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Article 51. Non-conformity of Part of Goods

TEXT OF ARTICLE 51

(1) If the seller delivers only a part of the goods or if only a part of the goods delivered is in conformity with the contract, articles 46 to 50 apply in respect of the part which is missing or which does not conform.

(2) The buyer may declare the contract avoided in its entirety only if the failure to make delivery completely or in conformity with the contract amounts to a fundamental breach of the contract.


OUTLINE OF ISSUES

Reproduced with permission of UNCITRAL

51A Delivery or conformity of only part of goods

51A1 Rules of 46-50 apply to part missing or non-conforming

51B Avoidance as to entire contract

51B1 Must be based on fundamental breach of contract as a whole

[Avoidance in installment contracts: see article 73]


DESCRIPTORS

Avoidance


CASE ANNOTATIONS: UNCITRAL DIGEST CASES PLUS ADDED CASES

UNCITRAL has identified relevant cases in Digests containing case annotations for each article of the CISG. For Art. 51, the UNCITRAL Digest cites eight cases: five court decisions from Germany, two ICC arbitration awards, and a Russian arbitration award.

Presented below is a composite list of Art. 51 cases reporting these UNCITRAL Digest cases and other Art. 51 cases. All cases are listed in chronological sequence, commencing with the most recent. Asterisks identify the UNCITRAL Digest cases, commencing with the 25 June 1997 citation reported below. Cases are coded to the UNCITRAL Thesaurus.

English texts and full-text English translations of cases are provided as indicated. In most instances researchers can also access UNCITRAL abstracts and link to Unilex abstracts and full-text original-language case texts sourced from Internet websites and other data, including commentaries by scholars to the extent available.
 

Germany 25 January 2008 Oberlandesgericht [Appellate Court] Hamburg (Café inventory case) 51A ; 51B [translation available]

Spain 17 January 2008 Tribunal Suprema [Supreme Court] (Used automobiles case) [translation available]
 

Germany 21 November 2007 Oberlandesgericht [Appellate Court] Koblenz (Shoes case) 51B1 [translation available]

American Arbitration Association 23 October 2007 [Interim Award] (Macromex Srl. v. Globex International Inc.)

Switzerland 27 April 2007 Tribunal cantonal [Appellate Court] Valais (Oven case) [translation available]
 

China December 2006 CIETAC Arbitration Award [CISG 2006/03] (Automobile case) [translation available]
 

China 31 October 2005 CIETAC Arbitration Award [CISG 2005/10] (Waste plastic case) [translation available]

Austria 21 June 2005 Oberster Gerichtshof [Supreme Court] (Software case) 51A ; 51B [translation available]
 

Switzerland 7 July 2004 Bundesgericht [Supreme Court] (Cable drum case) [translation available]

United States 29 March 2004 Federal Bankruptcy Court [Oregon] (In re: Siskiyou Evergreen, Inc. Debtor)
 

Spain 5 November 2003 Audiencia Provincial [Appellate Court] Vizcaya

Germany 27 October 2003 Oberlandesgericht [Appellate Court] Rostock

Netherlands 29 January 2003 Rechtbank [District Court] Zwolle

Russia 16 June 2003 Arbitration Award No. 164/2001 51B1 [translation available]

Australia 17 January 2003 Supreme Court of Western Australia (Ginza Pte Ltd v Vista Corporation Pty Ltd) 51A
 

Switzerland 25 February 2002 Kantonsgericht [District Court] Schaffhausen [translation available]

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

China 2002 Shanghai Yangpu District People's Court (China Xhanghai Dongda Import & Export Corp. v. Germany Laubholz – Meyer Corp) 51B1 [translation available]
 

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

Germany 12 October 2000 Landgericht [District Court] Stendal [translation available]
 

Russia 27 October 1999 Arbitration award 269/1998 [translation available]

ICC August 1999 International Court of Arbitration, Case 9083 [translation available]

ICC August 1999 International Court of Arbitration, Case 9887 [English text]

