GENERAL CONTRACT LAWGENERAL CONTRACT LAW Conflict rules: see Ch. 3 IPLConflict rules: see Ch. 3 IPL Most national legal systems have no specific rules for cross-Most national legal systems have no specific rules for cross-

border transactions or international contracts in general (see Ch. border transactions or international contracts in general (see Ch. 3 IPL)3 IPL)

Uniform international law (by international instruments) ? Uniform international law (by international instruments) ? - In the EU some harmonisation of general contract law. Esp. In the EU some harmonisation of general contract law. Esp.

Consumer law, but some rules for business contracts, eg Late Consumer law, but some rules for business contracts, eg Late Payment DirectivePayment Directive

- International conventions on specific types of contracts (sales, International conventions on specific types of contracts (sales, carriage or transport, factoring, …)carriage or transport, factoring, …)

- OHADA Uniform Acts (on commercial contracts) and draft general OHADA Uniform Acts (on commercial contracts) and draft general contract law 2004contract law 2004

- Soft law and model laws, next slide Soft law and model laws, next slide Obligations arising out of other instruments, but relevant for Obligations arising out of other instruments, but relevant for

contract law: contract law: - National mandatory lawNational mandatory law- International soft law, eg Principles on business and human rightsInternational soft law, eg Principles on business and human rights

GENERAL CONTRACT LAWGENERAL CONTRACT LAW « soft law » and model laws on general contract law « soft law » and model laws on general contract law

Possible optional instruments* : Unidroit « Principles », PECL Possible optional instruments* : Unidroit « Principles », PECL (Lando-commission). Conflict rule will determine whether (Lando-commission). Conflict rule will determine whether accepted as « law » or merely as contract clausesaccepted as « law » or merely as contract clauses

Other restatements in contract law in general: Draft Other restatements in contract law in general: Draft Common Frame of reference (DCFR)Common Frame of reference (DCFR)

Model laws on specific questions, e.g. Uncitral model law Model laws on specific questions, e.g. Uncitral model law electronic commerce.electronic commerce.

- *Examples of existing optional instruments: CISG (opt-out), *Examples of existing optional instruments: CISG (opt-out), European trademark, societas europea, international last European trademark, societas europea, international last will, european procedures. will, european procedures.

- * On Oct 11, 2011, the EU Commission published a Draft * On Oct 11, 2011, the EU Commission published a Draft optional sales law (« CESL »), withdrawn lateroptional sales law (« CESL »), withdrawn later

UNIDROIT PICCUNIDROIT PICC Unidroit Principles for International Commercial contractsUnidroit Principles for International Commercial contracts- « Principles », i.e. no Convention or Model Law« Principles », i.e. no Convention or Model Law- First edition 1994 (120 art.)First edition 1994 (120 art.)- Enlarged edition 2004 (185 art.)Enlarged edition 2004 (185 art.)- Further enlarged 2010/2011 (211 art.) (Endorsed by Uncitral)Further enlarged 2010/2011 (211 art.) (Endorsed by Uncitral)

Intended scope of application: international commercial contractsIntended scope of application: international commercial contracts

Regulated matters: Formation (incl. Representation), Validity (defects Regulated matters: Formation (incl. Representation), Validity (defects of consent, specific clauses), Interpretation, « Contents », of consent, specific clauses), Interpretation, « Contents », Performance Non-performance and remedies, Set-off, Contractual Performance Non-performance and remedies, Set-off, Contractual Assignment of rights and contracts, Transfer of obligations, Limitations Assignment of rights and contracts, Transfer of obligations, Limitations of Actions (Prescription) of Actions (Prescription)

Additional chapters 2010/2011: conditional obligations, illegality, Additional chapters 2010/2011: conditional obligations, illegality, plurality of debtors or creditors, unwinding of failed contracts plurality of debtors or creditors, unwinding of failed contracts (restitution)(restitution)

Not covered: non-contractual assignmentNot covered: non-contractual assignment

UPICC PREAMBLEUPICC PREAMBLE Preamble: Preamble: Purpose of the PrinciplesPurpose of the Principles These Principles set forth general rules for international commercial These Principles set forth general rules for international commercial

contracts. contracts. They shall be applied when the parties have agreed that their They shall be applied when the parties have agreed that their

contract be governed by them.contract be governed by them. They may be applied when the parties have agreed that their They may be applied when the parties have agreed that their

contract be governed by general principles of law, the contract be governed by general principles of law, the lex mercatorialex mercatoria or the like. or the like.

They may be applied when the parties have not chosen any law to They may be applied when the parties have not chosen any law to govern their contract. govern their contract.

They may be used to interpret or supplement international uniform They may be used to interpret or supplement international uniform law instruments. law instruments.

