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Remedies for Non-performance - Perspectives from CISG, UNIDROIT Principles and PECL,
Liu Chengwei  * 

INTRODUCTION

[INTRODUCTION]

LIST OF ABBREVIATIONS

A. For Documents
B. For Journals
C. For Organizations
D. For Citations

PART I. GENERAL REVIEW

CHAPTER 1. SOURCES OF INSPIRATION

[CHAPTER 1. SOURCES OF INSPIRATION]

1.1 INTRODUCTION

1.2 OVERVIEW OF THE STUDIED INSTRUMENTS

1.2.1 CISG
1.2.2 UNIDROIT Principles
1.2.3 PECL
1.2.4 Brief Comparison

1.3 MAJOR SOURCES OF INFORMATION

CHAPTER 2. REMEDIES AVAILABLE UPON NON-PERFORMANCE

[CHAPTER 2. REMEDIES AVAILABLE UPON NON-PERFORMANCE]

2.1 INTRODUCTION

2.2 THE CONCEPTS: BREACH OF CONTRACT vs. NON-PERFORMANCE

2.3 REMEDIAL SCHEMES OF THE STUDIED INSTRUMENTS

2.3.1 CISG Part III (Partial)
2.3.2 UNIDROIT Principles Chapter 7
2.3.3 PECL Chapters 8, 9
2.3.4 Concluding Remarks

2.4 STRUCTURE OF THIS PRESENTATION

PART II. PRESERVING PERFORMANCE
PART III. TERMINATION
PART IV. DAMAGES
PART V. EXCUSES

PART II. PRESERVING PERFORMANCE

CHAPTER 3. SPECIFIC PERFORMANCE

[CHAPTER 3. SPECIFIC PERFORMANCE]

3.1 COMPRISED APPROACH UNDER THE CISG

3.1.1 Introduction
3.1.2 Primacy of Specific Performance under Arts. 46/62
3.1.3 Forum's Rule under Art. 28

3.2 BUYER'S RIGHT TO SPECIFIC PERFORMANCE: CISG ART. 46

3.2.1 Introduction
3.2.2 General Rule: Art. 46(1)
3.2.2.1 Right to require performance
3.2.2.2 Non-resorting to inconsistent remedies
3.2.3 Right to Demand Cure: Arts. 46(2) and 46(3)
3.2.3.1 In general
3.2.3.2 Delivery of substitute goods: Art. 46(2)
3.2.3.3 Right to repair: Art. 46(3)
3.2.3.4 Time limit restriction
3.2.3.5 A summary

3.3 SELLER'S RIGHT TO SPECIFIC PERFORMANCE: CISG ART. 62

3.3.1 Rationale of Art. 62
3.3.2 General Application
3.3.3 Potential Problems

3.4 UNIFORM REMEDY IN UNIDROIT PRINCIPLES / PECL

3.4.1 Introduction
3.4.2 Performance of Monetary Obligation
3.4.2.1 Money due generally recoverable
3.4.2.2 Money not yet due
3.4.3 Performance of Non-monetary Obligation: In General
3.4.4 Exceptions to Performance of Non-monetary Obligation
3.4.4.1 The principle and exceptions
3.4.4.2 Performance impossible
3.4.4.3 Unreasonable burden
3.4.4.4 Performance from another source available
3.4.4.5 Performance of an exclusively personal character
3.4.4.6 Unreasonable delay in requiring performance
3.4.5 Right to Require Remedying of Defective Performance
3.4.6 Other Issues

CHAPTER 4. NACHFRIST FOR LATE PERFORMANCE

[CHAPTER 4. NACHFRIST FOR LATE PERFORMANCE]

4.1 GENERAL CONSIDERATIONS

4.2 RATIONALE UNDERLYING THE OPTIONAL APPROACH

4.2.1 Optional Approach under the Studied Instruments
4.2.2 Underlying Rationale
4.2.3 Granting Additional Period in Two Situations

4.3 SETTING OF A NACHFRIST NOTICE

4.3.1 Transmission of the Intention
4.3.1.1 Form of the notice
4.3.1.2 Risk in transmission
4.3.2 Fixing of the Time-limit
4.3.2.1 Fixed period
4.3.2.2 Reasonable length

4.4 EFFECTS OF SERVING A NACHFRIST NOTICE

4.4.1 Remedies Available/Suspended during the Period
4.4.2 Early End of the Existing Uncertainty upon Rejecting Notice
4.4.3 Termination upon Expiry of the Extension
4.4.3.1 In general
4.4.3.2 CISG approach
4.4.3.3 UNIDROIT Principles / PECL approach

CHAPTER 5. CURE BY NON-PERFORMING PARTY

[CHAPTER 5. CURE BY NON-PERFORMING PARTY]

