COMPARATIVE PRIVATE LAW NON-PERFORMANCE - LIABILITY University of Oslo Prof. Giuditta Cordero Moss.

COMPARATIVE PRIVATE LAW

NON-PERFORMANCE -LIABILITY

University of Oslo

Prof. Giuditta Cordero Moss

Case I – Destruction of subject-matter (1)

• Sale of car components built on specifications

• An earthquake destroys the facilities and the stored components

• Delivery cannot be made according to contract

• Is the seller liable for non-performance?

Destruction of subject-matter (1)

• Norwegian law: Seller is excused

• German law: Seller is excused

• Italian law: Seller is excused

• English law: Seller is excused

• UNIDROIT: Seller is excused

• PECL: Seller is excused

• CISG: Seller is excused

Case II – Destruction of subject-matter (2)

• Sale of car components built on specifications• A fire destroys the facilities and the stored

components• The fire alarm had not been installed due to

illness of the person in charge of security in the seller’s company

• Delivery cannot be made according to contract• Is the seller liable for non-performance?

Destruction of subject-matter (2)

• Norwegian law: Seller is not excused

• German law: Seller is not excused

• Italian law: Seller is not excused

• English law: Seller is not excused

• UNIDROIT: Seller is not excused

• PECL: Seller is not excused

• CISG: Seller is not excused

Case III – Act of god (factum principis) (1)

• New governmental regulations forbid export of various technical equipment, i.a. car components

Act of god (1)

• English law: Seller is excused

• UNIDROIT: Seller is excused

• PECL: Seller is excused

• CISG: Seller is excused

Case IV – Act of god (factum principis) (2)

• The seller’s export licence is withdrawn because of the seller’s non-compliance with governmental requiremenets

Act of god (2)

Case V – Supplier’s failure

• Sale of car components built on specifications• The aluminium supplier fails to deliver aluminium

on time for the production of the components• The aluminium supplier is a recognised supplier

on the market, but due to extraordinary wheather conditions cannot ship on time

• Delivery cannot be made according to contract• Is the seller liable for non-performance?

Supplier’s failure

• UNIDROIT, PECL: Seller is not excused

Case VI – Sub-contractor’s failure

• A sub-contractor fails to performe properly its part of the production, due to internal reorganisation

Sub-contractor failure

Case VII – Choice between contracts

• Destruction of part of the seller’s storage• Volumes in store sufficient to meet

obligations towards one buyer, but not all buyers

Choice between contracts

• CISG: Seller is excused (?)

• UNIDROIT, PECL: Seller is excused (?)

Case VIII – Unaffordability (1)

• Due to unexpected weather conditions the ship cannot leave the harbour unless an ice-breaker is especially ordered from abroad

Unaffordability (1)

• German law: Seller is excused (but first: renegotiation)

• UNIDROIT, PECL: Seller can require renegotiation

Case IX – Unaffordability (2)

• The price of aluminium increases significantly, and sale of the components at the agreed price would result in considerable losses for the seller

• Delivery “cannot” be made according to contract

Unaffordability (2)

Case X – Unaffordability (3)

• The price of aluminium increases significantly, and due to its numerous obligations the seller cannot pay for its raw materials

Unaffordability (3)

Possible aims of rules excusing non-performance

• Allocate the risk of supervening events

• Sanction negligence and reward diligence

• Avoid unfair situations

Norwegian law

• Kjpl.§ 27 : A party is not liable for failure to perform if due to impediment beyond his control that could not reasonably be taken into account or overcome

• ”Beyond his control”– Not Directly or indirectly caused by him, but– That could actually be controlled or affected

by him

German law

• §§ 276, 280 BGB: liability assumes negligence (presumed) or wilful misconduct

• §313: change in circumstances (including economic impossibility) – supervening events, unforeseen

Italian law

• Art. 1218 cc: Liability assumes that impediment was not due to the prevented party

• Art. 1176 cc: Evidence of diligence is sufficient• Art. 1175, 1375: Requesting performance is

against good faith if performance is unaffordable• Art. 1467: Request termination if unaffordability

due to unforseeable, extraordinary supervening event

English law

• Debtor has absolute obligation to perform accurately

• Discharge only if supervening events (without default) radically change the nature of the obligations (frustration)

• Inconvenience or increased onerousness do not qualify

• Self-induced events do not qualify• Expressed provisions are deemed to have

allocated the risk

• Art. 79: A party is not liable for failure to perform if due to impediment beyond his control that could not reasonably be taken into account or overcome

• To be constructed narrowly as frustration or flexibly as Norwegian law?

UNIDROIT

• Art. 7.1.7: A party is not liable for failure to perform if due to impediment beyond his control that could not reasonably be taken into account or overcome

• Art. 6.2.2: Change in circumstances – fundamental alteration of contract’s balance due to supervening event, unforeseeable, beyond the control, and no assumption of risk was made in the contract

• Art. 8:108: A party is not liable for failure to perform if due to impediment beyond his control that could not reasonably be taken into account or overcome

• Art. 6.111: Change in circumstances – contract becomes excessively onerous due to supervening event, unforeseeable, and no assumption of risk was made in the contract

Common features

• Supervening, external and unforeseeable event that objectively prevents performance excuses

Supervening events that excuse non-performance

Norway Germany Italy England CISG UNIDROIT PECL

Impossib.

diligence

fact.ctrl.

COMPARATIVE PRIVATE LAW NON-PERFORMANCE - LIABILITY University of Oslo Prof. Giuditta Cordero Moss.

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