Source: http://cisgw3.law.pace.edu/cisg/text/anno-art-73.html
Timestamp: 2019-07-21 19:46:57
Document Index: 126804188

Matched Legal Cases: ['art. 73', 'art. 73', 'art. 73', 'Art. 73', 'Art. 73', 'Art. 73', 'art. 25', 'art. 25', 'art. 73', 'art. 71', 'art.73', 'art. 73', 'art. 71', 'art. 64', 'art. 71', 'art. 72', 'art. 71', 'art. 72', 'art. 71', 'art. 73', 'art. 73', 'art. 73', 'art. 73', 'art. 73', 'art. 73', 'art. 27', 'art. 71', 'art. 72']

Article 73. Avoidance in Installment Contracts
Text of Article 73
73A Fundamental breach with respect to installment (art. 73(1))
73A1 Declaration of avoidance with respect to defective installment
73B Refusal of future installments (art. 73(2))
73B1 When breach in one installment gives grounds to expect:
73B12 Fundamental breach with respect to future installments
73B2 Declaration of avoidance for future within reasonable time
73C Defect in one delivery prevents use of other deliveries
73C1 Avoidance for both past and future installments (art. 73(3))
73D Other problems
Avoidance ; Installment contracts
UNCITRAL has identified relevant cases in Digests containing case annotations for each article of the CISG. UNCITRAL cites 19 cases in its Digest of Art. 73 case law:
Austria 2 Germany 3 Spain 1
China 1 Hungary 2 Switzerland 3
Finland 1 ICC 4 United States 1
France 1 TOTAL: 19
Presented below is a composite list of Art. 73 cases reporting UNCITRAL Digest cases and other Art. 73 cases. All cases are listed in chronological sequence, commencing with the most recent. Asterisks identify the UNCITRAL Digest cases, commencing with the 17 December 2001 citation reported below. Cases are coded to the UNCITRAL Thesaurus.
Denmark 1 December 2008 Sø-og Handelsrets [Maritime and Commercial Court] (Bonansea S.p.A. v. Bombardier Transportation Denmark A/s)
Germany 18 November 2008 Oberlandesgericht [Appellate Court] Brandenburg (Beer case) 73B12 [translation available]
Denmark 17 October 2007 Højesteret [Supreme Court] (Motorcycle case)
China October 2007 CIETAC Arbitration Award [CISG 2007/03] (CD-R and DVD-R production line systems case) 73A [translation available]
China August 2006 CIETAC Arbitration Award [CISG 2006/13] (Chilling press case) 73B12 [translation available]
Spain 22 May 2006 Court of First Instance of Badalona (Bermuda shorts case) 73B [translation available]
China 7 April 2005 CIETAC Arbitration Award [CISG/2005/01] (Cotton gin motes case) 73C [translation available]
Austria 1 February 2005 Oberlandesgericht [Appellate Court] Innsbruck (Powdered tantalum case) 73B [translation available]
Germany 6 October 2004 Oberlandesgericht [Appellate Court] Frankfurt 73A [translation available]
Austria 9 July 2004 Landesgericht [District Court] Innsbruck
Austria 17 December 2003 Oberster Gerichtshof [Supreme Court] 73A ; 73B12 [translation available]
ICC 2003 International Court of Arbitration, Case 11849 (Fashion products case) 73B [English text]
Netherlands 15 October 2002 Netherlands Arbitration Institute Case No. 2319 73A ; 73B ; 73C [English text]
Switzerland 11 April 2002 Tribunal Cantonal [Appellate Court] Vaud
Germany 29 May 2001 Landgericht [District Court] Darmstadt 73A1 [translation available]
Belgium 26 April 2000 Hof van Beroep [Appellate Court] Gent 73A [translation available]
China 31 January 2000 CIETAC Arbitration Award [CISG/2000/09] (Clothes case) 73C [translation available]
China 10 August 1999 CIETAC Arbitration Award [CISG 1999/35] (Raincoat case) 73A1 [translation available]
* Hungary 25 May 1999 Budapest Arbitration proceeding Vb 97142 73B
China 5 April 1999 CIETAC Arbitration Award [CISG/1999/19] (Air conditioner equipment case) 73A1 [translation available]
China 29 March 1999 CIETAC Arbitration Award [CISG/1999/14] (Flanges case) 73A1 [translation available]
