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Force Majeure

Perspectives from the CISG, UNIDROIT Principles, PECL and Case Law
[2nd edition: Case annotated update (April 2005)]

Chengwei Liu
LL.M. of Renmin University of China; E-mail: <lexway@mail.com>.

  1. Introduction
  2. Overview of the Relevant Rules
  3. Scope of Application
  4. Qualifications for Invoking the Exemption due to an Impediment
    4.1 In general
    4.2 The novel term "impediment"
    4.3 External character of the impediment: "beyond [the defaulting party's] control"
    4.4 Foreseeability of the impediment: "[the defaulting party] could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract"
    4.5 Unavoidability of the impediment: "[the defaulting party] could not reasonably be expected to have avoided or overcome [the impediment] or its consequences"
    4.6 Causality between the impediment and the non-performance
  5. Special Requirements for Exemption Involving Third Party
    5.1 Basic ideas underlying CISG Art. 79(2)
    5.2 Scope of application of CISG Art. 79(2): sub-contractor
    5.3 Three situations to be distinguished in applying CISG Art. 79
    5.4 The necessity of imposing a particular rule as CISG Art. 79(2)
  6. The Focus on an Assessment of the Risks
    6.1 In general
    6.2 Particular impediment: financial embarrassment
    6.3 Particular impediment: non-performance due to supplier's default
  7. Duty to Notify
  8. Effects Following an Exempting Impediment
    8.1 Overview
    8.2 Price reduction available
    8.3 Avoidance available
    8.4 Damages (including liquidated damages or penalties) exempted but interest unaffected
    8.5 The availability of specific performance in case of an exempting impediment
    8.6 A summary
  9. Temporary Impediment
  10. Partial Impediment


      Key provisions at issue

The legal elements for the qualification of an event as force majeure (vis maior, act of God, etc.) may vary by jurisdiction, however, court decisions show a universal trend to a comparable restrictive interpretation.[1]

1. Introduction

Since the doctrine of absolute obligation was abandoned by the common law, one may say that legal systems provide for the discharge of one or both parties when a contract has become impossible to perform. This widely accepted rule does not, however, apply similarly everywhere. In many countries it derives from the concept of force majeure, a concept extraneous to the common law which is impossible to translate into English. Furthermore, the notion of force majeure is subject to various interpretations.[2]

Nevertheless, the term "force majeure" is chosen here because it is widely known in international trade practice, as confirmed by the inclusion in many international contracts of so-called "force majeure" clauses.[3] It is generally recognized that force majeure is an excuse for non-performance of a contractual obligation which depends on the facts and circumstances.[4] However, it is to be stressed at the beginning that the term "force majeure," "has evolved progressively in international trade practice by assuming many original and autonomous features distinct from similar legal concepts."[5] This evolution will be further shown below in section 3.

In the following sections, the focus will be placed on the rules dealing with force majeure issues under the United Nations Convention on Contracts for the International Sale of Goods (1980; "CISG" or "Convention"), UNIDROIT Principles of International Commercial Contracts (1994; "UNIDROIT Principles") and Principles of European Contract Law (1998; "PECL"), i.e., CISG Art. 79, UNIDROIT Principles Art. 7.1.7 and PECL Art. 8:108.

2. Overview of the Relevant Rules

Under the Convention, force majeure issues are dealt with in Art. 79, which defines "the extent to which a party is exempted from liability for a failure to perform any of his obligations because of an impediment beyond his control."[6] It reads:

CISG Art. 79

(1) A party is not liable for a failure to perform any of his obligations if he proves that the failure was due to an impediment beyond his control and that he could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it or its consequences.

(2) If the party's failure is due to the failure by a third person whom he has engaged to perform the whole or a part of the contract, that party is exempt from liability only if: (a) he is exempt under the preceding paragraph; and (b) the person whom he has so engaged would be so exempt if the provisions of that paragraph were applied to him.

(3) The exemption provided by this article has effect for the period during which the impediment exists.

(4) The party who fails to perform must give notice to the other party of the impediment and its effect on his ability to perform. If the notice is not received by the other party within a reasonable time after the party who fails to perform knew or ought to have known of the impediment, he is liable for damages resulting from such non-receipt.

(5) Nothing in this article prevents either party from exercising any right other than to claim damages under this Convention.

This Article deals with the circumstances in which the buyer or seller may be excused from damages for non-performance of his contractual obligations because of an extraneous event that is judged sufficiently important to warrant the excuse.[7] It is "a compromise between the civil law doctrine, which bases impossibility on the lack of fault of the obligor and bars an award of damages, and the common law approach, which views impossibility as an exception from absolute liability and therefore terminates the contract."[8] Under this compromise, CISG Art. 79 "grapples with at least some of the problems dealt with in national systems under such headings as 'force majeure,' 'cause étrangère,' 'impossibility' (with or without epithets), 'frustration,' 'Wegfall der Geschäftsgrundlage'."[9]

Under the UNIDROIT Principles, it is Art. 7.1.7 that "covers the ground covered in common law systems by the doctrines of frustration and impossibility of performance and in civil law systems by doctrines such as force majeure, Unmöglichkeit, etc., but it is identical with none of these doctrines."[10] It reads:

UNIDROIT Principles Art. 7.1.7 (Force Majeure)

(1) Non-performance by a party is excused if that party proves that the non-performance was due to an impediment beyond its control and that it could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it or its consequences.

(2) When the impediment is only temporary, the excuse shall have effect for such period as is reasonable having regard to the effect of the impediment on the performance of the contract.

(3) The party who fails to perform must give notice to the other party of the impediment and its effect on its ability to perform. If the notice is not received by the other party within a reasonable time after the party who fails to perform knew or ought to have known of the impediment, it is liable for damages resulting from such non-receipt.

(4) Nothing in this article prevents a party from exercising a right to terminate the contract or to withhold performance or request interest on money due.

The concept of force majeure in UNIDROIT Principles Art. 7.1.7 corresponds to CISG Art. 79. Prerequisites for an exemption in either regime are almost identical to each other. A force majeure type of rule is also found in PECL Art. 8:108, which is also modelled on CISG Art. 79.[11] It reads:

PECL Art. 8:108 (Excuse Due to an Impediment)

(1) A party's non-performance is excused if it proves that it is due to an impediment beyond its control and that it could not reasonably have been expected to take the impediment into account at the time of the conclusion of the contract, or to have avoided or overcome the impediment or its consequences.

(2) Where the impediment is only temporary the excuse provided by this Article has effect for the period during which the impediment exists. However, if the delay amounts to a fundamental non-performance, the creditor may treat it as such.

(3) The non-performing party must ensure that notice of the impediment and of its effect on its ability to perform is received by the other party within a reasonable time after the non-performing party knew or ought to have known of these circumstances. The other party is entitled to damages for any loss resulting from the non-receipt of such notice.

There is an apparent similarity in the wording of the corresponding PECL provisions to CISG Art. 79 (or to UNIDROIT Principles Art. 7.1.7).[12] However, when read in conjunction with PECL Art. 8:101(2) which stipulates that "[w]here a party's non-performance is excused under Article 8:108, the aggrieved party may resort to any of the remedies set out in Chapter 9 except claiming performance and damages," a significant difference between the PECL approach and the CISG approach becomes clear: Unlike CISG Art. 79(5) which only expressly discharges damages and which "seems to warrant the right to claim performance even if performance has become permanently impossible,"[13] the excuse under PECL Art. 8:108 excludes, as stated in PECL Art. 8:101(2), not only damages but also the right to claim performance. In this respect, the implication under UNIDROIT Principles Art. 7.1.7 is similar to the PECL approach. UNIDROIT Principles Art. 7.1.7(4) specifies that force majeure does not prevent a party from the right to terminate the contract or withhold performance or request interest on money due, without mentioning, in what is not prevented by force majeure, the right to claim performance and damages. It is further clarified in the Comment on UNIDROIT Principles Art. 7.1.1 (Non-performance defined): "A party is not entitled to claim damages or specific performance for an excused non-performance of the other party [...]."[14]

In addition, it is to be mentioned that both UNIDROIT Principles and PECL, "widen the applicability of the exemptions outside pure instances of impossibility or force majeure by references to unreasonableness or unconscionability as well as to loyalty or the observance of good faith."[15] Specifically speaking, paragraphs (a) (b) of UNIDROIT Principles Art. 7.2.2 (and paragraphs (a) and (b) of PECL Art. 9:102(2) are very similar) regard impossibility and an unreasonable burden as grounds of exemption in cases of non-performance of non-monetary obligations. As for the relationship between the exemption under UNIDROIT Principles Art. 7.2.2 and the force majeure rule of UNIDROIT Principles Art. 7.1.7, it may be held that: "If the less strict criteria of Article 7.2.2 are met, the obligor is exempt from performing specifically, but he may still be liable in damages if he cannot prove an impediment in accordance with 7.1.7."[16]

Despite the differences, both the Convention and the UNIDROIT Principles or PECL have the same function in the sense that they each encourages "the universally held view that in certain circumstances, at least, a force majeure event should excuse an obligor from performance."[17]

3. Scope of Application

Textually, CISG Art. 79 sets forth a general cause of exemption for a party for "a failure to perform" "any of his obligations." It has been questioned, however, whether a seller that has delivered non-conforming goods is eligible to claim an exemption under CISG Art. 79.[18] This has particularly been questioned by persons of a common law background, where the possibilities of exemption in the case of non-conformity are unusual.[19]

This question generates controversy among scholars. Such controversy, for instance, has been noticed in [Germany 24 March 1999 Bundesgerichtshof [Federal Supreme Court]], a landmark decision in respect of the application of CISG Art. 79 which refers to scholars on both sides as below:[20]

"It may remain undecided whether CISG Art. 79 encompasses all conceivable cases and forms of non-performance of contractual obligations creating a liability and is not limited to certain types of contractual violations and, therefore, includes the delivery of goods not in conformity with the contract because of their defectiveness (compare Schlechtriem/Stoll, Kommentar zum einheitlichen UN-Kaufrecht, 2d ed. 1995, Art. 79 45-47; Staudinger/Magnus, Wiener UN-Kaufrecht, 1994, Art. 79 25-26; Piltz, Internationales Kaufrecht, Munich 1993, 4 217 et seq.; Herber/Czerwenka, Internationales Kaufrecht, Munich 1991, Art. 79 8; Schlechtriem, Internationales UN-Kaufrecht, Tübingen 1996, p. 164 et seq.), or whether a seller who has delivered defective goods cannot rely on Art. 79 CISG at all (compare Nicholas, Impracticability and Impossibility in the UN Convention on Contracts for the International Sale of Goods, in: Galston N.M./Smit H., International Sales, New York, Mathew Bender, 1984, Chapter 5 5.10 to 5.14; Tallon, in Bianca/Bonell, Commentary on the International Sales Law, Milan 1987 Art. 79 cmt. 2.6.2.; Honnold, J.O., Uniform Law for International Sales under the United Nations Convention, December 1982, Art. 79 N. 427; compare also Lautenbach, Die Haftungsbefreiung im internationalen Warenkauf nach dem UN-Kaufrecht und dem schweizerischen Kaufrecht, Doctor's Thesis of the University of Zürich, 1990 p. 33 et seq.; Keil, Die Haftungsbefreiung des Schuldners im UN-Kaufrecht, Doctor's Thesis of the law faculty of the Ruhr-University Bochum, Frankfurt am Main 1993, p. 18 et seq.). [...]."

More recently, the Court in [Germany 9 January 2002 Bundesgerichtshof [Federal Supreme Court]] again notes that: "It may remain open whether this rule [CISG Art. 79] can generally be applied to goods that do not meet contractual requirements."[21] Nevertheless, the above Court in [Germany 24 March 1999 Bundesgerichtshof [Federal Supreme Court]] has gone further to find that,[22]

"the [CISG] does not distinguish between an untimely delivery and a delivery of goods not in conformity with the contract. For both breaches of contract the same standard of liability applies."

That is to say, Art. 79 CISG also applies to the delivery of goods that do not meet the requirements of the contract. If one looks at the Convention one finds that the provision on defects in the goods is indeed expressed as an aspect of the obligation to perform under Art. 35: "The seller must deliver goods which are of the quantity, quality and description required by the contract [...]." There is therefore no ground for common lawyers, on the basis of a somewhat selective reading of the CISG legislative history, and perhaps overly influenced by their own domestic conceptions,[23] to argue their initial surprise at the idea of applying Art. 79 to the matter of defects. The only question is whether the requirement of an "impediment" excludes it. In light of the legislative history, the answer to this question should be in the negative. In other words, there may be cases where, e.g., the seller is not liable for defects in the goods if he can show that the defects were beyond his control, etc.[24] Indeed, as Tallon properly states in this regard:[25]

"The expression 'failure to perform' does not specify the nature of the non-performance. Accordingly, it may be total or partial, delayed or defective (as, for instance, when the terms of a contract that relates to packaging are forbidden by the law of the seller). The nature of the non-performance has, of course, repercussions on the effects of the exemption [...]. All the same, any failure to perform produces a certain exempting effect."

In other words, the term "failure to perform" in the sense of CISG Art. 79 is to be conceived here in the broadest sense of the word. Both the expression in present CISG Art. 79 and the reasoning from some innocent scholars lend clear and convincing support to an "expansive" reading of CISG Art. 79. Apart from late performance and non-performance it includes, in particular, non-conforming performance.[26] Furthermore, CISG Art. 79 explicitly refers to any obligation, no matter which party is concerned. The buyer and the seller are thus subject to the same conditions. This solution does not come as a surprise; it is in harmony with the global conception of the Convention. All the obligations of the buyer, such as they are spelled out in Art. 53, as well as all the obligations of the seller listed under Art. 30 and all the further obligations which may derive from the individual contract (Arts. 30 and 53 are not exhaustive), whether of major or minor importance, fall within the scope of Art. 79. Thus, this exemption may play in favor of either party. In a word, CISG Art. 79, in its general wording, applies to any sort of obligation generated by a contract of sale and relates to the obligations of both the seller and the buyer.[27]

In sum, any failure to perform, either defective performance or late performance or otherwise, may produce a certain exempting effect.[28] Moreover, an exemption applies to any obligation arising out of the contract.[29] Indeed, the definition of force majeure is necessarily of a rather general character. International commercial contracts often contain much more precise and elaborate provisions in this regard. The parties may therefore find it appropriate to adapt the content of these provisions so as to take account of the particular features of the specific transaction.[30] However, it cannot be inferred from such a general character that, as Tallon believes, "[t]he extensive interpretation of Article 79 is preferable as it creates uniformity."[31] As already mentioned at the outset, court decisions show a universal trend to a comparable restrictive interpretation.[32]

Such a restrictive trend has been evidenced by the fact that CISG Art. 79 has been invoked with some frequency in litigation, but with limited success.[33] Indeed, a restrictive interpretation of CISG Art. 79 has already been envisaged by the conditions specified thereunder, which the party must prove to have been fulfilled before the exemption would operate. These conditions will be discussed separately below.

4. Qualifications for Invoking the Exemption due to an Impediment

      4.1 In general

A literal analysis of CISG Art. 79(1) reveals the following four elements, which constitute the traditional components of force majeure[34] that would cumulatively qualify an exemption:

(i) an impediment beyond the defaulting party's control, which

(ii) could not have been reasonably taken into account by the defaulting party at the conclusion of the contract, or which (or the consequences of which)

(iii) could not have been reasonably avoided or overcome; and that

(iv) the defaulting party proves that the challenged non-performance was due to such an impediment.

Prerequisites for an exemption in UNIDROIT Principles Art. 7.1.7(1) or PECL Art. 8:108(1) are almost identical to CISG Art. 79(1). The conditions laid down for the operation of these articles are to the conditions traditionally required for force majeure. They are necessarily in general terms, given the great variety of fact situations to which they must apply. It is for the party which invokes it to show that the conditions are fulfilled.[35]

The above qualifications in CISG Art. 79(1) (or in UNIDROIT Principles Art. 7.1.7(1) or PECL Art. 8:108(1)) may, of course, be altered by the parties, as this is often the case in international contracts.[36] As Honnold notes in this respect,[37]

"[T]he Convention (Art. 6) gives overriding effect to the agreement of the parties. Contract provisions on impediments to performance have special value since impediments arise in a countless variety of circumstances and involve infinite gradations of difficulty and unpredictability. General legal rules, domestic or international, can scarcely provide clear and satisfactory answers to all these problems. Consequently, in important transactions and in a wide variety of standard contracts explicit provision is made for the consequences of serious impediments to performance. The contracts can (and do) take account of the conditions and needs presented by various types of transactions. [...]."

Under the rule expressed in CISG Art. 6, the parties may modify the allocation of the risk of impossibility of performance, either in general or in relation to a particular impediment (usages, especially in carriage by sea, may have the same effect).[38] But in the absence of such an express modification, only where the above four qualifications are satisfied, could a party successfully invoke an exemption under CISG Art. 79. Therefore, a detailed discussion on these four qualifications will be provided below, with a cross-reference made to the counterpart UNIDROIT Principles and PECL rules including their Official Comments.

      4.2 The novel term "impediment"

CISG Art. 79 was elaborated on a variegated background.[39] Significantly, however, the Convention avoided reference to similar domestic theories under such headings as "force majeure," "cause étrangère," "impossibility" (with or without epithets), "frustration," or "Wegfall der Geschäftsgrundlage," etc.

As a prerequisite to an exemption, CISG Art. 79(1) requires that a party's failure to perform be due to an "impediment" that meets certain additional requirements.[40] It is recalled that Art. 74(1) of ULIS used the word "circumstances" although the expression "temporary impediment" also appeared in ULIS Art. 74(2). The word "impediment" is all that emerged in the end from a lengthy attempt to escape from the elasticity and imprecision of the ULIS requirement that non-performance be "due to circumstances ..." and to formulate some more certain and objective criterion.[41] Under this change in terminology, Rimke believes that:[42]

"The CISG addresses this issue in Article 79 in an attempt to create uniformity and tackle the problem of changed circumstances on an international level. It avoids reference to existing concepts as it develops a system of its own."

By adopting the word "impediment," the Convention developed a system of its own, aiming at emphasizing the objective nature of the hindrance rather than its personal aspect.[43] It is important to stress that "the Convention has developed a concept of its own in regard to impediments, which cannot be directly traced back to any national law. This saves from borrowing from a domestic law in interpretation, which could be very misleading, especially when it comes to one's own domestic law."[44] CISG Art. 79 thus "preempts and displaces similar national doctrines."[45] Consequently, for instance, the Court in [Germany 14 May 1993 Landgericht [District Court] Aachen] holds that the application of CISG precludes the recourse to domestic law regarding Wegfall der Geschäftsgrundlage in German law, being this matter exhaustively covered by CISG.[46] Thus, in interpreting the concept of "impediment" we should, in the words of Honnold,[47]

"purge our minds of presuppositions derived from domestic traditions and, with innocent eyes, read the language of Article 79 in the light of the practices and needs of international trade."

