Source: http://www.jus.uio.no/sisu/remedies_for_non_performance_perspectives_from_cisg_upicc_and_pecl.chengwei_liu/20.4.html
Timestamp: 2013-05-23 16:47:12
Document Index: 709431248

Matched Legal Cases: ['Art. 79', 'Art. 74', 'Art. 8', 'Art. 8', 'Art. 79', 'Art. 79', 'Art. 79', 'Art. 79', 'Art. 8', 'Art. 8', 'Art. 79', 'Art. 79', 'Art. 79', 'Art. 79', 'Art. 79', 'Art. 79', 'Art. 79', 'Art. 79', 'Art. 79', 'Art. 79', 'Art. 79', 'Art. 79', 'Art. 79', 'Art. 79', 'Art. 8']

Another problem is how far the debtor is responsible for failure of a third person whom he has engaged to perform his obligations. Under modern conditions, most contracts are not performed in fact by the contracting parties personally. 1161 It often happens that the non-performance of a party is due to the non-performance of a third person. 1162 1302
Accordingly, Art. 79(2) CISG makes excuse for the debtor in these cases and stipulates that the promisor is liable for the conduct of a third person engaged to perform all or part of the contract on the promisor's behalf. It is to be welcomed that the CISG, by contrast to Art. 74 ULIS, directly bears on the problem of exemption where a breach of contract is caused by a third party, even if an interpretation of the relevant rule in detail proves to be difficult. 1163 Art. 8:107 PECL also deals with one aspect of this modern division of labour, namely the contracting party's responsibility for non-performance, and reads: "A party which entrusts performance of the contract to another person remains responsible for performance." The basic principle under Art. 8:107 PECL is that if a party does not perform a contract personally but entrusts performance to a third person, it remains nevertheless responsible for the proper performance of the contract vis-à-vis the other party. The internal relationship between the party and the third person is irrelevant in this context. The third person may be subject to instructions of the party, such as an employee or an agent; or he may be an independent subcontractor. 1164 1303
However, Art. 79(2) CISG seems to pose stricter conditions for the exemption of the promisor who must prove that the conditions of the Art. 79(1) CISG are fulfilled not only in relation to himself, but also in relation to the third person. It thus makes excuse for the debtor in these cases more difficult. To the contrary, Eiderlein and Maskow attempt to demonstrate in comparing a classic supplier and a classic sub-contractor, that the differences between the two paragraphs are not that great and that, above all, it cannot be said whether the one or the other of the two paragraphs offers a basis for stricter liability. The attempt to compare the strictness of the two norms is misleading. It seems to be correct to say that a differentiation of Art. 79 between paras. (1) and (2) aims toward finding proper solutions for different circumstances. This fiction has the effect that there will not necessarily be congruence in assessing the claims which are asserted vis-à-vis the engaging party, on the one hand, and his claims for recourse vis-à-vis the third party, on the other. This is the case, in particular, where the non-performance is caused by a carrier who can obtain exemption for other reasons. 1165 It has to be taken into account that it will not be easy for the engaging party to prove impediments when the third party can obtain exemption on completely different grounds. Therefore, neither the UNIDROIT Principles nor the European Principles continue to contain a particular rule as Art. 79(2) CISG dealing with the exemptions where third party is involved, and is therefore more lenient. The Official Comment to Art. 8:107 PECL explicitly applies the same standards under Art. 8:108 PECL where the contracting party has entrusted performance of the contract to another person (third party) for the impediment to exempting the contracting party's non-performance. 1166 1304
