Source: http://cisgw3.law.pace.edu/cisg/principles/uni46.html
Timestamp: 2018-01-22 06:14:56
Document Index: 735640304

Matched Legal Cases: ['Art. 1', 'Art. 1', 'Art. 28', 'Art. 6', 'Art. 6', 'Art. 1', 'Art. 7', 'Art. 7', 'Art. 7', 'Art. 7', 'Art. 7', 'Art. 7', 'Art. 1', 'Art. 7', 'Art. 7']

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Use of the UNIDROIT Principles to help interpret CISG Article 46
Match-up of Article 46 with UNIDROIT Principles
Match-up of CISG Article 46 with counterpart provisions of UNIDROIT Principles
Article 7.2.1- Performance of Monetary Obligation
[Buyer's right to performance]
3. If the goods do not conform with the contract, the buyer may require the seller to remedy the lack of conformity by repair, unless this is unreasonable having regard to all the circumstances. A request for repair must be made either in
conjunction with notice given under article 39 or within a reasonable time thereafter.
[Section 2 of the UNIDROIT Principles addresses seller's right to performance as well as buyer's right to performance. Seller's right to performance under the UN Sales Convention is addressed in CISG Article 62]
This article reflects the generally accepted principle that payment of money which is due under a contractual obligation can always be demanded and, if the demand is not met, enforced by legal action before a court. The term "require" is used in this article to cover both the demand addressed to the other party and the enforcement,whenever necessary, of such a demand by a court.
The article applies irrespective of the currency in which payment is due or may be made. In other words, the right of the obligee to require payment extends also to cases of payment in a foreign currency. For the determination of the currency in which a monetary obligation is due or payment may be made, see Arts. 6.1.9, 6.1.10 and 7.4.12.
Exceptionally, the right to require payment of the price of the goods or services to be delivered or rendered may be excluded. This is in particular the case where a usage requires a seller to resell goods which are neither accepted nor paid for by the buyer. For the applicability of usages, see Art. 1.8.
In accordance with the general principle of the binding character of the contract (see Art. 1.3), each party should as a rule be entitled to require performance by the other party not only of monetary, but also of non-monetary obligations, assumed by that party. While this is not controversial in civil law countries, common law systems allow enforcement of non-monetary obligations only in special circumstances.
While CISG provides that "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 [the] Convention" (Art. 28), under the Principles specific performance is not a discretionary remedy, i.e. a court must order performance, unless one of the exceptions laid down in the present article applies.
A performance which is impossible in law or in fact, cannot be required (sub-para. (a)). However, impossibility does not nullify a contract: other remedies may be available to the aggrieved party. See Arts. 3.3 and 7.1.7(4).
The refusal of a public permission which is required under the applicable domestic law and which affects the validity of the contract renders the contract void (see Art. 6.1.17(1)), with the consequence that the problem of enforceability of the performance cannot arise.When however the refusal merely renders the performance impossible without affecting the validity of the contract (see Art. 6.1.17(2)), sub-para. (a) of this article applies and performance cannot be required.
In exceptional cases, particularly when there has been a drastic change of circumstances after the conclusion of a contract, performance, although still possible, may have become so onerous that it would run counter to the general principle of good faith and fair dealing (Art. 1.7) to require it.
1. An oil tanker has sunk in coastal waters in a heavy storm.Although it would be possible to lift the ship from the bottom of the sea, the shipper may not require performance of the contract of carriage if this would involve the shipowner in expense vastly exceeding the value of the oil. See Art. 7.2.2(b).
The words "where relevant, enforcement" take account of the fact that in common law systems it is the courts and not the obligees who supervise the execution of orders for specific performance. As a consequence, in certain cases, especially those involving performances extended in time, courts in those countries refuse specific performance if supervision would impose undue burdens upon courts.
As to other possible consequences arising from drastic changes of circumstances amounting to a case of hardship, see Arts. 6.2.1 et seq.
Many goods and services are of a standard kind, i.e. the same goods or services are offered by many suppliers. If a contract for such staple goods or standard services is not performed, most customers will not wish to waste time and effort extracting the contractual performance from the other party. Instead, they will go into the market, obtain substitute goods or services and claim damages for non-performance.
In view of this economic reality sub-para. (c) excludes specific performance whenever the party entitled to performance may reasonably obtain performance from another source. That party may terminate the contract and conclude a replacement transaction. See Art. 7.4.5.
The word "reasonably" indicates that the mere fact that the same performance can be obtained from another source is not in itself sufficient, since the aggrieved party could not in certain circumstances reasonably be expected to have recourse to an alternative supplier.
2. A, situated in a developing country where foreign exchange is scarce, buys a machine of a standard type from B in Tokyo. In compliance with the contract, A pays the price of US $100,000 before delivery. B does not deliver. Although A could obtain the machine from another source in Japan, it would be unreasonable, in view of the scarcity and high price of foreign exchange in its home country, to require A to take this course. A is therefore entitled to require delivery of the machine from B.
Where a performance has an exclusively personal character, enforcement would interfere with the personal freedom of the obligor. Moreover, enforcement of a performance often impairs its quality. The supervision of a very personal performance may also give rise to insuperable practical difficulties, as is shown by the experience of countries which have saddled their courts with this kind of responsibility. For all these reasons, sub-para. (d) excludes enforcement of performance of an exclusively personal character.
The precise scope of this exception depends essentially upon the meaning of the phrase "exclusively personal character". The modern tendency is to confine this concept to performances of a unique character. The exception does not apply to obligations undertaken by a company. Nor are ordinary activities of a lawyer, a surgeon or an engineer covered by the phrase for they can be performed by other persons with the same training and experience. A performance is of an exclusively personal character if it is not delegable and requires individual skills of an artistic or scientific nature or if it involves a confidential and personal relationship.