However, on the other hand, the Convention does not define the word "impediment", and the legislative history casts little clear light on its "intended" meaning or scope.[48] Variations are therefore generated on what constitutes an "impediment" and it is concerned that:[49]

"This autonomy, illustrated by the lack of reference to accepted wording and concepts of domestic laws (force majeure, frustration, impracticability), renders the interpretation of Article 79 extremely difficult because one cannot resort to these laws as a guide."

Generally speaking, the term "impediment" is an elastic word [50] that covers every sort of event (natural occurrences, restraints of princes, acts of third parties).[51] It is impossible to enumerate all the events that constitute an impediment according to CISG Art. 79.[52] To some extent, the word "impediment" is indeed vague, but this degree of vagueness is unavoidably present in any such formula.[53] Indeed, even in domestic law it has been difficult to provide coherent answers to the problems that arise when unexpected difficulties prevent the performance of a contract.[54] At the utmost, one may refer to the traditional categories of force majeure, i.e., natural catastrophes (e.g., earthquakes, storms, etc.) and of the fait du prince which is gradually extending on account of the greater interference of States in international commercial relations (e.g., embargo, blockade, war and, more recently, export prohibitions).[55] Of course, the settings are diverse. They are only points on a continuum of difficulties with varying degrees of scope, severity and unpredictability. The applicable legal doctrines go under assorted labels - impossibility, Act of God, frustration, force majeure, failure of presupposed conditions.[56]

Of course, the fact that we define a given obstacle as a potential "impediment" to performance does not mean that a given non-performing party thereby qualifies for an Art. 79 exemption.[57] It is important to mention that such events shall not per se constitute impediments for the purposes of CISG Art. 79, since the characterization of an event as an impediment will depend upon the circumstances of each individual case.[58] A given event, e.g., the closure of the Suez Canal, may thus be considered as an instance of force majeure or frustration in one case and not in another depending on the time of the conclusion of the contract, the nature of the goods, etc.[59] Of determining relevance here is that an impediment must meet certain other conditions before it operates as an exemption in the sense of CISG Art. 79. As far as "impediment" is concerned, if the paragraph is read in the context of the strict liability approach of the Convention as a whole and in the light of the legislative history, Nicholas submits that the word must indicate a barrier to performance which is external to the party and the thing concerned.[60] Beyond this the main burden of CISG Art. 79(1), discussed separately below, must be that the party seeking to avail himself of this exemption could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract, or could not reasonably be expected to have avoided or overcome it or its consequences.

Practically speaking, one cannot expect the judge to spend too much time interpreting a text which is apparently clear.[61] As noted in the UNCITRAL Digest, some available decisions apparently have not focused on the question of what constitutes an "impediment" within the meaning of Art. 79(1). In certain other cases, although tribunals refuse to find an exemption using language suggesting that there was not an impediment within the meaning of Art. 79(1), it is often not clear whether the result was actually based on failure of the impediment requirement or on one of the additional elements going to the character of the required impediment (e.g., that it be beyond the control of the party claiming an exemption). The bulk of available decisions that deny a claimed exemption do so on the basis of requirements other than the impediment requirement, and without making clear whether the tribunal judged that the impediment requirement had been satisfied.[62]

What is actually the issue, as some legal systems readily admit, is the external character of the impediment with regard to the activity of the defaulting party; and, since it does not constitute a separate condition, it must be linked to the condition "beyond his control."[63] In this sense, the impediment in CISG Art. 79 may be referred to as events external to the party in breach which may be natural, social, or political events or physical or legal difficulties.[64] Thus, the following discussion will move on to the external character of the impediment.

      4.3 External character of the impediment: "beyond [the defaulting party's] control"

Bearing in mind the need for restrictive and objective interpretation, one may argue that only objective circumstances beyond the promisor's typical sphere of responsibility shall be considered as impediments within the meaning of CISG Art. 79.[65] The Convention expressly conditions the exemption under CISG Art. 79(1) to that the argued impediment be "beyond his [the defaulting party's] control".

This condition is based on the assumption that there is a typical sphere of control: a sphere within which it is objectively possible for, and can be expected of, the promisor to be in control.[66] Generally, the external character of the impediment may be defined as exterior to the defaulting party's activity. To the extent that the impediment relates to the defaulting party's activity, it is not "beyond his control."[67] Since, for example, a CISG obligator should always be deemed "in control" of his/her own business and financial condition in general, internal "excuses" connected with business operation (poor quality control, etc.) or financial management would never be held "beyond" that party's control.[68] Therefore, "events within the promisor's personal sphere of responsibilities and risks shall not be considered impediments for purposes of CISG Article 79."[69] On the other hand, where governmental regulations or the actions of governmental officials prevented a party's performance, it may be deemed an impediment beyond the control. For instance, in [Russian Federation 22 January 1997 Arbitration award 155/1996], the buyer who has paid for the goods is held exempt from liability for damages for failing to take delivery where the goods could not be imported into the buyer's country because officials would not certify their safety, hence a non-performance "due to circumstances beyond his control."[70]

In any event, a non-external impediment may never produce an exempting effect even though it meets the other requirements for a valid exemption.[71] Consequently, for instance, the Court in [Russian Federation 16 February 1998 High Arbitration Court], rejects the buyer's defense regarding the stolen payment, holding that this is not an impediment beyond the buyer's control under Art. 79 CISG.[72] More recently, the Court in [Germany 9 January 2002 Bundesgerichtshof [Federal Supreme Court]] states: "[Seller] did not sufficiently set forth the requirements of an exemption from the duty of compensation under Art. 79(1) CISG. [...]; in any case, [seller] did not show that the causes for the inactive lipase were outside its sphere of influence."[73] The Court in [Germany 24 March 1999 Bundesgerichtshof [Federal Supreme Court]] has commented further on the issue of control:[74]

"An exemption pursuant to Art. 79 CISG, upon which the Court of Appeals correctly based its decision, is not applicable because, in any case, the defectiveness of the vine wax was not outside defendant's control. It is, therefore, responsible for the consequences of a delivery of goods not in conformity with the contract.

"[...].

"Pursuant to CISG Art. 79, the seller's exemption from consequences of goods not in conformity with the contract can only be considered - if at all (citations omitted) - when the non-conformity cannot be deemed to be within the seller's control. Because the seller has the risk of acquisition (as shown), he can only be exempted under CISG Art. 79(1) or (2) (even when the reasons for the defectiveness of the goods are - as here - within the control of his supplier or his sub-supplier) if the defectiveness is due to circumstances out of his own control or out of each of his suppliers' control. The appeal cannot show this. Insofar as the appeal points out that the manufacturer, in 1994, used an inappropriate raw material possibly imported from Hungary during the production of the delivered vine wax, this is not relevant with respect to CISG Art. 79 because the manufacturer would be liable - and thus also plaintiff vis-à-vis defendant - for those product defects within its control."

Without further exploring other relevant cases, it may be generally concluded here:[75]

"The obligor is always responsible for impediments when he could have prevented them but, despite his control over preparation, organization, and execution, failed to do so. In this sense, the obligor 'guarantees' his ability to perform. If he wishes to restrict his liability, he must specify the particular impediments for which he will not be liable."

      4.4 Foreseeability of the impediment: "[the defaulting party] could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract"

To satisfy the requirements for an exemption under CISG Art. 79, a party's failure to perform must be due to an impediment that the defaulting party "could not reasonably be expected to have taken ... into account at the time of the conclusion of the contract." Indeed, most domestic laws adopt a similar rule. It is consistent with the basic idea that if the event were foreseeable, the defaulting party should, in the absence of any contrary provision in the contract, be considered as having assumed the risk of its realization.[76] For instance, if the refusal of a license were foreseeable at the time of the conclusion of the contract, it may thus be expected that the party in charge of obtaining the license should have arranged the insertion of a clause relating to the consequences of refusal. Otherwise, in such cases, one may say that it was at fault in not having foreseen it.[77]

Thus, both conditions - that the impediment was outside of the defaulting party's sphere of influence and that the impediment could not have been detectable - must be proved so that an excuse can operate. For instance, the Court in [Germany 9 January 2002 Bundesgerichtshof [Federal Supreme Court]] rules that, "as a precaution, that [seller] can only be freed from its obligation to pay damages for its failure to comply with the contract if it can prove that any lipase infestation of the delivered milk would not have been detectable, even upon the careful use of the necessary methods of analysis before any further processing, and (emphasis added) that a possible infestation in the manufacture of the powdered milk was based on grounds that were outside of its sphere of influence."[78] On the other hand, there is an implication that there might be cases where the obligor is liable even for impediments beyond his control, if such impediments were either reasonably foreseeable or known to him at the conclusion of the contract.

Indeed, failure to satisfy this foreseeability qualification has been frequently been cited as the reason for denying an exemption. For instance, in [Russian Federation 16 March 1995 Arbitration award 155/1994], it is held that the seller should bear responsibility for his failure to fulfill his obligations, "also because he did not prove that it could not be reasonably expected either that he would take such an impediment into account, when entering into the contract."[79] Similarly, it is stated in [Bulgaria 12 February 1998 Chamber of Commerce Arbitration award, Case 11/1996]: "The listed circumstances that caused the [buyer]'s desire to have delivery suspended do not correspond to the requirements outlined in Article 79 of the CISG. [...]. Such consequences are not unexpected."[80] Also, the Court in [Netherlands 2 October 1998 Arrondissementsrechtbank [District Court] 's Hertogenbosch] holds that the seller could not rely on Art. 79 CISG alleging that the Singaporean regulations are to be considered an impediment exempting the seller from performance, as the seller was well aware of such regulations before conclusion of the contract and therefore takes the risk of not being able to supply conforming goods.[81] More recently, the Supreme Court in [France 30 June 2004 Cour de Cassation] holds that the buyer's refusal to take delivery of goods was not exempt under Art. 79 CISG, because there was no evidence that the reduction of the repurchase price by the final customers was unforeseeable at the time of conclusion of the contract.[82]

Insofar the impediment was in existence even before the contract was concluded, it has to be proved, for the purpose of invoking exemption, that the party concerned neither knew nor ought to have been aware of it because otherwise he would have had to take it into consideration.[83] Several decisions have denied an exemption when the impediment was in existence and should have been known to the party at the time the contract was concluded. For instance, it is held in [ICC 1992 International Court of Arbitration, Case 7197] that the suspension of payment of foreign debts ordered by the Bulgarian Government is not a case of force majeure which prevents the buyer from opening the documentary credit. Because, in any case, the suspension had already been declared at the time of the conclusion of the contract and therefore the buyer could reasonably have foreseen the difficulties in opening the documentary credit.[84] Similarly, in [Bulgaria 24 April 1996 Chamber of Commerce Arbitration award 56/1995], although it is found that the public authority prohibition on exports of coal does represent an impediment beyond the seller's control, since the prohibition was already in force at the time of the conclusion of the contract, it is held that such prohibition is foreseeable and that the seller therefore is not exempted from liability under Art. 79 CISG.[85]

It seems that this foreseeability element is "the most difficult for the non-performing party to prove."[86] This is evident from the paucity of successful cases in this respect. The underlying reason may be that, as an author states in an interesting manner: "Anyone who has read a bit of history or who has lived for three or more decades of the twentieth century can foresee, in a general way, the possibility of war, revolution, embargo, plague, terrorism, hyper-inflation and economic depression, among the other horrors that have afflicted the human race. If one reads science fiction, one learns of the possibility of new terrors that have not yet afflicted us, but involve possibilities that are not pure fantasy."[87] It is similarly noted in the Secretariat Commentary that: "All potential impediments to the performance of a contract are foreseeable to one degree or another. Such impediments as wars, storms, fires, government embargoes and the closing of international waterways have all occurred in the past and can be expected to occur again in the future."[88]

Arguably, the more sophisticated and widespread international commerce becomes, the more difficult it is to say that a party could not reasonably have been expected to take an impediment into account.[89] Because nearly all potential pediments to performance - even wars, fires, embargoes and terrorism (let alone late trains and bad weather) - are increasingly "foreseeable" in the modern commercial environment, this is often the most difficult Art. 79 element to prove. According to Lookofsky & Flechtner, this seems fair enough:[90]

"Article 79 is, after all, a gap-filling rule, and the party damaged by the fruition of a foreseeable contingency might have protected himself by a more lenient (express) force majeure clause that specifically granted exemption if the (foreseeable) impediment occurred."

In the end, most of the phenomena that might become impediments are foreseeable. It is, however, not expected that such events are taken into account which, given general foreseeability, are not expected to materialize before the contract is performed and/or if they do nevertheless, they are at least not expected to have an effect on it.[91] Moreover, one should note that the party damaged by a foreseeable contingency will, of course, deserve protection if the contract in question contains a force majeure clause which re-allocates that particular risk.[92] As a general rule, one should be particularly reluctant to accept it when there is no gap or lacuna in the contract and when the intent of the parties has been clearly expressed. Caution is especially called for, moreover, in international transactions where it is generally much less likely that the parties have been unaware of the risk of a remote contingency or unable to formulate it precisely.[93] But, on the other hand, assuming the parties' contract is silent on such a re-allocation of risks, an impediment in general will not, in and of itself, lead to a liability exemption under the CISG. That is to say, "where neither the explicit nor the implicit terms of the contract show that the occurrence of the particular impediment was envisaged, it is necessary to determine whether the non-performing party could reasonably have been expected to take it into account at the time of the conclusion of the contract."[94]

In determining the foreseeability of a claimed impediment, one should further note that it may be relevant whether the parties could have taken into consideration not just the event itself but the date or period of its occurrence. A price control for some period may be foreseeable, but it could be an excuse if the period for which it is kept in force was not foreseeable by the parties. Equally it is stated that the test is "reasonable" foreseeability: that is to say, whether a normal person, placed in the same situation, could have foreseen it without either undue optimism or undue pessimism. Thus, in a particular area cyclones may be foreseeable at certain times of year, but not a cyclone at a time of year when they do not normally occur; that would not be reasonably foreseeable by the parties.[95] Therefore, the expectations of the impediment is to be "further qualified in stipulating that they will have to be reasonable, i.e., that it is proceeded in the customary way, like comparable parties would do. Thereby, an objectivization is effected."[96] In this respect, Tallon summarizes the guidance:[97]

"The impediment must be reasonably foreseeable. The reference is thus the reasonable person, the bon père de famille, in accordance with the general concept of the Convention, i.e., halfway between the inveterate pessimist who foresees all sorts of disasters and the resolute optimist who never anticipates the least misfortune (emphasis added). The impersonal tone of the text of the Vienna Convention must be noted as contrasting with ULIS which referred to the intention of the parties (this is even clearer in the French version which uses the formula 'un empêchement ... qu'on ne pouvait raisonablement attendre'). Everything here is a matter of measure, and it seems difficult to provide more details in a general text. It will be left to the judge or arbitrator to decide depending on the circumstances of the case (for a similar view see Secretariat's Commentary, Official Records, I, 55). Furthermore, foreseeability should relate not only to the impediment per se but also to the time of its occurrence. The closure of the Suez Canal was, for example, foreseeable in the more or less distant future. But the defaulting party could only be exempted if it were reasonably unforeseeable that the impediment should occur during the course of the contract. Foreseeability must be appreciated at the time of the conclusion of the contract. This solution is reasonable and generally acknowledged by domestic laws."

Indeed, this condition describes in a very flexible manner the criterion of foreseeability.[98] In the final analysis, whether the claimed impediment was foreseeable is a question of fact for the jury.[99] That is to say, the determination of this foreseeability condition can only be made by a court or arbitral tribunal on a case-by-case basis.[100] The case law supports the following notion of foreseeability:[101]

An event so unlikely to occur that reasonable parties see no need explicitly to allocate the risk of its occurrence, although the impact it might have would be of such magnitude that the parties would have negotiated over it, had the event been more likely.

      4.5 Unavoidability of the impediment: "[the defaulting party] could not reasonably be expected to have avoided or overcome [the impediment] or its consequences"

For an exemption to be successfully invoked, the impediment must also be unavoidable, in other words, the defaulting party, as framed in CISG Art. 79(1), "could not reasonably be expected to have avoided or overcome [the impediment] or its consequences." In respect of this condition, it is stated in the Secretariat Commentary:[102]

"Even if the non-performing party can prove that he could not reasonably have been expected to take the impediment into account at the time of the conclusion of the contract, he must also prove that he could neither have avoided the impediment nor overcome it nor avoided or overcome the consequences of the impediment. This rule reflects the policy that a party who is under an obligation to act must do all in his power to carry out his obligation and may not await events which might later justify his non-performance (emphasis added). This rule also indicates that a party may be required to perform by providing what is in all the circumstances of the transaction a commercially reasonable substitute for the performance which was required under the contract."

Thus, even an unforeseeable impediment exempts the non-performing party only if he can prove that he could neither avoid the impediment, nor by taking reasonable steps, overcome its consequences.[103] In other words, this unavoidability requirement must be met even in cases where the impediment could not reasonably be foreseen. It thus represents a potentially formidable barrier to a would-be exemptee, particularly in the common case of generically defined obligations.[104] According to Enderlein & Maskow, it is in line with the general liability of the parties in regard to the obligations they have assumed that they have to counteract impediments. The two main forms of doing so are mentioned here:[105]

"First, disturbances will have to be avoided. In order to achieve this, measures will have to be taken against such impediments which are generally looming ahead but cannot, a priori, be put in relation to the fulfilment of concrete obligations. These include measures of protection against accidents and specifically fire; a factory management which guarantees peaceful labour relations; etc. Above all, measures have to be taken against disturbances which are clearly approaching.

"Second, where a disturbance has already revealed itself, it has to be overcome as speedily as possible invoking, for instance, remedies against hindering decisions by the State insofar as they have a chance of succeeding. It is the requirement of overcoming which is aimed at removing the consequences of disturbances. Hence, the effects of accidents have to be removed fast. No clear distinction can be made between avoidance and overcoming when it comes to looking for a replacement for a supplier lost."