ICC 1999 International Court of Arbitration, Case 10274 73A1 ; 73B12 [English text]
* Germany 29 December 1998 Hamburg Arbitration award 73A ; 73B [translation available]
* Switzerland 30 November 1998 Handelsgericht [Commercial Court] Zürich 73A [translation available]
* Finland 30 June 1998 Helsingin hovioikeus [Appellate Court] Helsinki [translation available]
China 22 June 1998 Shanghai Second Intermediate People's Court [District Court] (China Yitou Group Company. v. Germany Gerhard Freyso LTD GmbH & Co.) 73B [translation available]
* Austria 12 February 1998 Oberster Gerichtshof [Supreme Court] 73B [translation available]
* Austria 10 December 1997 Vienna Arbitration award S 2/97 73B12 [translation available]
* Spain 3 November 1997 Audiencia Provincial [Appellate Court] Barcelona 73B12
China 29 September 1997 CIETAC Arbitration Award [CISG/1997/28] (Aluminum oxide case) 73C1 [translation available]
China 26 June 1997 CIETAC Arbitration Award [CISG/1997/17] (Monohydrate zinc sulphate case) 73C [translation available]
* Switzerland 5 February 1997 Handelsgericht [Commercial Court] Zürich 73A ; 73B12 [translation available]
Austria 25 October 1996 Oberlandesgericht [Appellate Court] Wien (Vienna) [3 R 167/96t-33]
* ICC October 1996 International Court of Arbitration, Case 8740 73A ; 73A1 [English text]
China 18 September 1996 CIETAC Arbitration Award 73A [translation available]
China 8 August 1996 CIETAC Arbitration Award [CISG/1996/36] (Diaper machine case) 73C1 [translation available
* Switzerland 31 May 1996 Arbitration ZHK 273/1995 [Zürich Chamber of Commerce] 73A ; 73A1 ; 73B2 [English text]
* Hungary 17 November 1995 Budapest Arbitration award Vb 94124 73B12
Germany 21 September 1995 Landgericht [District Court] Kassel 73A [translation available]
* China 18 September 1995 Chansha Intermediate People's Court Economic Chamber (Skandinaviska v. Hunan Co) 73A [translation available]
* Germany 21 August 1995 Landgericht [District Court] Ellwangen 73B12 [translation available]
Russia 25 April 1995 Arbitration award 161/1994 73C1 [translation available]
Belgium 1 March 1995 Rechtbank van Koophandel [District Court] Hasselt
* France 22 February 1995 Cour d'appel [Appellate Court] Grenoble 73B12 [translation available]
* ICC 1995 International Court of Arbitration, Case 8128 73A ; 73B [translation available]
CHINA 12 December 1994 CIETAC Arbitration Award [CISG/1994/14] (Sunflower seeds and groundnut case) 73C [translation available]
A/CN.9/SER.C/DIGEST/CISG/73 [8 June 2004]
[Text of Article 73
Digest of Article 73 case law
- What constitutes an instalment contract
- Avoidance of a single instalment
- Avoidance of contract as to future instalments
- Avoidance of contract as a whole]
(1) In the case of a contract for delivery of goods by instalments, if the failure of one party to perform any of his obligations in respect of any instalment constitutes a fundamental breach of contract with respect to that instalment, the other party may declare the contract avoided with respect to that instalment.�
(3) �A buyer who declares the contract avoided in respect of any delivery may, at the same time, declare it avoided in respect of deliveries already made or of future deliveries if, by reason of their interdependence, those deliveries could not be used for the purpose contemplated by the parties at the time of the conclusion of the contract.
DIGEST�OF�ARTICLE 73 CASE LAW
1.	This article provides special rules for instalment contracts. These rules set out when a seller or a buyer is entitled to declare the contract avoided with respect to a single instalment, future instalments, or the contract as a whole.[1] In accordance with article 26 a declaration of avoidance is effective only if the aggrieved party gives notice to the other party.