They may be used to interpret or supplement domestic law. They may be used to interpret or supplement domestic law. They may serve as a model for national and international legislators. They may serve as a model for national and international legislators. See also 1.4. : applicable insofar as the conflict rule allows itSee also 1.4. : applicable insofar as the conflict rule allows it

UPICC– INTERPRETATION UPICC– INTERPRETATION AND GAP-FILLINGAND GAP-FILLING

Art. 1. 6 (Comp. 7 CISG) – Autonomous (& teleological) interpretationArt. 1. 6 (Comp. 7 CISG) – Autonomous (& teleological) interpretation(Interpretation and supplementation of the Principles) (Interpretation and supplementation of the Principles) (1) In the interpretation of these Principles, regard is to be had to their (1) In the interpretation of these Principles, regard is to be had to their international character and to their purposes including the need to international character and to their purposes including the need to promote uniformity in their application. promote uniformity in their application. (2) Issues within the scope of these Principles but not expressly (2) Issues within the scope of these Principles but not expressly settled by them are as far as possible to be settled in accordance with settled by them are as far as possible to be settled in accordance with their underlying general principles. their underlying general principles.

But But alsoalso duty to act in good faith: Art. 1.7 duty to act in good faith: Art. 1.7 (Good faith and fair dealing) (Good faith and fair dealing) (1) Each party must act in accordance with good faith and fair dealing (1) Each party must act in accordance with good faith and fair dealing in international trade. in international trade. (2) The parties may not exclude or limit this duty. (2) The parties may not exclude or limit this duty.

And art. 1.9 Usages and practices (comp. 9 CISG) And art. 1.9 Usages and practices (comp. 9 CISG)

UPICC– GENERAL UPICC– GENERAL PROVISIONS JURIDICAL PROVISIONS JURIDICAL

ACTS ACTS Art. 1.1: Freedom of contractArt. 1.1: Freedom of contract Art. 1.2: No form required (unless ...)Art. 1.2: No form required (unless ...) Art. 1.3: Binding character of contractArt. 1.3: Binding character of contract Art. 1.7: Duty to act according to good faith & fair dealingArt. 1.7: Duty to act according to good faith & fair dealing How intention is determined – interpretation of acts: Art. 4.1 and 4.2 How intention is determined – interpretation of acts: Art. 4.1 and 4.2 - (4.1. for contracts, 4.2 for unilateral acts) – Quid merger clause – No (4.1. for contracts, 4.2 for unilateral acts) – Quid merger clause – No

oral modification clauseoral modification clause Usages and practices – Art. 1.9Usages and practices – Art. 1.9 Rules on notices in 1.10 Rules on notices in 1.10

In the EU: freedom of contract limited by non-discrimination rules, i.a. In the EU: freedom of contract limited by non-discrimination rules, i.a. - Directive 2000/43/EC prohibits discrimination based on racial or ethnic - Directive 2000/43/EC prohibits discrimination based on racial or ethnic

origin in access to goods and services.origin in access to goods and services.

E-COMMERCEE-COMMERCE Uncitral model law 1996 (1998) deals i.a. with:Uncitral model law 1996 (1998) deals i.a. with:

- « Data messages » cover EDI, e-mail, telegram, telex and telecopy- « Data messages » cover EDI, e-mail, telegram, telex and telecopy- Art. 5: Information shall not be denied legal effect merely because it is in the - Art. 5: Information shall not be denied legal effect merely because it is in the form of a data messageform of a data message- Art. 6: Writing < accessible so as to be usable for subsequent reference- Art. 6: Writing < accessible so as to be usable for subsequent reference- Art. 7: Signature- Art. 7: Signature- Art. 8: Whether a data message can be an « original »- Art. 8: Whether a data message can be an « original »- Art. 13: Attribution of data messages (who is the sender)- Art. 13: Attribution of data messages (who is the sender)- Art. 15: Time of (1) dispatch and (2) of receipt- Art. 15: Time of (1) dispatch and (2) of receipt

CISG Advisory Council Opinion No. 1 on e-communication under CISGCISG Advisory Council Opinion No. 1 on e-communication under CISG UN Convention on the Use of Electronic Communications in International Contracts UN Convention on the Use of Electronic Communications in International Contracts

2005 (in force but only 7 ratifications, i.a. Russia)2005 (in force but only 7 ratifications, i.a. Russia) EU Directive 1999/93 on electronic signatures: different degrees of e-signature; EU Directive 1999/93 on electronic signatures: different degrees of e-signature;

legal effects; on July 1, 2016 replaced by EU Reg. 910/2014 regulating ‘electronic legal effects; on July 1, 2016 replaced by EU Reg. 910/2014 regulating ‘electronic identification schemes’identification schemes’

EU Directive 2000/31, framework directive e-commerceEU Directive 2000/31, framework directive e-commerce- Art. 9 Treatment of contracts: equivalence (some exceptions)- Art. 9 Treatment of contracts: equivalence (some exceptions)- Rules relating to information duties, conclusion contract, receipt, ...- Rules relating to information duties, conclusion contract, receipt, ...

