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LEGISLATIVE HISTORY

Legislative history of CISG article 72: Match-up with 1978 Draft to assess relevance of Secretariat Commentary


1978 Draft article 63

If prior to the date for performance of the contract it is clear that one of the parties will commit a fundamental breach, the other party may declare the contract avoided.

  

CISG article 72

(1) If prior to the date for performance of the contract it is clear that one of the parties will commit a fundamental breach of contract, the other party may declare the contract avoided.

(2) If time allows, the party intending to declare the contract avoided must give reasonable notice to the other party in order to permit him to provide adequate assurance of his performance.

(3) The requirements of the preceding paragraph do not apply if the other party has declared that he will not perform his obligations.


Editorial comments

Paragraph (1) of CISG article 72 is identical to paragraph (1) of 1978 Draft article 63, except that CISG article 72(1) refers to "a fundamental breach of contract" rather than a "fundamental breach". Paragraph (2) and (3) of CISG article 72 are new. "Mr. SHAFIK (Egypt), introducing his delegation's amendments...said that...the remedy [in paragraph (1)] whereby a party might proceed directly to avoidance of contract was rather drastic; even if the other party had already been declared backrupt, his creditors might still be prepared to fulfill the contract...notification should be given in all cases..." (Official Records, p.420). Vilus elaborates: "[F]ears were expressed at the Vienna Conference by many delegates of developing countries who insisted especially on the condition that the party intending to declare the contract avoided must inform the other party of his intention so as 'to permit him to provide adequate assurance of his performance.' The industrially developed countries were against this, pointing out that two things had been mixed up, i.e., suspension of performance and the right to avoid the contract. In order to satisfy both demands, a compromise was reached. Accordingly, [CISG article 72(2)] provides that 'if times allows' (compromise to the developed countries), 'the party intending to declare the contract avoided must give reasonable notice to the other party in order to permit him to provide adequate assurance of his performance' (compromise to the developing countries)... An exception to this rule is provided in [CISG article 72(3)] in cases where it is absolutely clear that or obvious that the other party will not perform his obligations" (Vilus, International Sale of Goods, Sarcevic & Volken eds. (Oceana 1986), p. 245) Schlechtriem states: "Notice of the intent to avoid is unnecessary in those situations -- practically speaking, the most important -- in which the other party has already declared that he will not perform the contract [CISG article 72(3)]. Since this exception also covers the frequent cases in which a demand for new terms or alleged contract violations by the other side are used as a pretext for not performing one's own obligations, immediate avoidance still remains an option in most cases. However, [CISG article 72(2)] should apply primarily to situations where performance by a willing party is jeopardized by objective circumstances [see, for instance, circumstances cited in the Secretariat Commentary on 1978 Draft article 65 (counterpart to CISG article 79)]: the seller's factory burns down; an embargo is imposed; currency exchange laws prevent payment]. In those cases where there is no time to notify, where the delivery date is so near that assurances could not be procured in time, there is no need to notify the other party ... Where there is little chance that the other party can still provide security -- for example, where a delivery cannot be made because of was -- notice will often be unnecessary" (Schlechtriem, Uniform Sales Law: The UN Convention on Contracts for the International Sale of Goods (Manz Verlags: Vienna 1986), p. 95).


Pace Law School Institute of International Commercial Law - Last updated July 12, 1999
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