The Principles Of European Contract Law 2002 - (Parts I, II, and III)
European Union
Copyright (C) 2002 European Union
SiSU ‹<text:a xlink:type='simple' xlink:href='http://www.jus.uio.no/sisu'>http://www.jus.uio.no/sisu</text:a>› (this copy)
2002
eu_contract_principles_parts_1_to_3_2002.sst
SiSU text 0.72
SHA256(eu_contract_principles_parts_1_to_3_2002.sst)= 5b4f1120b37f81219826e797ca97dbe6cfed0b198741f1edb74f4b99ffbc91f7
SHA256(skin_sisu.rb)= 296e8f9c884bc0427ffad291d7e37538a90561a276da407a822b4214e600363b
Generated by: SiSU 2.8.2 of 2011w10/5 (2011-03-11)
ruby 1.8.7 (2011-02-18 patchlevel 334) [i486-linux]
Fri Mar 11 09:25:16 -0500 2011
1
The Principles Of European Contract Law 2002 - (Parts I, II, and
III),
2
CHAPTER 1 - GENERAL PROVISIONS
3
Section 1 - Scope of the Principles
4
Article 1:101 (ex art. 1.101) - Application of the Principles
5
(1) These Principles are intended to be applied as general rules of
contract law in the European Communities.
6
(2) These Principles will apply when the parties have agreed to
incorporate them into their contract or that their contract is to be
governed by them.
7
(3) These Principles may be applied when the parties:
8
(a) have agreed that their contract is to be governed by "general
principles of law", the "lex mercatoria" or the like; or
9
(b) have not chosen any system or rules of law to govern their
contract.
10
(4) These Principles may provide a solution to the issue raised where
the system or rules of law applicable do not do so.
11
Article 1:102 - Freedom of contract
12
(1) Parties are free to enter into a contract and to determine its
contents, subject to the requirements of good faith and fair dealing,
and the mandatory rules established by these Principles.
13
(2) The parties may exclude the application of any of the Principles or
derogate from or vary their effects, except as otherwise provided by
these Principles.
14
Article 1:103 - Mandatory Law
15
(1) Where the otherwise applicable law so allows, the parties may
choose to have their contract governed by the Principles, with the
effect that national mandatory rules are not applicable.
16
(2) Effect should nevertheless be given to those mandatory rules of
national, supranational and international law which, according to the
relevant rules of private international law, are applicable
irrespective of the law governing the contract.
17
Article 1:104 - Application to questions of consent
18
(1) The existence and validity of the agreement of the parties to adopt
or incorporate these Principles shall be determined by these
Principles.
19
(2) Nevertheless, a party may rely upon the law of the country in which
it has its habitual residence to establish that it did not consent if
it appears from the circumstances that it would not be reasonable to
determine the effect of its conduct in accordance with these
Principles.
20
Article 1:105 (ex art. 1.103) - Usages and Practices
21
(1) The parties are bound by any usage to which they have agreed and by
any practice they have established between themselves.
22
(2) The parties are bound by a usage which would be considered
generally applicable by persons in the same situation as the parties,
except where the application of such usage would be unreasonable.
23
Article 1:106 (ex art. 1.104) - Interpretation and Supplementation
24
(1) These Principles should be interpreted and developed in accordance
with their purposes. In particular, regard should be had to the need to
promote good faith and fair dealing, certainty in contractual
relationships and uniformity of application.
25
(2) Issues within the scope of these Principles but not expressly
settled by them are so far as possible to be settled in accordance with
the ideas underlying the Principles. Failing this, the legal system
applicable by virtue of the rules of private international law is to be
applied.
26
Article 1:107 (ex Art. 1.113) - Application of the Principles by Way of
Analogy
27
These Principles apply with appropriate modifications to agreements to
modify or end a contract, to unilateral promises and other statements
and conduct indicating intention.
