissed its general manager, and the seller invoked this as grounds for terminating the contract. The arbitral tribunal held that seller did not have the right to terminate because it had been involved in the activities that led to the general manager's dismissal, and in fact had become an "accomplice" of the general manager.[33] The tribunal appears to have invoked the principle of article 80 when, in support of its holding that the seller did not have the right to exercise the termination clause, it asserted that "[a]s is the case with all sanctions, its application may not be requested by those who are even partially responsible for the modification on which they rely in order to terminate the contract".

FOOTNOTES

* The present text was prepared using the full text of the decisions cited in the Case Law on UNCITRAL Texts (CLOUT) abstracts and other citations listed in the footnotes. The abstracts are intended to serve only as summaries of the underlying decisions and may not reflect all the points made in the digest. Readers are advised to consult the full texts of the listed court and arbitral decisions rather than relying solely on the CLOUT abstracts.

[Citations to cisgw3 case presentations have been substituted [in brackets] for the case citations provided in the UNCITRAL Digest. This substitution has been made to facilitate online access to CLOUT abstracts, original texts of court and arbitral decisions, and full text English translations of these texts (available in most but not all cases). For citations UNCITRAL had used, go to <http://www.uncitral.org/english/clout/digest_cisg_e.htm>.]

1. CLOUT case No. 230 [GERMANY Oberlandesgericht [Appellate Court] Karlsruhe 25 June 1997, available online at <http://cisgw3.law.pace.edu/cases/970625g1.html>] (see full text of the decision). This decision was reversed on other grounds in CLOUT case No. 270 [GERMANY Bundesgerichtshof [Supreme Court] 25 November 1998, available online at <http://cisgw3.law.pace.edu/cases/981125g1.html>].

2. [GERMANY Amtsgericht [Lower Court] München 23 June 1995, available online at <http://cisgw3.law.pace.edu/cases/950623g1.html>].

3. CLOUT case No. 282 [GERMANY Oberlandesgericht [Appellate Court] Koblenz 31 January 1997; available at <http://cisgw3.law.pace.edu/cases/970131g1.html>].

4. CLOUT case No. 311 [GERMANY Oberlandesgericht [Appellate Court] Köln 8 January 1997; available at <http://cisgw3.law.pace.edu/cases/970108g1.html>] (see full text of the decision).

5. CLOUT case No. 166 [GERMANY Hamburg Arbitration award case of 21 March / 21 June 1996; available at <http://cisgw3.law.pace.edu/cases/960321g1.html> / <http://cisgw3.law.pace.edu/cases/960621g1.html>].

6. See, in addition to the decisions discussed in the text, CLOUT case No. 273 [GERMANY Oberlandesgericht [Appellate Court] München 9 July 1997; available at <http://cisgw3.law.pace.edu/cases/970709g1.html>] (buyer that had unjustifiably withheld payments for certain deliveries it had received denied damages, pursuant to article 80, for seller's failure to make other deliveries because the buyer's own failure to pay caused the seller to withhold delivery); CLOUT case No. 133 [GERMANY Oberlandesgericht [Appellate Court] München 8 February 1995, available online at <http://cisgw3.law.pace.edu/cases/950208g1.html>] (buyer denied damages under article 80 because seller's non-delivery was caused by buyer's failure to take delivery) (see full text of the decision); CLOUT case No. 176 [AUSTRIA Oberster Gerichtshof [Supreme Court] 6 February 1996, available online at <http://cisgw3.law.pace.edu/cases/960206a3.html>] (buyer's failure to open a letter of credit, which would normally be a breach precluding it from recovering for seller's failure to deliver, was caused in this case by seller's failure to fulfill its obligation to designate a port for shipping the goods; therefore article 80 precluded the seller from invoking buyer's failure as a defense in buyer's suit for damages) (see full text of the decision).

7. [SWITZERLAND Zurich Chamber of Commerce Arbitration award no. ZHK 273/95 of 31 May 1996, available online at <http://cisgw3.law.pace.edu/cases/960531s1.html>].

8. [GERMANY Landgericht [District Court] Düsseldorf 9 July 1992, available online at <http://cisgw3.law.pace.edu/cases/920709g1.html>].

9. [GERMANY Oberlandgericht [Appellate Court] Düsseldorf 18 November 1993, available online at <http://cisgw3.law.pace.edu/cases/931118g1.html>].

10. CLOUT case No. 124 [GERMANY Bundesgerichtshof [Supreme Court] 15 February 1995, available online at <http://cisgw3.law.pace.edu/cases/950215g1.html>].

11. [GERMANY Oberlandgericht [Appellate Court] Düsseldorf 18 November 1993, available online at <http://cisgw3.law.pace.edu/cases/931118g1.html>]. A lower court decision in this case had focused upon the buyer's act of accepting delivery of the goods from the manufacturer while still under contract with the seller (thus misleading the seller into thinking that its obligations had been fulfilled) in finding that article 80 applied; see [GERMANY Landgericht [District Court] Düsseldorf 9 July 1992, available online at <http://cisgw3.law.pace.edu/cases/920709g1.html>]. On appeal of the decision of the appellate court, the Supreme Court affirmed without invoking article 80. CLOUT case No. 124 [GERMANY Bundesgerichtshof [Supreme Court] 15 February 1995, available online at <http://cisgw3.law.pace.edu/cases/950215g1.html>].

12. CLOUT case No. 273 [GERMANY Oberlandesgericht [Appellate Court] München 9 July 1997; available at <http://cisgw3.law.pace.edu/cases/970709g1.html>].

13. CLOUT case No. 133 [GERMANY Oberlandesgericht [Appellate Court] München 8 February 1995, available online at <http://cisgw3.law.pace.edu/cases/950208g1.html>] (see full text of the decision).

14. CLOUT case No. 176 [AUSTRIA Oberster Gerichtshof [Supreme Court] 6 February 1996, available online at <http://cisgw3.law.pace.edu/cases/960206a3.html>] (see full text of the decision).

