ON LEGAL UNCERTAINTY REGARDING TIMELY NOTIFICATION OF AVOIDANCE OF THE SALES CONTRACT

Abstract

The paper deals with the topic of timely notification of avoidance. It is noted that legal uncertainty in contractual relations in international trade can be caused by a strict interpretation of the wording in Article 49(2)(b)(i) CISG, which states that the buyer loses his right to avoid the sales contract, unless he avoids the contract within a reasonable period after he knew or ought to have known of the seller’s breach of contract. A strict interpretation of the said Article does not allow for the acknowledgment of the buyer’s difficulties in assessing the fundamentality of the breach. In a situation where the defect in the delivered goods worsens gradually over time, the breach is yet not fundamental at the time he makes his notice of non-conformity pursuant to Article 39(1) CISG. Later he may learn that the breach has evolved into a fundamental breach and that he would have an interest to avoid the sales contract. A strict interpretation of the wording in Article 49(2)(b)(i) CISG means that the time limit for notifying avoidance is triggered at the same time as the time limit for notifying non-conformity pursuant to Article 39(1) CISG. Consequently, the buyer may already have lost his ability to efficiently avoid the sales contract at the time he would have the right to invoke that remedy in his case. This paper presents a solution to that problem, based on the application of Article 7(1) CISG. It is concluded that uniform application of the CISG as well as the need to observe good faith in international trade requires that the time limit for notifying avoidance is triggered at the time the buyer learned or ought to have learned about the fundamentality of the breach, which could be later than when the buyer learned of the breach as such.