ICC July 1999 International Court of Arbitration, Case 9448 [English text]

Hungary 25 May 1999 Budapest Arbitration award Vb 97142 51A
 

Switzerland 30 November 1998 Handelsgericht [Commercial Court] Zürich [translation available]

Belgium 4 November 1998 Hof van Beroep [Appellate Court] Antwerp (I.S. Trading v. Vadotex) [translation available]

Russia 9 June 1998 Arbitration award 263/1997 51A [translation available]

Switzerland 24 March 1998 Obergericht [Appellate Court] Zug

France 18 March 1998 Cour d'appel [Appellate Court] Paris [translation available]
 

China 19 December 1997 CIETAC Arbitration Award [CISG/1997/36] (Steel case) 51A [translation available]

Germany 5 November 1997 Oberlandesgericht [Appellate Court] Hamm [translation available]

Hungary 1 July 1997 Fovárosi Bíróság [Metropolitan Court] [translation available]

* Germany 25 June 1997 Bundesgerichtshof [Federal Supreme Court] 51A1 [translation available]

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

Germany 31 January 1997 Oberlandesgericht [Appellate Court] Koblenz
 

Germany 17 June 1996 Landgericht [District Court] Hamburg [translation available]

Germany 21 March 1996 Hamburg Arbitration award [translation available]

China 30 January 1996 CIETAC Arbitration Award [CISG/1996/05] (Compound fertilizer case) 51B [translation available]
 

Switzerland 30 November 1995 Kantonsgericht [District Court] Zug

Germany 11 October 1995 Landgericht [District Court] Düsseldorf [translation available]

Egypt 3 October 1995 Arbitration award (Cairo Chamber of Commerce & Industry) [translation available]

Germany 20 September 1995 Oberlandesgericht [Appellate Court] Nürnberg

Germany 27 July 1995 Oberlandesgericht [Appellate Court] Rostock [translation available]

Germany 24 May 1995 Oberlandesgericht [Appellate Court] Celle 51A1 [translation available]

ICC 1995 International Court of Arbitration, Case 8128 51A1 [translation available]
 

* Russia 23 November 1994 Arbitration award 251/1993

Germany 15 September 1994 Landgericht [District Court] Berlin 51A [translation available]

* Germany 10 February 1994 Oberlandesgericht [Appellate Court] Düsseldorf [6 U 119/93] 51A [translation available]

* ICC 1994 International Court of Arbitration, Case 7531 [English text]

ICC 1994 International Court of Arbitration, Case 7565 [English text]

* ICC 1994 International Court of Arbitration, Case 7660 51A1 [English text]
 

* Germany 8 January 1993 Oberlandesgericht [Appellate Court] Düsseldorf [translation available]
 

Germany 3 July 1992 Landgericht [District Court] Heidelberg 51B1 [translation available]
 

* Germany 14 August 1991 Landgericht [District Court] Baden-Baden 51A [translation available]
 

Italy 24 November 1989 Pretura circondariale [District Court] Parma [translation available]


UNCITRAL CASE DIGEST

The UNCITRAL Digest of case law on the United
Nations Convention on the International Sale of Goods
[*]

A/CN.9/SER.C/DIGEST/CISG/51 [8 June 2004]
Reproduced with the permission of UNCITRAL

[Text of Article 51
Digest of Article 51 case law
-    Meaning and purpose of the provision
-    Prerequisites
-    Remedies for partial non-performance
-    Avoidance of entire contract (Article 51(2))]
ARTICLE 51

     (1) If the seller delivers only a part of the goods or if only a part of the goods delivered is in conformity with the contract, articles 46 to 50 apply in respect of the part which is missing or which does not conform.  

     (2) The buyer may declare the contract avoided in its entirety only if the failure to make delivery completely or in conformity with the contract amounts to a fundamental breach of the contract.