15. [SWITZERLAND Zurich Chamber of Commerce Arbitration award no. ZHK 273/95 of 31 May 1996, available online at <http://cisgw3.law.pace.edu/cases/960531s1.html>].

16. CLOUT case No. 282 [GERMANY Oberlandesgericht [Appellate Court] Koblenz 31 January 1997; available at <http://cisgw3.law.pace.edu/cases/970131g1.html>].

17. [GERMANY Amtsgericht [Lower Court] München 23 June 1995, available online at <http://cisgw3.law.pace.edu/cases/950623g1.html>].

18. CLOUT case No. 311 [GERMANY Oberlandesgericht [Appellate Court] Köln 8 January 1997; available at <http://cisgw3.law.pace.edu/cases/970108g1.html>] (see full text of the decision).

19. CLOUT case No. 166 [GERMANY Hamburg Arbitration award case of 21 March / 21 June 1996; available at <http://cisgw3.law.pace.edu/cases/960321g1.html> / <http://cisgw3.law.pace.edu/cases/960621g1.html>].

20. [GERMANY Amtsgericht [Lower Court] München 23 June 1995, available online at <http://cisgw3.law.pace.edu/cases/950623g1.html>].

21. CLOUT case No. 311 [GERMANY Oberlandesgericht [Appellate Court] Köln 8 January 1997; available at <http://cisgw3.law.pace.edu/cases/970108g1.html>] (see full text of the decision).

22. CLOUT case No. 166 [GERMANY Hamburg Arbitration award case of 21 March / 21 June 1996; available at <http://cisgw3.law.pace.edu/cases/960321g1.html> / <http://cisgw3.law.pace.edu/cases/960621g1.html>].

23. [GERMANY Oberlandgericht [Appellate Court] Düsseldorf 18 November 1993, available online at <http://cisgw3.law.pace.edu/cases/931118g1.html>]. A lower court decision in this case had focused upon the buyer's act of accepting delivery of the goods from the manufacturer while still under contract with the seller (thus misleading the seller into thinking that its obligations had been fulfilled) in finding that article 80 applied. [GERMANY Landgericht [District Court] Düsseldorf 9 July 1992, available online at <http://cisgw3.law.pace.edu/cases/920709g1.html>]. On appeal of the decision of the appellate court, the Supreme Court affirmed without invoking article 80; see CLOUT case No. 124 [GERMANY Bundesgerichtshof [Supreme Court] 15 February 1995, available online at <http://cisgw3.law.pace.edu/cases/950215g1.html>].

24. CLOUT case No. 273 [GERMANY Oberlandesgericht [Appellate Court] München 9 July 1997; available at <http://cisgw3.law.pace.edu/cases/970709g1.html>].

25. CLOUT case No. 133 [GERMANY Oberlandesgericht [Appellate Court] München 8 February 1995, available online at <http://cisgw3.law.pace.edu/cases/950208g1.html>].

26. CLOUT case No. 176 [AUSTRIA Oberster Gerichtshof [Supreme Court] 6 February 1996, available online at <http://cisgw3.law.pace.edu/cases/960206a3.html>] (see full text of the decision).

27. [SWITZERLAND Zurich Chamber of Commerce Arbitration award no. ZHK 273/95 of 31 May 1996, available online at <http://cisgw3.law.pace.edu/cases/960531s1.html>].

28. CLOUT case No. 282 [GERMANY Oberlandesgericht [Appellate Court] Koblenz 31 January 1997; available at <http://cisgw3.law.pace.edu/cases/970131g1.html>].

29. CLOUT case No. 273 [GERMANY Oberlandesgericht [Appellate Court] München 9 July 1997; available at <http://cisgw3.law.pace.edu/cases/970709g1.html>]; CLOUT case No. 133 [GERMANY Oberlandesgericht [Appellate Court] München 8 February 1995, available online at <http://cisgw3.law.pace.edu/cases/950208g1.html>] (see full text of the decision); CLOUT case No. 282 [GERMANY Oberlandesgericht [Appellate Court] Koblenz 31 January 1997; available at <http://cisgw3.law.pace.edu/cases/970131g1.html>].

30. [GERMANY Landgericht [District Court] Düsseldorf 9 July 1992, available online at <http://cisgw3.law.pace.edu/cases/920709g1.html>], affirmed in relevant part by the [GERMANY Oberlandgericht [Appellate Court] Düsseldorf 18 November 1993, available online at <http://cisgw3.law.pace.edu/cases/931118g1.html>], affirmed in relevant part without invoking article 80 in CLOUT case No. 124 [GERMANY Bundesgerichtshof [Supreme Court] 15 February 1995, available online at <http://cisgw3.law.pace.edu/cases/950215g1.html>].

31. CLOUT case No. 176 [AUSTRIA Oberster Gerichtshof [Supreme Court] 6 February 1996, available online at <http://cisgw3.law.pace.edu/cases/960206a3.html>] (see full text of the decision); [SWITZERLAND Zurich Chamber of Commerce Arbitration award no. ZHK 273/95 of 31 May 1996, available online at <http://cisgw3.law.pace.edu/cases/960531s1.html>].

32. [ISRAEL Eximin v. Textile and Footwear [Supreme Court] 22 August 1993, available online at <http://cisgw3.law.pace.edu/cases/930822i5.html>]. The transaction in this decision was actually governed by the Hague Sales Convention (ULIS), but the court referred to the CISG by analogy.

33. [ICC Court of Arbitration, case No. 8817 of December 1997, available online at <http://cisgw3.law.pace.edu/cases/978817i1.html>].