Practically speaking, the discussion of Art. 79(2) CISG revolved around the liability for secondary suppliers and subcontractors. Art. 79(2) does not illustrate the type of third party that was intended. In addition, the Article does not explain the meaning of "engaged to perform the whole or a part of the contract". Thus, the scope of Art. 79 as applied to third parties is not entirely clear. It is particularly doubtful whether it includes the suppliers of the seller. In this respect, Flambouras suggests that the seller's suppliers should not be considered third persons for the purposes of CISG Art. 79(2), since such persons simply create the preconditions or assist in the preparation for the performance of the promisor's obligation without, however, performing all or part of the actual contract as CISG Art. 79(2) requires. This opinion is supported by recent judgments and arbitral awards. 1167 Jenkins submits: "Non-performance by a general supplier of goods would not constitute the kind of impediment necessary for the seller to qualify individually under article 79. Although more comprehensive in the types of third parties, the availability under the Convention is more restrictive because of the scope of impediment necessary to establish the right to an exemption." 1168 These submissions are confirmed by the Secretariat Commentary, which states that the third person must be someone who has been engaged to perform the whole or a part of the contract. It does not include suppliers of the goods or of raw materials to the seller. 1169 1305
Rather, with regard to the meaning of "third person", the history of CISG Art. 79 suggests that it only covers persons who are acting independently and are neither within the promisor's organizational sphere nor under his responsibility. Enderlein and Maskow submit: "The fact that a third party carries out a performance directly vis-à-vis another party may indicate that he is a third party in the meaning of the CISG. As to its definition, the third party has to be legally independent of the party for whom he works. But it is, in our opinion, not required and not necessary that he be economically independent." 1170 The legislative history behind Art. 79 suggests that the third party must be more than the seller's general supplier. While not agreed to as the exclusive or sole source, the third party must stand in a delegated contractual relationship such as a subcontractor. 1171 Nonetheless, according to Schlechtriem, the seller is not liable for secondary suppliers when they are beyond his control and their failure could neither be taken into account nor cured. This would apply in cases where the seller could not choose nor control his suppliers and it was not possible to procure, produce or repair the goods in any other manner. 1172 But it is a case applying the normal requirements under Art. 79(1) instead of Art. 79(2).
Thus, in the application of Art. 79 CISG, three situations must be distinguished. First, the obligor is always responsible for his own personnel, as long as he organizes and controls their work. Deficiencies and poor performance caused by individual workers, therefore, do not exempt him from liability. Second, where third persons are involved, the seller's liability depends on whether he engaged these persons in fulfillment of his contractual obligations to the other party. If he did so the obligor can only be exempted where the failure was, for the obligor himself, unforeseeable and beyond his control (Art. 79(2)(a) in conjunction with para. (1)) and the third party personally meets the requirements for exemption from Art. 79(1) (Art. 79(2)(b)). Finally, Art. 79(1) remains the controlling provision in cases where the third party's performance is a mere precondition for the fulfillment of the obligor's obligations, i.e., where a third party does not directly fulfill the obligor's duty to the obligee. In particular, the seller is therefore not liable for secondary suppliers when they are beyond his control and their failure could neither be contemplated nor cured. This exemption will apply only in those very few cases when the seller could neither choose nor control his auxiliary suppliers and it was not possible to procure, produce or repair the goods in any other manner. Nevertheless, explicit limitations on such liability should probably be written into the contract. 1173 1161. See Comment and Notes to the PECL: Art. 8:107. Comment A. Available online at ‹http://www.cisg.law.pace.edu/cisg/text/peclcomp79.html› 1162. Supra. note 9, Comment 11. 1163. Supra. note 19, p. 326. 1164. Supra. note 72, Comment B. 1165. Supra. note 19, pp. 327-330. 1166. Supra. note 72, Comment C. 1167. Supra. note 28, p. 274. 1168. See Sarah Howard Jenkins in "Exemption for Nonperformance: UCC, CISG, UNIDROIT Principles -- A Comparative Assessment": 72 Tulane Law Review (1998); p. 2026. Available online at ‹http://www.cisg.law.pace.edu/cisg/biblio/jenkins.html› 1169. Supra. note 9, Comment 12. 1170. Supra. note 19, p. 327. 1171. Supra. note 26, p. 433. 1172. Supra. note 30, p. 104. 1173. Ibid. [ document manifest ]