breach of contract

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breach of contract
Remedies for Breach of Contract
(合同的违约救济)
• Remedies available to the injured party under
the general contract law
payment
Buyer
Seller
goods
• Contractual parties fully perform their
obligations and gain the benefits they
bargained for.
• If a party fails to perform part or all of the
required duties under the contract, then
breach of contract occurs. The other party
cannot get the benefits it bargained for.
• What types of breach of contract are
there?
Nonperformance, delayed performance
and defective performance.
• What are the buyer’s remedies for the
seller’s breach?
What are the seller’s remedies for the
buyer’s breach?
• What are the buyer’s remedies for the
seller’s breach?
1. Nonperformance
(1) The buyer may avoid the contract and
claim damages.
(2) The buyer may ask for specific
performance.
(3) The buyer may cover and claim
damages.
2. Delayed performance
(1)The buyer may give a grace period.
(2) Although a grace period is given,
the seller does not perform within
this period. Then the breach is
fundamental, the buyer may avoid
the contract and claim damages.
3. Defective performance
(1) The buyer may reject the nonconforming goods and ask the seller to
deliver conforming goods.
(2) The buyer may ask the seller to repair
the non-conformity.
(3) The buyer may reduce the price.
(4) If the former three remedies are not
available, the buyer may avoid contract
and claim damages.
• What are the seller’s remedies for the
buyer’s breach?
1.The seller may grant the buyer a grace period
2.The seller may ask for specific performance,
e.g., make payment.
3.The seller may resell the goods and claim the
difference between the contract price and the
selling price if the buyer does not take the
delivery.
4.The seller may avoid contract and claim
damages directly.
• Remedies for breach of contract outlined
in the CISG include ---1. avoidance of the contracts,
2. sellers’ right to remedy or cure,
3. sellers’ additional time to perform,
4. price reduction,
5. money damages,
6. specific performance.
• Fundamental breach and avoidance of
contract
1. What is a fundamental breach under the
CISG?
Art.25 defines a fundamental breach as
one that will substantially deprive one party
of what he is entitled to expect under the
contract.
According to the CISG, one party can avoid
the contract only in the case of a
fundamental breach of the other party.
In this way the CISG makes efforts to keep
the parties in their contractual relationship.
( Compare the CISG and the UCC in this
2. How to avoid a contract under the
CISG?
(1) “avoidance” refers to a party’s right to
cancel the contract.
(2) How may a buyer avoid the contract if
the seller commits a fundamental
breach?----Art. 49
cancel/ notify/ protect/ return
(3) Notice of avoidance– Art.49
A. How to make an effective avoidance?
The buyer’s avoidance rights are not
effective until the seller is given notice.
B. Under what situation may the buyer
lose his right to avoid the contract?
If the buyer does not notify the seller
of the intention to avoid within a
reasonable time after the buyer knew
or have known of the breach.
•Seller’s right to remedy/cure under
the CISG
1. Seller’s right to remedy within the time
for performance (prior to the delivery
date)
(1) What time is “ the delivery date ”?
The “date for delivery” under the
contract is the date the seller hands the
goods over directly to the first carrier
unless the parties specify otherwise.
• Two supplementary problems:
(1) Where is the place of delivery if the contract of
sale involves carriage of the goods?
The seller exercises his obligation to delivery
while handling the goods over to the first carrier
for transmission to the buyer. (Art. 31)
(2) If the contract of sale involves carriage of the
goods, when does the risk pass from the seller
to the buyer?
The risk passes to the buyer when the goods are
handed over to the first carrier for transmission
to the buyer in accordance with the contract of
sale.
(2) Seller’s right to remedy within the
time for performance (prior to the
delivery date)
---- Under what circumstances can the
seller exercise the right to remedy?
• The seller has delivered some goods to
the buyer before the delivery date.
• Exercising the right to remedy does not
cause unreasonable inconvenience
or expense to the buyer.
Under these circumstances the
buyer may not avoid the contract
until the time for performance
expires; before the time for
performance expires the seller
has the right to cure by sending
substitute or replacement goods
if the goods are nonconforming
or the shipment is not complete.
(Art.37)
2. Seller’s right to remedy beyond the date
for performance—grace period
In the event that the seller has failed to
deliver the goods, and the time for their
shipment or delivery has passed, what can
the parties do to keep their contract?
(1) The buyer can grant the seller extra
time to perform the contractual obligations.
During this time, the buyer may not avoid
the contract or resort to a breach of
contract action.
(2) The seller is entitled to ask for
additional time to perform if it does
not cause the buyer “unreasonable
delay” or “unreasonable
inconvenience”.
If a seller asks a buyer to agree to an
extension of time for delivery and the
buyer fails to respond within a
reasonable time, the seller may
perform within the time requested.
(Art.48)
•Specific performance
1. Specific performance is used when a court
requires a party to the contract to perform,
or carry out its part of the bargain.
Under the common law, this remedy is
only used where money damages cannot
be calculated or are inadequate; however,
under the civil law, this is the usual
remedy and it is granted quite often
without regard to whether money
damages are inadequate.
2. Specific performance under the
CISG
Specific performance may be
granted only if all of the following
conditions are met:
(1) The buyer had not resorted to
another remedy;
(2) The seller has made non-delivery
or delivered seriously
nonconforming goods;
(3) The buyer gave timely notice to the
seller that the goods were
nonconforming;
(4) The buyer had made a timely
request that the seller provide
substitute goods.
(Art. 46)

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