Q 79-1
(a) Which principle is laid down in Article 79 CISG?
(b) Describe the liability concept of the CISG, considering Articles 45, 61 and 79 CISG.
(c) Compare this liability concept to those found in domestic legal systems and the PICC 2016.
(a) Exemption from liability which is dealt with in domestic legal systems under force majeure, impossibility, frustration or impracticability.
(b) The CISG is based on the principle of strict liability without fault with the possibility of exceptional exemption.
(c) The original civil law approach is fault-based whereas the strict liability approach could be found in the common law legal systems. The modern approach advocated by the CISG has been followed by PICC as well as by the PRC contract law.
Q 79-2
To which contractual duties does Article 79 CISG apply?
It applies to all contractual duties, be they core duties or only additional duties. In principle, Article 79 CISG may also apply to seller’s duty to deliver goods in conformity with the contract according to Article 35 CISG. However, those cases will be very rare.
Q 79-3
At which point in time must the impediment occur in order to fall under Article 79 CISG?
Usually, the impediment occurs after the conclusion of the contract. However, Article 79 CISG should also be applied to impediments that, without the knowledge of the parties, had already occurred before the conclusion of the contract, ie to cases of so-called initial impossibility. For example, it may be almost impossible in case of goods in transitu to determine whether the goods were lost before or after the conclusion of the contract.
Q 79-4
Describe the circumstances under which an impediment in the sense of Article 79 CISG can be found.
Exemption will often be considered in typical cases of so-called force majeure, eg natural phenomena and catastrophes, acts of war or terrorist attacks. It is disputed whether State interventions, such as export or import bans, may also lead to an impediment.
Q 79-5
Could the seller be exempted under Article 79 CISG if its supplier fails (see C 79-1)?
In general exemption will be very rare as the seller bears the procurement risk.
Q 79-6
Could the debtor be exempted under Article 79 CISG if it was already in breach of contract when the impediment occurred?
If the impediment occurred while the debtor was already in breach, causality between the impediment and the non-performance will usually be missing, as in this case the breach is the relevant cause for the non-performance and not the impediment.
Q 79-7
What obligations are imposed on the seller who is not able to deliver the goods as originally intended (see C 79-2)?
The seller is bound to overcome the consequences of the impediment. It has to find a commercially reasonable substitute.
Q 79-8
Which concept underlies the CISG with relation to liability for third persons? See C 79-3.
The concept of respondeat superior, i.e. the debtor is liable for its own personnel.
Q 79-9
Compare the prerequisites in Article 79(1) CISG, Article 6.2.2 and 6.2.3 PICC 2016, § 313 BGB, and Article 1195 CC.
Article 79(1) CISG does not explicitly mention hardship at all. However, the criteria under which an exemption may be claimed are quite similar to those mentioned in Article 6.2.2 PICC 2016. The same applies to the threshold laid down in § 313(1) BGB and Article 1195 CC. Article 79(1) CISG as well as Article 6.2.2 PICC 2016 can be applied to cases where there was an initial imbalance between the obligations unknown to the parties. § 313(1) BGB and Article 1195 CC, however, only apply to subsequent changes of circumstances.
Q 79-10
Compare C 79-4 and C 79-5.
(a) What provisions do they apply to cases of hardship?
(b) What is the relevant threshold beyond which hardship can be found?
(a) C 79-4 obviously applies Article 79 CISG. C 79-5 suggests that hardship is not covered by the CISG; instead, the court applies Article 6.2.2 and 6.2.3 PICC.
(b) Whereas C 79-4 denies hardship where the price had tripled, C 79-5 even accepts an increase of 70% as qualifying for hardship.
Q 79-11
What are the consequences of hardship under Article 79(1) CISG, Article 6.2.3 PICC 2016, § 313(3) BGB, and Article 1195 CC?
Under Article 79(1) CISG, the sole consequence is an exemption of the non-performing party from liability for damages. There is no explicit duty to renegotiate. However, applying Article 77 CISG may well yield similar results by requiring the aggrieved party to deal with the contract breacher. Article 6.2.3 PICC 2016 as well as Article 1195 CC provide for an explicit duty to renegotiate as well as the power of the court not only to avoid the contract but also to adapt it to the changed circumstances. § 313(3) BGB does not contain a duty to renegotiate but provides for adaptation and possible avoidance of the contract.
Q 79-12
On an examination of the wording of Article 79(2) CISG, would you say that Article 79(2) CISG makes it more difficult for the breaching party to be exempt than Article 79(1) CISG?
Yes, there must be a double exemption; first, it is necessary for the party itself to be exempt under Article 79(1) CISG and, secondly, the person engaged by the party would also have to be exempt.
Q 79-13
Are suppliers covered by Article 79(2) CISG (see C 79-6)?
In C 79-6, the question of whether suppliers fall under Article 79(2) CISG was not finally decided as the risk of non-conforming goods was deemed to lie in the sphere of the seller.
Q 79-14
It has been stated that a manufacturer does not fall under Article 79(2) CISG. How else could a seller’s liability for its manufacturer be established? See C 79-7.
It is determined by whether the circumstances are within the sphere of risk of the seller and thus in the realm of Article 79(1) CISG.
Q 79-15
Numerous decisions state that the party relying on Article 79 CISG bears the burden of proof. This is expressly laid down in the wording of Article 79(1) CISG: ‘if he proves that the failure [to perform] was due to an impediment beyond his control’. Which general principle can be drawn from this provision?
Each party bears the burden of proof for facts that are advantageous for its position.
Q 79-16
If one of the parties can successfully rely on Article 79 CISG, does this hinder the other party from exercising any right other than claiming damages, in particular, the right to claim performance?
According to Article 79(5) CISG, the exemption only relates to damages and not to other remedies. However, it would be contradictory if in case of an impediment beyond the control of the debtor, it could be sentenced to specific performance. If specific performance is not deemed to be excluded by Article 79 CISG, such a result must be achieved by relying on Article 28 CISG.
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