2.	Article 73 does not preclude application of other articles of the Convention. When a party fails to deliver the goods or to pay for an instalment, the aggrieved party is entitled under article 47 or 64 to give the breaching party an additional period of time and to avoid the instalment when that party fails to perform within the additional time.[2] When some but not all instalments are delivered article 51 on partial delivery and article 73 may be applicable.[3] An aggrieved party may have the right to suspend its performance under article 71(1) or to avoid the contract as to future instalments under article 73(2).[4] An aggrieved party may be able to avoid its contractual obligations to make further deliveries under either article 72 or article 73.[5]
3.	An instalment contract is one that provides for delivery of goods in separate lots.[6] The goods do not have to be fungible so that an instalment contract may cover delivery of different kinds of goods in each instalment (e.g., men's lambskin coats and women's lambskin coats).[7] One decision states that an instalment contract need not determine the quantity of individual instalments under article 73 as precisely as partial deliveries under article 51.[8]
4.	Several decisions have characterized separate contracts between parties that have an on-going relationship as an instalment contract governed by article 73[9] or have concluded that the aggrieved party might act under either article 73 or another article, such as article 71[10] or 72.[11] One decision also applies article 73 to separate yearly supply contracts between same parties for the supply of aluminium.[12] Another decision, however, distinguishes an instalment contract from a distribution or framework agreement, which may provide for non-sales matters such as exclusive representation in a geographical area or an agreement without any determinable quantity.[13]
Avoidance of a single instalment
5.	Paragraph (1) entitles a party to declare a contract avoided as to a single instalment if the other party commits a fundamental breach (see art. 25) with respect to that instalment. The same standards for determining whether a party commits a fundamental breach apply both to a contract that requires a single delivery and to a contract that requires delivery by instalments. The aggrieved party was found to be entitled to avoid the instalment in the following cases: when the seller failed to deliver the promised goods;[14] when the seller conditioned delivery of an instalment on satisfaction of new demands.[15] On the other hand, the aggrieved party was found not to be entitled to avoid the instalment where the buyer had not paid the price for an instalment.[16]
6.	Paragraph (2) of article 73 entitles an aggrieved party to avoid the contract as to future instalments if the party has good grounds to conclude that the other party will commit a fundamental breach (see art. 25) of contract with respect to future instalments.
7.	An aggrieved buyer was found to be entitled to avoid the contract as to future instalments in the following cases: the seller made no delivery despite taking payment;[17] the seller failed to deliver first instalment;[18] when the seller stated that it would not make further deliveries;[19] when the seller refused to deliver further cherries because of dramatic increase in market price for the cherries;[20] late delivery of three instalments caused disruption of buyer's production;[21] delivery of poor quality goods;[22] the buyer had good grounds to believe that seller would be unable to deliver peppers that satisfied food safety regulations.[23]
8.	In the following cases it was found that the seller had good grounds to avoid the contract: failure to open letter of credit gave good grounds to conclude that the buyer would not pay;[24] the buyer would continue to breach a contract term that prohibited the buyer from reselling the goods in specified markets.[25]
9.	If a party declares the contract avoided as to future instalments under paragraph (2), it must notify the other party of the avoidance within a reasonable time. A buyer who was entitled to avoid the contract as to future instalments effectively avoided the contract when it gave notice to the seller within 48 hours of the third late delivery.[26]
Avoidance of contract as a whole
10.	Paragraph (3) sets out rules for the avoidance of past or future instalments when the instalments are so interdependent that the purpose contemplated by the parties at the time the contract was concluded is frustrated. A party may avoid the contract as to these instalments only if it has avoided the contract as to a present instalment under paragraph (1). If a party avoids the contract as to these instalments under paragraph (3), it must notify the other party at the same time as it notifies the party of the avoidance of the present instalment. There are no reported cases applying this paragraph.
1. See also [ICC International Court of Arbitration case No. 8740 of October 1996, available online at <http://cisgw3.law.pace.edu/cases/968740i1.html>] (buyer duly avoided last instalment when total delivery of coal was less than contract amount).
