Contract Law II: Fundamental Breach under CISG
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Contract Law II: Fundamental Breach under CISG

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Questions and Answers

What was the main reason the Court decided there was a fundamental breach in the first case mentioned?

The buyer wanted the fashion items specifically for the autumn season.

In the second case, what action did the buyer take as a result of the delayed delivery?

Avoided the contract after receiving two-thirds of the goods.

What aspect of the contract was considered fundamental in the second case?

The prompt delivery timeframe specified.

What was the seller's mistake in the first case regarding the deliveries?

<p>Failed to deliver the first part on the specified date.</p> Signup and view all the answers

Why did the buyer avoid the contract in the second case?

<p>Partial delivery unacceptable after a considerable delay.</p> Signup and view all the answers

What was the buyer's primary concern in the first case with the seller's actions?

<p>Time-sensitive arrival for the autumn season fashion</p> Signup and view all the answers

If the defect in the goods can be remedied within a reasonable time, what remedy is rarely available to the buyer in such cases?

<p>Avoidance of contract due to fundamental breach</p> Signup and view all the answers

Under what condition can the defect in the goods lead to the avoidance of the contract?

<p>If the defect in the goods cannot be rectified within a reasonable time</p> Signup and view all the answers

Which courts are known for taking a strict approach on fundamental breaches, according to the text?

<p>German and Swiss Supreme courts</p> Signup and view all the answers

According to Article 35 (1), what must the seller provide with regards to the delivered goods?

<p>Goods that are contained or packaged as required by the contract</p> Signup and view all the answers

In what circumstance will the buyer have the option of only claiming damages?

<p>If the defect in the goods is minor and can be remedied</p> Signup and view all the answers

Which articles of the CISG are mentioned as governing the avoidance of contracts due to fundamental breach?

<p>Article 51</p> Signup and view all the answers

According to Article 25 of the CISG, a fundamental breach is one that results in which of the following?

<p>A substantial detriment to the other party</p> Signup and view all the answers

Which of the following is NOT a consequence of a declaration of avoidance under the CISG?

<p>The party in breach is liable for damages</p> Signup and view all the answers

Which of the following statements about the foreseeability of a fundamental breach under the CISG is correct?

<p>The party in breach must have foreseen the result or a reasonable person of the same kind in the same circumstances would have foreseen such a result</p> Signup and view all the answers

Which of the following is NOT a requirement for a breach of contract under the CISG to be considered fundamental?

<p>The breach must be committed by the seller</p> Signup and view all the answers

What is the definition of a fundamental breach under the CISG?

<p>A breach of contract that results in substantial detriment to the other party</p> Signup and view all the answers

Which of the following is NOT a consequence of a fundamental breach under the CISG?

<p>The contract is void ab initio</p> Signup and view all the answers

What is the primary requirement for the seller according to Art 35 CISG?

<p>To deliver goods which are of the quantity, quality and description required by the contract</p> Signup and view all the answers

What was the consequence of the seller's actions in Example 3?

<p>The buyer had remedies in damages and reduction in value</p> Signup and view all the answers

Why did the Court not find a fundamental breach in Example 3?

<p>Because the buyer had not stipulated the particular characteristics of the goods as fundamental</p> Signup and view all the answers

What is one of the aspects of non-conformity under Art 35 CISG?

<p>Quantity and quality</p> Signup and view all the answers

What could the buyer have done to avoid the issue in Example 3?

<p>Stipulated the particular characteristics of the goods as fundamental in the contract</p> Signup and view all the answers

What is the last resort under the CISG according to the Court?

<p>Avoidance and restitution</p> Signup and view all the answers

In which situation was a fundamental breach of contract established based on non-conformity of goods?

<p>When a New York company delivered a portable air conditioning compressor to an Italian buyer with a smaller cooling capacity and higher electricity usage</p> Signup and view all the answers

Which case resulted in the avoidance of the contract on the grounds of non-conformity with the contract according to Article 35 CISG?

<p>The case involving the Italian seller adding sugar to wine delivered to the French buyer</p> Signup and view all the answers

In which case did the seller attempt to remedy the defects but ultimately failed?

<p>The case of the New York company delivering a portable air conditioning compressor</p> Signup and view all the answers

Which case resulted in the buyer avoiding the contract due to fundamental breach caused by non-conformity of goods?

<p>The case involving a New York company delivering a portable air conditioning compressor to an Italian buyer</p> Signup and view all the answers

In which situation was the delivery not in conformity with the contract, as per Article 35 CISG?

<p>When an Italian seller added sugar to wine delivered to a French buyer</p> Signup and view all the answers

The buyer was able to avoid the contract due to the delayed delivery of one-third of the goods two months after contract formation and payment of the full contract price.

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

In cases of defective performance, the buyer will always have the option of claiming damages as a remedy.

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

The defect in goods must be rectifiable within a reasonable time for the buyer to avoid the contract due to a fundamental breach.

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

German and Swiss Supreme courts are known for taking a flexible approach on fundamental breaches, unlike French, Austrian, and United States courts.