UPICC– FORMATIONUPICC– FORMATION Very similar to CISGVery similar to CISG 2.1.1.: conclusion of the contract by offer and acceptance 2.1.1.: conclusion of the contract by offer and acceptance or by or by

conduct of the parties that is sufficient to show agreement conduct of the parties that is sufficient to show agreement Rules on offer and acceptance similar to CISGRules on offer and acceptance similar to CISG Art. 2.1.12Art. 2.1.12 (Writings in confirmation) (Writings in confirmation) Art. 2.1.14Art. 2.1.14 (Contract with terms deliberately left open) (Contract with terms deliberately left open) Art. 2.1.17 and 2.1.18 on merger clauses and clauses on Art. 2.1.17 and 2.1.18 on merger clauses and clauses on

modification in a particular form.modification in a particular form. Going beyond CISG: Art. 2.1.15 on liability for negotiations (or Going beyond CISG: Art. 2.1.15 on liability for negotiations (or

breaking off) in bad faith; 2.1.16 Duty of confidentialitybreaking off) in bad faith; 2.1.16 Duty of confidentiality Incorporation of standard terms: not for surprising terms Incorporation of standard terms: not for surprising terms

(2.1.20)(2.1.20) SpecificSpecific rule for battle of forms (2.1.22, knock out) (NB. rule for battle of forms (2.1.22, knock out) (NB.

comparative law: usually knock out; Engl = last shot; NL = first comparative law: usually knock out; Engl = last shot; NL = first shot)shot)

UPICC– AUTHORITY OF UPICC– AUTHORITY OF AGENTSAGENTS

Not in CISG , inspired by Unidroit Convention (1983, not in Not in CISG , inspired by Unidroit Convention (1983, not in force)force)

Deals with « authority », i.e. external relationshipDeals with « authority », i.e. external relationship Not internal relationship (eg. agency contract) (2.2.1)Not internal relationship (eg. agency contract) (2.2.1) Authority by grant (express or implied) (2.2.2); authority Authority by grant (express or implied) (2.2.2); authority

based on belief caused by the principal (2.2.5 (b))based on belief caused by the principal (2.2.5 (b)) Direct relationship in case of disclosed agency (2.2.3)Direct relationship in case of disclosed agency (2.2.3) In principle no direct relationship in case of undisclosed In principle no direct relationship in case of undisclosed

agency (2.2.4)agency (2.2.4) Liability if the agent acts outside authority: positive Liability if the agent acts outside authority: positive

interest (2.2.6)interest (2.2.6) Art. 2.2.7 on conflicts of interest Art. 2.2.7 on conflicts of interest Art. 2.2.9 on ratificationArt. 2.2.9 on ratification Art. 2.2.10 on effect of internal termination of autorityArt. 2.2.10 on effect of internal termination of autority

UPICC– VALIDITYUPICC– VALIDITY Not in CISGNot in CISG

Ch. 3.2. Deals with defects of consent giving rise to a right Ch. 3.2. Deals with defects of consent giving rise to a right to avoid the contract (4 grounds) (next slide)to avoid the contract (4 grounds) (next slide)

« Negative reflex effect » of rules on non-performance in « Negative reflex effect » of rules on non-performance in Art. 3.2.4. Art. 3.2.4. Esp. important for sales (CISG rules on non-performance Esp. important for sales (CISG rules on non-performance not displaced by UPICC rules on e.g. mistake)not displaced by UPICC rules on e.g. mistake)

UPICC– VALIDITYUPICC– VALIDITY The 4 defects of consent (cont.):The 4 defects of consent (cont.): (1) Mistake (3.2.2.): 4 cases of mistake (shared, caused, left (1) Mistake (3.2.2.): 4 cases of mistake (shared, caused, left

in error, contract not yet relied upon) + requirement of in error, contract not yet relied upon) + requirement of material difference, no gross negligence, risk not assumed or material difference, no gross negligence, risk not assumed or to be bourneto be bourneCaused = normally by giving information Caused = normally by giving information (« representations »*) (« representations »*) turning out to be incorrectturning out to be incorrect

* Often a contract will contain explicit representations warranted * Often a contract will contain explicit representations warranted by a party.by a party.

Error in expression or transmission: treated as mistake of the Error in expression or transmission: treated as mistake of the sender (3.2.3)sender (3.2.3)

(2) Fraud (3.2.5.) fraudulent representation or non-disclosure(2) Fraud (3.2.5.) fraudulent representation or non-disclosure (3) Threats (3.2.6)(3) Threats (3.2.6) (4) Gross disparity or excessive advantage (with abuse of (4) Gross disparity or excessive advantage (with abuse of

circumstances) (3.2.7)circumstances) (3.2.7)

UPICC– VALIDITYUPICC– VALIDITY Deals with defects of consent (cont.):Deals with defects of consent (cont.):

General rules on « avoidance » and its effects (in CISG General rules on « avoidance » and its effects (in CISG avoidance means termination; here avoidance means avoidance means termination; here avoidance means annullment)annullment)

