Topic 6: CISG 3, Article 79 Exceptions to Contractual Liability

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Questions and Answers

What is the primary condition for a party to be exempt from liability under Article 79?

  • The party's deliberate actions caused the breach.
  • There was a lack of communication with the other party.
  • The breach occurred in a different country.
  • The breach was due to an impediment beyond the party's control. (correct)

A party is permanently exempt from obligations due to force majeure.

False (B)

What must a party do if they fail to perform due to an impediment?

Give notice to the other party of the impediment and its effect on ability to perform.

A party is exempt from liability if the failure is due to the actions of a __________ engaged to perform the contract.

<p>third person</p> Signup and view all the answers

Under what conditions can a party invoke exemptions for breach of contract?

<p>If they can demonstrate the impediment was beyond their control. (B)</p> Signup and view all the answers

Match the following terms with their correct definitions:

<p>Force Majeure = Exemption due to uncontrollable circumstances Impediment = A physical or external barrier to performance Notice = Communication regarding an impediment Temporary Exemption = Relief that is not permanent</p> Signup and view all the answers

A party must notify the other party of the impediment to avoid liability.

<p>True (A)</p> Signup and view all the answers

The exemption provided by Article 79 has effect during the period in which the __________ exists.

<p>impediment</p> Signup and view all the answers

What must a party do if they face a force majeure event?

<p>Inform the other party diligently (A)</p> Signup and view all the answers

The pandemic alone can be considered a force majeure event that automatically suspends contracts.

<p>False (B)</p> Signup and view all the answers

What burden of proof lies on the party who breaches the contract?

<p>The burden of proof lies on the party to produce sound evidence in court.</p> Signup and view all the answers

A party must fulfill their obligations that they are able to carry out if the impediment is only __________.

<p>partial</p> Signup and view all the answers

Match the following terms with their definitions:

<p>Force Majeure = An event beyond the control of contracting parties Diligence = The level of care and attention expected Burden of Proof = The obligation to prove one’s claim Impediment = A circumstance that prevents fulfilling a contract</p> Signup and view all the answers

Which of the following is an example of a foreseeable event?

<p>Economic crisis (B)</p> Signup and view all the answers

The interpretation of the rules regarding impediments should be broad and lenient.

<p>False (B)</p> Signup and view all the answers

What must happen if an impediment exists according to article 79?

<p>The impediment must only last as long as the barrier itself.</p> Signup and view all the answers

In case of impediments, a party has the duty to __________ the existence of the impediment immediately.

<p>inform</p> Signup and view all the answers

What can the other party do besides claim damages?

<p>Ask for any other sort of action (D)</p> Signup and view all the answers

Flashcards

Force Majeure: Proving Beyond Control

The party claiming force majeure must prove that the impediment was totally or partially beyond their control and couldn't be reasonably expected when the contract was made.

Force Majeure: Duty to Inform

The party claiming force majeure must inform the other party immediately about the impediment and its consequences.

Force Majeure

A situation where a party is excused from liability for breach of contract due to an unforeseen event beyond their control, like an earthquake or flood.

Force Majeure: Temporary Exemption

The exemption from liability due to force majeure only lasts as long as the impediment persists.

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Elements of Force Majeure

The party experiencing the impediment must demonstrate that it was objectively beyond their control, and that they acted with reasonable diligence to avoid or mitigate its consequences.

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Force Majeure: Economic Crises

Economic crises are generally considered foreseeable events and don't qualify as force majeure.

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Force Majeure and Third Parties

If the party failed to perform due to a third party they hired, they're exempt ONLY if BOTH the party and the third party meet force majeure conditions.

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Force Majeure: Recurring Events

Recurring events that are known and expected, like regular flooding, may not qualify as force majeure. The magnitude of the event must be exceptional.

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Temporary Nature of Force Majeure

The force majeure exemption lasts only as long as the impediment exists. Once it's gone, the party must fulfill their contract obligations.

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Notification Requirement

A party experiencing force majeure must promptly notify the other party about the impediment and its impact on their ability to perform.

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Force Majeure: Burden of Proof

The party claiming force majeure must provide strong evidence in court to support their claim.

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Force Majeure: Restrictive Application

The concept of force majeure is an exceptional mechanism in contract law and should be applied restrictively.

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Consequences of Delayed Notification

If the notification is delayed, the party experiencing force majeure may be liable for damages caused by the delay.

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Force Majeure and Contract Dissolution

Even in the presence of force majeure, if a party's post-impediment situation makes contract fulfillment impossible (e.g., bankruptcy), the contract may be legally dissolved.

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Force Majeure: Diligence in Informing

The party claiming force majeure must demonstrate that they acted diligently in informing the other party about the impediment and its impact.

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Force Majeure: External Impediment

A force majeure event must be completely outside the control of the parties involved in the contract.

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Article 79: Force Majeure Exemption

Article 79 of the contract sets out the legal framework for invoking force majeure as an exemption from liability.

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Force Majeure: Partial Fulfillment

The party claiming force majeure can't escape all obligations – they must fulfill whatever is possible under the circumstances.

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Study Notes

Article 79 Exceptions to Contractual Liability

  • Extraordinary Circumstances: Article 79 outlines exceptions to contract breaches under extraordinary circumstances, preventing automatic liability for certain failures to perform.
  • Impediment Beyond Control: A party isn't liable if a failure to perform is due to an insurmountable impediment beyond their control. This includes events like earthquakes or floods.
  • Objective and Subjective Elements: The party must prove the impediment was truly beyond their control (objective) and that they couldn't reasonably have anticipated, avoided, or mitigated the impediment (subjective).
  • Third-Party Involvement: If a party fails due to a third-party's non-performance, they're only exempt if the third party would also be exempt under the same rules.
  • Temporary Exemption: The exemption only applies during the period of the impediment. Obligations resume once the impediment ends.
  • Notification Requirement: The breaching party must immediately notify the other party of the impediment and its impact. Failure to do so results in liability for any damages.
  • Restrictive Interpretation: Article 79 must be interpreted narrowly. The burden of proof lies with the breaching party to demonstrate the impediment truly met the criteria.
  • Foreseeability and Examples:
    • Events like pandemics require demonstrably unforeseeable governmental restrictions, not the pandemic itself.
    • Economic downturns, foreseeable as cyclical events, are less likely to qualify.
    • Specific, recurring events (e.g., floods in a flood-prone area) require evidence of an exceptionally severe event outside reasonable expectations.
  • Key takeaway: The exception is highly restrictive, and the party claiming exemption must provide strong, demonstrable evidence of an unforeseen, uncontrollable event.

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