2. [AUSTRIA Arbitration Award case No. S-2/97, Schiedsgericht der Börse für Landwirtschaftlicher Produkte - Wien 10 December 1997, available online at <http://cisgw3.law.pace.edu/cases/971210a3.html>]; CLOUT case No. 214 [SWITZERLAND Handelsgericht [Commercial Court] Zürich 5 February 1997, available online at <http://cisgw3.law.pace.edu/cases/970205s1.html>]; [SWITZERLAND Arbitration Award case No. 273/95, Zürich Handelskammer 31 May 1996, available online at <http://cisgw3.law.pace.edu/cases/960531s1.html>] (buyer's failure to pay for instalment); [GERMANY Landgericht [District Court] Ellwangen 21 August 1995, available online at <http://cisgw3.law.pace.edu/cases/950821g2.html>] (seller's failure to deliver to third party as agreed).
3. [ICC International Court of Arbitration case No. 9448 of July 1999, available online at <http://cisgw3.law.pace.edu/cases/999448i1.html >] (both arts. 51 and 73 applicable but buyer did not establish right to withhold payments); [ICC International Court of Arbitration case No. 8128 of 1995, available online at <http://cisgw3.law.pace.edu/cases/958128i1.html>].
4. [UNITED STATES Shuttle Packaging Systems v. Tsonakis, Federal District Court (Western Dist. Michigan) 17 December 2001, available online at <http://cisgw3.law.pace.edu/cases/011217u1.html>] (citing arts. 71-73 for remedies available in instalment transaction); [ICC International Court of Arbitration case No. 9448 of July 1999, available online at <http://cisgw3.law.pace.edu/cases/999448i1.html>] (buyer not entitled to suspend because had taken partial delivery of goods); CLOUT case No. 238 [AUSTRIA Oberster Gerichtshof [Supreme Court] 12 February 1998, available online at <http://cisgw3.law.pace.edu/cases/980212a3.html>] (in addition to right to avoid instalments under art. 73, seller has right to suspend under art. 71(1) but seller failed to establish its right in this case).
5. EP S.A. v. FP Oy [FINLAND Helsingfors hovrätt [Appellate Court] Helsinki 30 June 1998, available online at <http://cisgw3.law.pace.edu/cases/980630f5.html>] (where two separate orders for skincare ointment made from same mixture the aggrieved buyer could avoid second contract under either article 72 or under article 73(2)); [SWITZERLAND Arbitration Award case No. 273/95, Zürich Handelskammer 31 May 1996, available online at <http://cisgw3.law.pace.edu/cases/960531s1.html>] (fundamental breach as to future instalments is covered by both articles 72 and 73).
6. [ICC International Court of Arbitration case No. 9887 of August 1999, available online at <http://cisgw3.law.pace.edu/cases/999887i1.html>] (chemical substance); CLOUT case No. 251 [SWITZERLAND Handelsgericht [Commercial Court] Zürich 30 November 1998, available online at <http://cisgw3.law.pace.edu/cases/981130s1.html>] (lambskin coats); CLOUT case No. 293 [GERMANY Arbitration Award, Schiedsgericht der Hamburger freundschlaftlichen 29 December 1998, available online at <http://cisgw3.law.pace.edu/cases/981229g1.html> (cheese); CLOUT case No. 238 [AUSTRIA Oberster Gerichtshof [Supreme Court] 12 February 1998, available online at <http://cisgw3.law.pace.edu/cases/980212a3.html>] (umbrellas); CLOUT case No. 246 [SPAIN Audiencia Provincial [Appellate Court] Barcelona 3 November 1997, available online at <http://cisgw3.law.pace.edu/cases/971103s4.html>] (manufactured springs); CLOUT case No. 214 [SWITZERLAND Handelsgericht [Commercial Court] Zürich 5 February 1997, available online at <http://cisgw3.law.pace.edu/cases/970205s1.html>] (sunflower oil); CLOUT case No. 154 [FRANCE Cour d'appel [Appellate Court] Grenoble 22 February 1995, available online at <http://cisgw3.law.pace.edu/cases/950222f1.html>] (jeans); [HUNGARY Budapest Arbitration Award case No. Vb 94124 of 17 November 1995, available online at <http://cisgw3.law.pace.edu/cases/951117h1.html>] (mushrooms); [CHINA Skandinaviska v. Hunan Co., Chansha Intermediate People's Court 18 September 1995, available online at <http://cisgw3.law.pace.edu/cases/950918c1.html>] (molybdenum iron alloy); [GERMANY Landgericht [District Court] Ellwangen 21 August 1995, available online at <http://cisgw3.law.pace.edu/cases/950821g2.html>] (peppers); [ICC International Court of Arbitration case No. 8128 of 1995, available online at <http://cisgw3.law.pace.edu/cases/958128i1.html>] (chemical fertilizer).
