THE CONCEPT OF THE FUNDAMENTAL BREACH OF CONTRACT IN THE CISG

Abstract

When contracting party fails to perform the contract for the international sale of goods, then the other party can use certain remedies, including the right to terminate the contract. The termination of the contract in situation when the debtor has breached his contractual obligation opposes the principle pacta sunt servanda and all legal systems provide for the conditions and limitations under which creditor can acquire and realize that right. The most important limitation in that sense refers to the requirement that the breach of contract must be serious and severe. The Vienna Convention on Contracts for the International Sale of Goods in this respect provides for the concept of fundamental breach of contract, as the general ground for termination the contract due to it̕s non-performance. General because it takes no account what exactly debtor do or not do when violated the contract; it is only important that his actions fits with the conditions for qualification the fundamental breach of contract. In that sense the Convention sets three criteria for estimate that question: first, that the debtor has breached the contract; second, it has resulted in such detriment to the other party as substantially deprives him of what he is entitled to expect under the contract and third, the debtor did not foresee such a damage as a consequence of breach of contract nor such a result could forese a reasonable person of the same kind in the same circumstances. The concept of fundamental breach of contract is the original solution of the Vienna Convention and is the result of decades of work on the unification of the law of the international sale of goods. The most important achievement of such solution is that it introduced applicable objective criteria and standards or the evaluation of the significance and severity of the breach of the contract which are sufficient to activate the creditorʼs right to terminate it. Several decades of successful implementation of the Convention contributed to the developing of that concept in practice and to its increasingly application not only in other international sources of law for the contract of sale of goods, but also in significant number of national laws. On that way legal systems harmonize over time in relation to this question, which contributes to the simplification of trading on the international market and to economic development and prosperity.