5.1 INTRODUCTION

5.2 CONDITIONS FOR INVOKING CURE

5.2.1 In General
5.2.2 Reasonableness of Notice
5.2.3 Appropriateness of Cure

5.3 SELLER'S RIGHT TO CURE AND BUYER'S RIGHT TO TERMINATION

5.4 EFFECTS OF EFFECTIVE NOTICE

5.4.1 Right to Inquire vs. Duty to Accept Cure
5.4.2 Suspension of Inconsistent Remedies
5.4.3 Retained Rights of the Aggrieved Party

CHAPTER 6. PRICE REDUCTION FOR NON-CONFORMITY

[CHAPTER 6. PRICE REDUCTION FOR NON-CONFORMITY]

6.1 GENERAL CONSIDERATIONS

6.2 FEATURES OF CISG ART. 50

6.2.1 Unique Role and Justification
6.2.2 Self-help Remedy
6.2.3 Seeming Advantages

6.3 IN CONTRAST WITH DAMAGES

6.3.1 Introduction
6.3.2 Distinctions from Damages under the CISG
6.3.2.1 Diverse ratio legis
6.3.2.2 Different manner in calculation
6.3.2.3 Other differences
6.3.2.4 A summary
6.3.3 An Alternative to Damages
6.3.3.1 Introduction
6.3.3.2 In conjunction with force majeure
6.3.3.3 In case of falling market
6.3.3.4 Upon difficulty in proving damages
6.3.3.5 A summary

6.4 ESSENTIALS OF CISG ART. 50

6.4.1 Scope of Application
6.4.1.1 General application in case of non-conformity
6.4.1.2 Ambiguity over defects in title
6.4.2 Exercise of the Right to Price Reduction
6.4.3 Calculation of Proportional Reduction
6.4.3.1 Decisive point: time of delivery
6.4.3.2 Place for comparing
6.4.4 Limited by the Cure

6.5 STATUS OF THE PRICE REDUCTION UNDER UNIDROIT PRINCIPLES / PECL

6.5.1 Exclusion under the UNIDROIT Principles
6.5.2 Inclusion under the European Principles

PART III. TERMINATION

CHAPTER 7. RIGHT TO TERMINATION

[CHAPTER 7. RIGHT TO TERMINATION]

7.1 GENERAL CONSIDERATIONS

7.2 GROUNDS FOR TERMINATION

7.3 CONCLUDING REMARKS

CHAPTER 8. FUNDAMENTAL NON-PERFORMANCE

[CHAPTER 8. FUNDAMENTAL NON-PERFORMANCE]

8.1 GENERAL CONSIDERATIONS

8.2 FORESEEABLE SUBSTANTIAL DETRIMENT

8.2.1 Introduction
8.2.2 Substantial Detriment
8.2.2.1 Existing detriment
8.2.2.2 Substantial deprivation
8.2.2.3 Discernible expectations
8.2.3 Foreseeability
8.2.3.1 Introduction
8.2.3.2 Test for foreseeability
8.2.3.3 Time for foreseeability
8.2.3.4 Burden to prove unforeseeability

8.3 OTHER ELEMENTS IN DEFINING FUNDAMENTAL NON-PERFORMANCE

8.3.1 Strict Compliance of Essence
8.3.2 Intentional Non-performance
8.3.3 No Reliance on Future Performance
8.3.4 Disproportionate Loss

8.4 CONCLUDING REMARKS

CHAPTER 9. ANTICIPATORY NON-PERFORMANCE

[CHAPTER 9. ANTICIPATORY NON-PERFORMANCE]

9.1 GENERAL CONSIDERATIONS

9.2 GROUNDS FOR SUSPENSION

9.3 SELLER'S RIGHT TO STOP GOODS IN TRANSIT UPON SUSPENSION

9.4 DUTY TO GIVE NOTICE IN EXERCISING SUSPENSION

9.5 RESTORING PERFORMANCE BY GIVING ADEQUATE ASSURANCE

9.6 TERMINATION UPON ANTICIPATORY FUNDAMENTAL NON-PERFORMANCE

9.6.1 In General
9.6.2 Clear Indication of A Fundamental Non-performance
9.6.3 Notice Given in case of Termination

9.7 ADEQUATE ASSURANCE OF DUE PERFORMANCE

9.7.1 Purpose of Rule
9.7.2 Non-receipt of Adequate Assurance

9.8 CONCLUDING REMARKS

CHAPTER 10. TERMINATION OF BREACHED INSTALLMENT OR PART

[CHAPTER 10. TERMINATION OF BREACHED INSTALLMENT OR PART]