28
Section 2 - General Obligations
29
Article 1:201 (ex art. 1.106) - Good Faith and Fair Dealing
30
(1) Each party must act in accordance with good faith and fair dealing.
31
(2) The parties may not exclude or limit this duty.
32
Article 1:202 (ex art. 1.107) - Duty to Co-operate
33
Each party owes to the other a duty to co-operate in order to give full
effect to the contract.
34
Section 3 - Terminology and Other Provisions
35
Article 1:301 (ex art. 1.105) - Meaning of Terms
36
In these Principles, except where the context otherwise requires:
37
(1) 'act' includes omission;
38
(2) 'court' includes arbitral tribunal;
39
(3) an 'intentional' act includes an act done recklessly;
40
(4) 'non-performance' denotes any failure to perform an obligation
under the contract, whether or not excused, and includes delayed
performance, defective performance and failure to co-operate in order
to give full effect to the contract.
41
(5) A matter is 'material' if it is one which a reasonable person in
the same situation as one party ought to have known would influence the
other party in its decision whether to contract on the proposed terms
or to contract at all. .
42
(6) 'Written' statements include communications made by telegram,
telex, telefax and electronic mail and other means of communication
capable of providing a readable record of the statement on both sides
43
Article 1:302 (ex art. 1.108) - Reasonableness
44
Under these Principles reasonableness is to be judged by what persons
acting in good faith and in the same situation as the parties would
consider to be reasonable. In particular, in assessing what is
reasonable the nature and purpose of the contract, the circumstances of
the case, and the usages and practices of the trades or professions
involved should be taken into account.
45
Article 1:303 (ex art. 1.110) - Notice
46
(1) Any notice may be given by any means, whether in writing or
otherwise, appropriate to the circumstances.
47
(2) Subject to paragraphs (4) and (5), any notice becomes effective
when it reaches the addressee.
48
(3) A notice reaches the addressee when it is delivered to it or to its
place of business or mailing address, or, if it does not have a place
of business or mailing address, to its habitual residence
49
(4) If one party gives notice to the other because of the other's
non-performance or because such non-performance is reasonably
anticipated by the first party, and the notice is properly dispatched
or given, a delay or inaccuracy in the transmission of the notice or
its failure to arrive does not prevent it from having effect. The
notice shall have effect from the time at which it would have arrived
in normal circumstances.
50
(5) A notice has no effect if a withdrawal of it reaches the addressee
before or at the same time as the notice.
51
(6) In this Article, 'notice' includes the communication of a promise,
statement, offer, acceptance, demand, request or other declaration.
52
Article 1:304 (ex art. 1.111) - Computation of Time
53
(1) A period of time set by a party in a written document for the
addressee to reply or take other action begins to run from the date
stated as the date of the document. If no date is shown, the period
begins to run from the moment the document reaches the addressee.
54
(2) Official holidays and official non-working days occurring during
the period are included in calculating the period. However, if the last
day of the period is an official holiday or official non-working day at
the address of the addressee, or at the place where a prescribed act is
to be performed, the period is extended until the first following
working day in that place.
55
(3) Periods of time expressed in days, weeks, months or years shall
begin at 00:00 on the next day and shall end at 24:00 on the last day
of the period; but any reply that has to reach the party who set the
period must arrive, or other act which is to be done must be completed,
by the normal close of business in the relevant place on the last day
of the period.
56
Article 1:305 (ex art. 1.109) - Imputed Knowledge and Intention
57
If any person who with a party's assent was involved in making a
contract, or who was entrusted with performance by a party or performed
with its assent:
58
(a) knew or foresaw a fact, or ought to have known or foreseen it; or
59
(b) acted intentionally or with gross negligence, or not in accordance
with good faith and fair dealing,
60
this knowledge, foresight or behaviour is imputed to the party itself.