DIGEST OF ARTICLE 51 CASE LAW

Meaning and purpose of the provision

1. Article 51 deals with partial non-delivery and delivery of partially non-conforming goods. The general rule is that apart from damages all remedies of the buyer refer only to that part of the contract which is not performed. The rest of the contract remains unimpaired. In particular the entire contract generally cannot be declared avoided.[1] Only if the partial non-performance amounts to a fundamental breach of the entire contract the buyer is also entitled to avoid the entire contract.

Prerequisites

2. Article 51 presupposes that the seller has breached the contract either by delivering fewer goods than contracted or by delivering goods part of which do not conform with the contract in the sense of article 35.[2] In any case, article 51 requires that the delivered goods consist of separable parts, e.g., some tons of cucumber,[3] a shipment of tiles,[4] textiles,[5] larger quantities of stainless steel wire,[6] scaffold fittings [7] or even a complete automatic assembly line for batteries for which the contracted spare parts were missing.[8] In case of a defective piece of a machinery article 51 has been found to apply when the piece forms an independent part of the contracted good.[9]

3. The remedies provided by article 51 presuppose that the buyer has given notice of the lack of conformity as required by article 39.[10] The notice requirement has to be observed as well in cases where the seller has delivered only a part of the goods.[11]

Remedies for partial non-performance

4. With regard to the non-conforming part of the delivered goods the buyer is entitled to any of the remedies referred to in articles 46-50. However, the specific requirements of those provisions must be satisfied in each case. If the buyer wants to declare avoidance with regard to the part of goods which do not conform with the contract then the lack of quality must constitute a fundamental breach -- that means that the non-conforming goods must be of no reasonable use to the buyer.[12] On the other hand, the fixing of an additional period of time for the delivery of conforming goods cannot help establish a right of avoidance since the mechanism of article 49(1)(b) applies only in case of non-delivery but not in case of delivery of defective goods.[13] Partial non-delivery does not generally constitute a fundamental partial breach of contract and therefore does not entitle the buyer to avoid the contract. The buyer may however fix an additional period of time for delivery of the missing part and may declare the contract partially avoided when delivery is not effected during the period so fixed. Partial non-delivery on a fixed date amounts to a fundamental breach -- with regard to the missing part -- only if the buyer has a special interest in delivery exactly on time and in respect of which the seller could foresee that the buyer would prefer non-delivery instead of late delivery.[14]

5. Article 51(1) refers only to the remedies provided in articles 46-50. This does not mean that the remedy of damages is excluded. On the contrary, this remedy remains unimpaired and can be exercised in addition to or instead of the remedies referred to in article 51(1). Even if the buyer has lost its right to declare a part of the contract avoided because of lapse of time, it may still claim damages.[15]

Avoidance of the entire contract (Article 51(2))

6. According to article 51(2) the buyer can avoid the entire contract only if the partial non-performance constitutes a fundamental breach of the entire contract. The partial breach must deprive the buyer of the main benefit of the whole contract (article 25). This is however the exception rather than the rule.[16]


FOOTNOTES

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

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

1. CLOUT case No. 302 [ICC International Court of Arbitration, case No. 7660 of 1994; available at <http://cisgw3.law.pace.edu/cases/947660i1.html>] (see full text of the decision).

2. However, article 35 also covers delivery of a smaller quantity than contracted.

3. CLOUT case No. 48 [GERMANY Oberlandesgericht [Appellate Court] Düsseldorf 8 January 1993, available online at <http://cisgw3.law.pace.edu/cases/930108g1.html>].

4. CLOUT case No. 50 [GERMANY Landgericht [District Court] Baden-Baden 14 August 1991; available at <http://cisgw3.law.pace.edu/cases/910814g1.html>].

5. CLOUT case No. 82 [GERMANY Oberlandesgericht [Appellate Court] Düsseldorf 10 February 1994, available online at <http://cisgw3.law.pace.edu/cases/940210g2.html>].

6. CLOUT case No. 235 [GERMANY Bundesgerichtshof [Federal Supreme Court] 25 June 1997; available at <http://cisgw3.law.pace.edu/cases/970625g1.html>].