1. Introduction
2. Act or omission of the promisee causing the promisor's failure to perform
   a. Perception under Article 80 CISG
   b. Influence of different wording in the UNIDROIT Principles
3. Requirement of causation of the promisor's failure to perform
   a. Limitation of causation under Article 80 CISG
   b. Limitation of causation under Article 7.1.2 UNIDROIT Principles
4. Failure to perform caused by both parties
   a. Applicability of Article 80 CISG
   b. Clarification by Article 7.4.7 UNIDROIT Principles
5. Extent of exemption
6. Conclusion

1. Introduction

Article 80 CISG is located in Part III of the Convention in the section "Exemptions". The article provides an excuse for a failure to perform of a party when this failure is caused by an act or omission of the other party. This statement, while seemingly self-evident,[1] is nonetheless, an important part of the general principle of good faith. Other than article 7(1) CISG, its point of reference is not the interpretation of the Convention but the contractual relationship between the parties. Thereby Article 80 CISG can be seen as an anchor within the Convention regarding the obligation between the parties to observe good faith in their relationship forbidding contradictory behavior.[2] But despite the general character of Article 80 CISG, its scope and meaning has yet to be ascertained. The aim of this comparative editorial is to contribute to establishing such an ascertainment and to investigate whether and in which way the counterpart provisions of UNIDROIT Principles can be of help thereby.

2. An act or omission of the promisee causing the promisor's failure to perform

a. Perception under Article 80 CISG

The first issue to be examined is whether the act or omission of the party causing the other party's failure to perform has to be of a certain quality and, if so, of what quality? Generally, any conduct of a party is sufficient to activate Article 80 CISG. It is not a condition that the act or omission were the promisee's fault,[3] also an exemption under Article 79 CISG is irrelevant.[4] Nor is it necessary that the act or omission of the promisee constituted a breach of contract.[5] Nevertheless, in cases in which the contract calls for a certain behavior and the promisee complies with this requirement, the mere causation of a breach of the promisor in terms of conditio sine qua non cannot be sufficient to invoke Article 80 CISG; acting in accordance with a contractual requirement to perform a certain action cannot be of the disadvantage of a party. Accordingly, this must be valid for an omission.[6] Therefore, the typical situations in which Article 80 CISG becomes relevant are inadequate or missing cooperation by the promisee followed by the promisor's failure to properly perform his obligations. This is illustrated by several court decisions in which Article 80 CISG was applied: Seller informed buyer in advance that no further goods would be delivered under the contract which constituted an anticipatory breach of the contract. Consequently, buyer was excused for withholding the payment.[7] In another case buyer was excused for not opening a letter of credit because seller failed to inform buyer about the place of loading.[8] Buyer was barred from relying on the non-conformity of the goods since buyer refused the seller's offer to cure without justification.[9]

b. Influence of different wording in the UNIDROIT Principles

As far as the basic requirements are concerned, the corresponding provision in the UNIDROIT Principles, Article 7.1.2, is equivalent with Article 80 CISG.[10] Art. 7.1.2 UNIDROIT Principles requires an act or omission of the party invoking non-performance which caused this non-performance. Although this is not expressly stated in the text or the Official Comments on the UNIDROIT Principles, the provision, like Article 80 CISG, is based on the premise that if an act or omission becomes a contractual obligation a fulfillment of the latter cannot be a relevant act or omission under Art. 7.1.2 UNIDROIT. But the application of this provision does not depend on the promisee's act or omission being a non-performance or even a non-excused non-performance.[11] The only difference between both provisions results from the additional clause contained in Article 7.1.2 UNIDROIT Principles which refers to events as to which the promisee bears the risk as potential grounds for exemption of the other promisor. Therefore, cases in which the performance of the party is prevented by events not caused by the promisee are expressly included in the scope of Article 7.1.2 UNIDROIT Principles. In the illustration contained in the Official Comments on this Article, the case is even contemplated in which the promisor caused its non-performance but the risk of this very event was contractually allocated to the promisee.[12]

How is one to deal with this regime under Article 80 CISG? What can be deduced from the fact that an additional clause is missing which would clarify that events not caused by the promisee can also lead to an exemption? One possible conclusion is that the scope of Article 80 CISG is indeed narrower than that of Article 7.1.2 UNIDROIT Principles. A second possible conclusion is, however, that the additional clause in Article 7.1.2 UNIDROIT Principles is of merely declaratory nature. The fact that such clarification does not appear in Article 80 CISG has no impact on the interpretation of this article. The understanding of Article 80 CISG as expression of the general principle of the observance of good faith [13] demands that a broad interpretation is adopted, i.e., the latter conclusion. This is because it is only appropriate to exempt a party from a non-performance the reason for which lies in the other party's sphere of risk. Virtually, this is the basic idea underlying Article 80 CISG as well as Article 7.1.2 UNIDROIT Principles. The causation of the non-performance by the promisee is merely the most evident case in which the latter bears the risk, simply due to the causation of the problem. As a result, the scope of Article 80 CISG generally corresponds to this of Article 7.1.2 UNIDROIT Principles despite the different wording with regard to events not caused by the promisee. In this respect one could even understand Article 7.1.2 UNIDROIT Principles as clarification of the elliptic wording of Article 80 CISG.

3. Requirement of causation of the promisor's failure to perform

a. Limitation of causation under Article 80 CISG

Article 80 CISG requires that the promisor's failure to perform is caused by the act or omission of the promisee. Article 80 CISG itself does not indicate that the causal link between the act or omission of a party and the failure of the other party to perform has to be of a certain quality. In particular, a mechanism to limit the relevant consequences -- like the requirement of foreseeability in Article 74 CISG -- is not employed by Article 80 CISG. There is also no restriction to direct causation either, indirect causation is generally sufficient.[14] The only prerequisite which can be taken from the wording is that a causal link of any kind between the act or omission of the promisee and the failure of the promisor to perform any of its obligation does exist. Nevertheless, the mere activation of a chain of causation cannot always be appropiate as the only criterion under Article 80 CISG.[15] In cases in which the failure to perform is not the only logical consequence of the promisee's act or omission, i.e., if the promisor could potentially overcome the consequences of the promisee's conduct, an evaluative contemplation of the causal link between act or omission and failure to perform is necessary. It has to be determined in which cases the promisor can be expected to overcome consequences of the promisee's conduct. Should seller be expected to inquire if buyer fails to properly specify the goods?[16] If seller refuses to deliver the goods since buyer had not complied with its duty to pay the price arising from an earlier contract, is the non-delivery caused by the buyer's failure to pay?[17] It is difficult to abstractly determine the line beyond which a causation in the sense of Article 80 CISG should be denied. However, the basic condition is that the promisee's act or omission impair proper performance by the promisor at all.[18] And if this condition is met, it has to be decided from case to case which effort could reasonably be expected of the promisor to comply with its contractual obligations despite the consequences of the promisee's act or omission.[19]

