Guide to the use of this commentary
The Secretariat Commentary is on 1978 Draft article 23 (which became CISG article 25). Significant changes were made to article 23 of the 1978 Draft. Accordingly, the Secretariat Commentary on 1978 Draft article 23 should not be regarded as entirely relevant to the interpretation of CISG article 25.
Text of Secretariat Commentary on article 23 of the 1978 Draft
[draft counterpart of CISG article 25] [Fundamental breach]
PRIOR UNIFORM LAW
ULIS, article 10.
1. Article 23 [draft counterpart of CISG article 25] defines "fundamental breach".
2. The definition of fundamental breach is important because various remedies of buyer and seller [see articles 42(2), 44(1), 45(1)(a), 47(2), 60(1)(a), 63, 64(1) and 64(2) (draft counterpart of CISG articles 46(2), 48(1), 49(1)(a), 51(2), 64(1)(a), 72, 73(1) and 73(2))], as well as some aspects of the passing of the risk [see article 82 (draft counterpart of CISG article 70)], rest upon it.
3. The basic criterion for a breach to be fundamental is that "it results in substantial detriment to the injured party. " The determination whether the injury is substantial must be made in the light of the circumstances of each case, e.g., the monetary value of the contract, the monetary harm caused by the breach, or the extent to which the breach interferes with other activities of the injured party.
4. Once this basic criterion is met, a criterion which looks to the harm suffered by the injured party, a breach is fundamental unless the party in breach can prove that he "did not foresee and had no reason to foresee such a result," i.e. the result which did occur. It should be noted that the party in breach does not escape liability merely by proving that he did not in fact foresee the result. He must also prove that he had no reason to foresee it.
5. Article 23 [draft counterpart of CISG article 25] does not specify at what moment the party in breach should have foreseen the consequences of the breach, whether at the time the contract was concluded or at the time of the breach. In case of dispute, that decision must be made by the tribunal.