7. CLOUT case No. 251 [SWITZERLAND Handelsgericht [Commercial Court] Zürich 30 November 1998, available online at <http://cisgw3.law.pace.edu/cases/981130s1.html>] (see full text of the decision).
8. CLOUT case No. 166 [GERMANY Arbitration Award, Schiedsgericht der Handedlskammer Hamburg 21 March / 21 June 1996, available online at <http://cisgw3.law.pace.edu/cases/960321g1.html> / <http://cisgw3.law.pace.edu/cases/960621g1.html>] (see full text of the decision).
9. [AUSTRIA Arbitration Award, Schiedsgericht der Börse für Landwirtschaftliche Produkte - Wein 10 December 1997, available online at <http://cisgw3.law.pace.edu/cases/971210a3.html>] (from economic perspective two instalment contracts for barley concluded same day to be delivered during same time period are part of same transaction and therefore governed by art.73).
10. CLOUT case No. 238 [AUSTRIA Oberster Gerichtshof [Supreme Court] 12 February 1998, available online at <http://cisgw3.law.pace.edu/cases/980212a3.html> (attempted suspension under art. 73 rather than art. 71).
11. EP S.A. v. FP Oy [FINLAND Helsingfors hovrätt [Appellate Court] Helsinki 30 June 1998, available online at <http://cisgw3.law.pace.edu/cases/980630f5.html>] (where two separate orders for skincare ointment made from same mixture the aggrieved buyer could avoid second contract under either article 72 or under article 73(2)); [SWITZERLAND Arbitration Award case No. 273/95 Zürich Handelskammer 31 May 1996, available online at <http://cisgw3.law.pace.edu/cases/960531s1.html>] (fundamental breach as to future instalments is covered by both articles 72 and 73).
12. [SWITZERLAND Arbitration Award case No. 273/95 Zürich Handelskammer 31 May 1996, available online at <http://cisgw3.law.pace.edu/cases/960531s1.html>] (fundamental breach as to future instalments is covered by both articles 72 and 73).
13. CLOUT case No. 166 [GERMANY Arbitration Award, Schiedsgericht der Handelskammer Hamburg 21 March / 21 June 1996, available online at <http://cisgw3.law.pace.edu/cases/960321g1.html> / <http://cisgw3.law.pace.edu/cases/960621g1.html>] (leaving open whether contract in case before the court is an instalment contract) (see full text of the decision).
14. CLOUT case No. 214 [SWITZERLAND Handelsgericht [Commercial Court] Zürich 5 February 1997, available online at <http://cisgw3.law.pace.edu/cases/970205s1.html>].
15. CLOUT case No. 293 [GERMANY Arbitration Award, Schiedsgericht der Hamburger freundschaftlichen Arbitrage 29 December 1998, available online at <http://cisgw3.law.pace.edu/cases/981229g1.html>].
16. [SWITZERLAND Arbitration Award case No. 273/95 Zürich Handelskammer 31 May 1996, available online at <http://cisgw3.law.pace.edu/cases/960531s1.html>].
17. CLOUT case No. 214 [SWITZERLAND Handelsgericht [Commercial Court] Zürich 5 February 1997, available online at <http://cisgw3.law.pace.edu/cases/970205s1.html >].
18. [SWITZERLAND Arbitration Award case 273/95 Zürich Handelskammer 31 May 1996, available online at <http://cisgw3.law.pace.edu/cases/960531s1.html>] (failure to deliver first instalment good grounds for concluding later instalments would not be delivered).
19. CLOUT case No. 293 [GERMANY Arbitration Award, Schiedsgericht der Hamburger 5 February 1997, available online at <http://cisgw3.law.pace.edu/cases/970205g1.html>].