b. Limitation of causation under Article 7.1.2 UNIDROIT Principles

As well as Article 80 CISG, Article 7.1.2 UNIDROIT Principles requires a party's non-performance to be caused by the other party's act or omission. The wording of Article 7.1.2. UNIDROIT Principles does not go any further than Article 80 CISG: it merely affirms the need for a causal link without specifying this causal connection. Thus, the provision itself cannot be used as tool to determine causation in the sense of Article 80 CISG. It can be derived from the Official Comments to Article 7.1.2 UNIDROIT Principles that the most important situation which should be covered by this article is that of performance of a party being made impossible in whole or in part.[20] Although the diction concerning the causation of the non-performance by an event for which the promisee bears the risk is less decisive using the description "may result from an event."[21] the underlying concept is that performance becomes impossible due to the very event. This, however, does not mean that the UNIDROIT Principles prohibit an evaluative interpretation of the causal link between act or omission and non-performance. Though, with regard to the issue of causation, Article 7.1.2 UNIDROIT Principles does not provide any information which could contribute new aspects to determining causation in the sense of Article 80 CISG.

4. Failure to perform caused by both parties

a. Applicability of Article 80 CISG

Another issue discussed in connection with causation under Article 80 CISG is how to deal with the situation in which both parties contributed to the failure of the promisor to perform its obligations. The provision itself remains silent on this point. The only possible reference in the wording is the use of the expression "to the extent".[22] However, relying on this formulation seems rather scholastic. The main argument for applying Article 80 CISG to cases in which the failure to perform was caused by both parties should be a factual one: within a contractual relationship the parties to the contract constantly have to interact with each other. Therefore, applying Article 80 CISG only to cases of exclusive causation by one party would inapproriately narrow the scope of this provision. The decision which act or omission of the promisee should be considered as the relevant trigger of the chain of causation under Article 80 CISG requires a contemplation of the contributions made by both parties to the contract. Thus, Article 80 CISG has to be applied to cases in which both parties caused the promisor's failure to perform as well.[23] When applying Article 80 CISG to such a case the respective contributions of the parties to this result should be evaluated and weighed up.[24] Where an adaption of the remedy reflecting the respective contributions of the parties is not practicable,[25] the general rule should be that the promisee cannot rely on the promisor's failure to perform if the former's contribution is preponderant to that of the latter.[26]

b. Clarification by Article 7.4.7 UNIDROIT Principles

Article 7.1.2 UNIDROIT Principles also does not expressly address the issue of a failure to perform caused by both parties. The only indication that this case is contemplated is - just as in Article 80 CISG - the formulation "to the extent that such non-performance was caused by the first party's act or omission [...]" (emphasis added). But different from the CISG, the UNIDROIT Principles expressly address a similar situation in Article 7.4.7 dealing with "Harm due in part to aggrieved party". The counterpart provision in the CISG, Article 77, is restricted to mitigation of loss already occurred and does not expressly deal with the situation in which the occurence of the harm is also due to the conduct of the promisor.[27] The basic approach of Article 7.4.7 UNIDROIT Principles is to assess the promisee's contribution to the harm and and to correspondingly reduce the amount of damages. Thereby, the conduct of the parties is also to be taken into account. It seems sensible to apply this approach under Article 7.1.2 UNIDROIT Principles as well. The only difficulty arises from the fact that Article 7.1.2 is not only applicable to damages but like Article 80 CISG to all remedies. Consequently, the relevant adaption cannot always be implemented by reducing a pecuniary claim. However, Article 7.4.7 shows that the UNIDROIT Principles generally allow for an evaluation of the respective contributions of the parties to a non-performance and for a corresponding adaption of the consequences of this non-performance. The Official Comments to Article 7.4.7 UNIDROIT Principles make clear that Article 7.1.2 is also based on this idea naturally presuming that the latter provision comprises cases where the non-performance is in part caused by the promisee.[28] This result matches with the conclusion reached under Article 80 CISG. Therefore, the above analysis of the UNIDROIT Principles offers a plausible argument to interpret Article 80 CISG in that particular manner as well. Considering that the UNIDROIT Principles do provide a guideline in Article 7.4.7 on how to deal with causation of non-performance by both parties whereas the Convention is silent on this point, the UNIDROIT Principles could, concerning this matter, also be consulted in establishing the proper interpretive approach to be taken under Article 80 CISG.

5. Extent of exemption

Article 80 CISG prohibits a party from relying on a failure of the other party to perform to the extent that such failure was caused by the first party. Two consequences can be deduced for the extent of exemption: First, the promisor is exempted from all legal consequences arising from this failure to perform, meaning the promisee may not resort to any remedy which is based on this failure to perform.[29] Other than Article 79 CISG, Article 80 CISG is not restricted to an exemption from damages, but the promisee is also barred from relying on another remedy,[30] e.g., price reduction, specific performance, etc. Second, the promisor is exempted only to the extent the failure was caused by the promisee. This means that the promisee is not generally excluded from any remedy but still can rely on any other failure of the promisor to perform not caused by the promisee. If, for example, the failure of the buyer to provide certain information concerning the shipping causes late delivery, the seller is exempted from damages due to the late delivery. However, this does not prevent buyer from avoiding the contract if seller fundamentally breached the contract by delivering non-conforming goods.[31]

The effect of Article 7.1.2 UNIDROIT Principles is similar: The exemption provided by this article is extended to all remedies,[32] but only to the extent the non-performance was due to the interference of the promisee. Article 7.1.2 UNIDROIT Principles is not applicable to cases of the interference acting only as a partial impediment to performance and concerning a non-performance of any other obligation independently from the promisee's act or omission. Again, Article 80 CISG and its counterpart provision are basically equivalent so that the UNIDROIT Principles cannot introduce new aspects to the interpretation of Article 80 CISG.