It must be emphasized that, "both conditions - that the party could not have avoided it and could not have overcome it - must be fulfilled before an excuse can operate"; in other words, "the party to be excused must prove that it could not have done either."[106] Here the attention should be focused on the behavior of the defaulting party. To "avoid" means taking all the necessary steps to prevent the occurrence of the impediment. In most cases, it will coincide with the idea of "beyond his control." To "overcome" means to take the necessary steps to preclude the consequences of the impediment. It is closely associated with the condition of the external character of the impeding event.[107]

In no event, however, should the promisor be expected to risk his own existence by performing his obligations at all costs.[108] What is required here is that a party who is under an obligation to act must do all in his power to carry out his obligation.[109] In this respect, the Comment on the counterpart PECL Art. 8:108 is of particular mention:[110]

"One cannot expect the debtor to take precautions out of proportion to the risk (e.g. the building of a virtual fortress) nor to adopt illegal means (e.g. the smuggling of funds to avoid a ban on their transfer) in order to avoid the risk."

Again, the yardstick used to measure the efforts of the party concerned is what can reasonably be expected from him. And that is what is customary, or what similar individuals would do in a similar situation. The exemption is thus granted when efforts would have been necessary that go beyond the former.[111] Thus, the basis of reference is the same as for unforeseeability, i.e., the reasonable person. In this context, with both the foreseeability condition and the unavoidability condition read together, the concept of CISG Art. 79 may be referred to as,[112]

"exonerations for events which a reasonable person in the same situation was not bound (could not be expected) to take into account or to avoid or to overcome."

This reasonable criterion regarding the unavoidability requirement is, however, to a degree uncertain, because whether an event could have been reasonably avoided or its consequences overcome depends on the facts.[113] Here again, a case-by-case analysis is required. If an object is lost at sea and can be fished out in good condition although at great cost, the final solution will not be the same if the object were a highly valuable sculpture or merely a machine tool. Thus, everything is a question of measure.[114]

      4.6 Causality between the impediment and the non-performance

The last, but not the least, condition relates to the causal element. The non-performance of the contract must be "due to" the impediment. Indeed, this causation requirement is even deemed the decisive prerequisite for an impediment that already cumulatively fulfils the above conditions (sections 4.2 to 4.5) to be taken into consideration.[115]

This causality condition, according to Tallon, "is logical. The seller cannot avail himself of an event, e.g., the burning of his warehouse, which occurred after he has refused to perform the contract. Non-performance in this case is due to his prior refusal to perform, not to the fire. Of course, it may sometimes be difficult to identify the precise cause of the failure as, for example, when several causes are invoked, such as the impediment and the act or omission of one of the parties. Since this is usually the case when a problem of causality is raised, the solution will depend on the subjective appraisal of the judge."[116]

In such an appraisal, however, controversy arises as to what theory shall prevail. While, for instance, Tallon argues that "the exempting event must necessarily be the exclusive cause of the failure to perform";[117] Enderlein & Maskow, on the contrary, believe that "it cannot be required that the impediment is the exclusive cause of a breach of contract;" according to them, the impediment should also be accepted when a cause overtakes another cause.[118] It seems that the following remarks by Enderlein & Maskow are more persuasive:[119]

"It is decisive, [...], whether the impediment lastly has caused the breach of contract. If this is so, it consumes other breaches of contract for which there are no grounds for exemption insofar as those no longer appear independently."

Moreover, as a component of the causality requirement, it is to be mentioned that CISG Art. 79 also confronts "the thorny problem of determining which party bears the burden of an unexpected barrier to performance."[120] Several decisions assert that CISG Art. 79(1) - in particular the language indicating that a party is exempt "if he proves that the failure [to perform] was due to an impediment beyond his control . . ." - expressly allocates the burden of proving the requirements for exemption to the party claiming the exemption. The approach and/or language of several other decisions strongly implies that the burden of proving the elements of an exemption falls to the party claiming the exemption.[121] On the other hand, however, one should note that the burden of proving the existence of the claimed non-performance remains on the part of the party challenging the non-performance, i.e., the party who was to receive the performance. In this respect, the Court in [Italy 12 July 2000 Tribunale [District Court] Vigevano], a leading case in respect of burden of proof under the Convention, grapples with the spirit of the Convention in stating that:[122]

"The Convention's general principle on the burden of proof seems to be ei incumbit probation qui dicit, non qui negat: The burden of proof rests upon the one who affirms, not the one who denies. Article 79 affirms such a rule when it provides that a breaching party has to prove that its failure to perform was due to an impediment beyond its control. In so providing, Article 79 implies that proof of the breach should be offered by the other party - i.e., the party who was to receive the performance. A corollary of this principle, affirmed many times by foreign courts, is that objections must be proved by the party who raises them [...]." (citations omitted)

In short, the burden of proof as regards liability exemption must be shouldered by the party who seeks the exemption; this means that the non-performing party remains liable unless he proves that a series of "conditions" (above sections 4.2 to 4.5) are fulfilled.[123] That is to say, the party seeking exemption has the burden of proving that the requirements set forth in CISG Art. 79(1) are met.[124] However, it is to be stressed that:[125]

"The force majeure must have come about without the fault of either party. There will be no excuse if an unforeseeable event impedes performance of the contract when the event would not have affected the contract if the party had not been late in performing."

Thus, for instance, the Tribunal in [Bulgaria 24 April 1996 Chamber of Commerce Arbitration award 56/1995] denies the seller's exemption claim, reasoning that the seller was already in default when the claimed strike occurred, thus excluding any later reliance on force majeure.[126] At the same time, one should also particularly note that the absence of fault cannot, in itself, give rise to any exemption since the Convention sets aside the system of liability based on fault. What is meant is that exemption will not be granted if the defaulting party fails to behave as required under the contract, including the implicit obligation of good faith. This would be the case if a governmental license is refused as a result of negligence on the defaulting party's part (e.g., because he failed to apply properly for such a license: see Art. 54 of the Convention).[127] Indeed, the general rule underlying is that:[128]

"An important restriction is that a change in circumstances will not be taken into account if it occurred during a delay in performance of the person alleging application of the doctrine, this because the principle is based on the 'good faith' concept."

Nevertheless, it seems somewhat reasonable to also argue that: "When the impediment occurs during the delay, its causality for the breach of contract is given only if it had an effect in the case of delivery within the period prescribed."[129]

Additionally, it is to be mentioned that the language of CISG Art. 79(1) also establishes that questions concerning the burden of proof are matters within the scope of the Convention, thereby that such questions are to be resolved pursuant to CISG Art. 7(2) as an issue covered but not expressly dealt with in the Convention.[130]

5. Special Requirements for Exemption Involving Third Party

      5.1 Basic ideas underlying CISG Art. 79(2)

CISG Art. 79(2) deals with the special case of non-performance by a third party engaged by the defaulting party to perform the whole or part of the contract. This is a novel provision since ULIS contained no similar rule. According to Tallon, it is the response to the increasing development of sub-contracting. The term sub-contractor, used in the initial draft was finally deleted as some legal systems ignore it while others use it in a specific sense.[131] It was replaced by the present paraphrase "a third person whom he [the defaulting party] has engaged to perform the whole or a part of the contract."

It often happens that the non-performance of a party is due to the non-performance of a third person.[132] In this sense, it is to be welcomed that the CISG, by contrast to Art. 74 ULIS, directly bears on the problem of exemption where a breach of contract is caused by a third party.[133] Where it applies, CISG Art. 79(2) demands that the requirements for exemption under Art. 79(1) be satisfied with respect to both the party claiming exemption and the third party before an exemption should be granted. This is so even though the third party may not be involved in the dispute between the seller and the buyer (and hence the third party is not claiming an exemption), and even though the third party's obligations may not be governed by the Convention.[134] CISG Art. 79(2) therefore increases the obligor's liability for third persons who fulfill contractual obligations directly to the obligee, for example, subcontractors who are engaged by the seller to perform directly to the buyer.[135]

In theory, according to Tallon, the solution is simple. Non-performance due to a sub-contractor does not in itself exempt the defaulting party, even if all the requirements set forth in Art. 79(1) are met: the impediment must also exempt the sub-contractor. Thus, e.g., in the case of the sale of a machine to be manufactured for which the seller sub-contracted the manufacture of a part, the seller may only be exempted if the sub-contractor does not deliver the part and if the cause of the non-delivery constitutes an impediment or a case of force majeure (e.g., the subcontractor's factory was destroyed by an earthquake). Put it another way, exemption may only be attained if the requirements set forth in Art. 79(1) are fulfilled with regard to both the main party and the sub-contractor. Moreover, the seller must prove that he was unable to obtain the missing part elsewhere (especially when specific rather than generic goods are concerned) and that the default of the sub-contractor was unforeseeable (at the time of the conclusion of the sub-contract). In short, the seller is liable for the sub-contractor's non-performance except in the case of total impossibility.[136]

      5.2 Scope of application of CISG Art. 79(2): sub-contractor

The special requirements imposed by CISG Art. 79(2) increase the obstacles confronting a party claiming exemption, so that it is important to know when it applies. A key issue, in this regard, is the meaning of the phrase "a third person whom he [the party claiming exemption] has engaged to perform the whole or a part of the contract."[137]

The meaning of this phrase, however, is not entirely clear. In particular, it is questionable whether a supplier of the seller falls within CISG Art. 79(2). In this respect, the legislative history behind Art. 79 suggests, as Jenkins notes, that the third party must be more than the seller's general supplier. While not agreed to as the exclusive or sole source, the third party must stand in a delegated contractual relationship such as a subcontractor.[138] Flambouras presents a similar view and further clarifies this regard by stating that:[139]

"With regard to the meaning of 'third person', the history of CISG Article 79 suggests that it only covers persons who are acting independently and are neither within the promisor's organizational sphere [e.g. his own staff] nor under his responsibility (emphasis added). Although such definition appears quite simple, it is doubtful whether it includes the suppliers of the seller. It is suggested that the seller's suppliers should not be considered third persons for the purposes of CISG Article 79(2), since such persons simply create the preconditions or assist in the preparation for the performance of the promisor's obligation without, however, performing all or part of the actual contract (as CISG Article 79(2) requires) (emphasis added). [...]."

In short, as the Secretariat Commentary clearly states:[140]

"The third person must be someone who has been engaged to perform the whole or a part of the contract. It does not include suppliers of the goods or of raw materials to the seller."

As a balance to the obstacles increased confronting a party claiming exemption, the conditions for the application of CISG Art. 79(2) are very restrictive. First of all, the sub-contract must really exist, i.e., there must be an organic link between it and the main contract. The defaulting party must have asked a third person to perform some task connected with the main contract and the latter should know that his action is a means of performing the main contract. The solution provided by Art. 79(2) can only be justified by the link which binds the two contracts. Furthermore, the sub-contractor must be legally independent of the party to the main contract. In any event, the task performed by the third party must relate to the performance of the particular contract only. The general supplier (or manufacturer) of goods or raw materials is not a third party according to Article 79(2), as his task is to provide products for a wide range of purposes to a wide range of clients. These materials moreover often constitute fungible goods, the destruction of which cannot, as a rule, lead to exemption. The assignment of these goods to a specific purpose, however, creates the link without which Article 79(2) is inapplicable.[141]

A restrictive interpretation has been further supported in case law. For instance, the Tribunal in [Germany 21 March 1996 Hamburg Arbitration award] suggests that CISG Art. 79(2) applies when the seller claims exemption because of a default by a "sub-contractor," but not when the third party is a "manufacturer or sub-supplier."[142] Furthermore, the Court in [Germany 31 March 1998 Oberlandesgericht [Appellate Court] Zweibrücken] holds that, even if the seller has acted only as an intermediary of his supplier, the supplier in such a case could not be regarded as a third party according to Art. 79(2) of the CISG.[143]

Similarly, when a carrier comes at hand, according to the Court in [Switzerland 10 February 1999 Handelsgericht [Commercial Court] Zürich], such a carrier, in cases where the carriage specifically does not belong to the defaulting party's contractual obligations, is not a "third person" within CISG Art. 79(2). The Court rules there:[144]

"Under the Vienna Sales Law, a party is principally liable for the non-performance of a contract, which was caused by the conduct of a third party that the party engaged for the performance of the contract, unless one of the exemptions of Art. 79 or 80 CISG is given. It is therefore a requirement [of CISG Art. 79(2)] that the third person was engaged for the performance of the contract, i.e., that he performs one of the obligations described by Art. 31 CISG as forming the content of the contract (emphasis added).

"As was determined above, the carriage of the goods [as in the case at hand] specifically does not belong to the seller's contractual obligations (emphasis added). Thus, by virtue of Art. 31(a) CISG, the [seller] is not liable for the mistakes of the carrier to whom he handed over the goods for transmission to the [buyer]. The [seller] fulfilled his delivery obligation by handing over the goods to the first carrier. [Seller] therefore did not engage the forwarding agent 'for the performance' of his delivery obligation. In this context, the carriers are not vicarious agents in the meaning of Art. 79(2) CISG (emphasis added)(citation omitted). The [seller] is therefore not responsible for the carrier's miscellaneous mistakes."

On the contrary, when the seller is obligated to carry out the freight under the not infrequent international trade terms such as CIF or CIP, then the carrier in such a case would usually fall within the scope of CISG Art. 79(2), i.e., a third party whom the seller engaged to transport the goods. But the issue seems to be more problematic where the seller is obligated to arrange for the carriage under terms such as CIF or CIP. In such cases, it remains complex whether those usages usually exempting the carrier equally exempt the seller. With such issues open for further discussion, it may be generally concluded here in respect of the "third person" within the meaning of CISG Art. 79(2) that:[145]

"Although more comprehensive in the types of third parties, the availability under the Convention is more restrictive because of the scope of impediment necessary to establish the right to an exemption."

      5.3 Three situations to be distinguished in applying CISG Art. 79

In respect of the categories of persons involved in the performance of the contract, apart from the actual parties to it, most commentators distinguish three groups: (a) the employees of the parties; (b) those, who on the basis of relevant contracts with one of the contracting parties, create the general prerequisites for the party in question to conduct his business (manufacturer or supplier); and (c) those who, as described in CISG Art. 79(2), are engaged to perform whole or a part of the contract.[146]

Schlechtriem suggests that the three situations must be distinguished as follows in the application of CISG Art. 79:[147]

   -    First, the obligor is always responsible for his own personnel, as long as he organizes and controls their work. Deficiencies and poor performance caused by individual workers, therefore, do not exempt the seller from liability.
 
   -    Second, where third persons are involved, the seller's liability depends on whether he engaged these persons in fulfillment of his contractual obligations to the other party. If he did so, the obligor can only be exempted where the failure was, for the obligor himself, unforeseeable and beyond his control (Art. 79(2)(a) in conjunction with Art. 79(1)) and the third party personally meets the requirements for exemption of Art. 79(1) (Art. 79(2)(b)).
 
   -    Finally, Art. 79(1) remains the controlling provision in cases where the third party's performance is a mere precondition for the fulfillment of the obligor's obligations, i.e., where a third party does not directly fulfill the obligor's duty to the obligee.

Every party is responsible for the conduct of his employees, at least where the latter are used in the organization of contract performance and where their behavior is concerned.[148] But only a vicarious agent such as a sub-contractor, which can be defined as taking charge of the whole or a part of the contract performance, would fall within CISG Art. 79(2). When a third party, such as a subcontractor of the defaulting party, falls within CISG Art 79(2) it does not suffice that the defaulting party who is claiming an exemption himself satisfies the qualifications specified in CISG Art. 79(1), but it is also necessary for the third party to personally meet those qualifications. By contrast, in cases where it is a third party such as a general manufacturer or supplier or the carrier in particular cases where the defaulting party claiming exemption is not obligated to the carriage, when such a third party fails to perform, the defaulting party does not have to prove that there were grounds for the exemption of the third party, but only that this was the case in regard to himself.

It is true that the defaulting party does not answer for a general manufacturer or supplier in the same measure as he does for a sub-contractor or his own staff.[149] Such a differentiation of the rule aims toward finding proper solutions for different circumstances.[150]

      5.4 The necessity of imposing a particular rule as CISG Art. 79(2)

As mentioned above in section 5.2, CISG Art. 79(2) obviously contemplates, in principle at least, a considerable tightening of the limits of the excuse. Therefore, as a balance, the scope of application of CISG Art. 79(2) is confined to a sub-contractor, and this was the word used in the Working Group's draft. The present formulation, "a third person whom he has engaged to perform the whole or a part of the contract," was adopted because the term "sub-contractor" seemed likely to cause difficulty in some systems. But the intended meaning was the same.[151] Thus, as discussed above in section 5.3, a distinction mainly envisaged under CISG Art. 79(2) is that between a sub-contractor and a general supplier. It has to be admitted, however, that the distinction between supplier and sub-contractor is not always easy. Often this question can only be answered considering the function of the rule.[152]

However, when we come to a careful examination of the "true" function, it appears that such a distinction would make little difference in qualifying an exemption. I will demonstrate this by examining the actual effect of the rule as apposed to its assumed function. The assumed function of CISG Art. 79(2), which has become one of the more misunderstood and controversial CISG provisions,[153] is to increase the defaulting party's liability for a third party, thereby obstacles confronting the former who claims exemption are increased as well. As a balance, therefore, the "third person" within CISG Art. 79(2) is confined to a person "whom he [the defaulting party] has engaged to perform the whole or a part of the contract," such as a subcontractor of the defaulting party. To sum up, on the one hand, it appears that non-performance of a third person (supposing one within the meaning of CISG Art. 79(2)) will seldom lead to the exemption of the party to the main contract; that party will remain liable for the failure to perform, as the guarantor of the sub-contractor's activity (nothing, however, should prevent him from initiating an action against the third party).[154]

On the other hand, as the Court in [Germany 31 March 1998 Oberlandesgericht [Appellate Court] Zweibrücken] suggests, even where a general manufacturer or supplier who could not be regarded as a third party within CISG Art. 79(2) is concerned, the defaulting party is still liable for the non-delivery or non-conformity of the goods, even if the latter has acted only as an intermediary of the former.[155] That is to say, non-performance by a general supplier or manufacturer of goods would not constitute the kind of impediment necessary for the seller to qualify individually under article 79.[156] It is further clarified in the appeal [Germany 24 March 1999 Bundesgerichtshof [Federal Supreme Court]] (affirming [Germany 31 March 1998 Oberlandesgericht [Appellate Court] Zweibrücken], although on somewhat different reasoning):[157]

"The possibility of exemption under CISG Art. 79 does not change the allocation of the contractual risk. According to the [CISG], the reason for the seller's liability is that he has agreed to provide the purchaser with goods that are in conformity with the contract. If the supplier's (or suppliers') breach of the contract is a general impediment within the meaning of CISG Art. 79 at all, it is generally an impediment that the seller must avoid or overcome according to the content of the contract of sale (emphasis added). This follows the typical meaning of such a contract (citations omitted). From the buyer's point of view, it makes no difference whether the seller produces the goods himself - with the consequence that the non-performance is generally in his actual control so that, as a rule, a dispensation pursuant to CISG Art. 79(1) is generally excluded - or whether the seller obtains the goods from suppliers (emphasis added). [...]. The appeal does not indicate that the parties agreed to a different allocation of risk at the formation of the contract, nor is this otherwise apparent."

