Source: http://cisgw3.law.pace.edu/cisg/text/anno-art-72.html
Timestamp: 2019-07-21 19:27:41
Document Index: 534038675

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

Article 72. Avoidance Prior to Date for Performance
Text of Article 72
72A When clear that party will commit fundamental breach (art. 25)
72A1 Grounds: Repudiation; obvious disability
72A2 Other party may declare avoidance (art. 72(1))
72B Advance notice of intent to avoid (art. 72(2))
72B1 Notice by party intending to declare avoidance
72C Reason: Opportunity for assurance of performance
72D Party has declared it will not perform (art. 72(3))
72D1 No need for advance notice under art. 72(2)
Anticipatory breach ; Avoidance
UNCITRAL has identified relevant cases in Digests containing case annotations for each article of the CISG. UNCITRAL cites 14 cases in its Digest of Art. 72 case law:
Australia 1 Germany 6 Switzerland 2
Austria 1 ICC 2 United States 1
Finland 1 TOTAL: 14
Presented below is a composite list of Art. 72 cases reporting UNCITRAL Digest cases and other Art. 72 cases. All cases are listed in chronological sequence, commencing with the most recent. Asterisks identify the UNCITRAL Digest cases, commencing with the 17 November 2000 citation reported below. Cases are coded to the UNCITRAL Thesaurus.
United States 29 May 2009 Federal District Court [New York] (Doolim Corp. v. R Doll LLC et al.) 72A
China October 2007 CIETAC Arbitration Award [CISG 2007/03] (CD-R and DVD-R production line systems case) 72A [translation available]
Australia 12 October 2001 Supreme Court of Queensland, Court of Appeal (Downs Investments v. Perwaja Steel) 72A
Russia 7 June 1999 Arbitration award 238/1998 72A [translation available]
China 16 December 1997 CIETAC Arbitration Award [CISG/1997/35] (Hot-dipped galvanized steel coils case) 72A ; 72D [translation available]
China 29 March 1996 CIETAC Arbitration Award [CISG/1996/15] (Caffeine case) 72D [translation available]
China 30 January 1996 CIETAC Arbitration Award [CISG/1996/05] (Compound fertilizer case) 72A ; 72D [translation available]
Russia 25 April 1995 Arbitration award 161/1994 72A2 [translation available]
China 1989 CIETAC Arbitration Award [CISG/1989/02] (Thai-made emulsion case) 72A ; 72C [translation available]
A/CN.9/SER.C/DIGEST/CISG/72 [8 June 2004]
[Text of Article 72
Digest of Article 72 case law
- Preconditions for avoidance
- Notice of intent to avoid
- Adequate assurance of performance]
(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.�
(3) �The requirements of the preceding paragraph do not apply if the other party has declared that he will not perform his obligations.
DIGEST�OF�ARTICLE 72 CASE LAW
1.	Article 72 entitles a seller or a buyer to avoid the contract if it becomes clear before the date for performance that the other party will commit a fundamental breach. Article 49 rather than article 72 applies if, at or after the date for performance, a party's failure to perform or nonconforming performance amounts to a fundamental breach. Thus, a buyer who has not declared the contract avoided before the date for performance may not avoid the contract under article 72 but must act instead under articles 45 and 49.[1]
2.	The right of an aggrieved party to avoid the contract under article 72 is to be distinguished from the right to suspend its obligations under article 71.[2] Both articles are concerned with predicting whether there will be a breach but the preconditions for the more drastic remedy of avoidance are more stringent than those for suspension, both as to the seriousness of the predicted breach and the probability that the breach will occur. The notification requirements also differ. Article 72 requires "reasonable" prior notice only if time allows and excuses the notice if the other party has declared that it will not perform, while article 71 requires immediate notice of suspension with no exceptions.[3]
3.	Article 72 entitles an aggrieved party to avoid a contract before the date for performance if the contract is for a single sale, while article 73 provides special rules on avoidance of future instalments if the contract is an instalment contract. Several decisions recognize that where the parties have on-going relations the aggrieved party might act under either article as to future instalments or contracts.[4]