6. Conclusion

The comparison of Article 80 CISG and Article 7.1.2 UNIDROIT Principles shows a wide congruency between the two provisions. The relevant requirements and effects are basically the same. But this automatically leads to the fact that the issues to be resolved by interpretation are also similar. In so far, the respective provisions do not indicate a certain direction for interpreting one another. However, where the formulation of Article 7.1.2 UNIDROIT Principles deviates from the one employed by Article 80 CISG and the result of interpretation is nevertheless the same, Article 7.1.2 UNIDROIT Principles can arguably be seen as an important affirmation of the proper interpretation of Article 80 CISG.

FOOTNOTES

* Research Assistant at the European Legal Studies Institute, University of Osnabrück, Germany.

1. Honnold, Uniform Law of International Sales Under the 1980 United Nations Convention, Art. 80 para. 436 (3rd ed. 1999 Deventer).

2. Staudinger/Magnus, Kommentar zum Bürgerlichen Gesetzbuch mit Einführungsgesetz und Nebengesetzen, Wiener UN-Kaufrecht (CISG), Art. 80 para. 5 (1999). The general principle of the Convention prohibiting contradictory behavior ("non concedit venire contra factum proprium") also becomes manifest in the following provisions: Articles 16(2)(b), 29(2) second sentence, 50 second sentence CISG. See for material concerning this principle as a "general principle" of transnational law: The Transnational Law Database, available at <http://tldb.uni-koeln.de/php/pub_show_principle.php?pubdocid=907000>.

3. Germany 31 January 1997 Oberlandesgericht [Appelate Court] Koblenz, available online at <http://cisgw3.law.pace.edu/cases/970131g1.html>; Schlechtriem/Stoll, Commentary on the UN Convention on the International Sale of Goods (CISG), Art. 80 para. 7 (1998).

4. Schlechtriem/Schwenzer/Stoll/Gruber, Kommentar zum einheitlichen UN-Kaufrecht -CISG-, Art. 80 para. 3 (4th ed. 2004).

5. Staudinger/Magnus, supra note 2, Art. 80 para. 9; Bianca/Bonell/Tallon, Commentary on the International Sales Law, Art. 80 note 2.3 (1987); Herber/Czerwenka, Internationales Kaufrecht, Art. 80 para. 3 (1991). Although it is difficult to find an example for an act or omission causing the failure to perform of the other party which does not amount to a breach of contract itself, it is possible in cases of misunderstandings, etc. between the parties. This is, however, only true, if one does not understand Article 80 CISG as to qualifying a certain conduct as breach of contract.

6. In most cases, the contract will not require that a party should omit a certain action but will rather order the other party to act.

7. Switzerland 31 May 1996, Zürich Chamber of Commerce, Arbitral Award, available online at <http://cisgw3.law.pace.edu/cases/960531s1.html>; see also Albert H. Kritzer, Editorial remarks on this case (available at above URL).

8. Austria 6 February 1996 Oberster Gerichtshof [Supreme Court], available at <http://cisgw3.law.pace.edu/cases/960206a3.html>; see for further case law Franco Ferrari/Harry Flechtner/Ronald Brand, ed., The Draft UNCITRAL Digest and Beyond: Cases, Analysis and Unresolved Issues in the UN Sales Convention, pp. 835-840 (2004).

9. Germany 31 January 1997 Oberlandesgericht [Appelate Court] Koblenz, available online at <http://cisgw3.law.pace.edu/cases/970131g1.html>.

10. The different terminology in the UNIDROIT Principles using "non-performance" instead of "failure to perform" does not lead to a different meaning as can be seen by Article 7.1.1 UNIDROIT Principles defining non-performance as failure by a party to perform any of its obligations under the contract, including defective performance or late performance.

11. Art. 7.1.2 UNIDROIT Principles Comment 1.

12. Art. 7.1.2 UNIDROIT Principles Comment 2.

13. Honnold, supra note 1, Art. 80 para. 436.1; Schlechtriem/Stoll, supra note 4, Art. 80 para. 2.

14. Schlechtriem/Schwenzer/Stoll/Gruber, supra note 5, Art. 80 para. 4.

15. Effectively, the narrowing interpretation of the terms act or omission (cf. supra) represents already a limitation of causation in the sense of Article 80 CISG since in consequence not every condition set by the promisee is considered relevant as reason of the failure of the promisor to perform.

16. See Schlechtriem/Schwenzer/Stoll/Gruber, supra note 5, Art. 80 para. 5; Vincent Heuzé, La vente internationale de marchandises - Droit uniforme, note 478 (2nd. ed. 2000).

17. See Schlechtriem/Schwenzer/Stoll/Gruber, supra note 5, Art. 80 para. 6; Arbitral Award, Zürich Chamber of Commerce, 31 May 1996, supra note 8: in this case seller alleged that buyer had not paid the price for goods which were already delivered. However, the Tribunal applied Article 80 CISG not in favor of seller but in favor of buyer, since later the seller informed buyer that it would not receive any further deliveries. This action "attributable to [seller], caused in the sense of Art. 80 Vienna Convention [buyer] to withhold payments". A similar case in which the application of Article 80 CISG was denied: Germany 19 April 1996 Aachen Landgericht [District Court], available at <http://cisgw3.law.pace.edu/cases/960419g1.html>: the contract calls for seller to deliver casks. Seller declared to deliver the goods only if buyer paid the remaining price for a machine which it had already delivered at an earlier time. Buyer claimed damages for non-delivery and seller could not invoke Article 80 CISG. Generally, to a right of retention arising from Article 80 CISG: Christoph Kern, Leistungsverweigerungsrechte im UN-Kaufrecht, available online at <http://cisgw3.law.pace.edu/cisg/biblio/kern2.html>.

18. Schlechtriem/Schwenzer/Stoll/Gruber, supra note 5, Art. 80 para. 6; Enderlein/Maskow/Strohbach, Internationales Kaufrecht, Art. 80 note 5.2 (1991); Achilles, Kommentar zum UN-Kaufrechtsübereinkommen (CISG), Art. 80 para. 3 (2000).

