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Reproduced with permission from 8 Journal of Law and Commerce (1988) 53-108

excerpt from

Remedies Under the New International Sales Convention: The Perspective from Article 2 of the U.C.C.

Harry M. Flechtner [*]

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Partial Avoidance Under Article 51

If a seller makes a delivery that includes some non-conforming goods or that contains less than the required quantity of goods, Article 51(1) provides that the Convention's remedy provisions for buyers apply to the missing or non-conforming portion of the delivery. In other words the buyer can treat the missing or non-conforming goods as the subject of a contract that is severable for remedy purposes. For example, the buyer may be able to avoid as to the faulty portion of the delivery,[158] thus eliminating its obligation to pay for the missing or defective goods [159] and entitling it to cover or market-price damages therefor.[160] This rule, which apparently applies to deliveries under both installment and single-delivery contracts, resembles the U.C.C. Article 2 provisions that permit a buyer to reject or revoke acceptance as to "commercial units" of goods [161] and to obtain market-price or cover damages for a missing portion of a delivery.[162]

Under Article 51 of the Convention, however, the buyer has aright to "partial avoidance" only if 1) the defects in the non-conforming goods or the delay in delivering the missing goods constitute a fundamental breach with respect to those goods or 2) the seller has failed to deliver missing goods within the time fixed in a Nachfrist notice.[163] Immaterial non-conformities in a portion of a delivery, for instance, will not permit the buyer to reject or withhold payment for the non-conforming portion, although the buyer can exercise its nonavoidance remedies (e.g., can require the seller to repair [164] or can claim damages [165]) with respect to the defective goods. Under U.C.C. section 2-601, in contrast, a buyer in a single-delivery contract has the theoretical right to reject any "commercial unit" of tendered goods even if the seller has committed only an immaterial breach.

Where a seller makes a partially non-conforming or insufficient delivery, Article 51(2) of the Convention provides that the buyer can avoid the contract "in its entirety" only if the seller's default "amounts to a fundamental breach of contract." At first glance, this provision appears redundant. Article 49(1) makes it clear that, absent use of the Nachfrist procedure, the buyer can avoid the contract only if the seller committed a fundamental breach. Nothing in Article 49 suggests that this rule does not apply when the seller delivers non-conforming goods or fails to deliver a full complement of goods. Article 51(2), nevertheless, is not mere verbiage. Professor Honnold notes that

"[o]ne of the purposes of paragraph (2) of Article 51 is to make clear that paragraph (1) does not force the buyer to sort out the non-conforming goods for separate handling. The buyer may "avoid" (reject) as to the entire delivery if the breach as to part causes detriment that is so substantial as to constitute a "fundamental breach" of the contract as a whole."[166]

In cases involving a partially non-conforming or insufficient delivery, furthermore, Article 51(2) permits the buyer to avoid the entire contract "only" if the failure constitutes a fundamental breach of contract. Thus if the seller fails to deliver an immaterial portion of the goods, the buyer cannot use the Nachfrist procedure to create grounds for avoiding the contract in its entirety.[167] The unavailability of Nachfrist avoidance whenever the seller has made a partial delivery is troubling. Suppose the seller delivers only 10 of the 100 bales of cotton required under the contract, but indicates that the balance will be delivered in the future. Under Article 51(2), the partial delivery deprives the buyer of the advantages of the Nachfrist procedure. The buyer must wait until it is sure that the seller's delay in completing delivery amounts to a fundamental breach before it can avoid the contract. Nachfrist avoidance was designed to eliminate such uncertainty. The rule making Nachfrist avoidance unavailable where the buyer has received partial delivery appears to reflect the confusion, previously noted, over delay in performance and the materiality of the delayed performance.[168]

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Go to entire text of Flechtner commentary


FOOTNOTES

* Assistant Professor, University of Pittsburgh School of Law. A.B. 1973, Harvard College; A.M. 1975, Harvard University; J.D. 1981, Harvard University School of Law. . . .

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158. Honnold, supra note 25, at 329-30.

159. See Sales Convention, supra note 1, art. 81.

160. Id. arts. 75, 76.

161. U.C.C. §§ 2-601(c), 2-608(1) (1978).

162.See id. § 2-711(1).

163. See Honnold, supra note 25, at 328-30. In other words, Article 49(1) authorizes the buyer to avoid the contract only if the seller has committed a fundamental breach or has failed to deliver within the time fixed in a Nachfrist notice. Article 51(1) merely makes this rule applicable to a non-conforming or missing portion of a delivery.

164. See Sales Convention, supra note 1, art. 46(3).

165. Id. arts. 45(1)(b), 74.

166. Honnold, supra note 25, at 330.

167. See Draft Commentary, supra note 86, art. 47, ¶ 4, reprinted in Official Records, supra note 71, at 44; Honnold, supra note 25, at 330.

168. See supra notes 85-91 and accompanying text. Under the construction of Article 49(1)(b) previously advocated, id., avoidance of the entire contract would be permitted only where the seller failed to deliver a material part of the goods within the time fixed by a Nachfrist notice. This approach would solve the problem that the drafters of Article 51(2) apparently had in mind when they limited the buyer’s power to avoid the entire contract to situations where the seller had committed a fundamental breach. For further discussion of this issue, see infra note 182.

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Pace Law School Institute of International Commercial Law - Last updated August 16, 1999
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