Attribution of acts or omissions to third parties (3.2.8)Attribution of acts or omissions to third parties (3.2.8) Exercise of the right: Exercise of the right:

– by notice to the other party (3.2.11) by notice to the other party (3.2.11) – within a reasonable period (3.2.12), within a reasonable period (3.2.12), – not anymore after confirmation (3.2.9)not anymore after confirmation (3.2.9)

Effect = retroactive (3.2.14)Effect = retroactive (3.2.14) Avoidance gives rise to a right to restitution (a non-Avoidance gives rise to a right to restitution (a non-

contractual obligation) (3.2.15)contractual obligation) (3.2.15) Possibly damages for precontractual liability (3.2.16)Possibly damages for precontractual liability (3.2.16)

UPICC– VALIDITYUPICC– VALIDITY Ch.3.3. deals with « illegality », or rather with the effect of Ch.3.3. deals with « illegality », or rather with the effect of

mandatory rules outside the PICC not specifying their mandatory rules outside the PICC not specifying their effect on the contracteffect on the contract

Eg contract caused by corruption: in principle voidability Eg contract caused by corruption: in principle voidability (3.3.1. UPICC)(3.3.1. UPICC)

Rules on restitution in case of violation of mandatory rules Rules on restitution in case of violation of mandatory rules in art. 3.3.2.in art. 3.3.2.

NB. Conflicts may arise between contradictory mandatory NB. Conflicts may arise between contradictory mandatory rules of countries, e.g.:rules of countries, e.g.:

- - (Anti-)Boycott: Arab league boycotts Israel and blacklists (Anti-)Boycott: Arab league boycotts Israel and blacklists companies doing business with Israel; USA prohibits companies doing business with Israel; USA prohibits companies to take part in boycott or more generally companies to take part in boycott or more generally discriminate on the basis of race, national origin etc. (see discriminate on the basis of race, national origin etc. (see US Export Administration Act, EAA & Tax Reform Act).US Export Administration Act, EAA & Tax Reform Act).

UPICC– CONTENTS OF UPICC– CONTENTS OF CONTRACTS IN GENERALCONTRACTS IN GENERAL

Ch. 5 contains various rulesCh. 5 contains various rules Under interpretation: supplying an omitted term (Art. 4.8) Under interpretation: supplying an omitted term (Art. 4.8)

where important for the determination of their rights and where important for the determination of their rights and dutiesduties

Art. 5.1.2: implied obligations Art. 5.1.2: implied obligations stem from (a) the nature and stem from (a) the nature and purpose of the contract; (b) practices established between purpose of the contract; (b) practices established between the parties and usages; (c) good faith and fair dealing; (d) the parties and usages; (c) good faith and fair dealing; (d) reasonableness. reasonableness.

Art. 5.1.3. Duty to co-operate with each otherArt. 5.1.3. Duty to co-operate with each other Art. 5.1.4. Distinction duty result / merely best efforts Art. 5.1.4. Distinction duty result / merely best efforts Art. 5.1.7. Price determination mechanisms: normal price; Art. 5.1.7. Price determination mechanisms: normal price;

unilateral unless manifestly unreasonable; third party unilateral unless manifestly unreasonable; third party decision: exernal factor ceasing to existdecision: exernal factor ceasing to exist

Art. 5.1.8. Contract for an indefinite period: ending by notice Art. 5.1.8. Contract for an indefinite period: ending by notice with reasonable timewith reasonable time

Art. 5.3.1 ff.: rules on conditional obligationsArt. 5.3.1 ff.: rules on conditional obligations

UPICC– CONTENTSUPICC– CONTENTS Art. 5.2.1. ff. Contracts in favour of third parties; rule on Art. 5.2.1. ff. Contracts in favour of third parties; rule on

defencesdefences

CONTENTS OF CONTRACTSCONTENTS OF CONTRACTS Main obligations will depend on the type of contract (sale, Main obligations will depend on the type of contract (sale,

service contract, …)service contract, …) Non-specific additional obligations and other Non-specific additional obligations and other

clauses:« Boilerplate clauses » (see also Ch. 3 IPL)*, egclauses:« Boilerplate clauses » (see also Ch. 3 IPL)*, eg– «no material adverse change »; «no material adverse change »; – « indemnity » (from and against third party claims); « indemnity » (from and against third party claims); – waiver of copyright; waiver of copyright; – waiver of privacy (use of personal data); waiver of privacy (use of personal data); – confidentiality clauses; confidentiality clauses; – non-disparagement clausesnon-disparagement clauses

- Reaction in national law, esp. consumer law (many clauses Reaction in national law, esp. consumer law (many clauses will be unfair in at least consumer contracts); YODA (you will be unfair in at least consumer contracts); YODA (you own your device Act), etc.own your device Act), etc.