10.1 TERMINATION OF INSTALLMENT CONTRACTS: CISG ART. 73

10.2 TERMINATION OF FUTURE INSTALLMENTS: CISG ART. 73(2)

10.3 TERMINATION OF A CONTRACT AS A WHOLE: CISG ART. 73(3)

10.4 PARTIAL TERMINATIO: CISG ART. 51

10.5 COMBINED APPROACH: PECL ART. 9:302

10.6 CONCLLUDING REMARKS

CHAPTER 11. DECLARATION OF TERMINATION

[CHAPTER 11. DECLARATION OF TERMINATION]

11.1 NO AUTOMATIC TERMINATION

11.2 INFORMALITY OF THE NOTICE

11.3 TRANSMISSION OF THE INTENTION

11.4 RISK IN COMMUNICATION

11.4.1 CISG Approach
11.4.2 Receipt Principle under the UNIDROIT Principles
11.4.3 Combined Approach under the PECL

11.5 TIME LIMIT FOR THE DECLARATION: IN GENERAL

11.6 DECLARATION WITHIN REASONABLE TIME

11.6.1 Definition of reasonable time
11.6.2 CISG Approach
11.6.3 UNIDROIT Principles / PECL Approach
11.6.4 Concluding Remarks

CHAPTER 12. EFFECTS OF TERMINATION

[CHAPTER 12. EFFECTS OF TERMINATION]

12.1 INTRODUCTION

12.2 RELIEF OF FUTURE PERFORMANCE

12.3 RETROSPECTIVE OR PROSPECTIVE APPROACH

12.4 UNAFFECTED RIGHTS AND OBLIGATIONS AFTER TERMINATION

12.4.1 Continuing Right to Claim Damages
12.4.2 Unaffected Clauses Intended to Apply despite Termination

12.5 RESTITUTION

12.5.1 In General
12.5.2 Entitlement of Parties to Restitution on Termination
12.5.3 Restitution under the PECL
12.5.3.1 Property reduced in value: Art. 9:306
12.5.3.2 Recovery of money paid and property: Arts. 9:306, 9:307
12.5.3.3 Concluding remarks
12.5.4 Restitution of Benefits Received
12.5.5 Exceptions: Restitution Not Possible or Appropriate
12.5.5.1 CISG approach: making restitution a prerequisite for avoidance
12.5.5.2 UPICC/PECL approach: focusing on the allowance upon impossible restitution
12.5.5.3 Comparative perspectives
12.5.5.4 Concluding remarks

PART IV. DAMAGES

CHAPTER 13. GENERAL MEASURE OF DAMAGES

[CHAPTER 13. GENERAL MEASURE OF DAMAGES]

13.1 RIGHT TO DAMAGES

13.2 FULL COMPENSATION

13.3 RECOVERABLE LOSSES

13.4 COMPENSATION OF NON-PECUNIARY LOSS

13.5 COMPUTATION OF LOSSES AND GAINS

CHAPTER 14. LIMITS TO CLAIMS FOR DAMAGES

[CHAPTER 14. LIMITS TO CLAIMS FOR DAMAGES]

14.1 GENERAL CONSIDERATIONS

14.2 FORESEEABILITY OF LOSS

14.2.1 In General
14.2.2 Test for Foreseeability
14.2.3 Party Concerned and Reference Point
14.2.4 Evaluation of Foreseeability
14.2.5 Content of Foreseeability
14.2.6 Concluding Remarks

14.3 CERTAINTY OF HARM

14.4 CONTRIBUTION TO HARM

14.4.1 In General
14.4.2 Ways of Contributing to the Harm
14.4.3 Remedies Affected by the Contribution
14.4.3.1 Remedies available upon non-performance caused solely by the contribution
14.4.3.2 Damages proportionately reduced due to partial contribution

14.5 DUTY TO MITIGATE

14.5.1 In General
14.5.2 Reasonable Measures Taken
14.5.3 Effects of Failure to Mitigate

CHAPTER 15. DAMAGES UPON TERMINATION

[CHAPTER 15. DAMAGES UPON TERMINATION]

15.1 GENERAL CONSIDERATIONS

15.2 DAMAGES UPON SUBSTITUTE TRANSACTIONS

15.2.1 Introduction
15.2.2 Presupposed Situations Calling for Concrete Calculation
15.2.3 Substitute Transaction must be Reasonable Substitute

15.3 DAMAGES UPON CURRENT PRICE

15.3.1 Introduction
15.3.2 Presupposed Situations Calling for Abstract Calculation
15.3.3 Determination of "Current Price"
15.3.3.1 In general
15.3.3.2 Reference point
15.3.3.3 Relevant place

15.4 FURTHER DAMAGES

CHAPTER 16. AGREED PAYMENT FOR NON-PERFORMANCE

[CHAPTER 16. AGREED PAYMENT FOR NON-PERFORMANCE]

CHAPTER 17. RECOVERY OF ATTORNEYS' FEES

[CHAPTER 17. RECOVERY OF ATTORNEYS' FEES]

