Document-Id: 942000, Please cite as: "https://www.trans-lex.org/942000"
Title
Content
No. VI.1 - Termination of contract in case of fundamental non-performance
(a) If a party's failure to perform its obligation amounts to a fundamental non-performance, the other party may terminate the contract.
(b) The right of a party to terminate the contract is exercised by notice to the other party.
(c) If performance has been offered late or otherwise does not conform to the contract the aggrieved party will lose its right to terminate the contract unless it gives notice to the other party within a reasonable time after it has or ought to have become aware of the offer or of the non-conforming performance.
(d) Termination of the contract releases both parties from their obligation to effect and to receive future performance.
(e) Upon termination of the contract either party may claim restitution of whatever it has supplied, provided that such party concurrently makes restitution of whatever it has received. If restitution in kind is not possible or appropriate allowance should be made in money whenever reasonable. However, if performance of the contract has extended over a period of time and the contract is divisible, such restitution can only be claimed for the period after termination has taken effect.
(f) Termination does not preclude a claim for damages for non-performance.
(g) Termination does not affect any provision in the contract for the settlement of disputes or any other term of the contract which is to operate even after termination.
Commentary
2 A party's non-performance is fundamental if the requirements of Art. 25 CISG are met, i.e. if the non-performance substantially deprives the other party of what it was entitled to expect under the contract unless the non-performing party did not foresee and could not reasonably have foreseen such result. The nature of the obligation which one party is not performing may also be relevant in determining whether that party's non-performance is fundamental, e.g. when strict performance in compliance with the letters of the contract is of the essence. The time factor may also be relevant in that a non-performance that, in and of itself, is not fundamental, may be qualified as fundamental because the non-performance is of such a nature that the other party has reasonable grounds to believe that the non-performing party will not or cannot perform in the future.
References
National Legislation
Civil Code Québec 1991Czechoslovak International Trade CodeEthiopian Civil CodeFrench Civil Code 2016GIW DDRGIW GDRLouisiana Civil Code 2015The Indian Contract Act, 1872 (Act no. 9 of 1872)Doctrine
Dasser, Felix, Internationale Schiedsgerichte und Lex Mercatoria, Zürich 1989Domingo, Ortega, Rodriguez-Antolin, Zambrana, Principios de Derecho Global, Navarra, 2006Fouchard Gaillard Goldman on International Commercial Arbitration (edited by Emmanuel Gaillard and John Savage) The Hague 1999Hutchison, Dale (Ed.) / Pretorius, Chris (Ed.), The Law of Contract in South Africa, Oxford University Press Southern Africa, 2018Jenks, Edward et al., A Digest of English Civil Law, London, Sydney, Calcutta, Winnipeg, Wellington 1921.Lando, Ole, CISG and Its Followers: A Proposal to Adopt Some International Principles of Contract Law, in: American Journal of Comparative Law 53, Berkley 2005.Lowenfeld, Andreas F., Lex Mercatoria: An Arbitrator's View, Arb.Int’l 1990, at 133 et seq.MacQueen, Hector L./Thomson, Joe, Contract Law in Scotland, Fourth Edition 2016Marrella, Fabrizio, La nuova lex mercatoria, Principi Unidroit ed usi di contratti des comercio internazionale, CEDAM, Tratto di dritto commerciale e di dritto publico dell‘economia, Volume 30, Padova 2003Mustill, Michael, The New Lex Mercatoria: The First Twenty-five Years, Arb.Int'l 1988, at 86 et seq.Paulsson, Jan, La Lex Mercatoria dans l‘Arbitrage C.C.I, Rev.d.Arb. 1990. at 55 et seq.Treitel, G.H., Remedies for Breach of Contract, in: David/ von Mehren (eds.), International Encyclopedia of Comparative Law, Bd. VII, Tübingen 1976, at 121 et seq.Zimmermann, Reinhard, Konturen eines Europäischen Vertragsrechts, JZ 1995, at 477 et seq.International Legislation
Fontaine, Marcel, OHADA Uniform Act On Contract Law Preliminary DraftOrganization for the Harmonization of Business Law in Africa (OHADA), Uniform act relating to general commercial lawArbitral Awards
ICC Award No. 10422, Clunet 2003, 1142 etseq.ICC Award No. 1795, YCA 1999, at 196 et seq.ICC Award No. 2583, Clunet 1977, at 950 et seq.ICC Award No. 4761, Clunet 1987, at 1012 et seq.ICC Award No. 8365, Clunet 1997, at 1078 et seq.ICC Award No. 9797, ASA Bull. 2000, at 514 et seq.ICSID Award Amco Asia Corp. et al. v. Republic of Indonesia, 24 ILM 1985 at 1022 et seq. (also pblished in: Clunet 1987, at 145 et seq.; ICSID Rep. 1993, at 413 et seq.; IntPrinciples / Restatements
OHADAC principles on international commercial contractsPrinciples of European Contract Law - PECLUNIDROIT Principles of International Commercial Contracts 2016Model Laws
Principles of Latin American Contract Law (PLACL)The Draft Civil Code for Israel in: Siehr, Kurt/Zimmermann, Reinhard (ed.) The Draft Civil Code for Israel in comparative perspective, 2008Model Terms
Standard Contracts for the UK Offshore & Gas Industry, General Conditions of Contract (inlcuding Guidance Notes) for Marine Construction, 2nd Ed., Aberdeen 2003, at 1 et seq.