7. CLOUT case No. 304 [ICC International Court of Arbitration, case No. 7531 of 1994; available at <http://cisgw3.law.pace.edu/cases/947531i1.html>].

8. CLOUT case No. 302 [ICC International Court of Arbitration, case No. 7660 of 1994; available at <http://cisgw3.law.pace.edu/cases/947660i1.html>].

9. Id.

10. CLOUT case No. 48 [GERMANY Oberlandesgericht [Appellate Court] Düsseldorf 8 January 1993, available online at <http://cisgw3.law.pace.edu/cases/930108g1.html>].

11. CLOUT case No. 48 [GERMANY Oberlandesgericht [Appellate Court] Düsseldorf 8 January 1993, available online at <http://cisgw3.law.pace.edu/cases/930108g1.html>].

12. See CLOUT case No. 235 [GERMANY Bundesgerichtshof [Federal Supreme Court] 25 June 1997; available at <http://cisgw3.law.pace.edu/cases/970625g1.html>] (parts of delivered steel wire were sub-standard and therefore not useable for the buyer's purposes) (see full text of the decision); for details compare Digest article 49 at footnotes 16, 17.

13. See Digest article 49 at footnote 21.

14. CLOUT case No. 275 [GERMANY Oberlandesgericht [Appellate Court] Düsseldorf 24 April 1997, available online at <http://cisgw3.law.pace.edu/cases/970424g1.html>].

15. CLOUT case No. 82 [GERMANY Oberlandesgericht [Appellate Court] Düsseldorf 10 February 1994, available online at <http://cisgw3.law.pace.edu/cases/940210g2.html>]; [RUSSIA Arbitration Award case No. 251/93 of 23 November 1994; available online at <http://cisgw3.law.pace.edu/cases/941123r1.html>].

16. CLOUT case No. 302 [ICC International Court of Arbitration, case No. 7660 of 1994; available at <http://cisgw3.law.pace.edu/cases/947660i1.html>].


CASE ANNOTATED COMPARATIVES
-  PECL comparatives

Remedies for breach of contract where only part of the contract has been
performed: Comparison between provisions of CISG (Articles 51, 73) and
counterpart provisions of the Principles of European Contract Law

Christopher Kee [*]
July 2002

1. Introduction
2. Scheme of CISG Articles 51, 73 and PECL Article 9.302
3. Advantages and disadvantages of the different phrases
4. Conclusion

1. Introduction

CISG Articles 51 and 73 are often considered concurrently as they both deal with the scenario where only part of a contract has been performed. However, by doing so, some very important distinctions between the two articles may be overlooked. Article 51, which appears under the heading Remedies for Breach of Contract by the Seller, does as one would expect provide rights only exercisable by the buyer. The first two sub-articles of Article 73, on the other hand, are provisions common to both the seller and the buyer.[1]

A further crucial distinction within the subject matter of the two articles is the type of contract considered by each. Article 51 applies where there has been a failure to deliver part of a contract intended to be delivered as a whole. Article 73 applies to [page 281] * instalment contracts and the failure to perform an obligation in respect to an instalment.[2] Further, while in both scenarios the buyer may ultimately obtain the same remedy, the two articles follow different paths to that result.[3]

The PECL does not draw a distinction between rights of the seller and buyer in the same manner as the CISG. Nor is the PECL intended to relate solely to contracts for the sale of goods. As a consequence of the latter difference the term "delivery" makes way for "performance". At first glance, PECL Article 9:302 is most comparable to CISG Article 73 as it considers a failure of performance in the situation where "… the contract is to be performed in separate parts and in relation to a part to which counter performance can be apportioned …" However, as shall be discussed, this language does not exclude those circumstances contemplated by CISG Article 51. Further, despite wording which may initially indicate the contrary, and arguably unlike CISG Article 73(3),[4] PECL Article 9:302 does not release an aggrieved party of any obligations that may have accrued at the time of the failure.

