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2008 UNCITRAL Digest of case law on the United Nations Convention on the International Sale of Goods

Digest of Article 26 case law [reproduced with permission of UNCITRAL] [*]

[Text of article
Overview
Form of notice
Contents of notice
Addressee of the notice
Time for communication of notice]

Article 26

A declaration of avoidance of the contract is effective only if made by notice to the other party.

OVERVIEW

1. Article 26 provides that avoidance of contract must be declared by the party who intends to terminate the contract, and that the declaration must be effected by notice to the other party. The Convention does not provide for an automatic (ipso facto) avoidance of contract.[1] It has nevertheless been held that notice of avoidance is unnecessary where a seller has "unambiguously and definitely" declared that it will not perform its obligations, since notice in such a situation would be a "mere formality," the date of avoidance can be determined from the obligor's declaration of the intention not to perform, and requiring notice of avoidance would be contrary to the mandate in article 7(1) to interpret the Convention in a fashion that promotes the observance of goods faith in international trade.[2]

2. The purpose of the notice requirement is to ensure that the other party becomes aware of the status of the contract.

Form of notice

3. The notice need not be given in a particular form (see also article 11). It therefore can be made in writing or even orally.[3] Also, a notice in a statement of claim filed with a court suffices.[4]

4. Article 26 does not mention the possibility of implicit notice, but several courts have dealt with this issue. One court found that the buyer's mere purchase of substitute goods did not constitute a valid (implicit) notice of declaration of avoidance;[5] another court decided that the buyer did not give valid notice of avoidance by sending back the delivered goods without further explanation.[6]

Contents of notice

5. The notice must express with sufficient clarity that the party will not be bound by the contract any longer and considers the contract terminated.[7] Therefore, an announcement that the contract will be avoided in the future if the other party does not react,[8] or a letter demanding either price reduction or taking the delivered goods back,[9] or the mere sending back of the goods [10] does not constitute a valid notice because it does not state in unequivocal terms that the originating party believes that the contract is avoided. The same is true if a party merely requests damages,[11] or if it declares avoidance with respect to a different contract.[12] It appears, however, that the phrase "declaration of avoidance" or even the term "avoidance" need not be used, nor need the relevant provision of the Convention be cited, provided that a party communicates the idea that the contract is presently terminated because of the other side's breach. Thus, one court found that the buyer effectively gave notice by declaring that it could not use the defective goods and that it placed them at the disposal of the seller.[13] The same was ruled with respect to a letter in which the buyer stated that no further business with the seller would be conducted.[14] A buyer's written refusal to perform combined with a demand for repayment has also been deemed sufficient notice of avoidance.[15] Notice of non-conformity of the goods and notice of avoidance can be combined and expressed in one declaration.[16]

Addressee of the notice

6. The notice must be directed to the other party, which is normally the other party to the original contract, or its authorized agent. If the contractual rights have been assigned to a third party the declaration must be addressed to this new party.[17]

Time for communication of notice

7. In certain circumstances, articles 49(2) and 64(2) require that notice of avoidance be communicated within a reasonable time. It has been held that notice after several months is clearly not reasonable under article 49(2).[18] To meet any applicable time limit, dispatch of the notice within the period is sufficient (see article 27).


NOTES

* This presentation of the UNCITRAL Digest is a slightly modified version of the original UNCITRAL text at <http://www.UNCITRAL.org/pdf/english/clout/CISG_second_edition.pdf>. The following modifications were made by the Institute of International Commercial Law of the Pace University School of Law:

   -    To enhance access to contents by computer search engines, we present in html rather than pdf;
 
   -    To facilitate direct focus on aspects of the Digests of most immediate interest, we inserted linked tables of contents at the outset of most presentations;
 
   -    To support UNCITRAL's recommendation to read more on the cases reported in the Digests, we provide mouse-click access to (i) CLOUT abstracts published by UNCITRAL (and to UNILEX case abstracts and other case abstracts); and also (ii) to full-text English translations of cases with links to original texts of cases, where available, in [bracketed citations] that we have added to UNCITRAL's footnotes; and
 
   -    To enable researchers to themselves keep the case citations provided in the Digests constantly current, we have created a series of tandem documents, UNCITRAL Digest Cases + Added Cases. The new cases and other cases that are cited in these updates are coded in accordance with UNCITRAL's Thesaurus.

In addition, this presentation introduces each section of the UNCITRAL Digest with a Google search button. This is to help you access doctrine (relevant material from the over 1,200 commentaries, monographs and books on the CISG and related subjects that we present on this database) as well as the texts of the cases that UNCITRAL cites in its Digests and that we present in our updates to UNCITRAL's Digests.

1. See [AUSTRIA Oberster Gerichtshof 6 February 1996 (Propane case)] (see full text of the decision); [GERMANY Oberlandesgericht Bamberg 13 January 1999]; [ICC International Court of Arbitration, Award 9887 of August 1999 (Chemicals case)]

2. [GERMANY Oberlandesgericht München 15 September 2004 (Furniture leather case)].

3. [AUSTRIA Oberster Gerichtshof 6 February 1996 (Propane case)].

4. [AUSTRALIA Federal Court of Adelaide 28 April 1995 (Roder v. Rosedown)].

5. [GERMANY Oberlandesgericht Bamberg 13 January 1999 (Fabric case)].

6. [GERMANY Landgericht Frankfurt a.M. 16 September 1991 (Shoe case)].

7. Id.

8. [GERMANY Landgericht Zweibrcken 14 October 1992 (Shoes case)].

9. [GERMANY Oberlandesgericht München 2 March 1994 (Coke case)].

10. [GERMANY Landgericht Frankfurt a.M. 16 September 1991 (Shoe case)].

11. [GERMANY Oberlandesgericht München 8 February 1995 (Automobiles case)].

12. [GERMANY Landgericht Frankfurt a.M. 16 September 1991 (Shoe case)] (see full text of the decision).

13. [GERMANY Bundesgerichtshof 25 June 1997 (Stainless steel wire case)].

14. [GERMANY Arbitration-Schiedsgericht der Hamburger freundschatlichen Arbitrage 29 December 1998 (Cheese case)].

15. [GERMANY Oberlandesgericht Karlsruhe 19 December 2002 (Machine case)].

16. [GERMANY Bundesgerichtshof 25 June 1997 (Stainless steel wire case)].

17. [GERMANY Landgericht Frankfurt a.M. 16 September 1991 (Shoe case)] (see full text of the decision).

18. See [GERMANY Bundesgerichtshof 15 February 1995 (Key press stamping machine case)] (notice after 5 months: too late); [GERMANY Oberlandesgericht Frankfurt a.M. 20 April 1994 (New Zealand mussels case)] (2 months: too late); [[GERMANY Oberlandesgericht München 2 March 1994 (Coke case)] (4 months: too late); [GERMANY Landgericht Frankfurt a.M. 16 September 1991 (Shoe case)] (1 day: in time) (see full text of the decision).


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