THE SELLER'S RIGHT TO CURE A FAILURE TO PERFORM: AN ANALYTIC COMPARISON OF THE RESPECTIVE PROVISIONS OF THE CISG AND THE PECL

Abstract

A contractual party’s right to cure a non-performance under the condition that such cure does not create any – or at least any excessive – hardship for the aggrieved party, has emerged from Common Law traditions to become almost a staple of modern contract law, and of modern sales law in particular.1 This study reviews and analyses the respective provisions governing the seller’s right to cure under two important legal regimes, that of the UN Convention on Contracts for the International Sale of Goods, 1980 (hereinafter CISG)2 and the newly drafted Principles of European Contract Law, 2003 (hereinafter PECL).3 Different justifications to the principle of cure may be cited, whether in terms of risk allocation, good faith obligations, or the relational approach to contract as a framework of relations between parties that shifts the analytic emphasis from overt rules (whether set contractually or by statute) to the actual framework of relations and interests involved. Be the theoretical overview what it may, the principle of cure is perhaps the most important deviation from strict doctrines of liability for breach, and as such it maintains an important relation to the doctrine of contract avoidance (“termination” in the context of the PECL), as discussed below. Curing a non-performance may be relevant in various contexts: payment, defective or missing documents, non-conforming or non-delivered goods, etc. In the PECL – which apply to any and all contractual transactions, not only sales or international sales – Art. 8:104 recognizes a nonperforming party’s general right to cure, limited by parameters that will be discussed presently. In the CISG – divided as it is into seller’s and buyer’s rights and obligations – the right to cure nonperformance depends upon the nature of the non-performance and the time of cure, and is divided into different typical situations, covered by several articles. Some grant parties the right to cure defective performance prior to the time of the projected performance as contracted: in those cases, cure limits aggrieved parties’ power to declare contracts avoided in situations of anticipatory breach. Thus, Art. 34 relates to curing defective or non-conforming documents, and Art. 37 deals with breach in respect to goods. Other articles refer to the aggrieved party’s power to require curative performance, such as Art. 46(2) and (3). These are relatively non-controversial issues, and one may argue that refusal to allow cure prior to the time set for performance is ad definitio a breach of good faith obligations. Indeed, the true meaning of cure pertains to a defaulting party’s right to cure a defective performance or non-performance after the time of the projected performance has passed. Thus this commentary deals with the seller’s right to cure under CISG Art. 48 and PECL Art 8:104, which extend the right to cure once the fact of breach has been established. Although both the PECL and CISG recognize a right to cure under certain conditions, they differ both in general approach as well as in the specific rights granted. This may not be surprising, as the PECL applies to any and all contractual transactions, not only sales or international sales; however, the seller’s right to cure is closely related to the buyer’s right to avoid the contract, an issue on which the CISG and PECL share similar approaches.4 Indeed, the relation between cure and avoidance must be a central topic for analysis once the nature of the right to cure has been clarified.