Thus, under either the general rule of CISG Art. 79(1) or the particular rule of CISG Art. 79(2), the scarcity of a successful claim of exemption is the same. A more detailed analysis, according to Enderlein & Maskow, produces the result that the differences between the two paragraphs are not that great.[158] Indeed, according to Lookofsky, one might wonder why any "special" rule was needed to cover this particular kind of "excuse." Clearly, in those cases where the "double force majeure" solution set forth in CISG Art. 79(2) applies - in other words, in those cases where a party's excuse is deemed due to the failure of a "third person" who falls within CISG Art. 79(2) - it should be even more difficult for the non-performing party (seller or buyer) to obtain an exemption than if the situation were judged (solely) in accordance with the rule in CISG Art. 79(1). Then again, since the general rule in CISG Art. 79(1) should itself be construed as a very narrow ("safety-valve") provision, the possibility of differing interpretations of the scope of the phrase "third person" in CISG Art. 79(2) need not lead courts and arbitrators to different results in "exemption" cases falling within the overall ambit of CISG Art. 79.[159]

As inspired by both the comparison by Enderlei & Maskow or the observation of Lookofsky and the leading ruling in the above [Germany 24 March 1999 Bundesgerichtshof [Federal Supreme Court]] (that from the buyer's point of view, it makes no difference whether the seller produces the goods himself or he obtains the goods from his suppliers) as well as evident from the paucity of successful cases under either CISG Art. 79(1) or Art. 79(2), I am ready to distill the conclusion that, from the point of view of the other party who was to receive the performance from the defaulting party claiming exemption, it makes no difference:

(i) whether the defaulting party performs himself (or via his own staff) - with the consequence that the non-performance is generally in the defaulting party's actual control so that, as a rule, a dispensation pursuant to CISG Art. 79(1) is generally excluded; or

(ii) whether the defaulting party's performance is generally preconditioned by a third party such as a general manufacturer or supplier or the carrier (in cases where the defaulting party claiming exemption is not obligated to the carriage) - in which case, even if the breach of such a third party meets, in regard to that third party, the qualifications of CISG Art. 79(1) at all, it is generally an impediment that the defaulting party must avoid or overcome according to the content of the contract so that, actually, a dispensation pursuant to CISG Art. 79(1) is excluded; or

(iii) whether his performance is specifically subcontracted to a third party within the meaning of CISG Art. 79(2) - in which case, the defaulting party's liability for the third party is increased and thereby obstacles confronting the party claiming exemption are increased so that, more scarcely, could the exemption of the defaulting party to the main contract be relied on the non-performance of that third party and therefore, again, a dispensation pursuant to CISG Art. 79(2) is excluded.

In each of the above cases, it appears that the defaulting party's claim of an exemption will seldom be established, evidencing a universal trend to a comparable restrictive interpretation of force majeure events.[160] Thus, the differentiation of CISG Art. 79(2) from Art. 79(1) is somewhat illusory and the increase of liability or obstacles thereunder are necessary. Consequently, neither UNIDROIT Principles Art. 7.1.7 nor PECL Art. 8:108 sees the necessity to contain a similar rule regarding the exemptions where a third party is involved. In this respect, PECL Art. 8:107 helps understand this non-inclusion.[161] It states that: "A party which entrusts performance of the contract to another person remains responsible for performance." As further stated in the companying Comment:[162]

"The basic principle is that if a party does not perform a contract personally but entrusts performance to a third person, it remains nevertheless responsible for the proper performance of the contract vis-à-vis the other party. The internal relationship between the party and the third person is irrelevant in this context (emphasis added). The third person may be subject to instructions of the party, such as an employee or an agent [or a general manufacturer or supplier]; or he may be an independent subcontractor."

6. The Focus on an Assessment of the Risks

      6.1 In general

Many decisions have suggested that the application of CISG Art. 79 focuses on an assessment of the risks that a party claiming exemption assumed when it concluded the contract. The decisions suggest, in other words, that the essential issue is to determine whether the party claiming an exemption assumed the risk of the event that caused the party to fail to perform.[163]

This is particularly true for the qualification "beyond his control" (above section 4.3) and the foreseeability qualification (above section 4.4). Above all, in requiring that the impediment must be beyond the control of the party concerned, the scope of risk of the latter is determined, though only roughly.[164] In substance, the obstacle must be something outside the debtor's sphere of control. The risk of its own activities, it must bear itself. Thus, the breakdown of a machine, even if unforeseeable and unpreventable, cannot be a qualified exempting impediment and this avoids investigation of whether the breakdown was really unforeseeable and the consequences unpreventable.[165] Similarly, the "foreseeability" requirement is also a key element in the overall Convention allocation of risk.[166] The requirement that the impediment must be reasonably unforeseeable is consistent with the basic idea that if the event were foreseeable, the defaulting party should be considered as having assumed the risk of its realization.[167] In other words, if there is a realistic risk of an impediment to performance and the contract is nevertheless unconditionally entered into, the risk of the impediment has been assumed and exemption cannot be successfully claimed.[168] But it is to be stressed that one cannot expect the debtor to take precautions out of proportion to the risk in order to avoid or overcome the impediments (above section 4.5).[169]

The risk analysis approach to exemption under CISG Art. 79 is also evident in cases raising issues concerning the relationship between Art. 79 and risk of loss rules of CISG Arts. 66 to 70.[170] As a rule, the loss has to be sustained by the party who bore the risk at the moment the force majeure occurs. This is emphasized in [Hungary 10 December 1996 Budapest Arbitration award Vb 96074], where the Court rules:[171]

"The Court of Arbitration came to the conclusion that the risk and the ownership has passed to Buyer . . . in accordance with the Contract at Kladovo. The [Buyer] could not exculpate itself proving the damage is due to an act or omission of Seller or he could not either prove Seller had known about the re-export intent of [Buyer]. In the opinion of the Court of Arbitration this means the damage caused by force majeure has to be borne by the party where the risk is at the moment the force majeure occurs (emphasis added). The Court of Arbitration finds it necessary [to] point out that the risk of the freight has to be borne by the Buyer unless the Contract of the parties or the applicable law otherwise provides (Art 67 of the Vienna Convention). Therefore, the Court of Arbitration stated that the claim of the Claimant is well founded and obliged [Buyer] to pay the Claimant the US $93,127 principal sum."

On the other hand, where a seller complied with its obligations under CISG Art. 31 by timely delivering goods to the carrier (so that, presumably, risk of loss had passed to the buyer), the Court in [Switzerland 10 February 1999 Handelsgericht [Commercial Court] Zürich] finds that the seller was exempt under Art. 79 from damages caused when the carrier delayed delivering the goods.[172] At this juncture, it seems advisable, in light of the present provision of CISG Art. 79(2), to keep in mind that in cases where the seller is obligated to the carriage and thereby the carrier is a "third person" in the meaning of CISG Art. 79(2) (i.e., the subcontractor of the seller), the seller must, for his purpose to successfully invoke an exemption, further prove that the carrier's delay would also satisfy, assuming that Art. 79(1) is applicable to the carrier, the qualifications specified in CISG Art. 79(1).

Since the two questions are closely linked, CISG Art. 79 therefore must be read in conjunction with the provisions that relate to the theory of risks, namely Arts. 66 to 70 of the Convention.[173] In any event, the Convention's rules on loss during transit (Chap. IV, Arts. 66-70) apply even though the goods are lost as a consequence of unpredictable disasters such as hurricane, war or government seizure - a point that is relevant to emphasize the line of demarcation between the risk rules of Chapter IV and the exemption rules of Art. 79.[174] However, the exemption rule of CISG Art. 79 is often mixed with the rules allocating risk under CISG Arts. 66 to 70. In respect of the relationship, it may be said that in applying the former, it is a consideration that whether the party claiming an exemption assumed the risk of the event that caused its failure to performance. In such a consideration, the latter rules (CISG Arts. 66 to 70) will play a determining role in allocating the risk, unless the contract of the parties otherwise provide.[175]

As further shown below, many decisions have suggested that the essential issue in applying CISG Art. 79 is to determine whether the party claiming an exemption assumed the risk of the event that caused the party to fail to perform.[176] Two particular situations, i.e., financial embarrassment and non-performance due to supplier's default, have been frequently involved in cases where the deciding body focuses on an assessment of the risks. Both situations are discussed separately below.

      6.2 Particular impediment: financial embarrassment

A much-discussed (but rarely exempting) contingency is a party's financial inability to perform, i.e., insolvency and the like.[177] Claims that a change in the financial aspects of a contract should exempt a breaching party from liability for damages have appeared repeatedly in the available decisions. These arguments have rarely been successful, however. Several courts have expressly commented that a party is deemed to assume the risk of market fluctuations and other cost factors affecting the financial consequences of the contract.[178]

Since the obligor (especially the seller) generally guarantees his financial capability to procure and produce the promised goods, increased procurement and production costs, even if unforeseeable or unpreventable, do not constitute exempting impediments.[179] Also, of more frequency, the CISG does not contain a rule that would entitle the debtor (especially the buyer) to refrain from paying the purchase price where the non-performance was caused by fluctuations in the market, even if that party had a claim based on non-conformity of the goods or where such fluctuations were beyond his control. It is to be noted, however, this latter situation should be distinguished from the situation in [Germany 15 September 1994 Landgericht [District Court] Berlin], where the Court states: "Pursuant to Art. 79(1) CISG, the buyer is not liable for the delayed payment as she could not reasonably be expected to pay immediately for defective goods the seller did not want to take back without either an agreement in this respect or without having tested the possibility of selling the goods despite their described defects."[180]

Essentially, as held in [Germany 21 March 1996 Hamburg Arbitration award], the financial straits of the defaulting party (or its supplier or manufacturer) and its need for cash are not an unmanageable risk or a totally exceptional event, such as force majeure, economic impossibility or excessive onerousness. Further, the defaulting party must guarantee his financial capability to perform, an aspect which belongs typically to the sphere of responsibility of the debtor. The defaulting party is not freed from his responsibility as to his financial capability to perform even where he loses the necessary means because of subsequent, unforeseeable events. The same applies to the cash difficulties in the relationship with its sub-supplier or manufacturer.[181] Consequently, the insolvency of the buyer is not generally regarded as an impediment. According to Tallon, it is, in effect, difficult to argue that the insolvency of the buyer is "beyond his control." The case would be different of course if the insolvency was due to a force majeure event, e.g., the undue confiscation of the buyer's ownings following a coup d'état.[182] In this regard, Perillo states:[183]

"It is generally believed that the risk of financial ability to perform is such a basic assumption underlying all contracts that it cannot be excused, except by a decree in a bankruptcy proceeding. It is hard to believe that this general belief is suspended in international trade. Consequently, the phrase 'beyond [the defaulting party's] control' should be given a broad meaning so that it will be deemed that financial health is always within a contracting party's control."

Even if classified as an "unavoidable impediment," a party's inability to finance his performance should not lead to an exemption under Art. 79(1), in that such a contingency is one which a (commercial) seller or buyer should reasonably foresee; put another way, a party who voluntarily make a promise to sell or buy goods must generally assume the risk of not being able to finance his performance.[184] Several courts have so held that and that the possibility of the change should have been taken into account when the contract was concluded. For instance, the Court in [Belgium 2 May 1995 Rechtbank van Koophandel [District Court] Hasselt] holds that the significant drop in the market price of the purchased goods after the conclusion of the contract does not constitute a case of force majeure exempting the buyer for non-performance under Art. 79 CISG. According to the Court, fluctuations of prices are foreseeable events in international trade and far from rendering the performance impossible and they result in an economic loss well included in the normal risk of commercial activities.[185] Thus similarly, as the Court in [Germany 28 February 1997 Oberlandesgericht [Appellate Court] Hamburg] notes, it was incumbent upon the seller to bear the risk of increasing market prices at the time of the substitute transaction.[186] Here it is to be mentioned that a risk in this latter situation would only be possible in case of the seller's fundamental breach and where the buyer claims specific performance in the form of substitute goods according to CISG Art. 46(2), or in case of the buyer's declaration of avoidance and where the buyer calculate his damages on the basis of the difference between the contract price and the price in the substitute transaction according to CISG Art. 75.[187]

Generally speaking, in respect of such difficulties as that "market conditions became worse, the [buyer] had problems with the distribution and the storage of the goods, the USA dollar quotation had increased and the construction business had been in depression," which were listed by the buyer in [Bulgaria 12 February 1998 Chamber of Commerce Arbitration award, Case 11/1996], it is held that they "present part of the commercial risk that is carried by each party to the contract; this is an obligation that cannot be unilaterally transferred to the other party (emphasis added)"; and that they "do not correspond to the requirements outlined in Article 79 of the CISG," because the described facts "are not unexpected."[188] On the other hand, an unanticipated (and not reasonably foreseeable) imposition of exchange controls by public authorities might lead to a liability exemption for the buyer, but only if the particular impediment could not reasonably be overcome, e.g., by arranging for alternative payment means.[189] It thus implies a third reason advanced for denying exemptions because of a change in financial circumstances: the consequences of the change could have been overcome.[190]

Thus reviewed, the financial embarrassment of the debtor, even an impediment in general, would satisfy none of the three qualifications as specified in CISG Art. 79(1) (above sections 4.3, 4.4 and 4.5). Nevertheless, "under very narrow conditions - impediment also includes 'unaffordability'."[191] Such impediments as "a government ban on transferring the sum due,"[192] "or other regulations of a similar nature may make it impossible for him [the debtor] to fulfill his obligation to pay the price at the time and in the manner agreed,"[193] hence qualifying an exemption. The debtor would, of course, be exempted from liability for damages for the non-payment only if he could not overcome the impediment by, for example, arranging for a commercially reasonable substitute form of payment.[194]

      6.3 Particular impediment: non-performance due to supplier's default

Certain claimed impediments appear with some frequency in the available decisions. One such impediment is failure to perform by a third-party supplier to whom the seller looked as the source for the goods.[195] Parties often argue that non-delivery or late delivery by the seller's supplier is an impediment for the purposes of CISG Art. 79. State courts, arbitral tribunals, and scholars are starting to accept the notion that the procurement risk falls within the seller's sphere of responsibility, especially in the case of a sale of generic goods.[196]

In a number of cases, sellers have invoked their supplier's default as an impediment that, they argued, should exempt the seller from liability for its own resulting failure to deliver the goods or for its delivery of non-conforming goods. These decisions, as already noted above in section 5, have however suggested that the seller normally bears the risk that its supplier will breach, and that the seller will not generally receive an exemption when its failure to perform was caused by its supplier's default.[197] For instance, it is held in [ICC 1995 International Court of Arbitration, Case 8128] that, "the seller's responsibility for his supplier is an integral part of the general risk of supply of goods."[198] Similarly, the Tribunal in [Germany 21 March 1996 Hamburg Arbitration award] holds that, "the risk related to the supply is to be borne by the seller."[199]

Generally following CISG Art. 79(1), one may argue that, as the Court in [Switzerland 15 September 2000 Bundesgericht [Federal Supreme Court] [4P.75/2000]] does, "in order for a supplier to be exempt from liability for a failure to perform any of his obligations in the terms of the previously mentioned provision [CISG Art. 79(1)], he must prove that the failure was due to an unpredictable and inevitable impediment, which lies outside his sphere of control, or due to an overwhelming obstacle, which is not the case in situations within his sphere of control and facts could be attributed to him personally, especially events that affect the supply of the goods (citations omitted)."[200] That is to say, in the words of Schlechtriem, the seller is not liable for suppliers when they are beyond his control and their failure could neither be contemplated nor cured. However, this exemption will apply only in those very few cases when the seller could neither choose nor control his auxiliary suppliers and it was not possible to procure, produce or repair the goods in any other manner. Nevertheless, explicit limitations on such liability should probably be written into the contract.[201]

Without denying the above possibilities in theory, one should particularly bear in mind, as Schlechtriem properly notes in a subsequent writing, that:[202]

"It is a question of an allocation of the risk of damages based on economic reasons and not only on the basis of control over the sphere in which damages could arise."

According to the Convention, as the Court in [Germany 24 March 1999 Bundesgerichtshof [Federal Supreme Court]] further clarifies, "the reason for the seller's liability is that he has agreed to provide the purchaser with goods that are in conformity with the contract. If the supplier's (or suppliers') breach of the contract is a general impediment within the meaning of CISG Art. 79 at all, it is generally an impediment that the seller must avoid or overcome according to the content of the contract of sale. This follows the typical meaning of such a contract (citations omitted)."[203] This Court explicitly mentions that under the CISG the seller bears the "risk of acquisition" - the risk that its supplier will not timely deliver the goods or will deliver non-conforming goods - unless the parties agreed to a different allocation of risk in their contract, and that a seller therefore cannot normally invoke its supplier's default as a basis for an exemption under CISG Art. 79.

In short, as the Court in [Germany 28 February 1997 Oberlandesgericht [Appellate Court] Hamburg] notes, the seller bears the risk of itself receiving delivery of the goods from its own supplier. Only if goods of an equal or similar quality were no longer available on the market would the seller be exempted from liability.[204] Similarly, the buyer who has engaged a third person for payment also bears the risk that the seller does not receive the payment, when the requirements for exemption set forth in Art. 79 CISG are not met.[205]

7. Duty to Notify

According to CISG Art. 79(4), the defaulting party must give notice to the other party, regardless of whether the impediment is of a permanent or temporary nature,[206] so as to enable the latter to take all the steps necessary to overcome the consequences of the failure.[207]

Probably a self-evident rule, CISG Art. 79(4) "appears not to have attracted significant attention in case law."[208] This duty to notify, the rationale underlying which is "to safeguard the parties from unpleasant surprises,"[209] is in any event in harmony with international practice and is often the subject of a particular clause in the parties' agreement. Thus only a few points deserve emphasis.[210] Among other things, it is to be stressed regarding the operation of CISG Art. 79(4) that, the defaulting party must notify the other party of both the impediment and its probable consequences, i.e., he must indicate whether the non-performance is partial or total, temporary or definitive, etc.[211]

More significantly, one should note that under CISG Art. 79(4), the notice is effective upon receipt. This is done in deviation from the rule of dispatch as spelled out in CISG Art. 27, but corresponds with CISG Art. 48(4) (notice of cure by the non-performing seller), which provides that: "A request or notice by the seller under paragraph (2) or (3) of this article is not effective unless received by the buyer." According to Enderlein & Maskow, this is important insofar as that notice can be conceived as a notice under CISG Art. 48, paragraph 2 or 3. The term "received" in Art. 79(4) should be interpreted by analogy in the same way as the term "reaches" in CISG Art. 24.[212] That is to say, as Tallon similarly argues, the solution in CISG Art. 79(4), is "in harmony with the provisions of the Convention relating to offer (Article 15) and acceptance (Article 18(2)), although it deviates from the general rule set forth in Article 27."[213]

The requirement that the notice must be received (to take effect) represents a reversal of the general CISG transmission-risk rule.[214] It is apparent that CISG Art. 79(4) puts the risk of loss of the notice or the risk of delay in the receipt of the notice on the sender, thus constituting an exception to the rule provided for by CISG Art. 27.[215] Put it another way, by providing that the notice must be "received" within a reasonable time, CISG Art. 79(4) adopts the theory of receipt, thus placing the risk of the transmission on the defaulting party.[216] This approach has been expressly followed in both UNIDROIT Principles Art. 7.1.7(3) and PECL Art. 8:108(3). As further clarified in the PECL Comment:[217]

The notification duty is "an application of the obligation of good faith (emphasis added) which governs the whole of the Principles [which also underlies both the PECL and CISG]. The non-performing party must in effect warn the other party, within a reasonable time, of the occurrence of the obstacle and of its consequences for the contracts. The notice must, in effect, allow the other party the chance to take steps to avoid the consequences of non-performance. It is also necessary in order for it to be able to exercise any right it may have to terminate when performance is partial or late."

