ANTICIPATORY BREACH UNDER THEUNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS

Abstract

Intricate issues of contract law stem from a rather plain question: is one party, suspecting that the other party will not fulfill his obligations in compliance with the terms of the contract, entitled, prior to the date agreed upon for performance, to suspend his own performance and demand additional guarantees, or even to avoid the contract? International uniform law envisages a number of situations in which a breach is said to have occurred prior to the time agreed upon for performance. In the area of international sales contracts, arts. 71, 72, and 73(2) of the United Nations Convention on Contracts for the International Sale of Goods (hereafter ” CISG” ), applicable to both the buyer and the seller, lay down, on the one hand, the situations in which an anticipatory breach is deemed to have occurred and, on the other hand, the remedies available to the aggrieved party. In other words, these provisions designate the circumstances in which, even though no breach of contract has yet been committed and the time for performance of the obligation has not yet elapsed, a party may, in order to protect his own interests, temporarily stop complying with his contractual obligations or completely free himself from those obligations. In this respect, arts. 71, 72, and 73(2) CISG differ from arts. 49 and 64 CISG, which govern the right of the aggrieved party to avoid the contract when performance is overdue, that is when the other party has actually committed a fundamental breach of contract. Art. 71 and art. 72 CISG differ in their purpose, their conditions of application, and the solutions that they provide. Art. 72 CISG is based on the AngloAmerican doctrine of anticipatory breach and authorizes the innocent party to declare the contract avoided, without the need to wait until the breach materializes on the date when performance is due, if it is clear that the other party will commit a fundamental breach of contract. Art. 71 CISG, on the other hand, merely authorizes the innocent party to suspend performance if it becomes apparent that the other party will not perform a substantial part of his obligations. In other words, whereas art. 72 CISG is aimed at the termination of the contractual relationship and the release of the parties of their obligations, art. 71 CISG is aimed at keeping the contract intact and on foot. Art. 73(2) CISG, in turn, deals with the issue of anticipatory breach in the specific context of installment contracts. The UNIDROIT Principles of International Commercial Contracts (hereafter ”UNIDROIT Principles” ) and the Principles of European Contract Law (hereafter ” PECL” ), represent, like the CISG, attempts to ” promote the unification and/or harmonization of international commercial law.” 1 Today, at the international and European level, the UNIDROIT Principles and the PECL respectively constitute, in the field of transnational commercial contracts, the two sources of nonbinding or soft law2 most commonly referred to. These two sets of Principles are largely inspired by the CISG. Indeed, the Governing Council of UNIDROIT recognized, in its introduction to the UNIDROIT principles, that ” to the extent that the UNIDROIT Principles address issues also covered by the CISG, they follow the solutions found in that Convention.” 3 In fact, the CISG was ” an obligatory point of reference in the preparation of the UNIDROIT Principles.” 4 Similarly, the CISG was, for the drafters of the PECL, ” a particularly fruitful source of ideas.” 5 With these considerations in mind, the present study will attempt, beyond the boundaries of comparative analysis, to draw conclusions regarding the impact of the CISG, with respect to the issue of anticipatory breach, on both the UNIDROIT Principles, and the PECL.