COMPARATIVE PRIVATE LAW NONPERFORMANCE REMEDIES University of Oslo

COMPARATIVE PRIVATE LAW NON-PERFORMANCE REMEDIES University of Oslo Prof. Giuditta Cordero Moss

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?

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

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?

Destruction of subject-matter (2) • 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

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?

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

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– Act of god (factum principis) (2) • Sale of car components built on specifications • The seller’s export licence is withdrawn because of the seller’s non-compliance with governmental requiremenets • Consequences as above.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

Act of god (2) • 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

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?

Supplier’s failure • 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.

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?

Unaffordability (1) • 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

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?

Unaffordability (2) • 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

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?

Unaffordability (3) • 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

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?

Choice between contracts • 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. (? )

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

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

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

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

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

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

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

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

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

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

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)

UNIDROIT • Damages – Assumption: strict liability – Foresseable as likely

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)

PECL • Damages – Assumption: strict liability – Foresseable as likely

Common features

Main differences – specific performance • Main remedy – – Norway Germany Italy CISG • Restricted use – England – PECL UNIDROIT

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

Main differences - Causation • Adequate causation – Germany – Norway • Foreseeability – – Italy England CISG PECL UNIDROIT

Main differences – effects of force majeure • 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 - Hardship • Renegotiation or termination – All but England CISG • Treated as breach – England – CISG