20. CLOUT case No. 265 [HUNGARY Budapest Arbitration Award case No. Vb 99142 of 25 May 1999, available online at <http://cisgw3.law.pace.edu/cases/970525h1.html>
21. CLOUT case No. 246 [SPAIN Audiencia Provincial [Appellate Court] Barcelona 3 November 1997, available online at <http://cisgw3.law.pace.edu/cases/971103s4.html>].
22. [ICC International Court of Arbitration case No. 9887 of August 1999, available online at <http://cisgw3.law.pace.edu/cases/999887i1.html>].
23. [GERMANY Landgericht [District Court] Ellwangen 21 August 1995, available online at <http://cisgw3.law.pace.edu/cases/950821g2.html>].
24. [HUNGARY Budapest Arbitration Award case No. Vb 99142 of 25 May 1999, available online at <http://cisgw3.law.pace.edu/cases/990525h1.html>].
25. CLOUT case No. 154 [FRANCE Cour d'appel [Appellate Court] Grenoble 22 February 1995, available online at <http://cisgw3.law.pace.edu/cases/950222f1.html>] (resale of jeans in Africa and South America; also citing art. 64(1)).
26. CLOUT case No. 246 [SPAIN Audiencia Provincial [Appellate Court] Barcelona 3 November 1997, available online at <http://cisgw3.law.pace.edu/cases/971103s4.html>].
[Articles 71, 72 and 73]
The CISG provisions set a high threshold before a party anticipates a breach and can suspend performance.[687] Anticipatory breach under Articles 71, 72, and 73 can occur in various contexts in the performance of a contract.[688] These Articles aim to provide a remedy while keeping the contract intact. A party may suspend the performance of his obligations if it becomes apparent that the other party will not substantially perform because of a serious deficiency in its ability to perform, such as poor creditworthiness, or in its failure to prepare to perform.[689] If these preconditions exist, a party can suspend performance. Alternatively, if a seller has dispatched the goods, he may prevent the goods from being handed over to the buyer.[690] Article 72 allows the suspending party to terminate the contract by electing the remedy of avoidance.[691]
The narrowness of the preconditions for suspension of performance is designed to prevent abuse of anticipatory breach. Another limitation on suspension of performance is that the party suspending performance must immediately give notice of suspension to the other party.[692] "Reasonable notice" to the other party enables the opportunity to provide adequate assurance of his performance. [693] If a party declares that he will not perform his obligations, notice need not be given. [694] Finally, a party's right to suspend performance is limited by the reciprocal right of the other party to provide adequate assurance that it will perform. If the party provides such assurance, then the party is prohibited from continuing the suspension.[695]
The final context in which the CISG addresses common obligations of [page 411] buyers and sellers for anticipatory breach is Article 73. Article 73 provides the threshold for fundamental breach in the context of installment contracts.[696] If one party's failure to perform any of his obligations constitutes a fundamental breach of contract with respect to that installment, the other party may declare the contract avoided only with respect to that installment.[697] However, if the failure to perform with respect to one installment gives the non-breaching party reasonable grounds to believe that the breaching party will not deliver a future installment, the anticipation of future breaches equates to a fundamental breach allowing the non-breaching party to declare the contract avoided.[698] The issues of fundamental breach as they pertain to installment contracts will be explored more fully below in Part VI.B.2. [page 412]
2. Anticipatory Breach, Adequate Assurance, and Installment Contracts: Articles 71-73 and the Importance of Notice
The concept of fundamental breach is also a determining factor in the context of anticipatory breach. The CISG affords both buyers and sellers the right to suspend or avoid a contract due to a fundamental breach under Articles 71-73.[717] If a fundamental breach occurs or is likely to occur, the non-breaching party may seek to suspend performance under Article 71 or to avoid the contract under Article 72. Although there is no bright-line standard for determining the degree of certainty needed to anticipate fundamental breach, there should be a very high degree of probability that the breach will occur.[718] [page 415]
The installment contract requires a more complicated analysis. A breach of an installment must be analyzed to determine if the breach is to be considered fundamental within the installment and the contract as a whole. Article 73(1) implies that as a general rule, a breach of an installment performance gives the other party the right to declare the contract avoided only with respect to the installment.[719] If, however, it is determined to be fundamental to the whole, then the non-breaching party may avoid obligations in connection with future deliveries.[720] A stronger case for fundamental breach is made when there are a series of defective installment performances. This occurred in the Spanish case of T. SA v. E.[721] Here, the seller delivered three installments four and eight weeks past the agreed upon dates, causing disruption to the buyer's production process. The court ruled that avoidance was proper and canceled the remaining installments due under the contract.[722]
In addition to fundamental breach, a second issue that often arises in connection with anticipatory breach is the sufficiency of notice. In many instances, notice is improperly made or given too late. It should be noted that consistent with Article 27, if any notice is made by "means appropriate in the circumstances," a delay or error in the transmission of the communication or its failure to arrive does not deprive that party of the right to rely on the communication.[723] Under Article 71, a party suspending performance must "immediately" give notice of the suspension to the other party. [724] Such notice is to be given as soon as the party makes the decision to suspend performance. [725] For example, simply failing to pay the purchase price does not replace the notification that payment of the purchase price is being suspended until the other party properly fulfills the contract or [page 416] provides adequate assurance.