2. Scheme of CISG Articles 51, 73 and PECL Article 9.302

Leser describes CISG Article 51 as creating a "de facto division" in the contract.[5] This artificialdichotomy was created to promote one of the fundamental tenets of the CISG - to keep contracts "on foot." An unintended consequence has been competition with CISG Article 73. From a buyer's perspective, Article 51 offers a considerably more certain method of avoiding the offending part of the contract. [page 282]

By providing recourse to the Nachfrist provisions in CISG Articles 47 and 49(1)(b),[6] there are circumstances in which the buyer does not need to show the fundamental breach required by CISG Article 73.[7] CISG Article 51(2) also offers the buyer the ability to avoid the entire contract in instances where failure as to a part amounts to a fundamental breach of the whole contract.[8] CISG Article 73(3) would instead appear to take the curious position of forcing the buyer to elect between avoiding future or previous deliveries, although this distinction has been dismissed.[9] [page 283]

As is the case with all of buyer's remedies under the CISG, Articles 51 and 73 are both subject to the examination and notice regimes of Articles 38 and 39 (examination of the goods "within as short a period as is practicable under the circumstances" and "notice to the seller specifying the nature of [any] lack of conformity within a reasonable time after [the buyer] has discovered it or ought to have discovered it"). If buyer elects the remedy of avoidance where the goods have been delivered, Article 49(2) also requires the buyer to declare the contract avoided "within a reasonable time." Article 51 states that "articles 46 to 50 apply" to it; hence this further reasonable-time requirement is an element of an avoidance proceeding pursuant to Article 51. There is no reference to that in Article 73(1).[10] Even so, the general consensus of scholarly opinion tends to favor the buyer applying the CISG Article 51 approach in the absence of a very clearly defined instalment contract.[11]

The drafters of the PECL have avoided the competition between CISG Articles 51 and 73 by not including a specific provision that explicitly directs the parties to act in the same manner as CISG Article 51. Although using the same language of CISG Article 51, i.e., "parts", a plain reading of PECL Article 9:302 does only allow termination [12] as to the part where there has been fundamental non-performance.[13] Therefore, with the exclusion of this linguistic argument, PECL Article 9:302 does represent a shorter restatement of CISG Article 73. [page 284] However, it is important not to immediately assume that the PECL promotes the rights and remedies afforded by CISG Article 73 and by its silence condemns the approach of CISG Article 51.

3. Advantages and disadvantages of the differences of phrases

There are a number of opposing conclusions that may be drawn from using the PECL to help interpret the CISG when considering these particular articles. Those familiar with arguing around the common law doctrine of precedent will appreciate that in this instance the omission of the PECL to explicitly address a CISG Article 51 scenario does not in and of itself suggest a criticism of the approach. Whilst that view could be taken, it is suggested that the better view is that the combined PECL articles promote the CISG Article 51 position in two ways - by providing a restrictive definition of termination, and by requiring fundamental non-performance.

As was foreshadowed in the introduction to this piece, PECL Article 9:302 allows termination of the "contract as a whole" where non-performance is fundamental to the contract as a whole. However, "contract as a whole" does not, as it might initially appear, mean the entire contract. PECL Article 9:305 describes the effect of termination as it applies to all references to this word within the PECL. With two exceptions, termination of a contract as a whole will only relieve the parties of their future obligations. The article specifically leaves intact the rights and liabilities that have accrued at the date of termination. The two exceptions are where the value of property already delivered has been fundamentally reduced (PECL Article 9:306) and where recovery of property already delivered can be made (PECL Article 9:308).