17.1 GENERAL CONSIDERATIONS

17.1.1 Introduction
17.1.2 Recoverability under "Loser-pays" Principle
17.1.3 Excluded by "American Rule"

17.2 CISG DECISIONS CONCERNING ATTORNEYS' FEES

17.3 PROBLEMATIC RECOVERY UNDER ART. 74 CISG

CHAPTER 18. PAYMENT OF INTEREST

[CHAPTER 18. PAYMENT OF INTEREST]

18.1 INTRODUCTION

18.2 GENERAL ENTITLEMENT TO INTEREST

18.3 ADDITIONAL DAMAGES

18.4 INTEREST ON DAMAGES

18.5 ACCRUAL OF INTEREST

18.6 RATE OF INTEREST

PART V. EXCUSES

CHAPTER 19. CHANGE OF CIRCUMSTANCES

[CHAPTER 19. CHANGE OF CIRCUMSTANCES]

19.1 INTRODUCTION

19.2 UNSDERLYING DOCTRINCE; REBUS SIC STANTIBUS

19.3 DIFFERENT APPROACHES TO CHANGED CIRCUMSTANCES

19.3.1 Historical Review
19.3.2 National Doctrines
19.3.3 International Perspective
19.3.3.1 Public international law
19.3.3.2 International commercial practice
19.3.4 Conclusion

19.4 DEFINITIONS OF force majeure AND HARDSHIP

19.4.1 Force Majeure
19.4.2 Hardship
19.4.3 Comparison

19.5 GENERAL APPROACHES IN THE STUDIED INSTRUMENTS

19.5.1 Approach under the CISG
19.5.2 Approach under the UNIDROIT Principles
19.5.3 Approach under the PECL
19.5.4 Concluding Remarks

CHAPTER 20. force majeure

[CHAPTER 20. force majeure]

20.1 INTRODUCTION

20.2 RELEVANT TEXTS

20.2.1 Exemptions: CISG Art. 79
20.2.2 Force Majeure: UNIDROIT Principles Art. 6.1.7
20.2.3 Excuse Due to an Impediment: PECL Art. 8:108
20.2.4 Comparison

20.3 GENERAL RULE

20.3.1 Scope of Excusable Non-performance
20.3.2 Existence of Qualifying Impediment
20.3.2.1 Introduction of a new word
20.3.2.2 Interpretation of the word
20.3.2.3 Problematic situations
20.3.3 Conditions for Exempting Impediment
20.3.3.1 Beyond control
20.3.3.2 Unforeseeable
20.3.3.3 Unavoidable or insurmountable
20.3.3.4 Causation

20.4 RESPONSIBILITY FOR THIRD PARTIES

20.5 TEMPORARY IMPEDIMENT

20.6 DUTY TO NOTIFY

20.7 EFFECTS

20.7.1 In General
20.7.2 Effect on Right to Damages
20.7.3 Effect on Right to Performance
20.7.4 Effect on Right to Termination

CHAPTER 21. HARDSHIP

[CHAPTER 21. HARDSHIP]

21.1 GAP IN THE CISG?

21.2 INTERPLAY BETWEEN CISG EXCUSE AND UNIDROIT PRINCIPLES / PECL HARDSHIP

21.2.1 Hardship: UNIDROIT Principles Arts. 6.2.1 through 6.2.3
21.2.2 Change of Circumstances: PECL Art. 6:111
21.2.3 Gap-filling Application of Hardship Provisions?

21.3 CONDITIONS FOR INVOKING HARDSHIP

21.3.1 In General
21.3.2 Crucial Point: Fundamental Alteration of Equilibrium
21.3.3 Additional Requirements for Hardship to Arise
21.3.3.1 Time factor: occurrence after conclusion
21.3.3.2 Unforeseeability
21.3.3.3 Risk not assumed

21.4 EFFECTS OF HARDSHIP

21.4.1 In General
21.4.2 Triggering of Renegotiation
21.4.2.1 Request for renegotiation
21.4.2.2 Renegotiation in good faith
21.4.3 Court Measures in case of Hardship
21.4.4 Concluding Remarks

CHAPTER 22. FORCE MAJEURE and HARDSHIP CLAUSES

[CHAPTER 22. FORCE MAJEURE and HARDSHIP CLAUSES]

22.1 GENERAL CONSIDERATIONS

22.2 FORCE MAJEURE CLAUSE

22.2.1 Introduction
22.2.2 Drafting Considerations

22.3 HARDSHIP CLAUSE

22.3.1 Introduction
22.3.2 Drafting Considerations

22.4 OVERLAPPING OF THE CLAUSES

22.5 USE OF STANDARD FORMS: ICC No. 421 (partial)

Endnotes

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Remedies for Non-performance - Perspectives from CISG, UNIDROIT Principles and PECL

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Liu Chengwei

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