19. Although reasonableness seems to be an amorphous standard it is at least an acknowledged general principle of the Convention and therefore applicable in accordance with Article 7 para. (2) CISG. Cf. Ulrich Magnus, Die allgemeinen Grundsätze im UN-Kaufrecht, RabelsZ 59 (1995), p. 469-494.

20. Art. 7.1.2 UNIDROIT Principles Comment 1.

21. Art. 7.1.2 UNIDROIT Principles Comment 2.

22. Schlechtriem/Schwenzer/Stoll/Gruber, surpa note 5, Art. 80 para. 7; Peter Rathjen, Haftungsentlastung des Verkäufers oder Käufers nach Art. 79, 80 CISG, Recht der Internationalen Wirtschaft 1999, pp. 561-565.

23. Different view: Schlechtriem/Stoll, supra note 4, Art. 80 para. 5.

24. Staudinger/Magnus, supra note 2, Article 80 para. 14; Bianca/Bonell/Tallon, supra note 6, Art. 80 note 2.5; Herber/Czerwenka, supra note 6, Art. 80 para. 7; Peter Rathjen, supra note 23, p. 561; Germany 21 March 1996 Schiedsgericht der Handelskammer [Arbitral Tribunal of the Chamber of Commerce] Hamburg Arbitration proceeding, available at <http://cisgw3.law.pace.edu/cases/960321g1.html>. In this case the buyer relies on a breach of a framework agreement between seller and buyer. The Tribunal was weighing up the respective contributions of the parties to the failing of the framework agreement, i.e., mainly the refusal of both sides to comply with their duties arisen from the sales contract.

25. Namely, in cases in which the subject matter is not a pecuniary claim which could proportionately reduced.

26. Staudinger/Magnus, supra note 2, Art. 80 para . 14.

27. Although it is not expressly stated in Article 77 CISG, the provision also requires the aggrieved party to take reasonable measures to avoid the occurence of loss at all. Schlechtriem/Stoll, supra note 4, Art. 77 para. 6; Staudinger/Magnus, supra note 2, Art. 77 para. 8.

28. Art. 7.4.7 UNIDROIT Principles Comment 1: "[...] the general principle established by Art. 7.1.2 which restricts the exercise of remedies where non-performance is in part due to the conduct of the aggrieved party, [...]" (emphasis added).

29. Schlechtriem/Stoll, supra note 4, Art. 80 para. 10; Vincent Heuzé, supra note 17, note 479; Enderlein/Maskow/Strohbach, supra note 19, Art. 80 note 3.1.

30. Franco Ferrari/Harry Flechtner/Ronald Brand, supra note 9, p. 840.

31. See Staudinger/Magnus, supra note 2, Art. 80 para. 17.

32. Art. 7.1.2 UNIDROIT Principles Comment 1: "When the article applies, the relevant conduct does not become excused non-performance but loses the quality of non-performance altogether."

1. General interpretation and application in CISG and PECL: Limitation of Remedies Available
2. "Acts" Constituting Failure of Performance
3. Failure of Performance Wholly or Partially Attributable to the Creditor or Aggrieved Party
4. Imputed Knowledge and Intention, Negligence and Bad Faith
5. Conclusion

1. General interpretation and application in the CISG and the PECL: Limitation of Remedies Available

The content and function of Article 8:101(3) PECL [1] is similar in substance and form to its counterpart provision contained in article 80 CISG.[2] Both provisions exemplify the prohibition to contradict one's own behavior - "venire contra factum proprium" - thereby incorporating an expression of general principles of good faith and fairness.[3] Both articles however prevent entitlement to remedies if the reason for the non-performance was the result of the act(s) or omission(s) of the party seeking relief. However, Article 8:101(3) PECL provides valuable insight as to term definitions and applications therein via cross-reference to other PECL articles [4] thereby providing a supplemental source for interpreting Article 80 CISG.

2. "Acts" Constituting Failure of Performance

Under Article 8:101(3) PECL, a cross-reference to Article 1:301 PECL provides that the definition of "act" includes omission. Such acts would include failure to provide information to the other party or giving wrong or incomplete information. This understanding of the term is commonly held true in all European legal systems; [5] however, in Germany, the statutory provision which has been drafted for acts is not automatically applicable to omissions.[6] In contrast, the CISG explicitly provides for acts and omissions. Hence, both provisions provide that a party seeking relief cannot seek relief if the failure to perform was due the first party's act or omission.[7]

3. Failure of Performance Wholly or Partially Attributable to the Creditor or Aggrieved Party

There are two applicable articles in the PECL that address the issue of non-performance - Articles 1:301 and 9:504 PECL. As to the former, a creditor who directly prevents performance or the so-called mora creditoris is prevented from seeking a remedy. An illustrative example would provide that if Party A failed to perform due to its failure to give instruction within a stipulated time to Party B which prevented Party B from performing, then Party B would have a remedy against Party A. However, Party A would have no remedy against Party B. If the facts revealed that A's non-performance was due to a force majeure or unforeseen event then A is not liable for damages for its failure to instruct and B has no remedies in damages against A. In other cases, where there is also a non-performance by the debtor, the creditor may exercise the remedies for non-performance to a limited extent. However, when the loss is caused by both parties, a limitation in the whole range of remedies is warranted as to the creditor.

In most of the European systems, the rules apply where the party who has prevented performance is the non-performing party against whom the remedies may be exercised.[8] This is set forth in Article 9:504 PECL, which embodies the principle that an aggrieved party should not recover damages to the extent that its loss is caused by its own unreasonable behavior. This concept embraces three distinct situations [9] due in part to the Common Law system's legal concept of "contributory negligence" and "failure to mitigate." Most continental European legal systems do not distinguish the concepts; however, a similar result is achieved by using concepts such as causation.

