Remedies for non-performance：Perspectives from CISG, UNIDROIT Priniciples and PE

Remedies for non-performance：Perspectives from CISG, UNIDROIT Priniciples and PECL
INTRODUCTION
The growth of international trade makes some kind of unification necessary. Increased trade overseas has drawn attention to the problems that are caused by the different ways in which countries have chosen to regulate international sales. And the legal community has tried to facilitate overseas trade through efforts to harmonize national laws by legislative or non-legislative means.
Against such a background, the analysis in this contribution is focused on the CISG, UNIDROIT Principles and PECL -- three of the most important international instruments for the regulation of international commercial transactions which combine elements from both civil law and common law systems. In so doing, this contribution provides a comparative analysis of these instruments. It is merely thought that comparison is, probably, one of the most efficient ways to underline some of the unique features inherent in some legal regimes and to develop solutions to existing theoretical problems. However, as most of the authors dealing with the vast domain of this area would have done, the author in this contribution has never meant to make an exhaustive examination of international commercial law, bearing in mind that the ability of a single contribution to deal with its many issues is limited. The approach offered here is to review some of the key issues frequently befell in international trade, based on those generally accepted principles or elaborate rules as evidenced by international restatements or conventions and usages and practices or so-called lex mercatoria that is widely known to and regularly observed in international commercial transactions.
Particularly, it is said that no aspect of a system of contract law is more revealing of its underlying assumptions than is the law that prescribes the relief available for non-performance (breach). Issues relating to the remedial provisions are difficult and central substantive issues, which will no doubt be the focus of a large part of the discussion and deliberation surrounding application of commercial law on both a domestic and an international level. Therefore, the study in this contribution focuses, in light of traditional and modern theories, on the remedial scheme established under each of the three bodies of rules, namely Part III (partial) of the CISG, Chapter 7 of the UNIDROIT Principles and Chapters 8 and 9 of the PECL. In practical terms, these sectors are the substantive heart of the particular instruments. It is where the corresponding solutions to a large proportion of real world disputes in commercial transactions are to be found.
The comparative analysis contained speculates on the potential similarities and differences of these sectors, intending to enunciate rules which are common in international commercial law and at the same time to select the solutions which seem best adapted to the special requirements of international trade. One should note, however, that to the extent this contribution doesn’t give absolute priority to any one of the three instruments, whenever it is necessary to choose between conflicting rules and sometime then to derive a number of general principles which apply to all of the rules, what’s decisive to the criterion used is not just which rule is mandatory or adopted by the majority of jurisdictions, but rather which of the rules under consideration have the most persuasive value and/or appear to be particularly well suited for international commercial transactions.
Summary of Contents
PART I  GENERAL REVIEW                              
Chapter 1  Sources of Inspiration                                       
Chapter 2  Remedies Available upon Non-performance                     
PART II  PRESERVING PERFORMANCE                  
Chapter 3  Specific Performance                                       
Chapter 4  Nachfrist for Late Performance                                
Chapter 5  Cure by Non-performing Party                                
Chapter 6  Price Reduction for Non-conformity                           
PART III  TERMINATION                                 
Chapter 7  Right to Termination                                       
Chapter 8  Fundamental Non-performance                                
Chapter 9  Anticipatory Non-performance                                
Chapter 10  Termination of Breached Installment or Part                    
Chapter 11  Declaration of Termination                                 
Chapter 12  Effects of Termination                                      
PART IV  DAMAGES                                    
Chapter 13  General Measure of Damages                                
Chapter 14  Limits to Claims for Damages                              
Chapter 15  Damages upon Termination                                 
Chapter 16  Agreed Payment for Non-performance                        
Chapter 17  Recovery of Attorneys’ Fees                                
Chapter 18  Payment of Interest                                       
PART V  EXCUSES                                      
Chapter 19  Change of Circumstances                                 
Chapter 20  Force Majeure                                          
Chapter 21  Hardship                                               
Chapter 22  Force Majeure & Hardship Clauses                          
Table of Contents
PART I  GENERAL REVIEW                        
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           
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 UPICC Chapter 7
2.3.3 PECL Chapters 8, 9
2.3.4 Concluding Remarks
2.4 Structure of this Book                                               
PART II  SAVING CONTRACT
PART III  TERMINATION
PART IV  DAMAGES
PART V  EXCUSES
PART II  PRESERVING PERFORMANCE            
Chapter 3  Specific Performance                              
3.1 Comprised Approach under the CISG                                 
3.1.1 Introduction
3.1.2 Primacy of Specific Performance under Art. 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
3.3.2 Potential Problems
3.4 Uniform Remedy in UPICC/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                     
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 UPICC/PECL approach
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        
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 UPICC/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                           
7.1 General Considerations                                          
7.2 Grounds for Termination                                          
7.3 Concluding Remarks                                             
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                    
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      
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 Termination: CISG Art. 51                                 
10.5 Combined Approach: PECL Art. 9:302                             
10.6 Concluding Remarks                                             
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 UPICC/PECL Approach
11.6.4 Concluding Remarks
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                    
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                  
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                     
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 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                    
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                       
19.1 Introduction                                                   
19.2 Underlying Doctrine: 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                                
20.1 Introduction                                                   
20.2 Relevant Texts                                                
20.2.1 Exemptions: CISG Art. 79
20.2.2 Force Majeure: UPICC Art. 7.1.7
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                                    
21.1 Gap in the CISG?                                               
21.2 Interplay Between CISG Excuse and UPICC/PECL Hardship         
21.2.1 Hardship: UPICC 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 & 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)