COMPARATIVE PRIVATE LAW NON-PERFORMANCE - REMEDIES

1. COMPARATIVE PRIVATE LAWNON-PERFORMANCE -REMEDIES University of Oslo Prof. Giuditta Cordero Moss

2. Case I – Destruction of subject-matter (1) • Sale of car components built on specifications • An earthquake destroys the facilities and the stored components • Non-delivery causes stop of car production: • buyer looses increase of sales because important car event is missed; • buyer looses extraordinary profit due to extremely profitable contract; • buyer incurred expenses to charter ships that were not used due to non-delivery • Supply contract is in force for 5 more years • What can the buyer do?

3. All: Seller is excused. Buyer may terminate contract/contract ceases to exist Destruction of subject-matter (1)

4. Case II – Destruction of subject-matter (2) • Sale of car components built on specifications • A fire destroys the facilities and the stored components • The fire alarm had not been installed due to illness of the person in charge of security in the seller’s company • Consequences as above. • What can the buyer do?

5. Norwegian, German law: Seller has to reimburse loss of increased profit, loss of extraordinary (?) profit, incurred expenses. Buyer may terminate contract Italian, English law, UNIDROIT, PECL, CISG : Seller has to reimburse loss of increased profit, incurred expenses. Buyer may terminate contract Destruction of subject-matter (2)

6. Case III – Act of god (factum principis) (1) • Sale of car components built on specifications • New governmental regulations forbid export of various technical equipment, i.a. car components • Consequences as above. • What can the buyer do?

7. All: Seller is excused. Buyer may terminate contract/effects cease Act of god (1)

8. Case IV – Act of god (factum principis) (2) • Sale of car components built on specifications • The seller’s export licence is withdrawn because of the seller’s non-compliance with governmental requiremenets • Consequences as above. • What can the buyer do?

9. Norwegian, German law: Seller has to reimburse loss of increased profit, loss of extraordinary (?) profit, incurred expenses. Buyer may terminate contract Italian, English law, UNIDROIT, PECL, CISG: Seller has to reimburse loss of increased profit, incurred expenses. Buyer may terminate contract Act of god (2)

10. Case V – Supplier’s failure • Sale of car components built on specifications • The aluminium supplier fails to deliver aluminium on time for the production of the components • The aluminium supplier is a recognised supplier on the market, but due to extraordinary wheather conditions it cannot ship on time • Consequences as above. • What can the buyer do?

11. Norwegian, Italian, German law: Seller is excused. Buyer may terminate contract English law: Seller has to reimburse loss of increased profit, incurred expenses . Buyer may terminate contract UNIDROIT, PECL, CISG: Buyer may request specific performance or terminate contract. Seller has to reimburse loss of increased profit, incurred expenses . Supplier’s failure

12. Case VI – Unaffordability (1) • Sale of car components built on specifications • Due to unexpected weather conditions the ship cannot leave the harbour unless an ice-breaker is especially ordered from abroad • Consequences as above. • What can the buyer do?

13. Norwegian, German, Italian law, UNIDROIT, PECL: Contract renegotiated or terminated English law, CISG: Seller has to reimburse loss of increased profit, incurred expenses. Buyer may terminate contract Unaffordability (1)

14. Case VII – Unaffordability (2) • Sale of car components built on specifications • The price of aluminium increases significantly, and sale of the components at the agreed price would result in considerable losses for the seller • Consequences as above. • What can the buyer do?

15. Norwegian, German law: Buyer may request specific performance or terminate contract. Seller has to reimburse loss of increased profit, loss of extraordinary (?) profit, incurred expenses Italian law, CISG: Buyer may request specific performance or request termination. Seller has to reimburse loss of increased profit, incurred expenses. English law, UNIDROIT, PECL: Seller has to reimburse loss of increased profit, incurred expenses. Buyer may terminate contract Unaffordability (2)

16. Case VIII – Unaffordability (3) • Sale of car components built on specifications • The price of aluminium increases significantly, and due to its numerous obligations the seller cannot pay for its raw materials • Consequences as above. • What can the buyer do?