Under the CISG, causation is not explicitly set forth. However, commentators' opinion has been consistent with the reasoning set forth in both PECL articles although no distinction is readily apparent.[10] The majority of the case law provides that courts have applied this concept in the event one party fails to secure financial arrangements,[11] make payment,[12] or makes payment to a third party [13] thereby precluding the remedy of avoidance or damages. At least one opinion found no causation when a seller failed to perform due to buyer's failure to pay a previous debt, finding that the terms of agreement made it irrelevant "as far as the question of the cause of the buyer's failure to perform according to Article 80 CISG is concerned."[14] Similarly, case law exists that illustrates application of degrees of negligence thereby allocating a loss between both parties.[15]

4. Imputed Knowledge and Intention, Negligence and Bad Faith

In order to neutralize the risks, imputation of actual or constructive knowledge or a legally relevant state of mind is relevant in performance of the contract pursuant to PECL Article 1:305.[16] A party that should have known or foreseen a fact is usually treated as if it had the knowledge or foresight. As such, the law of agency becomes relevant. This is due in part to the fact that performance of a contract rarely is performed by the contracting party but by its agents, employees, subcontractors and other third person.

When a contract is being made, a party is normally only fixed with the knowledge imputed to his employees or agents involved in making the contract. For the purposes of Article 1:305 PECL, knowledge or intention even of any subcontractor or other person to whom it has entrusted performance may be imputed to the party with exception.[17] Under several rules, intentional or grossly negligent behavior or bad faith by a party creates or increases his liability.[18] Even if the contracting party has not entrusted performance to a third person, a third person may nevertheless under certain conditions be entitled to perform the contract.[19] The intentional or grossly negligent behavior of a party or of a person whose state of mind is imputed to a party only refers to the act or omission which constitutes the non-performance. It is not necessary that the intention or gross negligence also extend to the consequences that may follow from the non-performance.

These issues are not clearly established in the national law of the countries of Europe.[20] In some national laws, there is the imputation of intention, negligence and bad faith.[21] According to several provisions, a non-performing party is responsible for the culpable behavior of persons whom he has charged with performing his obligations. This also appears to have been the intent of the drafters of Article 80 CISG.[22]

The CISG fails to address culpability of agents;[23] however, Article 8 of the CISG addresses the intent of the parties.[24] Undoubtedly, PECL rules may be referred to as supplementary reference to aid in the interpretation of the CISG. This is essentially true due to the necessity for interpretation of contracts made in an international and, often, multilingual settings of a contract.[25]

5. Conclusion

A comparison of the two documents illustrates that both the CISG and the PECL adopt the prohibition to obtain remedies if the damages were the result of one's own contradictual behavior. However, it is apparent that the collective application of several articles in the PECL and illustrative examples are broader in scope and therefore provide a supplemental resource for interpreting Article 80 CISG.

FOOTNOTES

* The author received her J.D. from Loyola University School of Law, New Orleans, Louisiana, USA (Common Law Program) and her B.A. in International Relations, with honors, from the University of South Florida, Tampa, Florida, USA. She is a published author and a private practitioner in Martin County, Florida, USA.

1. PECL Article 8:101(3) states: "A party may not resort to any of the remedies set out in Chapter 9 to the extent that its own act caused the other party's non-performance."

2. CISG Article 80 states: "A party may not rely on a failure of the other party to perform, to the extent that such failure was caused by the first party's act or omission." Notably, this article was based on a proposal by the German Democratic Republic and was unanimously adopted and included in the Convention (O.R., 386 fol, 135, fol) "out of an abundance of caution." See Jacob S. Ziegel and Claude Samson, Report to the Uniform Law Conference of Canada on Convention on Contracts for the International Sale of Goods (July 1981), available at <http://cisgw3.law.pace.edu/cisg/wais/db/articles/english2.html>.

3. See, e.g., Germany 25 November 1998 Supreme Court, translation and link to original textavailable at <http://cisgw3.law.pace.edu/cases/981125g1.html> (acknowledging the principles of good faith apply to Article. 80 CISG), but see, Commentary by Fritz Enderlein & Dietrich Maskow, excerpt from International Sales Law: United Nations Convention on Contracts for the International Sale of Goods, Convention on the Limitation Period in the International Sale of Goods, Oceana Publications, 1992, also available at <http://cisgw3.law.pace.edu/cisg/biblio/enderlein-art80.html>, stating that "Article 42, paragraph 2; subpara. (b) provides for a concrete manifestation of the principle of Article 80. This special norm existed before Article 80 was drafted and continues in existence, although it is consumed by the latter."

4. See generally, PECL Article 1:301(1) Meaning of Terms; PECL 1:305 Imputed Knowledge and Intentions; PECL Article 9:504 Loss Attributable to Aggrieved Party.

5. See, e.g., Austria, ABGB § 861 sent. 1; Greece, Simantiras No. 555.

6. See, e.g., BHG § 241, but see RB 31 March 1909, RGZ 70, 234 (241).

7. Germany 1 July 2002 Appellate Court München , translation and link to original text available at <http://cisgw3.law.pace.edu/cases/020701gl.html>; Germany, 9 July 1992, District Court Düsseldorf, available at <http://cisg3.law.pace.edu/cases/920709g1.html>; Ukraine 21 June 2002 Tribunal of International Commercial Arbitration, Ukrainian Chamber of Commerce & Trade, translation available at <http://cisgw3.law.pace.edu/cases/020621u5.html>.

8. Note, however, that in Belgian, Dutch, German, Greek and Nordic law it is not generally considered to a tekortkoming, Vertragsverletzung, or Kontraktsbrott to prevent performance by the other party. It will depend upon whether the acceptance of the performance is a main obligation (Hauptpflicht) of the creditor.

9. It embraces three distinct situations. The first is where the aggrieved party's conduct was a partial cause of the non-performance; the second, where the aggrieved party, though not in any way responsible for the non-performance itself, exacerbated its loss-producing effects by its behavior. A third situation, where the loss resulting from the non-performance could have been reduced or extinguished by appropriate steps in mitigation, is covered by PECL Article 9:505.

10. See Ziegel, supra at Note 2.

11. See Austria 6 February 1996 Supreme Court [10 Ob 518/95], 6 Vindobona Journal of International Law and Arbitration 153-168 (2002), also available at <http://cisgw3.law.pace.edu/cases/960206a3.html>.