Furthermore, it must be ensured that the notice is received "within a reasonable time" after the non-performing party knew or ought to have known of the impediment. The reasonable time may be a short one: circumstances may even require immediate notification. The time starts to run as soon as the impediment and its consequences for the contract become known; or from when the non-performing party should have known. Good faith may even require two successive notices, if for example the non-performing party cannot immediately tell what the consequences of the impediment will be.[218] However, one should also note that the duty to notify exists only when the occurrence of the impediment is certain, not when it may still be avoided (although it may be difficult to determine what is and what is not avoidable).[219]

In any event, if the notice is not received by the other party within a reasonable time after the party who fails to perform knew or ought to have known of the impediment, the defaulting party who fails to give a proper notice is liable for damages resulting from such non-receipt. One should note, however, "[t]he sanction for failing to give this notice is liability for the extra loss suffered by the aggrieved party as the result of not being informed."[220] That is to say, as Tallon states:[221]

"It should be noted that the damages for which the latter is liable are only those which result from the failure to give notice as opposed to those which follow from the non-performance of the contract. The former will, in effect, often constitute an additional charge for the defaulting party as the other party will have been unable to take the steps necessary to alleviate the consequences of non-performance."

8. Effects Following an Exempting Impediment

      8.1 Overview

At first glance, the effects following an exempting impediment are described in CISG Art. 79 "in a most obscure and even contradictory way."[222] The principle set forth in CISG Art. 79(1) is worded in very general terms: the party "is not liable for a failure to perform." Under this general principle, the non-performance is acknowledged, but the party is exempted on account of the impediment. Consequently, the other party cannot claim any remedies. CISG Art. 79(5), however, restrains, in a restrictive manner, the effects of the exemption to one remedy alone: damages.[223] This restriction is evident from the expression of CISG Art. 79(5) that: "Nothing in this article prevents either party from exercising any right other than to claim damages under this Convention."

The paradoxical structure between the general formula of CISG Art. 79(1) and the restrictive provision of CISG Art. 79(5), has been subsequently adopted in either UNIDROIT Principles or PECL (however, not without differences in respect of the specific effects). Such a structure may be understood by borrowing from the Comment on PECL Art. 8:108: An impediment to performance which fulfils the conditions set out relieves the party which has not performed from liability. But again (cf. section 3 above for the general character in defining the scope of application) it is necessary to define just what is meant by a rather general expression, which may be ambiguous. Here the approach is a pragmatic one: one must start with the remedies that are available to the aggrieved party (as does PECL Art. 8:101, which in paragraph (2) sets out the remedies which do not apply when a non-performance is excused, namely specific performance and damages).[224]

At this juncture, I mean to further show some light on the term "either party" used in CISG Art. 79(5). In my point of view, this term does not indicate the possibility that in case of a qualified exemption either party, the defaulting party that is exempted or the other party who was to receive performance from the former, may at the same time respectively exercise his right(s) (other than the right to damages). The possibility for the latter, as an aggrieved party in nature, to exercise his right(s) poses no problem. Of particular relevance is the right of the former, as a non-performing party in nature, to offer cure (CISG Art. 48). Such a right, which could be exercised by the non-performing party even after the date for performance, could not have arisen in the case of a qualified exemption; because, as discussed earlier (section 4.5 above), there would be no exemption if the defaulting party could have avoided or overcome (e.g., by offering cure) the impediment or its consequences. It is in my view that the term "either" is selected in the context of the structure of the Convention, which makes respective provisions, albeit similarly balanced between themselves, for a seller and a buyer. What the term "either party" means is just that: Art. 79(5) applies indifferently to the buyer or to the seller.[225] This structure was not followed under either UNIDROIT Principles or PECL, and therefore either UNIDROIT Principles Art. 7.1.7(4) or PECL Art. 8:108(4) uses the general term "a party," i.e., the aggrieved party who was to receive performance from the defaulting party that has successfully sought an exemption.

After a brief review of the structure, I will get down to the specific effects. Literally read, CISG Art. 79(5) suggests that an exempting impediment has only "a limited effect on the remedies available to the party that has suffered a failure of performance for which the non-performing party enjoys an exemption."[226] Specifically, CISG Art. 79(5) makes it particularly clear that an "exemption" - if granted - is only an exemption from liability (for damages).[227] Thus, when CISG Art. 79(1) says "A party is not liable ...," it means that he is not liable in damages. All the other remedies of the other party are unaffected.[228] Such other remedies include, as stated by Rimke, "the right to reduce price (Article 50), the right to compel performance (Articles 46 and 62), the right to avoid the contract (Articles 49 and 64) and the right to collect interest as separate from damages (Article 78)."[229] Nicholas similarly submits that the remedies available (under CISG Art. 79) are, "to avoid the contract, to compel performance or, in case of non-conformity, to reduce the price."[230]

As for the effects, UNIDROIT Principles Art. 7.1.7(4) expressly specifies that: "Nothing in this article prevents a party from exercising a right to terminate the contract or to withhold performance or request interest on money due." In a different manner but to a similar effect, paragraph 2 of PECL Art. 8:101 (Remedies Available) sets out that: "Where a party's non-performance is excused under Article 8:108, the aggrieved party may resort to any of the remedies set out in Chapter 9 except claiming performance and damages." It follows, all remedies (specified in PECL Chapter 9) other than specific performance and damages, such as termination, withholding performance, interest or price reduction, remain available even in case of an exempted non-performance. On the basis of all these relevant rules, the following sections will focus on the fate of several significant remedies in case of a qualified exemption.

      8.2 Price reduction available

In case of a qualified exemption, price reduction, while according to Nicholas its availability "poses no problem,"[231] is suggested by Tallon to be excluded "insofar as a reduction in price may be regarded as a form of damages."[232] In this respect, it is noted that UNIDROIT Principles Art. 7.1.7(4) do not mention price reduction as a remedy not prevented, either. But it is also to be noted that price reduction is not at all a remedy under the remedial scheme of the UNIDROIT Principles.

With the above not ignored, I nonetheless do not see any well-grounded reason not to include price reduction as a remedy available. Above all, the action for the price reduction under the Convention (Art. 50) is, contrary to common law ideas (e.g., Tallon), an action to compel performance.[233] Moreover, as a remedy, price reduction emerges in the event of delivery of non-conforming or defective goods. As already discussed above in section 3, there is no reason to exclude non-conformity from the application of CISG Art. 79. Thus, price reduction, a remedy for non-conformity which is "primarily concerned with preserving the bargain between the parties and being used as a means of rebalancing the performance required by both sides,"[234] may be useful or even necessary for a non-conformity that might be exempted.

In short, the right to reduction of the price (CISG Art. 50) is not affected because it is aimed at maintaining the originally agreed equivalence and does not constitute a claim for damages. The basic idea is that the claims of the greatest practical relevance continue to exist. Thus understood, the rights to delivery of substitute goods or repair (CISG Art. 46(2), Art. 46(3)) also seem to persist where there are grounds for exemption.[235] But the availability of specific performance is a more complex problem that has been particularly caused under the "unrealistic" provision of CISG Art. 79(5), and therefore deserves a separate discussion (below section 8.5).

      8.3 Avoidance available

More certain a remedy available, is the right to avoid the contract, which is useful in enabling the aggrieved party to bring the contract to an end where the non-performance by the exempted party is so extensive as to amount to fundamental breach.[236]

The existence of grounds for exemption per se does not preclude the right to avoid the contract.[237] Although it is not without any doubts and particularly it is not excluded that the existence of impediments is taken into consideration where a breach of contract is classified as fundamental,[238] force majeure, in general, can have the effect of terminating a contract if it renders performance of the contract impossible in a definitive way or for a prolonged period of time.[239] But it is to be stressed that the right to avoidance is given above all when there is a fundamental breach of contract (CISG Art. 25).[240] For the sake of simplicity, even for an avoidance in the case of an exempted non-performance, the same general system has been retained as applies in the case of general non-performance of contract: an avoidance is justified above all by the existence of a fundamental breach. Furthermore, the aggrieved party can only put an end to the contract, even already in the existence of a fundamental breach, by a unilateral declaration. It follows that in principle it will be for the creditor to exercise the right to avoidance, provided the non-performance is fundamental, by giving notice of termination to the debtor.[241]

In short, the grounds (fundamental breach) or conditions (declaration) for the avoidance remain applicable although the disappointed party may not recover damages. Additionally, one should also note that, once avoidance has been declared, the effects of avoidance specified in CISG Arts. 81 to 84 (especially the "restitution" but other than the exempted damages) are applicable to both parties.[242]

On the other hand, a particular notice should also be attached to the automatic termination brought by an exempting impediment, which has been envisaged under PECL Art. 9:303(4). Among other things, according to the PECL Comment, as it would be pointless to give the aggrieved party the right to keep in force a contract which has become totally and permanently impossible to perform, it follows that in such a case it is unnecessary to require a declaration of termination. Therefore, PECL Art. 9:303(4) clearly provides that: "If a party is excused under Article 8:108 through an impediment which is total and permanent, the contract is terminated automatically and without notice at the time the impediment arises." The result is the same as in those legal systems under which force majeure brings automatic termination of the contract.[243] The PECL approach may function to avoided the one-sided approach, namely, even where grounds for exemption exist, the right to avoid the contract remains limited to the party against which the breach is committed,[244] because force majeure brings an automatic termination.

But it is noted that: although, on the one hand, both CISG and UNIDROIT Principles adopt, like the PECL, as a rule thatthe aggrieved party may put an end to the contract by a unilateral declaration provided the non-performance is fundamental; on the other hand, unlike the PECL, neither regime has contemplated an automatic termination. Indeed, the above PECL Comment seems to be somewhat misleading. In my reading, the introduction of an automatic termination as under PECL Art. 9:303(4), seems to place the emphasis on that, in such a case, there is no necessity to still require the aggrieved party to serve a termination notice by a unilateral declaration. However, it can in no event be inferred that the aggrieved party's right to avoid the contract is impaired, even if such a right in that case might be pointless (as the PECL Comment states). What is crucial in this respect, is to distinguish the right to avoidance from the declaration of avoidance, although it is certain that the former is the departure and the latter is the consequence. Although, on the one hand, where the non-performance is total and definite, the notice of termination by a unilateral declaration does not make sense any more; on the other hand, the right to avoid the contract should not be impaired.

With an inspiration from the general rule that the character of a conduct being a breach of contract is not affected by the existence of impediments,[245] it may also be said that the nature of a right entitled by the aggrieved party is not affected to the existence of exempting impediments, although the condition (i.e., to declare the termination) on exercising such a right seems to be not necessary any more.

      8.4 Damages (including liquidated damages or penalties) exempted but interest unaffected

As discussed above, the force majeure rules under the Convention, UNIDROIT Principles or PECL do not restrict the rights of the party who has not received performance to terminate if the exempted non-performance is fundamental. What they do do, in case of a qualified exemption, is to excuse the non-performing party from liability for damages.

Exemption from liability for damages is certain because it is explicitly stated, although in a negative form, in CISG Art. 79(5).[246] Thus, when the conditions specified in CISG Art. 79(1) are satisfied, it provides a liability exemption and thus constitute a limited exception to (or a modification of) the otherwise strict non-fault starting point laid down in CISG Art. 45(1)/61(1). But, precisely speaking, this is true only where the contract leaves a gap on the question of a breaching party's liability for breach. Taken together, these three provisions (CISG Arts. 45, 61 and 79) constitute the CISG supplementary regime, i.e., the basis of liability absent contrary agreement.[247]

In this respect, PECL Art. 8:101(2) also explicitly provides, in a similar negative form, that where the conditions set out in PECL Art. 8:108(1) are satisfied, the aggrieved party may resort to any of the remedies set out in PECL Chapter 9"except claiming ... damages." Such an exemption is also contemplated under UNIDROIT Principles Art. 7.1.7(4), the Comment on which clearly states that what this Article does do, where it applies, is to excuse the non-performing party from liability in damages.[248]

Despite its being clearly classified as an exempted remedy, damages in this context has also generated some problems. First of all, it will have to be clarified how far the notion of damages reaches. A proposal to expressly include penalties under the contract in their different manifestations (penalties and liquidated damages) was rejected without being put to a vote (O.R., 135). However, the reasons given for the rejection do not exclude that, other contractual clues lacking, the grounds for exemption will also be extended to penalty claims.[249] In this respect, it is recalled that the Convention consciously does not deal with so-called liquidated damages and penalty clauses,[250] because, as it is well known, during the drafting of the Convention, no agreement was reached on the highly controversial question of penalty clauses.[251]

Accordingly, the framers of the Convention agreed that the validity and application of such clauses were to be dealt with in terms of the applicable legal system due to widely divergent approaches in the different legal systems.[252] Against such a background, the Secretariat Commentary states:[253]

"It is a matter of domestic law not governed by this Convention as to whether the failure to perform exempts the non-performing party from paying a sum stipulated in the contract for liquidated damages or as a penalty for non performance or as to whether a court will order a party to perform in these circumstances and subject him to the sanctions provided in its procedural law for continued non-performance."

At the same time, the UNCITRAL Committee also felt that such regulation is particularly desirable because the rules on liquidated damages vary widely, and it would be a practical contribution to international trade to bring uniformity in their application. As a result, the basic principle underlying the liquidated damages provision was not rejected in the Convention. Accordingly, a liquidated damages clause agreed upon by the parties should be given full effect under the Art. 6 principle of contractual freedom to derogate from the Convention.[254] Therefore, generally speaking, the answer depends, in effect, on the interpretation of the clause (specifying penalties or liquidated damages). If the sum is due in lieu of damages, it will have to be set aside.[255]

On the other hand, it is recalled that one of the reasons put forward to reject the proposal to expressly include (in the damages that may be exempted) penalties, was that penalties under the contract are not a claim following from the Convention and the shaping of contracts in that respect should not be influenced (O.R., 385 et seq.). According to Enderlein & Maskow, this objection is not realistic insofar as penalties are agreed frequently without the question of possible exemptions being touched upon. Nevertheless, they do also note that if the latter happens - penalties or liquidated damages have been particularly agreed to also deal with the question of possible exemptions - then the contractual agreement will in any way supersede the Convention.[256] That is to say, in the existence of such a particular agreement, the liquidated damages would not be exempted.

In contrast with the gap in the Convention, UNIDROIT Principles Art. 7.4.13, in view of "their frequency in international contract practice,"[257] gives "an intentionally broad definition of agreements to pay a specified sum in case of non-performance, whether such agreements be intended to facilitate the recovery of damages (liquidated damages according to the common law) or to operate as a deterrent against non-performance (penalty clauses proper), or both."[258] Almost identical to UNIDROIT Principles Art. 7.4.13, PECL Art. 9:509 also expressly gives effect to such provisions. Thus, when the effects of exemption come at hand, it is generally stated in the Comment on PECL Art. 8:108 that, in case of a qualified exemption, damages of any kind, including "liquidated damages" and penalties, would be exempted unless the parties have agreed otherwise.[259]

Arguably, the notion of "damages" that may be exempted must be interpreted widely. But one should not go so far as Tallon to exempt even the payment of interest,[260] although the liability to pay interest as part of an award of damages seems to be an accepted international legal principle.[261] It is accepted that interest under the Convention is owed even if the delay in the payment of price (or any other monetary obligation in general) is due to a force majeure event.[262] A point in favor of this is that the entitlement to interest is not mentioned in Art. 79(5), but could be explained with the genesis of the Convention.[263] Essentially, the purpose of the interest rule (CISG Art. 78) is to give compensation for the financial loss due to the mere fact that delay in payment has a financial cost.[264] Indeed, with a separate Article 78 dealing with interest issues (distinct from the damages rule of CISG Art. 74), the Convention clearly distinguishes between interest payment obligation and damages, and the obligation to pay interest commences where payment has been delayed even if the creditor of the payment obligation has not suffered any damage from such delay and the debtor is not liable.[265]

In short, an Article 79 exemption does not preclude a claim to interest, just as a party who receives non-conforming goods remains entitled to a proportionate reduction in price.[266] This has been expressly codified in UNIDROIT Principles Art. 7.1.7(4), which clearly sets out that: "Nothing in this article prevents a party from exercising a right to [...] request interest on money due." Accordingly, UNIDROIT Principles Art. 7.4.9(1) continues to provide that "the aggrieved party is entitled to interest [...] whether or not the non-payment is excused." This may be similarly implied from the provision of PECL Art. 8:101(2). Furthermore, it is also explicitly stated in the Comment on PECL Art. 9:508 (Delay in Payment of Money): "Interest is owed whether or not non-payment is excused under Article 8:108."[267]

      8.5 The availability of specific performance in case of an exempting impediment

It is the right to compel performance that presents the true difficulty,[268] as compared with the above remedies available or exempted in case of an exempting impediment. In case of an exempting impediment, any form of specific performance is by definition impossible.[269] In this respect, while PECL Art. 8:101(2) explicitly exempts specific performance, CISG Art. 79(5) seems to warrant the right to claim performance even if performance has become permanently impossible.[270]

It is clearly stated in the Secretariat Commentary that even if the impediment is of such a nature as to render impossible any further performance, the other party retains the right to require that performance under CISG Art. 46 or 62.[271] Taken literally, however, this text (CISG Art. 79(5)) entails unrealistic results. As Tallon notes, it would allow an action for specific performance in a case where the goods are destroyed (and thus cannot be delivered) or in the case where the transfer of funds is prohibited (thus rendering the payment of the price impossible or subsequently illegal). Other remedies (that generally fall under the group of specific performance) are inconceivable: replacing or repairing the goods (because the conditions of exemption would not be fulfilled); allowance of extra-time (because the extra-time allowed might exceed the period during which the impediment exists and would conflict, in most cases, with the durable nature of the impediment).[272] But according to Kritzer, by virtue of the Art. 28 restriction,[273] such a seeming concern that can arise because CISG Art. 79(5) does not preclude the right to compel performance of an obligation that is impossible to perform may well be a tempest in a teapot. The only time Kritzer could see difficulties arising in such a situation would be if one knew of a jurisdiction in which under its own law in respect of similar contracts not governed by this Convention a court would enter a judgment for specific performance of an obligation that is impossible to fulfill. Furthermore, concern over the "unrealistic" failure of Article 79(5) to in itself rule out specific performance seems to be in itself of some unreality; this is particularly true when we come to the following question: Who would want to seek specific performance of an obligation that is impossible to perform?