The importance of notice is a general theme found throughout the CISG.[726] It is particularly evident in Article 71(2). Failure to give proper notice under Article 71(2) results in the revocation of an otherwise reasonable suspension of performance. A German court held that reasonable doubts about the buyer's creditworthiness were not sufficient to overcome the seller's failure to give notice pursuant to Article 71(3).[727] The court reasoned that if the seller wanted to exercise his right of suspension, he was obligated to inform the buyer about any doubts regarding her creditworthiness or ability to perform her duties and liabilities under the sales contract. Inasmuch as the seller did not demonstrate that he gave any such notice and information to the buyer, he was not permitted to suspend performance. Hence, notification is an absolutely necessary prerequisite for exercising the right of suspension for anticipatory breach.[728]
Proper notice must also be given for a party to avail itself of the avoidance provisions in Article 72, except that the standard is slightly different.[729] Under Article 72, the party intending to declare the contract avoided must give "reasonable notice" to the other party to allow that party the opportunity to provide adequate assurance of performance.[730] The substance of the notice is just as important as the timing; notice must be given prior to the date of performance.[731] After the parties have performed the contract, neither party is entitled to declare the contract avoided under Article 72. [page 417]
687. Jelena Vilus, Provisions Common to the Obligations of the Seller and the Buyer, in International Sale of Goods; Dubrovnik Lectures, supra note 512 [available at <http://cisgw3.law.pace.edu/cisg/biblio/vilus.html>].
688. See generally, Seig Eiselen, Remarks on the Manner in Which the UNIDROIT Principles of International Commercial Contracts may be Used to Interpret or Supplement Articles 71 and 72 of the CISG (Sept. 2002) available at <http://cisgw3.law.pace.edu/cisg/principles/uni71,72.html> (using the UNIDROIT principles as an aid to the interpretation of Articles 71-71 of the CISG); Seig Eiselen, Remarks on the Manner In Which The Principles of European Contact Law May Be Used to Interpret or Supplement Articles 71 and 72 of the CISG (Sept. 2002) available at <http://cisgw3.law.pace.edu/cisg/text/peclcomp71,72.html> (using the European Union legal principles as an aid to the interpretation of Articles 71-71 of the CISG).
689. CISG, supra note 4, at arts. 71(1)(a) and (b).
690. Id. at art. 71(2).
691. Id. at art. 72.
692. Id. at art. 71(3).
693. Id. at art. 72(2).
694. Id. at art. 71(3).
695. Id.
696. Id. at art. 73.
697. Id. at art. 73(1).
698. Id. at art. 73(2). As is the case in other instances of avoidance, however, notice must be provided to the other party within a reasonable time. Id. Note that a buyer who declares the contract avoided in respect to any delivery may, at the same time, declare it avoided in respect to deliveries already made or of future deliveries if, by reason of interdependence, those deliveries could not be used for the purpose contemplated by the parties at the time of the conclusion of the contract. Id. at art. 73(3).