It must also be remembered that PECL Article 9:302 only allows termination in instances where there has been fundamental non-performance, or to use the CISG terminology a fundamental breach. In doing so, the PECL is similarly promoting the notion of keeping contracts "on foot." Where the failure to perform, or non-performance, is not fundamental, there are a variety of other remedies available to the innocent party. One such remedy is PECL Article 8:106, a Nachfrist - type notice. Whilst this remedy is consistent with the CISG, its applicability in this instance may not be. It is important to be mindful of the rationale that guides PECL Article 9:302 and CISG Articles 51 and 73 - where the failure to [page 285] perform or deliver a part of the contract does not compromise the purpose of the entire contract, it is would be unreasonable to allow the entire contract to be ended.[14] If one cannot find a similar theme to CISG Article 51 in the PECL generally, then this rationale may be circumvented by PECL Article 8:106. An extremely unfortunate consequence when apportioning counter-performance is frequently the relatively simple matter of identifying a monetary value.[15]

Therefore, when considering PECL Articles 9:302, 9:305 and 9:306 together and in context, it is possible to see that the same philosophy that drives CISG Article 51 emerges. Recourse is first given to what might be described as "non-drastic" remedies. If the failure to perform a part of the contract amounts to fundamental non-performance of the entire contract, then with the assistance of PECL Article 9:306, all obligations including those previously accrued can be avoided.

4. Conclusion

The PECL endorses and promotes many of the principles outlined in the CISG. Although, in this instance, the articles are not drafted in an identical or substantially similar manner, it is nonetheless possible to identify support for the notion of restricting a party's ability to unreasonably end an entire contract. [page 286]


FOOTNOTES

* Christopher Kee is an Associate Lecturer in Law at Deakin University and is a Partner with Keelins, Melbourne Australia <ckee@keelins.com>.

This comparative is also published at 6 Vindobona Journal of International Commercial Law and Arbitration (2002-2) 281-286. Pagination to that publication is provided to facilitate citation to the Vindobona text.

A match-up is available setting CISG Articles 51 and 73 alongside PECL Article 9:302 [Contract to be performed in parts]; see also PECL Articles 9:301 [Right to terminate the contract] and 9:306 [Property reduced in value] <http://cisgw3.law.pace.edu/cisg/text/peclcomp51.html>. The match-up is accompanied by:

-   Comments on these PECL provisions authored by the European Commission describing and illustrating the manner in which they are to be applied; and
-   Notes that compare them with continental and common law domestic rules, doctrine and jurisprudence.

1. Both CISG Articles 51 and 73 belong to the Convention's Part III: Sale of Goods. Article 51 is listed in Chapter II: Obligations of the Seller, Section III: Remedies for breach of contract by the seller. Article 73 is listed in Chapter V: Provisions Common to the Obligations of the Seller and of the Buyer, Section I: Anticipatory breach and instalment contracts.

Schlechtriem, commenting on the operation of CISG Art. 73 states that "this provision is concerned with successive deliveries, not instalment payments. By analogy, however, Article 73(2) can also apply to missed payments if they coincide with instalment deliveries. Otherwise, the entire contract may be avoided under Article 72. Article 73(2) is also applicable to other breaches by the buyer, such as not taking delivery of an instalment." P. Schlechtriem, Uniform Sales Law - The U.N. Convention on Contracts for the International Sale of Goods, (1986) at p. 96 [relevant excerpt also available on-line at <http://cisgw3.law.pace.edu/cisg/biblio/schlechtriem-73.html>].

2. Cf. Karollus, Martin. Judicial Interpretation and Application of the CISG in Germany 1988-1994, Cornell Review of the Convention on Contracts for the International Sale of Goods (1995) 51-94 [also available at <http://cisgw3.law.pace.edu/cisg/biblio/karollus.html>]. Karollus provides a critique of the German Baden-Baden Landgericht [District Court] case of 14 August 1991 [translation available at: <http://cisgw3.law.pace.edu/cases/910814g1.html>]. This was a case where the German buyer placed an order for two tile sets A & B with an Italian seller. Both sets contained basic and decorative tiles. The basic tiles belonging to set A were non-confirming and the buyer sought to avoid the contract in respect of the entirety of set A. In a step that appears to be inconsistent with Article 51, the German Court accepted avoidance of that set, based on the rationale that without the appropriate basic tiles, the decorative tiles in set A were useless. Had Article 51 been followed strictly the only two remedies available would have been either avoidance as to the whole contract, i.e., set A and B, or avoidance as to the basic tiles of set A only. Karollus supports the court's decision as such a remedy is contemplated by Article 73, and he argues there is no reason why it should not apply to non-instalment contracts as well.