17. Norwegian, German law: Buyer may request specific performance or request termination. Seller has to reimburse loss of increased profit, loss of extraordinary (?) profit, incurred expenses. Italian law, CISG: Buyer may request specific performance or request termination. Seller has to reimburse loss of increased profit, incurred expenses. English law, UNIDROIT, PECL: Seller has to reimburse loss of increased profit, incurred expenses. Buyer may terminate contract Unaffordability (3)

18. Case IX – Choice between contracts • Sale of car components built on specifications • Destruction of part of the seller’s storage • Volumes in store sufficient to meet obligations towards one buyer, but not all buyers • Consequences as above. • What can the buyer do?

19. Norwegian, Italian, German law: Seller is excused. Buyer may terminate contract English law: Seller has to reimburse loss of increased profit, incurred expenses . Buyer may terminate contract UNIDROIT, PECL, CISG: Buyer may request specific performance or terminate contract. Seller has to reimburse loss of increased profit, incurred expenses . (?) Choice between contracts

20. Norwegian law • Breach of contract, main remedies: • Specific performance + damages • Termination (only if fundamental breach) + damages • Hardship: adjustment of contract terms • Force majeure: • Sale: excludes damages (as long as impediment lasts). Creditor may terminate. • Construction: duration extended • Other contracts: contract suspended or terminated

21. Norwegian law • Damages: • Assumption: liability • Adequate causation (direct damages) • Irrespective of degree of negligence (but: evaluation of what is adequate is affected) • Casus mixtus: gross negligence or wilful misconduct: also inadequate causation

22. German law • Breach of contract, main remedies: • Specific performance + damages • Payment instead of performance + damages • Termination (only upon notice) + damages • Hardship: adjustment of terms or termination • Force majeure: excludes damages (as long as impediment lasts). Creditor may terminate

23. German Law • Damages: • Assumption: negligence • Adequate causation (also indirect damages, if reasonable) • Irrespective of degree of negligence

24. Italian law • Breach of contract, main remedies: • Specific performance + damages • Termination (only if fundamental breach and debtor’s negligence) + damages • Hardship: termination (may be avoided by adjustment of terms) • Force majeure: contract suspended or ceases to have effect

25. Italian law • Damages • Assumption: strict liability and good faith • Foreseeable damages • If wilful misconduct: also unforseeable damages

26. English law • Breach of contract, main remedies: • Damages • Termination (only if fundamental breach) + damages • Specific performance (at court’s discretion, only if: (i) damages are inadequate, (ii) does not cause great hardship on debtor) • Hardship: as in breach of contract • Frustration: kills the contract

27. English law • Damages • Assumption: strict liability • Foreseeable: (i) usual course of things, (ii) reasonably contemplated

28. CISG • Breach of contract, main remedies: • Specific performance (but, art 28: domestic law) + damages • Termination (only if fundamental breach or, if delay, upon notice) + damages • Hardship: as in breach of contract • Force majeure: excludes damages (as long as impediment lasts). Creditor may terminate

29. CISG • Damages • Assumption: strict liability • (i) Foreseeable as (ii) possible consequences on basis of (iii) known circumstances

30. UNIDROIT • Breach of contract, main remedies: • Specific performance (not if: impossible, hardship, alternative,personal, lapse of time) + damages • Termination (only if fundamental breach or, if delay, upon notice) + damages • Hardship: adjustment of terms or termination • Force majeure:excludes damages (as long as impediment lasts)

31. UNIDROIT • Damages • Assumption: strict liability • Foresseable as likely

32. PECL • Breach of contract, main remedies: • Specific performance (not if: impossible, hardship, services, alternative) + damages • Termination (only if fundamental breach or, if delay, upon notice) + damages • Hardship: adjustment of terms or termination • Force majeure:excludes damages (as long as impediment lasts)

33. PECL • Damages • Assumption: strict liability • Foresseable as likely

34. Common features

35. Main remedy Norway Germany Italy CISG Restricted use England PECLUNIDROIT Main differences – specific performance

36. Negligence Norway (?) Germany Italy (?) Strict liability England CISG PECL UNIDROIT Main differences – assumption for damages

37. Adequate causation Germany Norway Foreseeability Italy England CISG PECLUNIDROIT Main differences - Causation

38. Excuse from damages All Use of other remedies All but England, Italy Temporary All but England Automatic termination England Italy (but not if temporary) Main differences – effects of force majeure

39. Renegotiation or termination All but England and CISG Treated as breach England CISG Main differences - Hardship