4.	Paragraph (1) sets out the principal precondition for a rightful avoidance: it must be clear prior to the date for performance that the party required to perform will commit a fundamental breach. A very high probability that there will be a fundamental breach rather than complete certainty is required.[5] One decision has stated that a claim of anticipatory repudiation must allege "(1) that the defendant intended to breach the contract before the contract's performance date and (2) that such breach was fundamental".[6]
5.	A party that declares that it will not perform its obligations satisfies this precondition.[7] Allegations, if proved, that the seller stated it would "no longer feel obligated" to perform and would "sell the material elsewhere" would entitle the buyer to avoid the contract.[8] Conditioning delivery on new demands beyond those agreed upon is an anticipatory repudiation of the contract.[9]
6.	The preconditions of paragraph (1) were also found to have been satisfied in the following circumstances: the buyer's failure to pay for prior shipments;[10] the buyer's failure to open a letter of credit;[11] the seller's failure to reduce price and to commit to deliver fashion goods on time;[12] the seller's deliberate termination of delivery of goods.[13]
7.	The preconditions were found not satisfied in the following circumstances: where the seller had held back the goods;[14] where the seller expressed an interest in stopping deliveries but also agreed to continue negotiations;[15] the buyer's failure to pay one instalment.[16]
8.	Paragraph (2) of article 72 requires the aggrieved party to give the other party prior notice of the aggrieved party's intent to avoid the contract if time allows.[17] This notice is different from the declaration of avoidance governed by article 26.[18] One decision concluded that if the aggrieved party is relying on article 72 it must declare the contract avoided prior to the date for performance.[19]
9.	The party intending to avoid the contract must give notice of this intent in order to permit the other party to provide adequate assurance of performance.[20] The Convention does not prescribe the form assurance must take. There is no requirement that the aggrieved party must post a bond.[21]
1. CLOUT case No. 171 [GERMANY Bundesgerichtshof [Supreme Court] 3 April 1996, available online at <http://cisgw3.law.pace.edu/cases/960403g1.html>]; CLOUT case No. 124 [GERMANY Bundesgerichtshof [Supreme Court] 15 February 1995, available online at <http://cisgw3.law.pace.edu/cases/950215g1.html>].
2. [ICC International Court of Arbitration case No. 8786 of January 1997, available online at <http://cisgw3.law.pace.edu/cases/978786i1.html>] (buyer did not suspend obligations but avoided contract under art. 72(1)); [ICC International Court of Arbitration case No. 8574 of September 1996, available online at <http://cisgw3.law.pace.edu/cases/968574i1.html>] (buyer's purchase of substitute goods not a suspension of its obligations).
3. [ICC International Court of Arbitration case No. 8574 of September 1996, available online at <http://cisgw3.law.pace.edu/cases/968574i1.html>] (noting differences as to notice).
4. 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).
5. [GERMANY Landgericht [District Court] Berlin 30 September 1992, available online at <http://cisgw3.law.pace.edu/cases/920930g1.html>] (very high probability rather than complete certainty required). See also [AUSTRIA Arbitration Award case No. S2/97, Schiedsgericht der Börse für Landwirtschaftlich Produkte - Wien 10 December 1997, available online at <http://cisgw3.law.pace.edu/cases/971210a3.html>] ("good grounds" under art. 73 means high probability, a less severe test than that found in art. 72(1)).
6. CLOUT case No. 417 [UNITED STATES Magellan International v, Salzgitter Handel, Federal District Court (Northern Dist. Illinois) 7 December 1999, available online at <http://cisgw3.law.pace.edu/cases/991207u1.html>] (citing arts. 25 and 72) (see full text of the decision).
7. See art. 72(3) (excusing the aggrieved party from giving prior noticed "if the other party has declared that he will not perform his obligations").
8. CLOUT case No. 417 [UNITED STATES Magellan International v.Salzgitter Handel, Federal District Court (Northern Dist. Illinois) 7 December 1999, available online at <http://cisgw3.law.pace.edu/cases/991207u1.html>].