3. Cf. CISG Article 64 for seller's rights and remedies for a breach of contract by the buyer.

4. See note 9 infra.

5. Leser, Hans G., in: Schlechtriem, P. (ed.) Commentary on the UN Convention on the International Sale of Goods (CISG), 2nd edition. Clarendon Press, Oxford, 1998 at p. 545.

6. See Zeller, B. Editorial Remarks, in Guide to Articles 47 and 49(1)(b) <http://cisgw3.law.pace.edu/cisg/text/peclcomp47.html#er>.

7. See further Honnold, J., Uniform Law for International Sales under the 1980 United Nations Convention 2nd Edition. Kluwer Law and Taxation Publishers, Deventer, Boston 1991 at p. 501, where he notes that the idea of a Nachfrist notice cannot be compatible with CISG Articles 73(2) and 73(3). Honnold does, however, suggest that, in certain circumstances, for example delivery of an instalment or the failure to establish a letter of credit, it is not repugnant to all scenarios contemplated by CISG Article 73(1).

8. "The approach in CISG Art. 51 follows logically from its linkage of the right of avoidance to the gravity of the breach". Jacob S. Ziegel, Report to the Uniform Law Conference of Canada on Convention on Contracts for the International Sale of Goods, (July 1981) [available on-line at <http://cisgw3.law.pace.edu/cisg/text/ziegel51.html>]. That approach has been widely recognized in the case law; see, e.g., Germany 24 May 1995, Oberlandesgericht [Appellate Court] Celle [translation available at: <http://cisgw3.law.pace.edu/cases/950524g1.html>], where the court reiterated that regarding a delivery or conformity of only part of goods, the rules of CISG Articles 46 to 50 apply to the part which is missing or non-conforming under Art. 51(1) and, further, that if the seller's offer to deliver conformed with the contract, the buyer would not have the right to avoid the contract unless he could show that a partial delivery was a fundamental breach and therefore the missing part [a used printing press] entitled him to avoid the entire contract under CISG Art. 51(2).

See also, Germany 3 July 1992, Landgericht [District Court] Heidelberg [translation available on-line at <http://cisgw3.law.pace.edu/cases/920703g1.html>]. In that case, a German buyer concluded a contract for the sale of computer components with a U.S. seller, but after delivery of 5 parts had been carried out, the buyer refused payment and declared the contract avoided on the grounds that the delivery of 11 parts had been agreed. The German court held that even if delivery of 11 parts had been agreed the dispatch of only 5 parts would not entitle the buyer to declare the contract in its entirety avoided according to CISG Art. 51(2). See further, R. Koch, "The Concept of Fundamental Breach of Contract Under the U.N. Convention on Contracts for the International Sale of Goods", Review of the Convention on Contracts for the International Sale of Goods (CISG) 1998, Kluwer Law International (1999) 177-354 [also available on-line at <http://cisgw3.law.pace.edu/cisg/biblio/koch.html>].

See also, ICC Arbitration Case No. 7660 of 1994 [available at: <http://cisgw3.law.pace.edu/cases/947660i1.html>], where the arbitral tribunal noted that article 51(1) CISG provided for a partial avoidance of the contract as declared by the buyer, and that under article 51(2) CISG such partial avoidance was the rule rather than the exception in cases of partial non-performance amounting to a non-fundamental breach of the contract (article 49(1)(a) CISG). In that case, the arbitral tribunal determined that a partial avoidance under article 51(1) CISG was permissible where the defective piece of machinery formed an independent part of the contracted goods as it was in the case at issue. However, the arbitral tribunal further determined that the buyer's partial avoidance was barred by the 18-month time limit contained in the contract.