717. CISG supra note 4, at arts. 71-73. See Shuttle Packaging Sys., LLC, 2001 WL 34046276.
718. LG Berlin 99 O 123/92, Sept. 30, 1992 (F.R.G.), available at <http://cisgw3.law.pace.edu/cases/920930g1.html>. The chance of a breach should be "clear" or obvious to anyone. In German, the standard is defined by the words "it is clear" or offensichtlich. Id. For example, in a German case, a seller delivered the goods to a third-party's warehouse; after the third-party declared bankruptcy and the goods disappeared, the seller attempted to collect the alleged outstanding purchase price from the buyer. The court held that the buyer was not obligated to pay the purchase price, because the seller did not prove that the goods were lost after the risk passed to the buyer. OLG Hamm 19 U 127/97, Jun. 23, 1998, supra note 544. Parties are generally allowed to avoid a contract under similar circumstances under Article 72. For example, a buyer was entitled to terminate a contract concerning non-delivered goods where the seller only made a partial delivery after the price of the goods rose significantly. Arbitration Court attached to the Hungarian Chamber of Commerce and Industry, Vb/97142, May 25, 1999 (Hung.), CLOUT Case No. 265, available at [<http://cisgw3.law.pace.edu/cases/990525h1.html>]. In another case, a seller was entitled to avoid a contract after the buyer failed to settle other bills with the seller. The buyer ordered 140 pairs of winter shoes from the seller; after the shoes were manufactured, seller demanded security for the sales price as the buyer still had other unsettled bills with the seller. Because the buyer did not pay and did not furnish security, the court held that the seller had the right to avoid the contract. OLG Düsseldorf 17 U 146/93, Jan. 14, 1994 (F.R.G.), available at <http://cisgw3.law.pace.edu/cases/940114g1.html> [English translation by Ruth M. Janal, translation edited by Camilla Baasch Andersen].
719. CISG, supra note 4, at art. 73(1). See, e.g., Schiedsgericht der Hamburger freundschaftlichen Arbitrage [Arbitral Award], Dec. 29, 1998 (F.R.G.), CLOUT Case No. 293, available at [<http://cisgw3.law.pace.edu/cases/981229g1.html>] [English translation by Todd Fox, translation edited by Dr. Loukas Mistelis].
720. S.A.R.L. Bri Production "Bonaventure" v. Société Pan Africa Export, supra note 713.
721. T. SA v. E., Audiencia Provincial [Appellate Court] de Barcelona, sección 16a, Nov. 3, 1997 (Spain), CLOUT Case No. 246, available at [<http://cisgw3.law.pace.edu/cases/971103s4.html>].
722. Id. In order to protect the right of avoidance, the avoiding party must give "reasonable notice" that a fundamental breach will occur with respect to future installments. CISG, supra note 4, at art. 73(2). See generally HG Zürich, HG 930634, Nov. 30, 1998, supra note 339.
723. CISG, supra note 4, at art. 27; See LG Stendal 22 S 234/94, Oct. 12, 2000 (F.R.G.), available at <http://cisgw3.law.pace.edu/cases/001012g1.html> [English translation by Ruth M. Janal, translation edited by Camilla Baasch Andersen].
724. CISG, supra note 4, at art. 71(3).
725. This was particularly true in a case in which the parties agreed upon a modification of the contract by reducing the purchase price. LG Stendal 22 S 234/94, Oct. 12, 2000, supra note 723.
730. Id. at art. 72(2). The plain language of Article 72 reveals that a party needs to "simply allege (1) that the defendant intended to breach the contract before the contract's performance date and (2) that such breach was fundamental." Magellan Int'l Corp. v. Salzgitter Handel GmbH, 76 F.Supp.2d 919, 925-26 (N.D. Ill. 1999).
731. See generally BGH VIII ZR 18/94, Feb. 15, 1995, supra note 654. One way that reasonable notice is given is when goods are examined upon receipt and a message is promptly faxed noting the non-conformity. See generally HO Helsinki, S 96/1215, Jun. 30, 1998 (Fin.), available at <http://cisgw3.law.pace.edu/cases/980630f5.html> [English translation by Jarno Vanto].