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Excerpt from John O. Honnold, Uniform Law for International Sales under the 1980 United Nations Convention, 3rd ed. (1999), pages 496-500. Reproduced with permission of the publisher, Kluwer Law International, The Hague.

Article 80

Failure of Performance Caused by Other Party

Text of Article
A. Relationship to Article 79 on Exemptions
      (1) Article 80 and the Exemption Rules of Article 79
            (a) Resources apart from Article 80
B. Article 80 as a General Obligation

§436 This second (and last) article in Section IV. Exemptions has the seductive charm of a self-evident statement. Our principal problem is to find its appropriate role in the statutory structure: Does Article 80 govern only problems of exemption from liability (Article 79, supra) or does it modify all of the remedial provisions of the Convention?

Article 80 [1]

"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."

§436.1 A. Relationship to Article 79 on Exemptions

The legislative history of Article 80 links it closely to the rules on exemption in Article 79. The idea expressed in Article 80 appeared as part of the article of ULIS (1964) that dealt with exemptions. Article 74(3) of ULIS stated that relief from liability did not exclude avoidance of the contract or reduction of the price "unless the circumstances which entitled the first party to relief were caused by the act of the other party...". No such provision was included in the drafts approved by the UNCITRAL Working Group or by the Commission.[2]

The language that had been omitted from ULIS 74(3) reappeared at the Diplomatic Conference in a proposal that the article on exemptions be followed by an article substantially like Article 80.[3] Some delegates stated that the proposal expressed the important general principle that one should not gain by a wrongful act; others noted that such a statement [page 496] was unnecessary and, in any event, followed from the good faith requirement of Art. 7(1), §§94-95, supra.[4] Most delegates seemed to feel that there might be some value and, at any rate, no danger in stating the obvious; the provision was approved. The Conference authorized the Drafting Committee to place the new article either in Ch. V Sec. IV, Exemptions, or in Part III, Ch. 1, General Provisions; the Drafting Committee chose the former and the provision as so structured was approved by the Plenary.[5] Placing Article 80 in the section entitled "Exemptions" is significant since chapter and section headings were regarded as parts of the Convention and were considered and approved by UNCITRAL and the Diplomatic Conference.[6]

§ 436.2 (1) Article 80 and the Exemption Rules of Article 79

The role of Article 80 in exemption cases can be examined in the following case.

Example 80A. A contract called for Seller to deliver goods to Buyer in State X. State X required sellers to obtain a license for the importation of such goods. Seller made an appropriate application but Buyer persuaded the officials of State X to deny the license; as a result Seller could not deliver the goods. Buyer, in a remarkable display of nerve, sued Seller for damages for failure to deliver.[7] [page 497]

The denial of a government license normally would constitute an "impediment" to performance and would exempt Seller from liability for damages (Art. 79(5)). Suppose, however, that Buyer surprisingly (see note 7, supra) claims damages for breach of contract on the ground that, under Article 79(1), Seller should have "taken the impediment into account" or should have "avoided or overcome it or its consequences". In these circumstances Seller can invoke Article 80 to bar Buyer’s damage claim; the failure to overcome the impediment "was caused by [Buyer’s] act or omission" and Seller is excused from damages by Article 79.

§ 436.3 (a) Resources apart from Article 80.

In the above case, Article 80 may not be needed to defeat Buyer’s outrageous claim. Article 60(a) (§§342-343, supra) states that the buyer’s obligation to "take delivery" (Art. 53) includes "doing all the acts which could reasonably be expected of him in order to enable the seller to make delivery"—a requirement that, at the very least, prevents the buyer from placing obstacles in the seller’s path. One might conceive of cases where an obligation not to block the other party’s performance is not stated so explicitly in the Convention; however, a comparable obligation may be fairly implied (as in Example 80A) from normal expectations implied from the contract (Art. 8) and from the parties’ practices and trade usages (Art. 9), construed with regard (Art. 7(1)) for "the observance of good faith in international trade".

The possibility of achieving the objectives of Article 80 by other provisions of the Convention does not mean that Article 80 is wholly without value; in some situations Article 80 may provide the clearest basis for a just result.

§436.4 B. Article 80 as a General Obligation

Article 80, apart from its position in Section IV. Exemptions, might be read as a rule of general applicability and, as we have seen (§436.1), both supporters and opponents of this provision claimed that it embodied self-evident truth. Does it follow that Article 80 is technically applicable to all of the many provisions on remedies, as if it had been placed in Part III, Chapter 1, General Provisions (Arts. 25–29) instead of in Ch. V, Sec. IV, Exemptions (Arts. 79–80)? For reasons set forth at §436.1, footnote 6, placing Article 80 in Section IV on Exemptions should be respected in determining whether the article technically has the same general operative effect as the articles in Chapter 1, General Provisions. On the other [page 498] hand, the principle expressed in Article 80 and its relationship to other provisions of the Convention that call for cooperation between the parties in the performance of their contract make it suitable for analogical use under Article 7(2) for questions "not expressly settled" by the Convention (§§96-102, supra).