Non-competition clauses: see limits under competition lawNon-competition clauses: see limits under competition law* Some boilerplate clauses are discussed separately: entire agreement * Some boilerplate clauses are discussed separately: entire agreement

clause, no waiver clause, no oral amendment, severability or clause, no waiver clause, no oral amendment, severability or divisibility, clauses on notices, hardship and force majeure, clause divisibility, clauses on notices, hardship and force majeure, clause specifying essential terms or fundamental breaches, sole remedy specifying essential terms or fundamental breaches, sole remedy clause, clause shortening prescription or limitationclause, clause shortening prescription or limitation

CONTENTS OF CONTRACTSCONTENTS OF CONTRACTS Related contracts: Related contracts: some rules ‘link’ contracts to protect consumer or small some rules ‘link’ contracts to protect consumer or small

business, whereby termination of one contract entails business, whereby termination of one contract entails termination of linked contracts (eg consumer credit; termination of linked contracts (eg consumer credit; French Loi-Macron 2015)French Loi-Macron 2015)

CONTENTS OF CONTRACTSCONTENTS OF CONTRACTS- Clauses related to the responsibility that buyer/client may incur Clauses related to the responsibility that buyer/client may incur

in its home country due to behaviour of the supplier: in its home country due to behaviour of the supplier: - Eg sustainability clauses imposed on supplier (to protect Eg sustainability clauses imposed on supplier (to protect

against unethical behaviour of suppliers) (esp. because against unethical behaviour of suppliers) (esp. because certain efforts may be required by law, e.g. California certain efforts may be required by law, e.g. California Transparency in Supply Chains Act 2010; UK Modern Slavery Transparency in Supply Chains Act 2010; UK Modern Slavery Act 2015)Act 2015)

- Incl. clauses against trafficking and slavery stipulated by Incl. clauses against trafficking and slavery stipulated by client/buyerclient/buyer

- Anti-corruption clauses (ICC model anti-corruption clause Anti-corruption clauses (ICC model anti-corruption clause 2012) or more generally compliance clauses; they may also 2012) or more generally compliance clauses; they may also give the client rights to inspect the suppliergive the client rights to inspect the supplier

- E.g. EU rules for responsible sourcing of minerals originating E.g. EU rules for responsible sourcing of minerals originating in conflict-affected and high-risk areasin conflict-affected and high-risk areas

Other general obligations imposed on business parties, e.g.Other general obligations imposed on business parties, e.g.- Respecting privacy (protection of personal data of clients) – - Respecting privacy (protection of personal data of clients) –

EU DirectivesEU Directives

Rules on SERVICESRules on SERVICES- Important instruments for international service contracts ?Important instruments for international service contracts ?- - international conventions in certain sectors, esp. international - international conventions in certain sectors, esp. international

transport (maritime, road, air, rail ….)transport (maritime, road, air, rail ….)- - international conventions and standard contracts for financial - international conventions and standard contracts for financial

services, see Ch. 9 Financing and Ch. 10. Paymentsservices, see Ch. 9 Financing and Ch. 10. Payments- - standard contracts for international construction services, see - standard contracts for international construction services, see

esp. the FIDIC conditions: « red book » for construction esp. the FIDIC conditions: « red book » for construction contracts, « yellow book » for building and designing electrical contracts, « yellow book » for building and designing electrical or mechanical plants, « silver book » for process or power or mechanical plants, « silver book » for process or power plants turnkey projects, « green book » for simple contractsplants turnkey projects, « green book » for simple contracts

- - model general rules for service contracts in the DCFR Book IV - model general rules for service contracts in the DCFR Book IV (supplemented by specific rules for construction, processing, (supplemented by specific rules for construction, processing, storage, design, information/advice and treatment contracts)storage, design, information/advice and treatment contracts)

- - supra EU law on ‘services of the information society’ (e-- supra EU law on ‘services of the information society’ (e-commerce Directive 2000/31)commerce Directive 2000/31)

- Services can be part of distribution contracts (see Ch. 6 Services can be part of distribution contracts (see Ch. 6 Distribution) or technology transfer (Ch. 7)Distribution) or technology transfer (Ch. 7)

UPICC - PERFORMANCE UPICC - PERFORMANCE Modalities of (performance) of the obligation:Modalities of (performance) of the obligation: Time of performance (Art. 6.1.1.)Time of performance (Art. 6.1.1.) Order of performance (Art. 6.1.4.) in principle simultaneouslyOrder of performance (Art. 6.1.4.) in principle simultaneously Place of performance (Art. 6.1.6) default rulesPlace of performance (Art. 6.1.6) default rules

- Monetary obligation: creditor’s place (« obligee »)- Monetary obligation: creditor’s place (« obligee »)- Other obligations: debtor’s place (« obligor »)- Other obligations: debtor’s place (« obligor »)

Monetary obligations: means of payment, currency etc. (6.1.7 ff.). Monetary obligations: means of payment, currency etc. (6.1.7 ff.). See Topic 10 (International Payments)See Topic 10 (International Payments)

Costs of performance (Art. 6.1.11)Costs of performance (Art. 6.1.11) Rules where public permission required for performance (6.1.14 ff)Rules where public permission required for performance (6.1.14 ff)

Hardship (change of circumstances) Hardship (change of circumstances) Art. 6.2.1 ff. Art. 6.2.1 ff.

