5 November 2002,
For a summary of the facts see C 35-10 above.
4. a) In case of a seller’s non-compliance with a contract or CISG obligation, in principal the following five legal remedies (defects rights) are at the buyer’s disposal:
— Right to performance (Art 46(1) CISG);
— Right to cure (Art 48 CISG);
— Right to avoid the contract because of a fundamental breach of contract (Art 49(1)(a) CISG);
— Right of price reduction (Art 50 sentence 1 CISG);
— Right to damages (Art 45(1)(b) in connection with Arts 74-77 CISG).
In the present case, the [buyer] declared the contract’s avoidance, due to the existence of a fundamental breach of contract, analogously already in his notification of defects dated 27 May 2000 and unmistakably, in the letter of his legal representative dated 14 June 2000. As, according to Art 48(1) CISG, the seller ‘subject to Art 49’ may remedy any failure even after the date for delivery, the question arises concerning the relationship between the seller’s right to cure (according to Art 48(1) CISG) and the buyer’s right to avoid the contract (according to Art 49(1)(a) CISG). About this the following may be stated.
b) aa) The term fundamental breach of contract according to Art 49(1)(a) CISG is defined in Art 25 CISG. According to this Article, the condition for a fundamental breach of contract is an especially weighty impairment of the buyer’s interest in the performance. Yet, besides the objective weight or importance of a defect, it is decisive of the substantiality of a breach of contract, whether the defect can be removed by subsequent repair or substitute delivery. The UN Sales Law proceeds from the fundamental precedence of preservation of the contract, even in case of an objective fundamental defect. When in doubt, the contract is to be maintained even in case of fundamental defects, and an immediate contract avoidance should stay exceptional. Because, as long as and so far as (even) a fundamental defect can still be removed by remedy or replacement, the fulfillment of the contract by the seller is still possible and the buyer’s essential interest in the performance is not yet definitively at risk. According to doctrine as well as jurisdiction of the UN Sales Law, an objective fundamental defect does not mean a fundamental breach of contract when the defect is removable and the seller agrees to remedy this defect without creating unreasonable delay or burden on the buyer. That the buyer is obliged to accept a remedy (subsequent cure of the defect) offered by the seller results from Art 48(2) CISG. According to this provision, when the seller notifies the buyer of his readiness for performance, the buyer may not within a reasonable period of time ‘resort to any remedy which is inconsistence with performance by the seller’. For this reason, the buyer does not have the right to avoid the contract even in case of an objective fundamental defect as long as and as far as the seller comes up with a remedy (subsequent cure of the defect) and such is still possible.
c) In the present case, both the quality problem or manufacturing defect (tearing out of the connection of the D2-arch with the ‘stamp’) which occurred on 27 May 2000, and the lacking stability of the Arcor-Arch could have been remedied. And it is certain that the [seller] reacted immediately to the notice of defects dated 27 May 2000 and made different proposals (‘as I see it’) in his writing dated 29 May 2000, through which the ‘goal jointly’, i.e., the subsequent performance, could be reached. The [buyer] reacted to the [seller]’s readiness to remedy on 14 June 2000 by declaring the contract avoided. [Buyer] was not entitled to do so according to the explained priority of the entitlement to subsequent cure or remedy over the entitlement of contract avoidance that forms the basis of the UN Sales Law, even in the case of an objective fundamental defect.
d) aa) According to UN Sales Law doctrine, a buyer’s right of immediate contract avoidance is conceded by way of exception, without having to wait for the seller’s readiness to remedy or the remedy itself. Yet, these exceptional facts of the case require that a remedy not be possible, if it is refused by the seller, or is not reasonable for the buyer. An entitlement to immediate contract avoidance is conceded by Schlechtriem/Huber if:
— The date of delivery has a fundamental importance (usual practice in the trade or similar cases);
— The remedy of the defect by the seller is not reasonable from an objective point of view; for example because of the uncertainty about the refund of the expenses in the sense of Art 48(1) CISG;
— It is not reasonable for the buyer to agree with the remedy of the defect; for example, because it is obvious that the seller is not capable of this;
— The seller refuses to remedy the defect seriously and finally.