This approach seems advisable since, as Tallon demonstrates (B-B Commentary §2.5, p. 598–599), Article 80 is not well-drafted to serve as an operative rule supplementing or modifying the many remedial rules provided by the Convention—a deficiency that should not be surprising since (§436.1, supra) this provision was prepared in relation to the exemption rules of Article 79. In this setting Article 80 can give a quick answer to an outrageous claim for damages by a party (e.g. Party A) who has prevented performance by Party B. However, in these cases the more important question is this: Can B recover damages from A for the loss A’s conduct inflicted on B by preventing B’s performance of the contract? The language of Article 80 does not address this question; it merely states that A (who prevented performance by B) "may not rely" on B’s failure to perform. Read literally, Article 80 gives B only a shield when B needs a sword.

Fortunately, it is not necessary to distort the language of Article 80 to deal with problems for which it was not designed. As §436.3 indicates, the Convention provides more suitable tools (e.g. Art. 60(a), supra) for handling these problems. In addition, these provisions are supplemented (Art. 7(2)) by the "general principles on which [the Convention] is based"—i.e., the premises underlying various provisions calling for cooperation in performance—including, of course, Article 80.

Finally, the obstructive conduct which Article 80 addresses (albeit inadequately) is governed by this fundamental principle: The making of a contract necessarily implies an expectation of performance; action by one party to prevent performance by the other is clearly inconsistent with their mutual expectations.[8] For such breaches of contract the Convention provides a wide range of remedies: Arts. 45–52, 61–65, 71–78.

[NOTE: The discussion, above, at §§436.1-.2 suggested that legislative history, and placing Article 80 with Article 79 in Section IV. Exemptions, indicated that Article 80 was related to the problems of "force majeure" introduced by Article 79. However, the following decision, involving many complex issues, employed Article 80 to solve a problem related to Article 79 or Exemptions.][page 499]

Decision:  AUSTRIA ObGH (Sup. Ct.) 100 b 518/95, 6 February 1996. B ordered propane gas from S; S failed to deliver. B claimed damages, including loss of profit. S’s defense included the claim that non-delivery resulted from B’s failure to open a letter of credit. The court, citing Article 80, rejected S’s defense: S had failed to provide B with the information needed for establishing the credit. UNILEX D.1996-3.1, CLOUT 176.[page 500]

FOOTNOTES: Chapter on Article 80

1. The 1978 Draft had no provision like Art. 80; this article resulted from an amendment proposed at the Diplomatic Conference. Cf. ULIS 74(3) (final clause.).

2. W. G. Sess. No. 5, Jan. 1974: V YB 39–40, 58 Docy. Hist. 185–86, 204 (draft article 74). The omitted language did appear in an alternative proposal submitted by an observer. W. G. Sess. No. 6, Jan. 1975: VI YB 60–61, Docy. Hist. 251–252.

3. The proposal (by G.D.R.) was labelled Article 65 bis. Text of the proposal: O.R 135–136 Docy. Hist. 707–708. First Committee Deliberations: O.R. 386–387, 393 Docy. Hist. 607–608, 614.

4. In support: O.R. 386–387, Docy. Hist. 607–608, at paras. 50, 52, 53, 54, 56, 61, Opposed: Id. at paras. 55, 57, 60.

5. First Committee: O.R. 393, Docy. Hist. 614. Plenary: O.R. 227, Docy. Hist. 762. The Title of, Sec. III, Exemptions, containing Articles 79 and 80 (then 65 and 65 bis) appeared in the draft that was submitted to the Plenary but, unlike some of the headings, was not the subject of a separate vote.

6. The Drafting Committee was generally not authorized to make substantive decisions. However, the First Committee in this case authorized the Drafting Committee to decide where the new article should be placed and this decision was not challenged when the Conference reviewed the final text including the titles of sections and chapters. The names for individual articles in this book were supplied by the present writer for ease of identification and, like the names of articles in the Secretary’s Commentary, have no legislative significance. See O.R. 14, note 1, Docy. Hist. 404.

7. The example is abnormal in several respects. It would be more usual for the buyer to obtain the import license. In such cases a buyer who regrets making the contract might well either make a feeble attempt to obtain the license or induce its government to deny the license. In this setting, as in the above example, a buyer who regrets making the contract would usually be satisfied to be rid of the contract and would not sue for damages; apart from loss of good-will and the danger of a defense exposing the buyer’s machinations, it would be difficult to prove damages from the loss of undesired performance. The difficulty in finding a more normal example lets one hope that Article 80 will seldom be needed.

8. Cf. Farnsworth, Contracts, 610–611 at n. 23; Treitel, Remedies (1988) 296.

Pace Law School Institute of International Commercial Law - Last updated March 1, 2005
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