Performance as extinction of an obligationPerformance as extinction of an obligation Art. 6.1.12-13: imputation of performanceArt. 6.1.12-13: imputation of performance

UPICC – REMEDIES FOR UPICC – REMEDIES FOR NON-PERFORMANCE NON-PERFORMANCE

Overview of remedies for non-performance: Overview of remedies for non-performance: Withholding performance (suspension)Withholding performance (suspension) Specific performanceSpecific performance Termination (called « avoidance » in CISG) and price reductionTermination (called « avoidance » in CISG) and price reduction DamagesDamages

General principles:General principles:- Free choice, no hierarchy of remedies (« pari passu ») (but Free choice, no hierarchy of remedies (« pari passu ») (but

sometimes fundamental breach required)sometimes fundamental breach required)- Combinability, esp. of damages and other remediesCombinability, esp. of damages and other remedies- Largely self-help (unilateral declaration)Largely self-help (unilateral declaration) By notification (usually within a reasonable time)By notification (usually within a reasonable time) Instruments for restraining termination as a remedy:Instruments for restraining termination as a remedy:

− Additional period for performance (Art. 7.1.5)Additional period for performance (Art. 7.1.5)− The seller’s right to cure (Art. 7.1.4)The seller’s right to cure (Art. 7.1.4)

UPICC – NON-UPICC – NON-PERFORMANCE PERFORMANCE

« Non-performance » of an obligation as general (unitary) concept) « Non-performance » of an obligation as general (unitary) concept) (Art. 7.1.1, shift from «(breach of) contract » to « obligation ») (Art. 7.1.1, shift from «(breach of) contract » to « obligation »)

In view of the available remedies, distinction between:In view of the available remedies, distinction between:- non-performance caused by the creditor itself (7.1.2): no remedy- non-performance caused by the creditor itself (7.1.2): no remedy- non-performance excused under 7.1.7 (force majeure): only - non-performance excused under 7.1.7 (force majeure): only withholding performance, termination and interest on money duewithholding performance, termination and interest on money due- non-performance cured without delay (7.1.4): only withholding - non-performance cured without delay (7.1.4): only withholding performance, damagesperformance, damages- non-performance not excused: all remedies- non-performance not excused: all remedies

Rule on exemption clauses: only if not grossly unfair (7.1.6)Rule on exemption clauses: only if not grossly unfair (7.1.6)

UPICC – REMEDIES FOR UPICC – REMEDIES FOR NON-PERFORMANCE NON-PERFORMANCE

Withholding performance (7.1.3.)Withholding performance (7.1.3.)(the rule on anticipatory breach as in CISG is missing) (but implied (the rule on anticipatory breach as in CISG is missing) (but implied in 7.3.3/7.3.4)in 7.3.3/7.3.4)

Right to (enforce) (specific) performanceRight to (enforce) (specific) performance- always for monetary obligations (7.2.1) (no exception for cases - always for monetary obligations (7.2.1) (no exception for cases where you can sell it elsewhere)where you can sell it elsewhere)- in principle for other obligations (7.2.2) unless:- in principle for other obligations (7.2.2) unless:- impossible or unlawful - impossible or unlawful - unreasonably burdensome - unreasonably burdensome - reasonably available elsewhere - reasonably available elsewhere - strictly personal character - strictly personal character - not requested within a reasonable time- not requested within a reasonable time

UPICC – REMEDIES : UPICC – REMEDIES : TERMINATION (1) TERMINATION (1)

Grounds for termination:Grounds for termination:- fundamental non-performance (7.3.1. (1) (2))- fundamental non-performance (7.3.1. (1) (2))- after an additional period granted for performance (- after an additional period granted for performance (NachfristNachfrist, , 7.1.5. and 7.3.1 (3))7.1.5. and 7.3.1 (3))- in case of anticipatory fundamental non-performance: 7.3.3. and - in case of anticipatory fundamental non-performance: 7.3.3. and 7.3.4.7.3.4.

Mode of termination (7.3.2):Mode of termination (7.3.2):- by notice- by notice- in case of late or defective performance: within a reasonable time- in case of late or defective performance: within a reasonable time

UPICC – REMEDIES : UPICC – REMEDIES : TERMINATION (2) TERMINATION (2)

Scope of termination: all obligations, unless extended over Scope of termination: all obligations, unless extended over time and divisible (7.3.6 (2))time and divisible (7.3.6 (2))

? Price reduction? Price reduction

Effects of termination:Effects of termination:- release from (outstanding) obligations (7.3.5 (1))- release from (outstanding) obligations (7.3.5 (1))- restitution of performances (in kind or in money) (7.3.6. - restitution of performances (in kind or in money) (7.3.6. (1))(1))- surviving clauses (7.3.5 (3))- surviving clauses (7.3.5 (3))- damages reserved (7.3.5 (2))- damages reserved (7.3.5 (2))

UPICC – REMEDIES : UPICC – REMEDIES : DAMAGESDAMAGES

Except where non-performance is excused (7.4.1.)Except where non-performance is excused (7.4.1.)

