Title

VI.6 - Anticipatory breach

Content

No. VI.6 - Anticipatory breach

When a party to a contract absolutely and unequivocally expresses an intention – expressly or tacitly – not to perform, or when it becomes otherwise clear, after the conclusion of the contract, that there will be a fundamental non-performance, the other party may terminate the contract. Principle VI.1 applies.

Commentary

1 This Principle equates a fundamental non-performance that can be expected with actual non-performance. In order to be equated with actual non-performance, however, the future non-performance must meet one of the two tests provided for in the Principle.

2 The first test relates to a declaration of the party that it will not perform. This declaration, whether express or tacit, however, must be more than a mere general statement or indication of intent. Rather, the party must express this intention "absolutely and unequivocally". This means 1) that the declaration has left no alternative to non-performance and 2) that there must be no doubt left as to the party's intention not to perform.

3 Absent such an express or tacit declaration of the party, future non-performance is equated with actual non-performance only if the circumstances make it reasonably clear that there will be a fundamental non-performance. Contrary to the first test, this is an objective, rather than a subjective test.

4 If a future non-performance can be equated with actual non-performance under one of the two tests, the other party has the right to terminate the contract pursuant to Principle VI.1.

References

Doctrine

Beale, H. G.; Chitty, Joseph et al., Chitty on Contracts, Vol. 1, London 2004.Domingo, Ortega, Rodriguez-Antolin, Zambrana, Principios de Derecho Global, Navarra, 2006Jenks, Edward et al., A Digest of English Civil Law, London, Sydney, Calcutta, Winnipeg, Wellington 1921.

International Legislation

Fontaine, Marcel, OHADA Uniform Act On Contract Law Preliminary Draft

Model Laws

The Draft Civil Code for Israel in: Siehr, Kurt/Zimmermann, Reinhard (ed.) The Draft Civil Code for Israel in comparative perspective, 2008

National Legislation

Contract Law of the People's Republic of ChinaEthiopian Civil Code

Principles / Restatements

Principles of European Contract Law - PECL

Contract Clauses

1. Subjective TestSales & Purchase ContractTermination

Either Party may terminate this Contract forthwith by written notice if (...) the other Party ceases or threatens to cease carrying on its business.


20022. Objective TestAsset Transfer AgreementConditions of Termination

This Agreement may only be terminated as listed below, namely (...) by the Purchaser, if any of the Seller or the Management Shareholder expressly states or by its conduct indicates that it will not execute the whole or part of its obligations hereunder; or by any of the Seller or the Management Shareholder, if the Purchaser expressly states or by its conduct indicates that it will not execute any of its obligations hereunder.


2009