3. An undertaking by a firm of architects to design a row of 10 private homes can be specifically enforced as the firm can delegate the task to one of the partners or employ an outside architect to perform it.
The performance of obligations to abstain from doing something does not fall under sub-para. (d).
Performance of a contract often requires special preparation and efforts by the obligor. If the time for performance has passed but the obligee has failed to demand performance within a reasonable time, the obligor may be entitled to assume that the obligee will not insist upon performance. If the obligee were to be allowed to leave the obligor in a state of uncertainty as to whether performance will be required, the risk might arise of the obligee's speculating unfairly, to the detriment of the obligor, upon a favourable development of the market.
For these reasons sub-para. (e) excludes the right to performance if it is not required within a reasonable time after the obligee has become, or ought to have become, aware of the non-performance.
For a similar rule concerning the loss of the right to terminate the contract, see Art. 7.3.2(2).
This article applies the general principles of Arts. 7.2.1 and 7.2.2 to a special, yet very frequent, case of non-performance, i.e. defective performance. For the sake of clarity the article specifies that the right to require performance includes the right of the party who has received a defective performance to require cure of the defect.
Under the Principles cure denotes the right both of the non-performing party to correct its performance (Art. 7.1.4) and of the aggrieved party to require such correction by the non-performing party. The present article deals with the latter right.
Most of the exceptions to the right to require performance that are set out in Art. 7.2.2 are easily applicable to the various forms of cure of a defective performance. Only the application of sub-para. (b) calls for specific comment. In many cases involving small, insignificant defects, both replacement and repair may involve "unreasonable effort or expense" and are therefore excluded.
A new car is sold which has a small painting defect which decreases the value of the car by [0.01%] of the purchase price. Repainting would cost [0.5%] of the purchase price. A claim for repair is excluded but the buyer is entitled to require a reduction in the purchase price.
The present article takes a middle course by providing for monetary but not for other forms of penalties, applicable to all kinds of orders for performance including those for payment of money.
The use of the word "may" in para. (1) of this article makes it clear that the imposition of a penalty is a matter of discretion for the court. Its exercise depends upon the kind of obligation to be performed. In the case of money judgments, a penalty should be imposed only in exceptional situations, especially where speedy payment is essential for the aggrieved party. The same is true for obligations to deliver goods. Obligations to pay money or to deliver goods can normally be easily enforced by ordinary means of execution. By contrast, in the case of obligations to do or to abstain from doing something, which moreover cannot easily be performed by a third person, enforcement by means of judicial penalties is often the most appropriate solution.
While rejecting this latter view and indicating the aggrieved party as the beneficiary of the penalty, the first sentence of para. (2) of this article expressly mentions the possibility of mandatory provisions of the law of the forum not permitting such a solution and indicating other possible beneficiaries of judicial penalties.
The second sentence of para. (2) makes it clear that a judicial penalty paid to the aggrieved party does not affect its claim for damages. Payment of the penalty is regarded as compensating the aggrieved party for those disadvantages which cannot be taken into account under the ordinary rules for the recovery of damages. Moreover, since payment of damages will usually occur substantially later than payment of a judicial penalty, courts may to some degree be able, in measuring the damages, to take the payment of the penalty into account.
Judicial penalties are moreover to be distinguished from agreed payments for non-performance which are dealt with in Art. 7.4.13, although the latter fulfil a function similar to that of the former. If the court considers that the contractual stipulation of the payment of a sum in case of non-performance already provides a sufficient incentive for performance, it may refuse to impose a judicial penalty.
Since according to Art. 1.10 "court" includes an arbitral tribunal, the question arises of whether arbitrators might also be allowed to impose a penalty.
While a majority of legal systems seems to deny such a power to arbitrators, some modern legislation and recent court practice have recognised it. This solution, which is in keeping with the increasingly important role of arbitration as an alternative means of dispute resolution, especially in international commerce, is endorsed by the Principles. Since the execution of a penalty imposed by arbitrators can only be effected by, or with the assistance of, a court, appropriate supervision is available to prevent any possible abuse of the arbitrators' power.
In the first case, the aggrieved party has required performance but changes its mind before execution of a judgment in its favour, perhaps because it has discovered the non-performing party's inability to perform. The aggrieved party now wishes to invoke one or more other remedies. Such a voluntary change of remedy can only be admitted if the interests of the non-performing party are duly protected. It may have prepared for performance, invested effort and incurred expense. For this reason para. (1) of this article makes it clear that the aggrieved party is entitled to invoke another remedy only if it has not received performance within a fixed period or otherwise within a reasonable period of time.
For similar conditions which restrict the right of termination in case of delay in performance, see Art. 7.3.2(2).
Para. (2) addresses the second and less difficult case in which the aggrieved party has attempted without success to enforce a judicial decision or arbitral award directing the non-performing party to perform. In this situation it is obvious that the aggrieved party may immediately pursue other remedies.
In the event of a subsequent change of remedy the time limit provided for a notice of termination under Art. 7.3.2(2) must, of course, be extended accordingly. The reasonable time for giving notice begins to run, in the case of a voluntary change of remedy, after the aggrieved party has or ought to have become aware of the non-performance at the expiry of the additional period of time available to the non-performing party to perform; and in the case of para. (2) of this article, it will begin to run after the aggrieved party has or ought to have become aware of the unenforceability of the decision or award requiring performance.