General measure of damage: General measure of damage: - positive interest (see 7.4.2 (1), incl. lost profit)- positive interest (see 7.4.2 (1), incl. lost profit)- includes non-pecuniary loss (7.4.2. (2))- includes non-pecuniary loss (7.4.2. (2))- includes loss of a chance (7.4.3.)- includes loss of a chance (7.4.3.)

- limited by foreseeability test (7.4.4)- limited by foreseeability test (7.4.4)

- restriction where due to creditor or non-mitigation of harm by - restriction where due to creditor or non-mitigation of harm by creditor (7.4.7, 7.4.8)creditor (7.4.7, 7.4.8)- includes costs of mitigation (7.4.8 (2))- includes costs of mitigation (7.4.8 (2))

UPICC – REMEDIES : UPICC – REMEDIES : DAMAGESDAMAGES

Calculation of damage:Calculation of damage:- late payment: interest (plus further damage) (Art. 7.4.9); interest rate late payment: interest (plus further damage) (Art. 7.4.9); interest rate

in 7.4.9 (2, place of payment); in 7.4.9 (2, place of payment); dies interpellat pro homine dies interpellat pro homine (7.4.10)(7.4.10)- reasonable substitute transaction: price difference (plus further reasonable substitute transaction: price difference (plus further

damage) (Art. 7.4.5)damage) (Art. 7.4.5)- current price (Art. 7.4.6)current price (Art. 7.4.6)

Agreed payment for non-performance: clauses binding unless grossly Agreed payment for non-performance: clauses binding unless grossly excessive in relation to actual harm (7.4.13)excessive in relation to actual harm (7.4.13)(compare Council of Europe Resolution 1978(3) on penal clauses in (compare Council of Europe Resolution 1978(3) on penal clauses in civil law; UNCITRAL Uniform Rules on contract clauses for an agreed civil law; UNCITRAL Uniform Rules on contract clauses for an agreed sum due upon failure of performance 1983)sum due upon failure of performance 1983)

NB. An ‘indemnity’ is an autonomous obligation to pay an amount (not NB. An ‘indemnity’ is an autonomous obligation to pay an amount (not as compensation for non-performance of another obligation)as compensation for non-performance of another obligation)

UPICC – SET-OFFUPICC – SET-OFF Requirements: Requirements:

Obligations of the same kind between 2 parties – incl. monetary debts in different Obligations of the same kind between 2 parties – incl. monetary debts in different but freely convertible currencies (8.2.)but freely convertible currencies (8.2.)

Different models in national laws: either automatic if stricter conditions are met, or Different models in national laws: either automatic if stricter conditions are met, or by unilateral declaration. Unidroit Principles chooses last model.by unilateral declaration. Unidroit Principles chooses last model.

> Can be set-off by notice (8.3.) by one party where:> Can be set-off by notice (8.3.) by one party where:- its own obligation (« active obligation ») is payable (entitled to perform) (8.1.(1)a)- its own obligation (« active obligation ») is payable (entitled to perform) (8.1.(1)a)- the obligation of the other party (« passive obligation ») is: - the obligation of the other party (« passive obligation ») is: (a) due (8.1.(1)b) and (a) due (8.1.(1)b) and (b) ascertained or arising from the same contract ((8.1.(1) b and (2))(b) ascertained or arising from the same contract ((8.1.(1) b and (2))

In UPICC no « retroactive » effect (8.5 (3)) (but in some cases a partly similar rule, In UPICC no « retroactive » effect (8.5 (3)) (but in some cases a partly similar rule, cfr. set-off & prescription; set-off & assignment)cfr. set-off & prescription; set-off & assignment)

UPICC does not deal with contractual set-off (netting) but does not exclude itUPICC does not deal with contractual set-off (netting) but does not exclude it

UPICC – ASSIGNMENT OF UPICC – ASSIGNMENT OF RIGHTSRIGHTS

Assignment = transfer of a right (property)Assignment = transfer of a right (property)

Scope of Ch. 9.1: Scope of Ch. 9.1: - contractual assignment of contractual rights- contractual assignment of contractual rights- not: rights embodied in a negotiable instrument (9.1.2.)- not: rights embodied in a negotiable instrument (9.1.2.)

