25 CISG

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aa) [Fundamental breach of contract (Art 25 CISG)]

The concept of fundamental breach as defined in article 25 CISG must be interpreted in a restrictive way and, in case of doubt, it must be considered that conditions of such breach are not fulfilled (Neumayer/Ming, op. cit., n. 2 ad Art 25 CISG). The breach must concern the essential content of the contract, the goods, or the payment of the price concerned, and it must lead to serious consequences to the economic goal pursued by the parties. The importance of the breach is not determinative; only the consequences of the breach to the damaged party are determinative. This means that a principal obligation must have been breached in such a way that the economic goal of the contract cannot be achieved; the damaged party being interested no longer in the performance of the contract. Absolute loss of all objective interests of the creditor is not required. Moreover, it does not matter whether or not the default is objectively reparable (Neumayer/Ming, op. cit., n. 3 ad Art 25 CISG).

According to that view, the breach of an ancillary obligation can only constitute a fundamental breach if it has some repercussions on the performance of the principal obligations in a such way that the interest of the creditor in the performance of the contract is lost, without the necessity that the latter suffers some monetary damage (Neumayer/Ming, op. cit., n. 4 and 7 ad Art 25 CISG). The motivation of the creditor must be identifiable by the debtor, so the debtor could have known or it would be possible to know that the creditor considered the performance of the breached contractual clause so essential that he would have refused the contract if he had known of such future breach (Neumayer/Ming, op. cit., n. 5 ad Art 25 CISG). To judge that point, at the place and at the time of the conclusion of the contract, the determining interest of each of the parties must be identifiable by the other (Neumayer/Ming, op. cit., n. 6 ad Art 25 CISG). Finally, the damage must be foreseeable by the breaching party or by any other reasonable person of the same kind in the same circumstances at the time the breach of contract is committed. The contract determines if there existed a risk of a substantial detriment to the reasons and interests of the affected party, which had encouraged that party to conclude the contract (Neumayer/Ming, op. cit.,n. 8 ad Art 25 CISG). […]