On the other hand, the issue can be much more complex. To clarify, specifically speaking, three types of situations must be distinguished: those in which the solution is certain; those in which the failure to perform is total and definitive; and those in which the failure to perform is temporary, partial or delayed.[274] Among such real situations, the temporary impediment is of particular concern. Here it is recalled that the opposition to exempt specific performance seemed to rest partly on the assumption (which comes more easily to a civil lawyer than to a common lawyer) that if an action for performance will not lie there can be no obligation to perform, and therefore that to exclude the action for performance in the case of a merely temporary impediment would result in total extinction of the obligation. Another reason was the fear that accessory rights and the right to claim interest would disappear.[275] Thus, the present approach (allowing specific performance even in the case of an exempting impediment) seems to be justified: it has become clear at least that the right to performance continues to exist in the event of temporary grounds for exemption and that auxiliary claims that are related to it, like interest, continue to accumulate thus stimulating the parties concerned to make greater efforts to overcome the impediments.[276]

This solution, however, may not appear satisfactory in the situations where performance has been rendered impossible, i.e., the subject matter of the performance no longer exists (the goods have perished) or the performance would be excessively onerous or expensive (e.g., necessity for expensive salvage operation or subsequent illegality).[277] Of course insofar as the impediment makes performance actually impossible, there can be no specific enforcement.[278] It has to be admitted, however, that, textually read, CISG Art. 79(5) presently only concerns exemptions from damages. It has no direct significance, particularly in situations such as actual impossibility or subsequent illegality, in relation to the exemption from specific performance. Nonetheless, it has been said that: "Although the wording of Article 79(5) would allow a claim for performance in situations where obligations are physically impossible to fulfill, it is thought that the general belief expressed at the Vienna Conference that judgment for a physically impossible performance would neither be sought nor obtained should lead to a reasonable limitation of Article 79(5) CISG." Also, one suggested approach to the problem in such extreme situations is proposed to admit a "limit of sacrifice" beyond which the promisor of the obligation could not reasonably be expected to perform his obligation.[279] Of course, such solutions are so theoretical that no real problems caused in this area may be satisfactorily resolved.

By contrast, PECL Art. 8:101(2) expressly specifies that where there is an impediment which fulfils the conditions set out in PECL Art. 8:108(1), the aggrieved party may resort to any of the remedies set by PECL Chapter 9 except claiming performance and damages. However, in light of the real complexity in reality, this rigid solution does not seem to be a satisfactory one because, as noted above, an absolute exemption of specific performance might lead to some unreasonable situations, particularly in the case of temporary impediments. But, on the other hand, the said unreasonableness seems to be somewhat illusory, especially when we have a careful reading of the rule that, in case of a temporary impediment, the exemption has effect for the period during which the impediment exists (for details, see section 9 below). Thus, even it is accepted, as PECL Art. 8:101(2) stipulates, that the aggrieved party may not resort to specific performance. Such an exemption effect is for the period during which the impediment exists. Therefore, when the temporary impediment disappears and has no affect any longer, then the exemption from specific performance is also unjustified and therefore does not continue. Following this line of thinking, I doubt why the above concerns (in respect of the exemption from specific performance) have arisen. Despite such doubt, I mean to promote the more flexible approach adopted under the UNIDROIT Principles.

Instead of specifying what remedies the aggrieved party cannot resort to in case of an exempting impediment (structurally like neither CISG nor PECL), UNIDROIT Principles Art. 7.1.7(4) specifies certain claims not affected by the impediment, namely the "right to terminate the contract or to withhold performance or request interest on money due." Under this approach, no rigid exemption from specific performance, as under PECL Art. 8:101(2), is contemplated. The basic idea underlying such an approach is made clear in the Comment:[280]

"In some cases the impediment will prevent any performance at all but in many others it will simply delay performance and the effect of the article will be to give extra time for performance."

However, it should be noted that where the impediment will simply delay performance, i.e., in the event of a temporary impediment, the extra time may be greater (or less) than the length of the interruption because the crucial question will be what is the effect of the interruption on the progress of the contract.[281] This is what is to be discussed below (section 9).

      8.6 A summary

The character of a conduct being a breach of contract is not affected by the existence of impediments.[282] Therefore, even in case of a qualified exemption, certain remedies, such as reduction, termination or interest remain available on the part of the aggrieved party. But, on the other hand, the defaulting party is indeed also affected to a negative extent, it would conflict with good faith or the contractual intention of parties, if, even in case of an exempting impediment, the other party remained entitled to claim damages or require performance which is actually impossible or will cause to the defaulting party illegality.

Generally speaking, the determination of effects of exemption is somewhat complex and calls for a careful examination. An approach characteristic of today's tribunals seems to be a "careful analysis of particular factual circumstances and particular legal obligations in determining the consequences of force majeure."[283] In any event, as force majeure arises out of and depends on factual circumstances, the factual effect of force majeure depends on the extent to which these circumstances, practically and objectively, render performance impossible.[284] In other words, questions relating to force majeure are considered ones of fact, and, thus, their legal effects very much depend on the circumstances of each case.[285]

9. Temporary Impediment

It is probably the rule in all legal systems that the excuse has effect as long as the impediment lasts.[286] In other words, it is commonly agreed that a temporary impediment, in principle results in only a temporary excuse.[287]

Thus, CISG Art. 79(3), which appears not to have been the subject of significant attention in case law,[288] states that, "the exemption provided by this article has effect for the period during which the impediment exists." Therefore, when a temporary impediment to performance abates, the non-performing party becomes liable once again,[289] meaning that the injured party may claim any remedy, including damages. But, on the other hand, CISG Art. 79(3) (in conjunction with Art. 79(5)) also suggests that the exempted party is not liable for damages for over-due performance.[290] That is to say, where the impediment will simply delay performance, i.e., in the event of temporary impediment, the effect of exemption for the period will be to give extra time for performance.[291]

However, it should be noted that in the event of a temporary impediment, the extra time may be greater than the length of the interruption because the crucial question will be what is the effect of the interruption on the progress of the contract.[292] In this respect, it is recalled that a proposal (O.R., 381-382) was indeed made to add to CISG Art. 79(3) a provision that the non-performing party should be permanently exempted if at the end of the period of temporary exemption circumstances had "so radically changed that it would be manifestly unreasonable to hold him liable." The proposal was, however, rejected, apparently out of a reluctance to embark on the problems of frustration or imprévision. As a palliative, however, it was agreed to delete the word "only," which until then had stood in the text after "has effect." The intention behind this amendment was to leave open the possibility that the exemption might continue even after the period during which the exemption existed. According to Nicholas, the present CISG Art. 79(3) therefore might be read as if it said something like the following: "The exemption has effect for the period during which the impediment exists and may have permanent effect if after the impediment has ceased to exist the circumstances have so radically changed that it would be manifestly unreasonable to hold the non-performing party liable." One may well think that this was the most pregnant deletion of a single word that was ever made. But it certainly cannot be imagined that any court would arrive at this interpretation without the assistance of the legislative history.[293]

Although a word "only" may still be found in PECL Art. 8:108(2), the first sentence of which is equivalent to CISG Art. 79(3),[294] it should be pointed out that this word stands in PECL Art. 8:108(2) before "temporary" instead of after "has effect." More significantly, the second sentence of PECL Art. 8:108(2) continues to stipulate that, "if the delay amounts to a fundamental non-performance, the creditor may treat it as such." This is in harmony with, though emphasizing on different aspect, ULIS Art. 74(2) which granted definitive exemption when late performance amounted to fundamental non-performance.[295] Indeed, it is noted that writers support the rule laid down in the second sentence of PECL Art. 8:108(2).[296] In any event, the crucial question will be what is the effect of the interruption on the progress of the contract.[297] As is further made clear in the PECL Comment:[298]

"Temporary impediment means not only the circumstances which cause the obstacle but also the consequences which follow; these may last longer than the circumstances themselves. The excuse covers the whole period during which the debtor is unable to perform.

"It may be, however, that late performance will be of no use to the aggrieved party. Therefore it is given the right to terminate the contract provided that the delay is itself fundamental (see Article 8:103)."

In the UNIDROIT Principles (Art. 7.1.7(2)), the rule is framed more flexibly: "When the impediment is only temporary, the excuse shall have effect for such period as is reasonable having regard to the effect of the impediment on the performance of the contract." But as noted above, CISG does not address the question of termination, although it may be implied from the deletion of the term "only" that had stood in the draft text after "has effect." Nevertheless, Tallon, who seems to have provided a helpful argument in this respect,believes that CISG Art. 79(5) leads to the same result, as over-due performance (on account of the temporary impediment) may be deemed a fundamental breach that enables the injured party to declare the contract avoided.[299]

As mentioned above, in the event of temporary impediment, the effect of exemption during that period will be to give extra time for performance.[300] Equally in the case of a temporary excuse, the aggrieved party can use the Nachfrist procedure (laid down in CISG Art. 47/63, UNIDROIT Principles Art. 7.1.5 or PECL Art. 8:106) to serve a notice making time of the essence.[301] In any event, due to the possibility of a temporary impediment, the following situation (similar to the situation of a partial impediment, see section 10 below) must be distinguished in determining exemption effects:[302]

"[In particular cases], the exemption of a party does not prevent the other party from claiming remedies (including damages) as a result of the non-performance of any other obligation. This solution follows from the requirement of a cause-effect relationship described above (the non-performance must be due to the impediment) [section 4.6, cf. texts keyed to nn. 125 to 129]. Thus, if non-conforming goods are delivered with delay on account of some impediment, the buyer will be able to claim every remedy normally available in cases of non-conformity. [The presumption underlying this illustration is that, what is affected by the exempting impediment is the performance in due time but the delivery of conforming goods, though already late, is not affected.]"

10. Partial Impediment

It is noted that CISG Art. 79, UNIDROIT Principles Art. 7.1.7 or PECL Art. 8:108 provides nothing expressly concerning partial impediment, although, as just discussed above, they each deals with temporary impediment in a separate clause. Nevertheless, such a "gap" does not seem to raise meaningful problems and may be filled by analogy to the ideas underlying partial performance (CISG Art. 51, PECL Art. 9:302).

Partial impediment supposes that the exempting impediment affects only part of the main obligation or an accessory obligation and that the contract may still be performed.[303] It thus follows, in the case of a partial impediment, when a divisible part of the main obligation or a secondary obligation becomes impossible, that the creditor has a real choice; it must be permitted to decide whether or not to maintain the contract according to whether partial performance will be of any value to it. In such cases, if the aggrieved party does not elect to terminate the contract, it may demand performance of that part of the contract which still can be performed. In this case its own obligation will be reduced proportionately. On the other hand, if he elects to terminate, one should note that such an option is also governed by the general termination rules, that is to say the right to terminate in such a case also depends on whether or not the non-performance is fundamental.[304]

However, partial performance may indeed be of no interest to the injured party. If, for example, the output is cut by half after the partial destruction of the seller's plant by an earthquake, the buyer may either declare the contract avoided or claim the delivery of the goods with a commensurate reduction in price. He cannot, however, claim damages.[305] But it becomes more complex when the question comes as to whether CISG Art. 79 covers the solution as under some domestic systems to authorize, or at least encourage, the adaptation of the contract by the parties' renegotiation or by the judge. Such issues fall under the heading "hardship," and deserve a detailed discussion (but not to be discussed here).


FOOTNOTES

1. See Werner Melis in "Force Majeure and Hardship Clauses in International Commercial Contracts in View of the Practices of the ICC Court of Arbitration": 1 Journal of International Arbitration (1984), p. 215; available at: <http://tldb.uni-koeln.de/TLDB.html>; TLDB Document ID: 126600.

2. East European legal systems, for example, rarely permit the discharge of the promisor because it jeopardizes official planning. Elsewhere, the notion, although interpreted narrowly at first, became gradually more flexible. Standard forms in international commercial agreements illustrate this trend. (See Denis Tallon in Commentary on the International Sales Law: The 1980 Vienna Sale Convention, Cesare Massimo Bianca & Michael Joachim Bonell eds., Milan (1987), p. 573; available at: <http://www.cisg.law.pace.edu/cisg/biblio/tallon-bb79.html>.)

3. See Comment on UNIDROIT Principles Art. 7.1.7: Comment 1; available at: <http://www.cisg.law.pace.edu/cisg/principles/uni79.html>.

4. See Anaconda Iran Ltd. v. Iran, 13 Iran-US Claims Tribunal Report 1986, p. 211; available at: <http://tldb.uni-koeln.de/TLDB.html>; TLDB Document ID: 231800.

5. See Ugo Draetta in "Force Majeure Clauses in International Trade Practice": 5 International Business Law Journal (1996); p. 547.

6. See Secretariat Commentary on Art. 65 of the 1978 Draft [draft counterpart of CISG Art. 79]: Comment 1; available at: <http://www.cisg.law.pace.edu/cisg/text/secomm/secomm-79.html>.

7. See Jacob S. Ziegel in "Report to the Uniform Law Conference of Canada on Convention on Contracts for the International Sale of Goods" (1981); available at: <http://www.cisg.law.pace.edu/cisg/text/ziegel79.html>.

8. See David R.Rivkin in "Lex Mercatoria and Force majeure": Transnational Rules in International Commercial Arbitration, Gaillard ed., ICC Publ Nr. 480,4; Paris (1993), p. 200; available at: <http://tldb.uni-koeln.de/TLDB.html>; TLDB Document ID: 116100.

9. See Barry Nicholas in "Force Majeure and Frustration": 27 American Journal of Comparative Law (1979), pp. 231-245; available at: <http://www.cisg.law.pace.edu/cisg/biblio/nicholas.html>. (This is a commentary on the counterpart to force majeure contained in Art. 65 of the 1978 Draft Convention.)

10. Comment 1; supra. n. 3.

11. See Comment and Notes to PECL Art. 8:108: Note 1; available at: <http://www.cisg.law.pace.edu/cisg/text/peclcomp79.html>.

12. See Dionysios Flambouras in "Comparative Remarks on CISG Article 79 & PECL Articles 6:111, 8:108" (2002); available at: <http://www.cisg.law.pace.edu/cisg/text/peclcomp79.html>.

13. See Arthur Hartkamp in "The UNIDROIT Principles For International Commercial Contracts and the United Nations Convention on Contracts for the International Sale of Goods": Boele-Woelki/Grosheide/Hondius/Steenhoff eds., Comparability and Evaluation, Dordrecht, Boston, London (1994), p. 96; available at: <http://tldb.uni-koeln.de/TLDB.html>; TLDB Document ID: 113000.

14. See Comment on UNIDROIT Principles Art. 7.1.1.

15. See Tom Southerington in "Impossibility of Performance and Other Excuses in International Trade": Tuula Ämmälä ed., Private law publication series B:55, Publication of the Faculty of Law of the University of Turku (2001); available at: <http://www.cisg.law.pace.edu/cisg/biblio/southerington.html>.

16. Ibid.

17. See David R Rivkin, supra. n. 8; p. 201.

18. See UNCITRAL Digest of case law on the United Nations Convention on the International Sale of Goods (8 June 2004), A/CN.9/SER.C/DIGEST/CISG/79: Digest 8; available at: <http://www.uncitral.org/english/clout/digest_cisg_e.htm>.

19. See Fritz Enderlein & Dietrich Maskow, International Sales Law: United Nations Convention on Contracts for the International Sale of Goods, Oceana Publication (1992), p. 320; available at: <http://www.cisg.law.pace.edu/cisg/biblio/enderlein.html>.

20. See Judgment by Bundesgerichtshof [Federal Supreme Court], Germany 24 March 1999; No. VIII ZR 121/98. English translation by <Walter, Conston, Alexander & Green, P.C.>; translation edited by William M. Barron and Birgit Kurtz; available at: <http://www.cisg.law.pace.edu/cases/990324g1.html>.

21. See Judgment by Bundesgerichtshof [Federal Supreme Court], Germany 9 January 2002; No. VIII ZR 304/00. English translation by Alston & Bird LLP; translation edited by William M. Barron & Birgit Kurtz; available at: <http://www.cisg.law.pace.edu/cases/020109g1.html>.

22. Supra. n. 20.

23. See Joseph Lookofsky in"The 1980 United Nations Convention on Contracts for the International Sale of Goods": J. Herbots editor / R. Blanpain general editor, Suppl. 29 International Encyclopaedia of Laws - Contracts, Kluwer Law International (December 2000), p. 161; available at: <http://www.cisg.law.pace.edu/cisg/biblio/loo79.html>.

24. See Barry Nicholas in "Impracticability and Impossibility in the U.N. Convention on Contracts for the International Sale of Goods": Galston & Smit ed., International Sales: The United Nations Convention on Contracts for the International Sale of Goods, Matthew Bender (1984), Ch. 5, p. 5-13; available at: <http://www.cisg.law.pace.edu/cisg/biblio/nicholas1.html>.

25. See Denis Tallon, supra. n. 2; p. 576.

26. See Fritz Enderlein & Dietrich Maskow, supra. n. 19; p. 320.

27. See Denis Tallon, supra. n. 2; pp. 576, 577.

28. Nevertheless, it has also been noted that the kind of impediments most often alleged as exempting contingencies relate to the seller's obligation to make timely delivery, although it is certainly possible to conceive of "impediments" that might impact upon a given seller's obligation to deliver conforming goods. (See Joseph Lookofsky & Harry Flechtner in "Nominating Manfred Forberich: The Worst CISG Decision in 25 Years?": (2005) 9 The Vindobona Journal of International Commercial Law and Arbitration; p. 206.)

