Serious Deficiencies in the Drafting of Article 71 of the CISG on Suspension Due to Prospective Impairment of Contract Expectations
38 Pages Posted: 12 Oct 2021 Last revised: 13 Oct 2021
Date Written: 2020
Between the time of contract formation and the time for contract performance, a variety of communications or events might give one of the party’s real concerns about whether the other party will be able or willing to fulfill its future contract performance obligations. These concerns prospectively impair, to varying degrees, the legitimate contract expectations of the concerned party. That party can now find itself in a position of insecurity that it would not have assumed if the concerns had been known before entering the contract.
The United Nations Convention on the International Sales of Goods (CISG) addresses this situation in Chapter 5 of Part III on provisions common to the obligations of both sellers and buyers. It allows an aggrieved party to take specified actions prior to a breach, with the objective of enabling that party to initiate action to address the impairment. One of the options is the Article 71 right of the aggrieved party to suspend performance that has become due on its part (e.g., making an advance payment) to see if the impairment can be resolved before proceeding. The more drastic action is for the aggrieved party to avoid (cancel) the contract under Article 72.
This Paper analyzes the treatment of the remedies of suspension and avoidance under the CISG. Although Article 72 treatment of avoidance is on solid footing, the approach to suspension in Article 71 leaves a great deal to be desired. Without question, the availability of suspension can be an effective remedy. However, in my opinion, which is contrary to the stated positions of nearly all other commentators that have addressed the issue, Article 71 undercuts the suspension remedy so severely as to question whether it has any real distinction from the Article 72 requirements on avoidance.
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