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

Article 35 (1) of the CISG requires the seller to provide goods of quantity, quality, and description specified in the contract, in the desired container, or packaging.

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

If the defect in goods can be remedied within a reasonable time, the buyer will likely be able to avoid the contract due to a fundamental breach.

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

The seller in the first case made the final delivery on time according to the contract.

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

In the second case, the buyer accepted the partial delivery of one-third of the goods.

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

The Court found a fundamental breach in the first case due to the seller's failure to deliver fashion for the summer season.

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

The Court decided in the second case that prompt delivery was not a fundamental aspect of the contract.

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

In the first case, the buyer avoided the contract due to the late delivery of goods.

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

The seller in the second case managed to deliver all the goods within the initially agreed timeframe of 10-15 days.

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

The Italian seller intentionally delivered a non-conforming product to the French buyer, violating Article 35 CISG.

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

The portable air conditioning compressor delivered to the Italian buyer had a larger cooling capacity than agreed, causing the buyer to avoid the contract.

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

In both cases, the buyers immediately declared avoidance of the contract without considering the possibility of remedying the defects.

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

The US courts apply a strict approach when considering the fundamental breach under the CISG, resulting in the allowance of avoidance of contracts.

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

The buyer in Example 4 had the option to only claim damages instead of avoiding the contract due to the non-conformity of the wine delivered.

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

A fundamental breach can only be committed by the buyer under the CISG.

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

A breach of contract committed by one of the parties is considered fundamental only if it is foreseeable.

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

If the breach of contract is considered a fundamental breach, the parties are not released from their remaining contractual obligations under the CISG.

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

A declaration of avoidance under the CISG can lead to unjust enrichment of one of the parties.

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

Under the CISG, a breach of contract can be considered fundamental even if the consequences of the breach were not foreseeable.

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

According to the CISG, the avoidance of a contract is only possible if the breach is considered 'minor' rather than 'fundamental' breach of contractual obligations.

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

In the given scenario, the German Supreme Court ruled that delivery of goods different from what was agreed upon in the contract constitutes a fundamental breach under Art 35 CISG.

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

Under Art 35 CISG, the seller must deliver goods which are not only of the quantity, quality, and description required by the contract but also fit for the ordinary purposes of such goods.

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

In the given scenario, the seller supplied the agreed quality of cobalt sulphate but the accompanying documents were partially falsified.

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

The CISG allows for 'avoidance' and 'restitution' as remedies for non-conforming goods, without considering them as last resorts.

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

The buyer in the scenario could not have avoided the issue by stipulating the particular characteristics of the goods as fundamental in the contract.

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

Under Art 35 CISG, the seller is not responsible for ensuring that goods are fit for a particular purpose, unless otherwise agreed by the parties.

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

Study Notes

Fundamental Breach

  • A fundamental breach of contract by one party allows the other party to avoid the contract under the CISG.
  • A declaration of avoidance releases the parties from their remaining contractual obligations, with no unjust enrichment.

Article 25: Fundamental Breach

  • A breach of contract is fundamental if it results in such detriment to the other party as to substantially deprive them of what they are entitled to expect under the contract.
  • The party in breach must have foreseen, or a reasonable person in the same circumstances would have foreseen, such a result.

What Constitutes the “Fundamentality” of the Breach?

  • A fundamental breach is committed when a party fails to deliver goods that meet the quantity, quality, and description required by the contract.
  • Non-conformity with the contract or law, partial performance, impossibility, delay, and non-conformity with ordinary or particular purposes are also considered fundamental breaches.

Foreseeability in Fundamental Breach

  • Foreseeability is a crucial element in determining whether a breach is fundamental.
  • The party in breach must have foreseen, or a reasonable person would have foreseen, the detrimental consequences of the breach.

Uniform Concept of Nonconformity under Art 35 CISG

  • Non-conformity includes:
    • Partial performance
    • Impossibility
    • Delay
    • Quantity and quality non-conformity
    • Non-conformity with law and contract

Case Examples

  • Example 3: German buyer vs. Dutch seller (BGH)
    • No fundamental breach found, buyer had remedies in damages and reduction in value.
  • Example 4: Italian seller vs. French buyer
    • Fundamental breach found due to non-conforming wine delivery, allowing avoidance of the contract.
  • Example 5: US Courts (New York company vs. Italian buyer)
    • Fundamental breach found due to non-conforming air conditioning compressor delivery, allowing avoidance of the contract.

National Approaches to Fundamental Breach

  • Different national legal systems and traditions lead to varying approaches to finding fundamental breaches and allowing avoidance of the contract.
  • Examples include:
    • German and Swiss Supreme courts taking a strict approach
    • French, Austrian, and US courts being more flexible in finding fundamental breaches

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Description

Learn about the concept of fundamental breach in Contract Law under the CISG (United Nations Convention on Contracts for the International Sale of Goods). This quiz covers the criteria for declaring a fundamental breach, consequences of avoidance, and parties' obligations post-declaration.

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