12. See Germany 1 July 2002 Appellate Court München, translation and link to original text available at <http://cisgw3.law.pace.edu/cases/020701gl.html>.

13. See Germany 9 July 1992 District Court Düsseldorf, available at <http://cisg3.law.pace.edu/cases/920709g1.html>.

14. Germany 21 March 1996 Hamburg Arbitration proceeding, translation and link to original text available at <http://cisgw3.law.pace.edu/cases/960321g1.html>; see also, Germany 23 June 1995 Lower Court München, translation and link to original text available at <http://cisgw3.law.pace.edu/cases/950623g1.html>.

15. Russian Federation arbitration proceeding 55/1998 of 10 June 1999, translation available at <http://cisgw3.law.pace.edu/cases/990610r1.html> (arbitrators acknowledge degree of negligence on the part of the seller); see also, Israel 22 August 1993 Supreme Court (Eximin v. Textile and Footwear), available at <http://cisgw3.law.pace.edu/cases/930822i5.html> (ruling under the Hague Sales Convention (ULIS) which refers to the CISG as well "by way of analogy").

16. Several provisions use the criteria of knowledge, awareness, foreseeability, contemplation (see PECL Articles 1:301(5), 2:104, 3:102(2) 3:204(2), 3:205(1) and (3), 3:208, 3:209(1), 3:301(1), 4:103(1), 4:109(1), 4:111(2), 4:113(1), 4:114, 4:117(1), 6:101(2) and (3), 6:110(3), 6:111(2), 7:101(2), 8:103 subparagraph (b), 8:108(3), 9:102(3), 9:303(2) and (3), 9:503).

17. The employee or other person must have been someone who was, or who appeared to be, involved in the negotiation or performance of the contract. If a person not so related to the contract knows a relevant fact he may not be able to appreciate its relevance to the contract and thus might not report it. The burden of proving that the person for whom the contracting party is held responsible was not and did not reasonably appear to the other party to be involved in the making or performance of the contract rests on the first party.

18. See PECL Articles 2:301(2), 4:107(2), 5:101(1) and (2), 6:102, 8:103 subparagraph (c), 9:503; cf. also PECL Article 1:201(1).

19. See PECL Article 7:106. If the third person acted with the contracting party's assent (PECL Article 7:106(1) (a)) that is equivalent to an entrustment and therefore falls under PECL Article 1:305.

20. Imputation of knowledge (Article 1:305 (a)) is dealt with in rules on agency in Belgium (De Page & Dekkers I no. 52), Germany (BGB § 166), Italy (Cc art. 1391) and Portugal (CC art. 259(1)). In Germany, it is held that the rule of BGB § 166 on agency express a general principle: a person who entrusts another with executing certain affairs on his own responsibility will have imputed to him knowledge which the other has acquired in that context. Although there is no explicit rule in the Austrian Code, the OGH reaches the same result by reference to ABGB § 1017. Austrian ABGB § 1313a; Belgium: Cass. 24 January 1974, Pas. I 553 and Cass. 21 June 1979, Pas. I 1226; Denmark: Danske Lov 1683 art. 3-19-2; Germany: BGB § 278 sent. 1; Greece: CC arts. 330 and 334; Italy: Cc art. 1228; Netherlands: BW art. 6:76; Portugal: CC art. 800(1)). French law reaches the same result for exclusion clauses (Malaurie & Aynès, Obligations no. 861).

Under Spanish law, there is no corresponding general rule for contractual liability, but legal writers and case law acknowledge contractual liability for acts of persons for whom the non-performing party is responsible (Diez-Picaso I paras. 724-726; Jordano Frago 561 ff.; STS 22 June 1989 (Ar. 4776); STS 1 March 1990 (Ar. 1656)), although intention probably cannot be imputed. In ENGLISH law, the question does not arise because the fact that a breach is deliberate usually does not affect a party's liability.

21. Some of the aforementioned modern codes in Civil Law countries also deal with good and bad faith. Italy and Portugal start out from the general principle set out supra (sub 1). If, however, the principal is in bad faith, he cannot invoke the agent's ignorance or good faith (Italian CC art. 1391(2) and Portuguese CC art. 259(2)).

22. The following excerpt from the Summary Records of Committee Meetings of the Diplomatic Conference at which the CISG was promulgated indicates that the reference in CISG Article 80 to a party's act or omission is intended to include the act or omission of the party's employees.

Mr. ROGNLIEN (Norway) asked whether the expression 'by his own act or omission' covered the acts and omissions not only of the party concerned but also of persons whom the party might employee in the performance of the contract. After an exchange of views in which Mr. MASKOW (German Democratic Republic), Mr. MICHIDA (Japan), Rapporteur of the Committee, Mr. KHOO (Singapore), Chairman of the Drafting Committee, and Mr. SHAFIK (Egypt) took part, the CHAIRMAN [Mr. LOEWE (Austria)] proposed that the Committee should keep the current working of article 65 bis [became article 80 CISG] on the understanding that the expression 'by his own act or omission' was unanimously recognized as covering not only the acts or omissions of the party concerned but also those of persons who might be employed by him for the purposes of the performance of the contract. It was so decided. (Official Records, p. 430).

23. Germany 24 January 1994 Appellate Court Berlin, No. 2U7418/92, UNILEX, available at <http://www.unilex.info/case.cfm?pid=case&id=46&step=Sources> (finding that CISG does not address agency law referencing CISG Article 4 thereby applying Italian law); see also, Convention on Agency in the International Sale of Goods (Geneva 17 February 1983); Albert H. Kritzer, Guide to Practical Applications of the United Nations Convention on Contracts for the International Sale of Goods, p. 86 (1989).

24. See generally, Maja Stanivukovic, Editorial remarks on the manner in which the PECL may be used to interpret or supplement CISG Article 8, available at <http://cisgw3.law.pace.edu/cisg/text/peclcomp8.html#er>.

25. CISG Article 7(1).