9. 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>] (see full text of decision).
10. CLOUT case No. 130 [GERMANY Oberlandesgericht [Appellate Court] 14 January 1994, available online at <http://cisgw3.law.pace.edu/cases/940114g1.html>], affirming with modifications, [GERMANY Landgericht [District Court] Krefeld 28 April 1993, available online at <http://cisgw3.law.pace.edu/cases/930428g1.html>]; [GERMANY Landgericht [District Court] Berlin 30 September 1992 , available online at <http://cisgw3.law.pace.edu/cases/920930g1.html>].
11. [AUSTRALIA Downs Investment v. Perwaja Steel, Supreme Court of Queensland 17 November 2000, available online at <http://cisgw3.law.pace.edu/cases/001117a2.html>].
12. [ICC International Court of Arbitration case No. 8786 of January 1997, available online at <http://cisgw3.law.pace.edu/cases/978786i1.html>].
13. [SWITZERLAND Arbitration Award case No. 273/95, Zürich Handelskammer 31 May 1996, available online at <http://cisgw3.law.pace.edu/cases/960531s1.html>].
14. [SWITZERLAND Bezirksgericht [District Court] Sanne 20 February 1997, available online at <http://cisgw3.law.pace.edu/cases/970220s1.html>].
15. [ICC International Court of Arbitration case No. 8574 of September 1996, available online at <http://cisgw3.law.pace.edu/cases/968574i1.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. 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>] (timing and content of fax gave prior notice).
18. [ICC International Court of Arbitration case No. 8574 of September 1996, available online at <http://cisgw3.law.pace.edu/cases/968574i1.html>] (noting difference between art. 72 notice and declaration of avoidance and finding that avoidance was not timely); CLOUT case No. 130 [GERMANY Oberlandesgericht [Appellate Court] Düsseldorf 14 January 1994, available online at <http://cisgw3.law.pace.edu/cases/940114g1.html>] (seller gave notice of intent to avoid followed by notice of avoidance when it heard nothing from buyer) (see full text of decision).
19. [GERMANY Bundesgerichtshof [Supreme Court] 15 February 1995, available online at <http://cisgw3.law.pace.edu/cases/950215g1.html>].
20. CLOUT case No. 130 [GERMANY Oberlandesgericht [Appellate Court] Düsseldorf 14 January 1994, available online at <http://cisgw3.law.pace.edu/cases/940114g1.html>] (buyer failed to provide assurance when did not respond) (see full text of decision).
21. [ICC International Court of Arbitration case No. 8786 of January 1997, available online at <http://cisgw3.law.pace.edu/cases/978786i1.html>
A match-ups of CISG Articles 71 and 72 with Articles 7.3.3 [Anticipatory non-performance] and 7.3.4 [Adequate assurance of due performance] of the UNIDROIT Principles of International Commercial Contracts are available: <http://cisgw3.law.pace.edu/cisg/principles/uni71,72.html>. The match-ups are accompanied by Official UNIDROIT Comments on these provisions describing and illustrating the manner in which they are to be applied.
Case annotated remarks on the manner in which the
Principles of European Contract Law may be used to
interpret or supplement Articles 71 and 72 of the CISG
A match-ups of CISG Articles 71 and 72 with Articles 8:105 [Assurance of performance] and 9:304 [Anticipatory non-performance] of the Principles of European Contract Law are available: <http://cisgw3.law.pace.edu/cisg/text/peclcomp71,72.html>. The match-ups are accompanied by:
- Comments on these provisions authored by the European Commission describing and illustrating the manner in which provisions are to be applied; and
15. 14. Staudinger/Magnus Art 72 Rn 7; Honnold p 439 para 397; Honsell/Schnyder/Straub Art 72 Rn 26-28; Australia 17 November 2000 Supreme Court of Queensland (Downs Investments v. Perwaja Steel) <http://cisgw3.law.pace.edu/cases/001117a2.html>.