9. See further Leser, supra note 5 at p. 551. He states that often in these situations as it will be not possible to achieve the purpose of the contract as a whole, there must be a fundamental breach allowing avoidance of the entire contract despite this wording. It is, however, interesting to note that ULIS Article 75 on which CISG Article 73 is modelled did specifically refer to deliveries already made or future deliveries or both.

Cf. Schlechtriem, commenting on the operation of Art. 73(3). He states: "If, due to the interdependence of the instalments, the defective or failed performance makes past or future instalments worthless, those instalments can be avoided as well. However, this is true only if the purpose of the entire contract was clear to both parties at the conclusion of the contract (Article 73(3)). The buyer's interest in receiving complete performance must, therefore, have been recognizable to the seller." P. Schlechtriem, Uniform Sales Law - The U.N. Convention on Contracts for the International Sale of Goods, (1986) [relevant excerpt also available on-line at <http://cisgw3.law.pace.edu/cisg/biblio/schlechtriem-73.html>].

See, e.g., Switzerland 30 November 1998, [Commercial Court] Zürich [CLOUT abstract no. 251, also available at: <http://cisgw3.law.pace.edu/cases/981130s1.html>], where that court stated that regarding avoidance in installment contracts under CISG Art. 73, installment deliveries do not have to be of the same type of goods.

10. Though CISG Article 73(2) provides that in respect of refusal of future instalments, a buyer may declare the contract avoided for the future, provided he does so within a reasonable time. See, e.g., Switzerland 5 February 1997, Handelsgericht [Commercial Court] Zürich [CLOUT no. 214, also available at <http://cisgw3.law.pace.edu/cases/970205s1.html>]. In that case, a German buyer had entered into a contract with a French seller for the delivery to Romania of 2 to 4 million liters of sunflower oil per month at a specified price. Although the buyer had paid a timely instalment for the first delivery, the seller did not ship the goods to Romania. The buyer declared the contract avoided and sued the seller for restitution of the first instalment and for damages. The Swiss court held that the buyer had a right to declare the contract avoided as the seller did not deliver the goods and this failure to perform its obligation gave reason to believe that a fundamental breach of contract was to be expected for further instalments (article 49(1)(b), 73(1) and (2) CISG).

11. Leser, supra note 5 at p. 551 and authorities cited at his n.24.

12. "Termination" is the PECL's counterpart to the CISG's term "avoidance."

13. About the terminology adopted, the PECL Comments to Article 9:302, state: " 'Termination in relation to a part' of the contract is a slightly awkward phrase, as the contract is not terminated, but it has the advantage that the general rules on termination (such as the need to give notice under Article 9:303) applies. CISG Article 73 takes the same approach." Comment B, also available on-line at <http://cisgw3.law.pace.edu/cisg/text/peclcomp51.html#9:302>.

14. See further PECL Comments to Article 9:302, Comment A [available on-line at <http://cisgw3.law.pace.edu/cisg/text/peclcomp51.html#mu>].

15. The PECL Comments to Article 9:302 make it clear that where one party's obligations consists of distinct parts and the non-performance affects only one of those parts, PECL Article 9:302 is still applicable even though payment is not made separately. See Comment C [available on-line at <http://cisgw3.law.pace.edu/cisg/text/peclcomp51.html#mu>].

Cf. Ziegel who, commenting on the operation of CISG Art. 51, points out: "Read literally, art. 51(1) suggest that the non-conforming goods may be subject to the remedy of avoidance regardless of the commercial viability of the rejected goods. UCC 2-601, by way of contrast, provides that only a 'commercial unit' may be accepted or rejected by the buyer. Presumably the Convention did not intend a different result." Jacob S. Ziegel, Report to the Uniform Law Conference of Canada on Convention on Contracts for the International Sale of Goods, (July 1981) [available on-line at <http://cisgw3.law.pace.edu/cisg/text/ziegel51.html>].


Pace Law School Institute of International Commercial Law - Last updated June 26, 2009
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