Fundamental Breach - Chapter 7 - Remedies in International Sales
About the Author:
Chengwei Liu has practiced as a PRC lawyer in international trade and arbitration, FDI, M & A and IPO since his graduation from Renmin University of China. He has contributed to a CISG comparative review book published by Cambridge University Press and has authored over ten journal articles that have appeared in the Pace Review of the CISG, China Law & Practice, etc.
About the Editor:
Marie Stefanini Newman is the Director of the Pace University School of Law Library and an Associate Professor of Law. She also serves as Database Manager of the Pace website devoted to the United Nations Convention on Contracts for the International Sale of Goods.
Originally from Remedies in International Sales - Hardcover
Remedies in International Sales - PDF
Preview Page from Chapter 7
The Convention uses the term “fundamental breach” in various settings, which “plays its most important roles in Articles 49(1)(a) and 64(1)(a) which state grounds on which the buyer or seller may ‘avoid’ the contract and thereby become free from further contractual obligations […].” CISG Art. 49(1)(a)/64(1)(a) makes it clear, “only if a party’s failure to perform his contractual obligations amounts to a fundamental breach will the other party be entitled to avoid the contract as of right (de pleno jure).” This concept also plays a role in several other special situations of avoidance: (a) in CISG Art. 51(2) on avoidance of an entire contract based on defective performance of a part of the contract; (b) in CISG Art. 72 on avoidance triggered by anticipatory breach; and (c) in CISG Art. 73 on avoidance in the event of delivery by instalments.
Apart from its most important role as the usual precondition for avoidance,the concept “fundamental breach” is also used in CISG Art. 46(2) to qualify the buyer’s remedy to require delivery of substitute goods. Additionally, it also plays an important role in bypassing the passing of risk: CISG Art. 70 stipulates that if the seller has committed a fundamental breach of contract, the passing of risk (Arts. 67 to 69) does not impair the remedies available to the buyer on account of the breach.
In light of the significant role it plays in the Convention’s remedial scheme, the concept “fundamental breach” deserves a detailed discussion. CISG Art. 25 defines it as follows:
Section
§7.1 General
§7.2 Gravity of the Consequences of Non-performance
7.2.1 Overview
7.2.2 Substantial deprivation of contractual expectations of the aggrieved party
(a) The broad term “detriment”
(b) Substantiality of the deprivation
(c) Contractual expectations of the aggrieved party
(d) A summary
7.2.3 Foreseeability by the breaching party of the substantial deprivation
(a) A conditional element availing the breaching party
(b) Standard for assessing the foreseeability
(c) Reference point of the assessment
7.2.4 Burden of proof
§7.3 Nature of the Breached Obligations
7.3.1 Overview
7.3.2 Minor breach of strict performance
7.3.3 Breach of ancillary obligations depriving main interest
7.3.4 A summary
§7.4 The Concept in Specific Instances
7.4.1 Introduction
7.4.2 Late performance
(a) Late delivery by the seller
(b) Late payment or taking delivery by the buyer
(c) A summary
7.4.3 Delivery of defective goods
(a) Overview
(b) Determinative role of the contractual specification
(c) Relevance of goods’ availability for alternative use or resale in light of the goods’ purpose
§7.1 Remedies in International Sales
(d) Relevance of goods’ reparability
(e) Relevance of the seller’s offer to cure
(f) A summary
7.4.4 Defects in documents
§7.5 Concluding Remarks