COMPARATIVE PRIVATE LAW

NON-PERFORMANCE -REMEDIES

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• Non-delivery causes stop of car production:

– buyer looses increase of sales because important car event is missed;

– buyer looses extraordinary profit due to extremely profitable contract;

– buyer incurred expenses to charter ships that were not used due to non-delivery

• Supply contract is in force for 5 more years• What can the buyer do?

Destruction of subject-matter (1)

• All: Seller is excused. Buyer may terminate contract/contract ceases to exist

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

• Consequences as above.• What can the buyer do?

Destruction of subject-matter (2)

• Norwegian, German law: Seller has to reimburse loss of increased profit, loss of extraordinary (?) profit, incurred expenses. Buyer may terminate contract

• Italian, English law, UNIDROIT, PECL, CISG : Seller has to reimburse loss of increased profit, incurred expenses. Buyer may terminate contract

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

• Sale of car components built on specifications

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

• Consequences as above.

• What can the buyer do?

Act of god (1)

• All: Seller is excused. Buyer may terminate contract/effects cease

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

• Sale of car components built on specifications

• The seller’s export licence is withdrawn because of the seller’s non-compliance with governmental requiremenets

• Consequences as above.

• What can the buyer do?

Act of god (2)

• Norwegian, German law: Seller has to reimburse loss of increased profit, loss of extraordinary (?) profit, incurred expenses. Buyer may terminate contract

• Italian, English law, UNIDROIT, PECL, CISG: Seller has to reimburse loss of increased profit, incurred expenses. Buyer may terminate contract

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 it cannot ship on time

• Consequences as above.• What can the buyer do?

Supplier’s failure

• Norwegian, Italian, German law: Seller is excused. Buyer may terminate contract

• English law: Seller has to reimburse loss of increased profit, incurred expenses . Buyer may terminate contract

• UNIDROIT, PECL, CISG: Buyer may request specific performance or terminate contract. Seller has to reimburse loss of increased profit, incurred expenses .

Case VI – Unaffordability (1)

• Sale of car components built on specifications

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

• Consequences as above.

• What can the buyer do?

Unaffordability (1)

• Norwegian, German, Italian law, UNIDROIT, PECL: Contract renegotiated or terminated

• English law, CISG: Seller has to reimburse loss of increased profit, incurred expenses. Buyer may terminate contract

Case VII – Unaffordability (2)

• Sale of car components built on specifications

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

• Consequences as above.

• What can the buyer do?

Unaffordability (2)

• Norwegian, German law: Buyer may request specific performance or terminate contract. Seller has to reimburse loss of increased profit, loss of extraordinary (?) profit, incurred expenses

• Italian law, CISG: Buyer may request specific performance or request termination. Seller has to reimburse loss of increased profit, incurred expenses.

• English law, UNIDROIT, PECL: Seller has to reimburse loss of increased profit, incurred expenses. Buyer may terminate contract

Case VIII – Unaffordability (3)

• Sale of car components built on specifications

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

• Consequences as above.

• What can the buyer do?

Unaffordability (3)

• Norwegian, German law: Buyer may request specific performance or request termination. Seller has to reimburse loss of increased profit, loss of extraordinary (?) profit, incurred expenses.

• Italian law, CISG: Buyer may request specific performance or request termination. Seller has to reimburse loss of increased profit, incurred expenses.

• English law, UNIDROIT, PECL: Seller has to reimburse loss of increased profit, incurred expenses. Buyer may terminate contract

Case IX – Choice between contracts

• Sale of car components built on specifications

• Destruction of part of the seller’s storage

• Volumes in store sufficient to meet obligations towards one buyer, but not all buyers

• Consequences as above.

• What can the buyer do?

Choice between contracts

• Norwegian, Italian, German law: Seller is excused. Buyer may terminate contract

• English law: Seller has to reimburse loss of increased profit, incurred expenses . Buyer may terminate contract

• UNIDROIT, PECL, CISG: Buyer may request specific performance or terminate contract. Seller has to reimburse loss of increased profit, incurred expenses . (?)

Norwegian law

• Breach of contract, main remedies:– Specific performance + damages– Termination (only if fundamental breach) + damages

• Hardship: adjustment of contract terms• Force majeure:

– Sale: excludes damages (as long as impediment lasts). Creditor may terminate.

– Construction: duration extended– Other contracts: contract suspended or terminated

Norwegian law

• Damages:– Assumption: liability– Adequate causation (direct damages)– Irrespective of degree of negligence (but:

evaluation of what is adequate is affected)– Casus mixtus: gross negligence or wilful

misconduct: also inadequate causation

German law

• Breach of contract, main remedies:– Specific performance + damages– Payment instead of performance + damages– Termination (only upon notice) + damages

• Hardship: adjustment of terms or termination

• Force majeure: excludes damages (as long as

impediment lasts). Creditor may terminate

German Law

• Damages:– Assumption: negligence– Adequate causation (also indirect damages, if

reasonable)– Irrespective of degree of negligence

Italian law

• Breach of contract, main remedies:– Specific performance + damages– Termination (only if fundamental breach and debtor’s

negligence) + damages

• Hardship: termination (may be avoided by adjustment of terms)

• Force majeure: contract suspended or ceases to have effect

Italian law

• Damages– Assumption: strict liability and good faith– Foreseeable damages– If wilful misconduct: also unforseeable

damages

English law

• Breach of contract, main remedies:– Damages– Termination (only if fundamental breach) + damages– Specific performance (at court’s discretion, only if: (i)

damages are inadequate, (ii) does not cause great hardship on debtor)

• Hardship: as in breach of contract

• Frustration: kills the contract

English law

• Damages– Assumption: strict liability– Foreseeable: (i) usual course of things, (ii)

reasonably contemplated

CISG

• Breach of contract, main remedies:– Specific performance (but, art 28: domestic law) +

damages– Termination (only if fundamental breach or, if delay, upon

notice) + damages

• Hardship: as in breach of contract

• Force majeure: excludes damages (as long as

impediment lasts). Creditor may terminate

CISG

• Damages– Assumption: strict liability– (i) Foreseeable as (ii) possible consequences

on basis of (iii) known circumstances

UNIDROIT

• Breach of contract, main remedies:– Specific performance (not if: impossible, hardship,

alternative,personal, lapse of time) + damages– Termination (only if fundamental breach or, if delay, upon

notice) + damages

• Hardship: adjustment of terms or termination

• Force majeure:excludes damages (as long as impediment lasts)

UNIDROIT

• Damages– Assumption: strict liability– Foresseable as likely

PECL

• Breach of contract, main remedies:– Specific performance (not if: impossible, hardship,

services, alternative) + damages– Termination (only if fundamental breach or, if delay, upon

notice) + damages

• Hardship: adjustment of terms or termination

• Force majeure:excludes damages (as long as impediment lasts)

PECL

• Damages– Assumption: strict liability– Foresseable as likely

Common features

Main differences – specific performance

• Main remedy– Norway – Germany– Italy– CISG

• Restricted use– England– PECL

UNIDROIT

Main differences – assumption for damages

• Negligence– Norway (?)– Germany– Italy (?)

• Strict liability– England– CISG– PECL– UNIDROIT

Main differences - Causation

• Adequate causation– Germany– Norway

• Foreseeability– Italy– England– CISG– PECL

UNIDROIT

Main differences – effects of force majeure

• Excuse from damages– All

• Use of other remedies– All but England, Italy

• Temporary– All but England

• Automatic termination– England– Italy (but not if

temporary)

Main differences - Hardship

• Renegotiation or termination– All but England and

CISG

• Treated as breach– England– CISG