29. Comment B, supra. n. 11.

30. Comment 4, supra. n. 3.

31. See Denis Tallon, supra. n. 2; p. 578.

32. See Werner Melis, supra. n. 1, p. 215.

33. Digest 7, supra. n. 18.

34. See Denis Tallon, supra. n. 2; p. 578.

35. Comment C, supra. n. 11.

36. See Denis Tallon, supra. n. 2; p. 576.

37. See John O. Honnold, Uniform Law for International Sales under the 1980 United Nations Convention, 3rd ed., Kluwer Law International, The Hague (1999), p. 475; available at: <http://www.cisg.law.pace.edu/cisg/biblio/ho79.html>.

38. Comment A, supra. n. 11.

39. See Denis Tallon, supra. n. 2; p. 574.

40. Digest 10; supra. n. 18.

41. See Barry Nicholas, supra. n. 9.

42. See Joern Rimke in "Force majeure and hardship: Application in international trade practice with specific regard to the CISG and the UNIDROIT Principles of International Commercial Contracts": Pace Review of the Convention on Contracts for the International Sale of Goods, Kluwer (1999-2000), p. 242; available at: <http://www.cisg.law.pace.edu/cisg/biblio/rimke.html>.

43. See Denis Tallon, supra. n. 2; p. 579.

44. See Fritz Enderlein & Dietrich Maskow, supra. n. 19; p. 320.

45. Digest 5; supra. n. 18.

46. See Case Abstract of the Judgment by Landgericht [District Court] Aachen, Germany 14 May 1993; No. 43 O 136/92; available at: UNILEX Database <http://www.unilex.info/case.cfm?pid=1&do=case&id=23&step=Abstract>.

47. See John O. Honnold, supra. n. 37, p. 476.

48. See Joseph Lookofsky, supra. n. 23; p. 161.

49. See Denis Tallon, supra. n. 2; p. 574.

50. See Barry Nicholas, supra. n. 24; p. 5-4.

51. Comment B; supra. n. 11.

52. See Denis Tallon, supra. n. 2; p. 583.

53. See Barry Nicholas, supra. n. 24; p. 5-9.

54. See John O. Honnold, supra. n. 37, p. 472.

55. See Denis Tallon, supra. n. 2; p. 583.

56. See John O. Honnold, supra. n. 37, p. 472.

57. See Joseph Lookofsky, supra. n. 23; p. 161.

58. See Dionysios P. Flambouras in "The Doctrines of Impossibility of Performance and clausula rebus sic stantibus in the 1980 Vienna Convention on Contracts for the International Sale of Goods and the Principles of European Contract Law: A Comparative Analysis": 13 Pace International Law Review (Fall 2001), p. 267; available at: <http://www.cisg.law.pace.edu/cisg/biblio/flambouras1.html>.

59. See Denis Tallon, supra. n. 2; p. 584.

60. See Barry Nicholas, supra. n. 24; p. 5-14.

61. See Denis Tallon, supra. n. 2; p. 579.

62. For details, see Digests 11, 12 and 13; supra. n. 18.

63. See Denis Tallon, supra. n. 2; p. 579.

64. See Hans Stoll in "Commentary on the U.N. Convention on the International Sale of Goods (CISG)", 2nd ed. by Peter Schlechtriem, Geoffrey Thomas trans. (1998); p. 608.

65. See Dionysios P. Flambouras, supra. n. 58; p. 266.

66. See Hans Stoll, supra. n. 64; p. 610.

67. See Denis Tallon, supra. n. 2; p. 580.

68. See Joseph Lookofsky & Harry Flechtner, supra. n. 28; p. 206.

69. See Dionysios P. Flambouras, supra. n. 58; p. 267.

70. See Judgment by Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry, Russia 22 January 1997; No. 155/1996. English translation by Yelena Kalika; available at: <http://www.cisg.law.pace.edu/cases/970122r1.html>.

71. See Denis Tallon, supra. n. 2; p. 580.

72. See Case Abstract of the Judgment by Vysshi Arbitrazhnyi Sud Rossyiskoi Federatsii [High Arbitration Court (or Presidium of Supreme Arbitration Court) of the Russian Federation], Russia 16 February 1998; Information Letter No. 29; available at: UNILEX Database <http://www.unilex.info/case.cfm?pid=1&do=case&id=365&step=Abstract>.

73. Supra. n. 21.

74. Supra. n. 20.

75. See Peter Schlechtriem, Uniform Sales Law - The UN-Convention on Contracts for the International Sale of Goods, Manz, Vienna (1986), p. 101; available at: <http://www.cisg.law.pace.edu/cisg/biblio/schlechtriem-79.html>.

76. See Denis Tallon, supra. n. 2; p. 580.

77. Comment C(ii); supra. n. 11.

78. Supra. n. 21.

79. See Judgment by Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry, Russia 16 March 1995; No. 155/1994. English translation by Yelena Kalika; available at: <http://www.cisg.law.pace.edu/cases/950316r1.html>.

80. See Judgment by Bulgarian Chamber of Commerce and Industry [BTTP (Bulgarska turgosko-promishlena palata)], Bulgaria 2 December 1998; No. 11/1996. English translation by Bojidara Borisova, translation edited by Vessela Velkova; available at: <http://www.cisg.law.pace.edu/cases/980212bu.html>.

81. See Case Abstract of the Judgment by Arrondissementsrechtbank [District Court] 's-Hertogenbosch Netherlands 2 October 1998; No. 9981/HAZA 95-2299; available at: UNILEX Database <http://www.unilex.info/case.cfm?pid=1&do=case&id=443&step=Abstract>.

82. See Case Abstract of the Judgment by Cour de Cassation [Supreme Court], France 30 June 2004; No. Y 01-15.964; available at: UNILEX Database <http://www.unilex.info/case.cfm?pid=1&do=case&id=981&step=Abstract>.

83. See Fritz Enderlein & Dietrich Maskow, supra. n. 19; p. 323.

84. See Case Abstract of ICC Arbitration Case No. 7197 of 1992; available at: UNILEX Database <http://www.unilex.info/case.cfm?pid=1&do=case&id=37&step=Abstract>.

85. See Case Abstract of the Judgment by Bulgarian Chamber of Commerce and Industry [BTTP (Bulgarska turgosko-promishlena palata)], Bulgaria 24 April 1996; No. 56/1995. English translation by Bojidara Borisova, translation edited by Vessela Velkova; available at: <http://www.cisg.law.pace.edu/cases/96042bu.html>.

86. Comment 5, supra. n. 6.

87. See Joseph M. Perillo in "Force Majeure and Hardship under the UNIDROIT Principles of International Commercial Contracts": Contratación internacional. Comentarios a los Principios sobre los Contratos Comerciales Internacionales del Unidroit, Universidad Nacional Autónoma de México - Universidad Panamericana (1998); p. 122; available at: <http://www.cisg.law.pace.edu/cisg/biblio/perillo3.html>.

88. Comment 5, supra. n. 6.

89. See Barry Nicholas, supra. n. 24; p. 5-14.

90. See Joseph Lookofsky & Harry Flechtner, supra. n. 28; p. 206.

91. See Fritz Enderlein & Dietrich Maskow, supra. n. 19; pp. 323-324.

92. See Joseph Lookofsky, supra. n. 23; p. 162.

93. See ICC Award No. 1512, Yearbook Commercial Arbitration (1976); p. 129 (also Clunet 1974, at 905 et seq.); available at: <http://tldb.uni-koeln.de/TLDB.html>; TLDB Document ID: 201512.

94. Comment 6; supra. n. 6.

95. Comment C(ii); supra. n. 11.

96. See Fritz Enderlein & Dietrich Maskow, supra. n. 19; p. 324.

97. See Denis Tallon, supra. n. 2; pp. 580-581.

98. See Fritz Enderlein & Dietrich Maskow, supra. n. 19; p. 323.

99. See Raw Materials Inc. v. Manfred Forberich GmbH (force majeure event an early freezing of the port in St. Petersburg), U.S. Federal District Court, Northern District, Illinois, No. 03 C 1154; available at: <http://www.cisg.law.pace.edu/cases/040706u1.html>.

100. Comment 6; supra. n. 6.

101. See Joseph M. Perillo, supra. n. 87; p. 122.

102. Comment 7; supra. n. 6.

103. See Dionysios P. Flambouras, supra. n. 58; p. 272.

104. See Joseph Lookofsky & Harry Flechtner, supra. n. 28; p. 207; see also Joseph Lookofsky, supra. n. 23; p. 163.

105. See Fritz Enderlein & Dietrich Maskow, supra. n. 19; p. 324.

106. Comment C(iii); supra. n. 11.

107. See Denis Tallon, supra. n. 2; p. 581.

108. See Tom Southerington, supra. n. 15.

109. Comment 7; supra. n. 6.

110. Comment C(iii); supra. n. 11.

111. See Fritz Enderlein & Dietrich Maskow, supra. n. 19; p. 324.

112. See Judgment of ICC Arbitration Case No. 6281 of 1989; available at: <http://www.cisg.law.pace.edu/cases/896281i1.html>.

113. Comment C(iii); supra. n. 11.

114. See Denis Tallon, supra. n. 2; pp. 581-582.

115. See Fritz Enderlein & Dietrich Maskow, supra. n. 19; p. 321.

116. See Denis Tallon, supra. n. 2; p. 583.

117. Ibid.

118. See Fritz Enderlein & Dietrich Maskow, supra. n. 19; p. 322.

119. Ibid.

120. See John O. Honnold, supra. n. 37, p. 472.

121. Digest 20, supra. n. 18.

122. See Judgment by Tribunale [District Court] di Vigevano, Italy 12 July 2000; No. 12 July 2000, n. 405. English translation by Francesco G. Mazzota; available at: <http://www.cisg.law.pace.edu/cases/000712i3.html>.

123. See Joseph Lookofsky, supra. n. 23; p. 161.

124. See Denis Tallon, supra. n. 2; p. 586.

125. Comment C(i); supra. n. 11.

126. See Judgment by Bulgarian Chamber of Commerce and Industry [BTTP (Bulgarska turgosko-promishlena palata)], Bulgaria 24 April 1996; No.: 56/1995. English translation by Bojidara Borisova, translation edited by Vessela Velkova; available at: <http://www.cisg.law.pace.edu/cases/960424bu.html>.

127. See Denis Tallon, supra. n. 2; pp. 579-580.

128. See A.H. Puelinckx in "Frustration, Hardship, Force Majeure, Imprévision, Wegfall der Geschäftsgrundlage, Unmöglichkeit, Changed Circumstances": 3 Journal of International Arbitration No. 2 (1986) p. 64; available at: <http://tldb.uni-koeln.de/TLDB.html>; TLDB Document ID: 128100.

129. See Fritz Enderlein & Dietrich Maskow, supra. n. 19; p. 321.

130. In this respect, the Court in [Italy 12 July 2000 Tribunale [District Court] Vigevano] (supra. n. 122), referring to a large number of decided cases, rules in the pertinent part that:

"[21] What is said above would be sufficient to justify rejecting the request of the [buyer's assignee]. There is, however, another reason, independent of considerations relating to the promptness and particularity of the buyer's notice of defects, that [buyer's assignee]'s claim must fail. The controversy before the court raises an important question concerning the burden of proving that goods did not conform to a contract for an international sale of goods."

"[22] According to a minority of courts and commentators (see the decision of the International Chamber of Commerce Court of Arbitration, (arbitral decision) arbitration no. 6653 [text + English translation available at <http://cisgw3.law.pace.edu/cases/936653i1.html>]), the United Nations Convention does not govern the burden of proof issue. To justify their conclusion, these authorities refer to Article 4 of the Convention, which does not mention the issue of burden of proof among those dealt with by the Convention. The first sentence of Article 4 does indeed state, 'This Convention governs only the formation of the contract of sale and the rights and obligations of the seller and the buyer arising from such a contract.' Because Article 4 fails to mention the issue of burden of proof, it is argued, 'the conclusion should be drawn that domestic law will govern that issue' (see the decision of the Court of Appeals of Lugano [Switzerland], January 15, 1998 [text + English translation available at <http://cisgw3.law.pace.edu/cases/980115s1.html>])."

"[23] According to better-reasoned and more numerous authorities, however, the United Nations Convention governs the burden of proof issue although it does not directly deal with it. To support the argument that the burden of proof issue is not excluded from the reach of the Convention, so that the issue of the burden of proof is not beyond the scope of the regime of international sales law introduced by the Convention, these authorities refer (correctly, in the view of this Tribunal) to Article 79(1) of the Convention, which expressly refers to the burden of proof concerning exemption from damages for breach. According to this provision, 'A party is not liable for a failure to perform any of his obligations if he proves that the failure was due to an impediment beyond his control and that he could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it or its consequences.' Thus, the issue of the burden of proof cannot be deemed beyond the ambit of the Convention, in contrast to, e.g., the issue of set-off (see the decision of the OLG [Appellate Court] München [Germany], July 9, 1997 [text + English translation available at <http://cisgw3.law.pace.edu/cases/970709g1.html>]; and the decision of the OLG [Appellate Court] Koblenz [Germany], January 31, 1997 [text available at <http://cisgw3.law.pace.edu/cases/970131g1.html>]), the issue [page 220] of the statute of limitations (see the decision of the LG [District Court] Düsseldorf [Germany], October 11, 1995 [text + English translation available at <http://cisgw3.law.pace.edu/cases/951011g1.html>]; the decision of the OLG [Appellate Court] Hamm [Germany], June 9, 1995 [text + English translation available at <http://cisgw3.law.pace.edu/cases/950609g1.html>]; and the decision of the International Chamber of Commerce Court of Arbitration, (arbitral decision), arbitration # 7660 [English text available at <http://cisgw3.law.pace.edu/cases/947660i1.html>]), the issue of the validity of an assignment of rights arising from a sales contract (see the decision of the OLG [Appellate Court] Hamm [Germany], February 8, 1995 [text available at <http://cisgw3.law.pace.edu/cases/950208g3.html>]), the issue of an agent's authority to act for another (see the decision of the Austrian Supreme Court, June 29, 1997 in Osterreichische Juristenzeitung, 1997, 829 ss.; the decision of the AG [Lower Court] Alsfeld [Germany], [May 12, 1995] [text available at <http://cisgw3.law.pace.edu/cases/950512g1.html>]), and the issue of the validity of a penalty clause limiting compensation for breach of a contract to an agreed amount (see the decision of the International Chamber of Commerce Court of Arbitration, (arbitral decision), arbitration # 7331 [English text available at <http://cisgw3.law.pace.edu/cases/947331i1.html>]; and the decision of the OLG [Appellate Court] München [Germany], February 8, 1995 [text + English translation available at <http://cisgw3.law.pace.edu/cases/950208g1.html>])."

"[24] Unlike those issues which, because they are not governed by the United Nations Convention, must be resolved according to the law determined by the private international law rules of the forum, the issue of the burden of proof must, like other issues governed by but not expressly settled in the Convention, be resolved under Article 7(2) in conformity with the general principles upon with the Convention is based (see the decision of the LG [District Court] Frankfurt [Germany], July 6, 1994 [text available at <http://cisgw3.law.pace.edu/cases/940706g1.html>]). [...]."

131. See Denis Tallon, supra. n. 2; p. 584.

132. Comment 11; supra. n. 6.

133. See Fritz Enderlein & Dietrich Maskow, supra. n. 19; p. 326.

134. Digest 21, supra. n. 18.

135. See Peter Schlechtriem, supra. n. 75; p. 104.

136. See Denis Tallon, supra. n. 2; pp. 584, 585.

137. Digest 21, supra. n. 18.

138. See Sarah Howard Jenkins in "Exemption for Nonperformance: UCC, CISG, UNIDROIT Principles -- A Comparative Assessment": 72 Tulane Law Review (1998), p. 2026; available at: <http://www.cisg.law.pace.edu/cisg/biblio/jenkins.html>.

139. See Dionysios P. Flambouras, supra. n. 58; p. 274.

140. Comment 12; supra. n. 6.

141. See Denis Tallon, supra. n. 2; p. 585. In this respect, Tallon also notes that A different solution would prevail if the sub-contractor were a branch (établissement) of the same firm. The default of the "third party" in such a case would not be "beyond the control" of the non-performing party and one of the conditions set forth in Art. 79(1) would therefore not be fulfilled. Similarly, this condition may give rise to delicate problems of interpretation in the case of subsidiaries that are wholly owned by the mother-company.

142. See Judgment by Schiedsgericht der Handelskammer [Arbitral Tribunal] Hamburg, Germany. Partial award of 21 March 1996. English translation by International Council of Commercial Arbitration: Yearbook Commercial Arbitration XXII, Albert Jan van den Berg ed. (Kluwer 1997); available at: <http://www.cisg.law.pace.edu/cases/960321g1.html>.

143. See CLOUT case abstract No. 272 Oberlandesgericht [Appellate Court] Zweibrücken Germany 31 March 1998; available at: <http://www.cisg.law.pace.edu/cases/980331g1.html>.

144. See Judgement by HG [HG = Handelsgericht = Commercial Court] Zürich, Switzerland 10 February 1999; No. HG 970238.1; English translation (second draft) by Ruth M. Janal; available at: <http://www.cisg.law.pace.edu/cases/990210s1.html>.

145. See Sarah Howard Jenkins, supra. n. 138; p. 2026.

146. See Fritz Enderlein & Dietrich Maskow, supra. n. 19; p. 326.

147. See Peter Schlechtriem, supra. n. 75; p. 104.

148. See Fritz Enderlein & Dietrich Maskow, supra. n. 19; p. 326. Note also the colloquy that resolved the final text of CISG Article 80 (Legislative History of the 1980 Vienna Diplomatic Conference, Summary Records of Meetings of the First Committee, 37th meeting, paras. 87-88; available at: <http://www.cisg.law.pace.edu/cisg/firstcommittee/Meeting37.html>:

"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 that party might employ 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 proposed that the Committee should keep [this wording of the Article], 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 purpose of the performance of the contract (emphasis added)."

In this regard, however, Enderlein & Maskow would not go so far as Stoll who presumes that the party should always vouch for them. According to Enderlein & Maskow, if a party had employed, in excusable ignorance, a saboteur or an arsonist, he should not be liable when that person becomes active. The exemption would, however, have to be granted on the basis of paragraph 1 in this case. (See Fritz Enderlein & Dietrich Maskow, supra. n. 19; p. 326.) Furthermore, it gets more problematic where employees are on strike. In this respect, it is advisable to follow Schlechtriem, who takes a careful stand in the matter and argues that whether a strike is "beyond his control" or must be regarded as the employer's responsibility depends on the circumstances and the extent of the strike as well as the labor laws of the particular country. (See Peter Schlechtriem, supra. n. 75; p. 104.)