Limits to assignabilityLimits to assignability- where significantly more burdensome (9.1.3.)- where significantly more burdensome (9.1.3.)- partially assignable ? If divisible (9.1.4)- partially assignable ? If divisible (9.1.4)- no-assignment clauses have NO effect (1) for rights to payment of money - no-assignment clauses have NO effect (1) for rights to payment of money and (2) in case of good faith of assignee (9.1.9)and (2) in case of good faith of assignee (9.1.9)- UPICC have no rule as the lex Anastasiana (right of the debtor to buy the - UPICC have no rule as the lex Anastasiana (right of the debtor to buy the claim against the price paid by the assignee); there may be overriding claim against the price paid by the assignee); there may be overriding mandatory rules as e.g. the Belgian Act of July 12, 2015 against vulture mandatory rules as e.g. the Belgian Act of July 12, 2015 against vulture funds (assignee’s right against debtor State limited to what he paid funds (assignee’s right against debtor State limited to what he paid himself)himself)

UPICC – ASSIGNMENT OF UPICC – ASSIGNMENT OF RIGHTSRIGHTS

Requirements for assignment:Requirements for assignment:- existence of the right ? For future rights assignment takes - existence of the right ? For future rights assignment takes place with retroactive effect as soon as the right comes into place with retroactive effect as soon as the right comes into existence (9.1.6)existence (9.1.6)- mere agreement assignor / assignee (neither notice nor - mere agreement assignor / assignee (neither notice nor consent required for the transfer as such) (9.1.7)consent required for the transfer as such) (9.1.7)

Duty to perform of the debtor: Duty to perform of the debtor: - according to (order of) notice (9.1.10 and 9.1.11)- according to (order of) notice (9.1.10 and 9.1.11)- the assignee may demand adequate proof of assignment (9.1.12)- the assignee may demand adequate proof of assignment (9.1.12)

UPICC – ASSIGNMENT OF UPICC – ASSIGNMENT OF RIGHTSRIGHTS

All defences available + set-off available at time of notice All defences available + set-off available at time of notice (9.1.13)(9.1.13)

UPICC – NEW DEBTORSUPICC – NEW DEBTORS

Ch. 9.2. Substitution or addition of debtorCh. 9.2. Substitution or addition of debtor

3 Types (9.2.5)3 Types (9.2.5)- substitution: original debtor discharged- substitution: original debtor discharged- subsidiary liability of the original debtor - subsidiary liability of the original debtor - solidary liability of old & new debtor (« joint and several » in Eng. law)- solidary liability of old & new debtor (« joint and several » in Eng. law)

Several more specific institutions or instruments can be classified in Several more specific institutions or instruments can be classified in this scheme.this scheme.

Independent new debtors ? See e.g.: documentary credit, independent Independent new debtors ? See e.g.: documentary credit, independent guaranteesguarantees

UPICC – PLURALITY OF UPICC – PLURALITY OF PARTIESPARTIES

Ch. 11.1. Plurality of debtors (2 types):Ch. 11.1. Plurality of debtors (2 types):- either separate debtors- either separate debtors- or « joint and several » (= solidary debtors)- or « joint and several » (= solidary debtors)

> Art. 11.1.3. ff deal with the availability of defences, effects of > Art. 11.1.3. ff deal with the availability of defences, effects of performance and set-off, release, etc. for the other debtors.performance and set-off, release, etc. for the other debtors.> Art. 11.1.9 ff. deal with the apportionment of shares and the > Art. 11.1.9 ff. deal with the apportionment of shares and the internal relationship between solidary debtors (contributory claim internal relationship between solidary debtors (contributory claim + subrogation)+ subrogation)

- No category of ‘joint debtors’No category of ‘joint debtors’

Ch. 11.2. Contains rules on plurality of creditors (3 types)Ch. 11.2. Contains rules on plurality of creditors (3 types)- separate- separate- joint and several- joint and several- joint- joint

UPICC – LIMITATION OF UPICC – LIMITATION OF ACTIONSACTIONS

System of a double period: 3 / 10 years (10.2)System of a double period: 3 / 10 years (10.2)- 3 years from (constructive) knowledge (after the creditor knows or ought - 3 years from (constructive) knowledge (after the creditor knows or ought to know the facts as a result of which the creditor’s right can be exercised)to know the facts as a result of which the creditor’s right can be exercised)- 10 years from the day the right can be exercised- 10 years from the day the right can be exercised

Renewal of limitation period by acknowledgment (irrespective of 10 years) Renewal of limitation period by acknowledgment (irrespective of 10 years) (10.4)(10.4)

Suspension in case of proceedings (judicial, arbitral and similar): 10.5 to Suspension in case of proceedings (judicial, arbitral and similar): 10.5 to 10.7 – without a one year extension !?10.7 – without a one year extension !?

Prolongation until one year after impediment (force majeure, death or Prolongation until one year after impediment (force majeure, death or incapacity) ceases: 10.8incapacity) ceases: 10.8

Effects of expiration:Effects of expiration:- « weak effect » (art. 10.9); no restitution because not « undue » (10.11) - « weak effect » (art. 10.9); no restitution because not « undue » (10.11) - set-off possible until assertion of prescription (10.10)- set-off possible until assertion of prescription (10.10)- not ex officio by the judge- not ex officio by the judge