Title

VII.1 - Damages in case of non-performance

Content

No. VII.1 - Damages in case of non-performance

The aggrieved party is entitled to damages for loss caused by the other party's non-performance of its contractual obligations. It is entitled, subject to the provisions of Principle VII.2 and Principle VII.3.1, to receive such a sum of money by way of damages as will, so far as possible, put him in the same position as if the contract had been performed.

Commentary

1 The Principle, together with the Principle VII.3.1 establishes the principle of full compensation as the corner stone of the law on damages. The party suffering the damage is entitled to full compensation for the harm it has sustained as a consequence of the other party's non-performance. At the same time, the damages claimed and received must not enrich the party suffering the damage. This limitation is relevant for the recovery of future harm, including lost profits.

2 By referring to the recovery of damages "caused" by the other party's non-performance, the Principle refers to the need for a causal nexus between the non-performance and the damages. Establishing such nexus may be problematic in cases in which a party claims compensation for future damages.

References

Model Laws

A Contract Code: Drawn up on Behalf of the English Law CommissionPrinciples 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, 2008

Doctrine

Bishop, R. Doak, International Arbitration of Petroleum Disputes: The Development of a Lex Petrolea, YCA 1998, at 1131 et seq.Blase, Friedrich/Höttler, Philipp, Remarks on the Damages Provisions in the CISG, Principles of European Contract Law (PECL) and UNIDROIT Principles of International Commercial Contracts (UPICC)Derains, Yves, note to ICC Award No. 1526, Clunet 1974, at 918 et seq.Domingo, 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 1999Gotanda, John Yukio, Damages in Private International Law, 326 (2007) Recueil des cours 83Hutchison, 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.Langen, Eugen, Transnationales Recht, Heidelberg 1981.MacQueen, Hector L./Thomson, Joe, Contract Law in Scotland, Fourth Edition 2016Magnus, Ulrich, Die allgemeinen Grundsätze im UN-Kaufrecht, 59 RabelsZ 1995, at 469 et seq.Ortscheidt, Jérôme, La réparation du dommage dans l'arbitrage commercial international, Paris 2001.Osman, Filali, Les Principes Généraux de la Lex Mercatoria, Paris 1992Ripert, Georges, Les Règles du Droit Civil Applicables aux Rapports Internationaux (Contribution à l'Etude des Principes Généraux du Droit Visés au Statut de la Cour Permanente de Justice Internationale), 44 Rec.Cours 1933-II, at 569 et seq.Wöss, Rivera, Spiller, Dellepiane, Damages in International Arbitration Under Complex Long-Term Contracts, Oxford 2014

Court Decisions

Chaplin v. Hicks [1911] 2 KB 786Cour de cassation de Belgique, C090624F, 6th January 2011PCIJ Judgement No. 13, Case Concerning The Factory At Chorzów, at http://www.icj-cij.org/pcij/serie_A/A_17/54_Usine_de_Chorzow_Fond_Arret.pdf, also published in PCIJ, Series A, No. 17, Sept. 13th, 1928.Robinson v. Harman (1848) 1 Exch 850 (Jan. 18, 1848)Taylor v. Caldwell, 122 E.R. 309.

Miscellaneous

CISG Advisory Council Opinion No. 6: Calculation of Damages under CISG Article 74Decision taken by the Governing Council of the United Nations Compensation Commission, S/AC.26/1992/9, 06 March 1992

National Legislation

Civil Code of the People's Republic of China (2020)Civil Code Québec 1991Contract Law of the People's Republic of ChinaContract Law of the People's Republic of ChinaCzechoslovak International Trade CodeEthiopian Civil CodeFrench Civil Code 2016Indonesian Civil Code (excerpts)Louisiana Civil Code 2015Nieuw Burgerlijk Wetboek - New Netherlands Civil Code ( Dutch Civil Code )Russian Civil CodeThe Indian Contract Act, 1872 (Act no. 9 of 1872)UK Sale Of Goods Act 1979, Chapter 54

Arbitral Awards

CRCICA Award no. 14/1989, in: Mohie Eldin I. Alam Eldin, Arbitral Awards of the Cairo Regional Centre of International Commercial Arbitration, The Hague 2000, p. 17CRCICA Award no.6/1985, in: Mohie Eldin I. Alam Eldin, Arbitral Awards of the Cairo Regional Centre of International Commercial Arbitration, The Hague 2000, p. 189ICC Award No. 1526, Clunet 1974, at 915 et seq.ICC Award No. 2520, Clunet 1976, at 992 et seq.ICC Award No. 2583, Clunet 1977, at 950 et seq.ICC Award No. 3131, Rev. d. Arb. 1983, at 525 et seq.ICC Award No. 5835, 10 ICC Bull. No. 2, 1999, at 33 et seq.ICC Award No. 5910, Clunet 1988, at 1216 et seq.ICC Award No. 8502, 10 ICC Bull. No. 2, 1999, at 72 et seq.ICC Award No. 9392/9426, YCA 2001, 13 et seq.ICC Award No. 9771, YCA 2004, at 46 et seq.Karaha Bodas Company L.L.C. v. Pertamina and PT. PLN (Persero), Int'l Arb. Rep. March 2001, at C-2 et seq.Lena Goldfields v. Soviet Government, Award of 2nd Sept 1930, German original text previously unpublished; English translation: 36 Cornell Law Quarterly (1950/1951), at 42 et seq.Saphire Award, ILR 1963, at 136 et seq.

International Legislation

Fontaine, Marcel, OHADA Uniform Act On Contract Law Preliminary DraftUnited Nations Convention on Contracts for the International Sale of Goods (CISG)

Model Terms

Standard Contracts for the UK Offshore Oil & Gas Industry, General Conditions of Contract (including Guidance Notes) for Marine Construction, 2nd Ed., Aberdeen 2004, at 1 et seq. (available at: http://www.logic-oil.com/contracts.cfm)North American Export Grain Association, Inc. - Free on Board Export Contract U.S.A./Canada (No. 2)

Principles / Restatements

Principles of European Contract Law - PECL

Contract Clauses

1. Full CompensationEmployment Contract