149. Supra. n. 142.

150. See Fritz Enderlein & Dietrich Maskow, supra. n. 19; p. 328.

151. See Barry Nicholas, supra. n. 24; p. 5-23.

152. See Fritz Enderlein & Dietrich Maskow, supra. n. 19; p. 328.

153. See Joseph Lookofsky, supra. n. 23; p. 165.

154. See Denis Tallon, supra. n. 2; p. 586.

155. Supra. n. 143.

156. See Sarah Howard Jenkins, supra. n. 138; p. 2026.

157. Supra. n. 20.

158. See Fritz Enderlein & Dietrich Maskow, supra. n. 19; p. 327. In this respect, Enderlein & Maskow note that there was no agreement at the Diplomatic Conference as to how far the exemption under Art. 79(1) would reach and whether or not the exemption under Art. 79(2) would entail stricter liability (O.R., 378 et seq.). According to them, it cannot be said whether the one or the other of the two paragraphs offers a basis for stricter liability. By comparing a classic supplier and a classic sub-contractor, they conclude that the attempt to compare the strictness of the two norms is therefore misleading: "When a supplier fails to deliver, the seller (the same applies to the buyer who, for instance, is to supply sub-deliveries) does not have to prove that there were grounds for the exemption of the former, but only that this was the case in regard to himself. In this context he can even rely on failure by the supplier, and it will then be examined whether this constitutes a reason for exemption. In general this will not be the case because recourse can be demanded to other sources. Where there are, in exceptional instances, no such sources, e.g. because only one electric power company can be engaged or the only possible supplier of certain microelectronic chips has sold elsewhere, exemption can be granted even though, especially in the latter case, the supplier has obviously not breached his obligation because of grounds for exemption (citation omitted)." "Let us consider now the case of the sub-contractor. The impediment is, similar to the case of the supplier, a breach of contract by the third party. But by contrast to the former example, the breach of contract is not a ground for exemption of the third party when the reason for exemption is given for the seller. It must have been given also for the sub-contractor. Because of this cumulation, greater requirements are made for an exemption to be granted. Conversely, the requirements that are made for the seller's own conduct to be a ground for exemption are less far-reaching (note 8)." "It can thus be summarized that the exemption under paragraph 2 is granted for such impediments which are based on non-performance by a certain category of partners of the seller. It is judged according to criteria which, because of the different actual circumstances, diverge from those of paragraph 1. Constellations that are comparable in structure can, therefore, lead to an exemption under paragraph 1, but not under paragraph 2 or vice-versa. The attempt to compare the strictness of the two norms is therefore misleading." (See Fritz Enderlein & Dietrich Maskow, supra. n. 19; pp. 327-328.)

159. See Joseph Lookofsky, supra. n. 23; p. 165.

160. See Werner Melis, supra. n. 1; p. 215. (It is to be stressed that such a trend would be irrelevant where there is no gap or lacuna in the contract when the intent of the parties regarding the definition of a force majeure event has been clearly expressed and where the conditions specified in the contract have been satisfied.)

161. Despite the non-inclusion of a rule similar to CISG Art. 79(2), both UNIDROIT Principles Art. 7.1.7 and PECL Art. 8:108 can well handle the issues dealt with under CISG Art. 79(2). Essentially, the term "impediment" in either article "covers every sort of event" including acts of third parties. (Comment B, supra. n. 11.) It logically follows that: "The debtor cannot invoke the default of a subcontractor unless it was outside its control - for instance because there was no other subcontractor which could have been employed to do the work; and the impediment must also be outside the subcontractor's sphere of control." (Comment C(i), supra. n. 11.) The same is true for the other conditions such as foreseeability or unavoidability.

162. See Comment and Notes on PECL Art. 8:107: Comment B; available at: <http://www.cisg.law.pace.edu/cisg/text/peclcomp79.html>.

163. Digest 6; supra. n. 18.

164. See Fritz Enderlein & Dietrich Maskow, supra. n. 19; p. 322.

165. Comment C(i), supra. n. 11.

166. See Joseph Lookofsky, supra. n. 23; p. 162.

167. See Joern Rimke, supra. n. 42; p. 216; see also the texts keyed to supra. nn. 76, 77.

168. See Hans Stoll, supra. n. 64; p. 611.

169. Comment C(iii), supra. n. 11.

170. Digest 6; supra. n. 18.

171. See Judgment by Arbitration Court of the Chamber of Commerce and Industry of Budapest, Hungary 10 December 1996; No. VB 96074. English text available at: <http://www.cisg.law.pace.edu/cases/961210h1.html>.

172. Supra. n. 144.

173. See Denis Tallon, supra. n. 2; p. 575.

174. See John O. Honnold, supra. n. 37, p. 472- 473. In this respect, Honnold continues to submit: "Assume that the Chapter IV rules allocate transit risk to the seller and the goods are lost as the result of a hurricane. This disaster may produce two types of loss: (1) Physical loss of the goods and (2) Loss to the buyer because of a rise in price, or because failure to receive the goods (e.g. machinery) interrupts production. Although the seller bears the first type of loss--physical loss of the goods--Article 79 exempts the seller from liability for breach of contract." "Pragmatic reasons underlie these results. Physical loss during transit is readily and customarily covered by insurance. On the other hand, the buyer's contractual loss from non-arrival, although not so readily or customarily covered by insurance, can be coped with more readily by the buyer than by the seller through insurance or reserves; the seller and seller's insurer will have little or no information about the commercial risks encountered by the various buyers whom the seller supplies."

175. Supra. n. 171.

176. Digest 6; supra. n. 18.

177. See Joseph Lookofsky, supra. n. 23; p. 163.

178. Digest 15; supra. n. 18.

179. See Peter Schlechtriem, supra. n. 75; p. 102.

180. See Judgment by Landgericht [District Court] Berlin, Germany 15 June 1994; No. 52 S 247/94. English translation by Martin Eimer, translation edited by Ruth M. Janal; available at: <http://www.cisg.law.pace.edu/cases/940915g1.html>.

181. Supra. n. 142.

182. See Denis Tallon, supra. n. 2; pp. 582-583; see also Comment 10, supra. n. 6; Comment B, supra. n. 11.

183. See Joseph M. Perillo, supra. n. 87; p. 122.

184. See Joseph Lookofsky, supra. n. 23; p. 163.

185. See Case Abstract of the Judgment by Rechtbank [District Court] van Koophandel Hasselt, Belgium 2 May 1995; No. A.R. 1849/94, 4205/94; available at: UNILEX Database <http://www.unilex.info/case.cfm?pid=1&do=case&id=263&step=Abstract>.

186. See CLOUT case abstract No. 277, Oberlandesgericht [Appellate Court] Hamburg Germany 28 February 1997]; available at: <http://www.cisg.law.pace.edu/cases/970228g1.html>.

187. In either case, a substitute transaction is called for and the risk, for the defaulting seller, of the increase in price at the time of such a substitute transaction (either a transaction to be rendered by the defaulting seller itself under CISG Art. 46(2) or the transaction rendered by the aggrieved buyer according to CISG Art. 75) may arise.

188. Supra. n. 80.

189. See Joseph Lookofsky, supra. n. 23; p. 163.

190. Digest 15; supra. n. 18.

191. See Peter Schlechtriem, supra. n. 75; p. 102.

192. Comment B, supra. n. 11.

193. Comment 10, supra. n. 6.

194. Ibid.

195. Digest 14; supra. n. 18.

196. See Dionysios P. Flambouras, supra. n. 58 at Note 20.

197. Digest 14; supra. n. 18.

198. See Judgment of ICC Court of International Arbitration, Case No. 8128 of 1995. English translation by Serge Lapine; available at: <http://www.cisg.law.pace.edu/cases/958128i1.html>.

199. Supra. n. 142.

200. See Judgment by Bundesgericht [Supreme Court], Switzerland 15 September 2000; No. 4P.75/2000. English translation by Helena C.C. Mendes; available at: <http://www.cisg.law.pace.edu/cases/000915s1.html>.

201. See Peter Schlechtriem, supra. n. 75; p. 104.

202. See Peter Schlechtriem in "Uniform Sales Law in the Decisions of the Bundesgerichtshof", translation by Todd J. Fox.; available at: <http://www.cisg.law.pace.edu/cisg/biblio/schlechtriem3.html>.

203. Supra. n. 20.

204. Supra. n. 186.

205. See Case Abstract of the Judgment by Amtsgericht [Petty District Court] Alsfeld, Germany 12 May 1995; No. 31 C 534/94; available at: Unilex Database <http://www.unilex.info/case.cfm?pid=1&do=case&id=146&step=Abstract>.

206. See Dionysios P. Flambouras, supra. n. 58; p. 272.

207. See Denis Tallon, supra. n. 2; p. 586.

208. Digest 3; supra. n. 18.

209. See Nagla Nassar, Sanctity of Contracts Revisited, Dordrecht, Boston, London (1995); p. 202; available at: <http://tldb.uni-koeln.de/TLDB.html>; TLDB Document ID: 105700.

210. See Denis Tallon, supra. n. 2; p. 586.

211. See Denis Tallon, supra. n. 2; p. 587.

212. See Fritz Enderlein & Dietrich Maskow, supra. n. 19; p. 331. (CISG Art. 24 reads: "For the purposes of this Part [Part II: Formation of the Contract] of the Convention, an offer, declaration of acceptance or any other indication of intention 'reaches' the addressee when it is made orally to him or delivered by any other means to him personally, to his place of business or mailing address or, if he does not have a place of business or mailing address, to his habitual residence."

213. See Denis Tallon, supra. n. 2; p. 587.

214. See Joseph Lookofsky, supra. n. 23; p. 166.

215. See Dionysios P. Flambouras, supra. n. 58; p. 273.

216. See Denis Tallon, supra. n. 2; p. 587.

217. Comment F, supra. n. 11.

218. Ibid.

219. See Denis Tallon, supra. n. 2; p. 586.

220. Comment F, supra. n. 11

221. See Denis Tallon, supra. n. 2; p. 587.

222. Ibid.

223. See Denis Tallon, supra. n. 2; p. 588.

224. Comment D, supra. n. 11.

225. See Denis Tallon, supra. n. 2; p. 591.

226. Digest 4, supra. n. 18.

227. See Joseph Lookofsky, supra. n. 23; p. 166.

228. See Barry Nicholas, supra. n. 24; p. 5-18.

229. See Joern Rimke, supra. n. 42; p. 218.

230. See Barry Nicholas, supra. n. 24; p. 5-19.

231. Ibid.

232. See Denis Tallon, supra. n. 2; p. 588.

233. See Barry Nicholas, supra. n. 24; p. 5-20.

234. See Erika Sondahl in "Understanding the Remedy of Price Reduction - A Means to Fostering a More Uniform Application of the United Nations Convention on Contracts for the International Sale of Goods" (2003), fn. 38; available at: <http://www.cisg.law.pace.edu/cisg/biblio/sondahl.html>.

235. See Fritz Enderlein & Dietrich Maskow, supra. n. 19; p. 333.

236. See Barry Nicholas, supra. n. 24; p. 5-19.

237. See Fritz Enderlein & Dietrich Maskow, supra. n. 19; p. 332; see also John O. Honnold, supra. n. 37, p. 474.

238. See Fritz Enderlein & Dietrich Maskow, supra. n. 19; p. 332

239. See Anaconda Iran Ltd. v. Iran, supra. n. 4; p. 211.

240. See Fritz Enderlein & Dietrich Maskow, supra. n. 19; p. 332.

241. Comment D, supra. n. 11.

242. See John O. Honnold, supra. n. 37, p. 474-475.

243. Comment D, supra. n. 11.

244. Here it is recalled that considerations to introduce such a right (to avoidance), in the case of a qualified exemption, also for the other party (O.R., 134 fol, 381 fol) did not meet with a response. For relevant discussions, see Fritz Enderlein & Dietrich Maskow, supra. n. 19; p. 332.

245. See Fritz Enderlein & Dietrich Maskow, supra. n. 19; p. 332.

246. See Denis Tallon, supra. n. 2; p. 589.

247. See Joseph Lookofsky, supra. n. 23; pp. 160, 161.

248. Comment 2, supra. n. 3.

249. See Fritz Enderlein & Dietrich Maskow, supra. n. 19; p. 332.

250. See Sieg Eiselen in "Remarks on the Manner in which the UNIDROIT Principles of International Commercial Contracts May Be Used to Interpret or Supplement Article 74 of the CISG" (October 2002); available at: <http://www.cisg.law.pace.edu/cisg/principles/uni74.html>.

251. See Case Comment by Marie-France Papandréou-Deterrvilleon the Judgment by Gerechtshof [Appellate Court] Arnhem, Netherlands 22 August 1995; No. 94/305, the Comment published in Dalloz Sirey (1997) 223-224, English translation by Annabel V. Teiling.; available at: <http://www.cisg.law.pace.edu/cases/950822n1.html>.

252. See Sieg Eiselen; supra. n. 250.

253. Comment 9, supra. n. 6.

254. See Phanesh Koneru in "The International Interpretation of the UN Convention on Contracts for the International Sale of Goods: An Approach Based on General Principles": 6 Minnesota Journal of Global Trade (1997), pp. 105-152; available at: <http://www.cisg.law.pace.edu/cisg/biblio/koneru.html>.

255. See Denis Tallon, supra. n. 2; p. 589.

256. See Fritz Enderlein & Dietrich Maskow, supra. n. 19; p. 332.

257. See Comment 2 on Art. 7.4.13 UNIDROIT Principles; available at: <http://www.cisg.law.pace.edu/cisg/principles/uni74.html>.

258. Comment 1; supra. n. 257.

259. Comment D, supra. n. 11.

260. In this respect, Tallon believes that: "It [the notion of "damages" that may be exempted] designates all damages, regardless of their proper denomination: dommages-intérêts compensatoires (damages), dommages-intérêts moratoires (damages for over-due performance, interests on damages), direct or consequential damages, etc." (See Denis Tallon, supra. n. 2; p. 589.)

261. See John Yukio Gotanda, Supplemental damages in private international law: the awarding of interest, attorneys' fees and costs, punitive damages and damages in foreign currency examined in the comparative and international context; The Hague /Boston (1998); p. 12; available at: <http://tldb.uni-koeln.de/TLDB.html>; TLDB Document ID: 123420. See also Berger who notes that: "It is a long-standing practice of international arbitrators to consider the interest claim as part of the general claim for damages." (See Klaus Peter Berger in "International Arbitral Practice and the UNIDROIT Principles of International Commercial Contracts": American Journal of Comparative Law, Vol. 46, 1998; p. 135.); and Behr who believes that, "in general, there is no problem in awarding interest under the heading of damages" (See Volker Behr in "The Sales Convention in Europe: From Problems in Drafting to Problems in Practice": 17 Journal of Law and Commerce (1998), p. 268; available at: <http://www.cisg.law.pace.edu/cisg/biblio/behr.html>.)

262. See Dionysios P. Flambouras, supra. n. 58; p. 282.

263. See Fritz Enderlein & Dietrich Maskow, supra. n. 19; p. 311.

264. See Judgement inICC Arbitration Case No. 7585 of 1992; available at: UNILEX Database <http://www.unilex.info/case.cfm?pid=1&do=case&id=134&step=FullText>.

265. See Dionysios P. Flambouras, supra. n. 58; p. 282.

266. See Joseph Lookofsky, supra. n. 23; p. 166.

267. See Comment and Notes on PECL Art. 9:508: Comment B; available at: <http://www.cisg.law.pace.edu/cisg/text/peclcomp78.html>.

268. See Barry Nicholas, supra. n. 24; p. 5-19.

269. Comment D, supra. n. 11; see also Denis Tallon, supra. n. 2; p. 560.

270. See Arthur Hartkamp, supra. n. 13; p. 96.

271. Comment 9, supra. n. 6.

272. See Denis Tallon, supra. n. 2; p. 588.

273. CISG Art. 28 reads: "If, in accordance with the provisions of this Convention, one party is entitled to require performance of any obligation by the other party, a court is not bound to enter a judgement for specific performance unless the court would do so under its own law in respect of similar contracts of sale not governed by this Convention."

274. See Denis Tallon, supra. n. 2; p. 589.

275. See Barry Nicholas, supra. n. 24; pp. 5-19, 5-20.

276. See Fritz Enderlein & Dietrich Maskow, supra. n. 19; p. 353.

277. See Dionysios P. Flambouras, supra. n. 12.

278. See Barry Nicholas, supra. n. 24; p. 5-19.

279. See Dionysios P. Flambouras, supra. n. 12.

280. Comment 2, supra. n. 3.

281. Ibid.

282. See Fritz Enderlein & Dietrich Maskow, supra. n. 19; p. 332.

283. See John R.Crook in "Applicable Law In International Commercial Arbitration: The Iran-US-Claims Tribunal Experience": 83 American Journal of International Law (1989), p. 294; available at: <http://tldb.uni-koeln.de/TLDB.html>; TLDB Document ID: 120000.

284. See 15 Iran-US Claims Tribunal Report (1987 II); p. 211.

285. See Nagla Nassar, supra. n. 209; p. 203.

286. Note 2, supra. n. 11.

287. Comment E, supra. n. 11.

288. Digest 3, supra. n. 18.

289. See Joseph Lookofsky, supra. n. 23; p. 165.

290. See Denis Tallon, supra. n. 2; p. 591.

291. Comment 2, supra. n. 3.

292. Ibid.

293. See Barry Nicholas, supra. n. 24; p. 5-17, 5-18.

294. Note 2, supra. n. 11.

295. ULIS Art. 74(2) reads: "Where the circumstances which gave rise to the non- performance of the obligation constituted only a temporary impediment to performance, the party in default shall nevertheless be permanently relieved of his obligation if, by reason of the delay, performance would be so radically changed as to amount to the performance of an obligation quite different from that contemplated by the contract."

296. Note 2, supra. n. 11.

297. Comment 2, supra. n. 3.

298. Comment E, supra. n. 11.

299. See Denis Tallon, supra. n. 2; p. 591.

300. Comment 2, supra. n. 3.

301. Comment E, supra. n. 11.

302. See Denis Tallon, supra. n. 2; p. 589.

303. See Denis Tallon, supra. n. 2; p. 591.

304. Comment D, supra. n. 11.

305. See Denis Tallon, supra. n. 2; p. 590.


Pace Law School Institute of International Commercial Law - Last updated April 27, 2005
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