61
CHAPTER 2 - FORMATION
62
Section 1 - General Provisions
63
Article 2:101 (ex art. 5.101) - Conditions for the Conclusion of a
Contract
64
(1) A contract is concluded if:
65
(a) the parties intend to be legally bound, and
66
(b) they reach a sufficient agreement
67
without any further requirement.
68
(2) A contract need not be concluded or evidenced in writing nor is it
subject to any other requirement as to form. The contract may be proved
by any means, including witnesses.
69
Article 2:102 (ex art. 5.102) - Intention
70
The intention of a party to be legally bound by contract is to be
determined from the party's statements or conduct as they were
reasonably understood by the other party.
71
Article 2:103 (ex art. 5.103) - Sufficient Agreement
72
(1) There is sufficient agreement if the terms:
73
(a) have been sufficiently defined by the parties so that the contract
can be enforced, or
74
(b) can be determined under these Principles.
75
(2) However, if one of the parties refuses to conclude a contract
unless the parties have agreed on some specific matter, there is no
contract unless agreement on that matter has been reached.
76
Article 2:104 (ex art. 5.103 A) - Terms not individually negotiated
77
(1) Contract terms which have not been individually negotiated may be
invoked against a party who did not know of them only if the party
invoking them took reasonable steps to bring them to the other party's
attention before or when the contract was concluded.
78
(2) Terms are not brought appropriately to a party's attention by a
mere reference to them in a contract document, even if that party signs
the document.
79
Article 2:105 (ex art. 5.106 A) - Merger Clause
80
(1) If a written contract contains an individually negotiated clause
stating that the writing embodies all the terms of the contract (a
merger clause), any prior statements, undertakings or agreements which
are not embodied in the writing do not form part of the contract.
81
(2) If the merger clause is not individually negotiated it will only
establish a presumption that the parties intended that their prior
statements, undertakings or agreements were not to form part of the
contract. This rule may not be excluded or restricted.
82
(3) The parties' prior statements may be used to interpret the
contract. This rule may not be excluded or restricted except by an
individually negotiated clause.
83
(4) A party may by its statements or conduct be precluded from
asserting a merger clause to the extent that the other party has
reasonably relied on them.
84
Article 2:106 (ex art. 5.106 B) - Written Modification only
85
(1) A clause in a written contract requiring any modification or ending
by agreement to be made in writing establishes only a presumption that
an agreement to modify or end the contract is not intended to be
legally binding unless it is in writing.
86
(2) A party may by its statements or conduct be precluded from
asserting such a clause to the extent that the other party has
reasonably relied on them.
87
Article 2:107 (ex art. 5.108) - Promises binding without acceptance
88
A promise which is intended to be legally binding without acceptance is
binding.
89
Section 2 - Offer and Acceptance
90
Article 2:201 (ex art. 5.201) - Offer
91
(1) A proposal amounts to an offer if:
92
(a) it is intended to result in a contract if the other party accepts
it, and
93
(b) it contains sufficiently definite terms to form a contract.
94
(2) An offer may be made to one or more specific persons or to the
public.
95
(3) A proposal to supply goods or services at stated prices made by a
professional supplier in a public advertisement or a catalogue, or by a
display of goods, is presumed to be an offer to sell or supply at that
price until the stock of goods, or the supplier's capacity to supply
the service, is exhausted.
96
Article 2:202 (ex art. 5.202) - Revocation of an Offer
97
(1) An offer may be revoked if the revocation reaches the offeree
before it has dispatched its acceptance or, in cases of acceptance by
conduct, before the contract has been concluded under Article 2:205(2)
or (3).
98
(2) An offer made to the public can be revoked by the same means as
were used to make the offer.
99
(3) However, a revocation of an offer is ineffective if:
100
(a) the offer indicates that it is irrevocable; or
101
(b) it states a fixed time for its acceptance; or
102
(c) it was reasonable for the offeree to rely on the offer as being
irrevocable and the offeree has acted in reliance on the offer.
103
Article 2:203 (ex art. 5.203) - Lapse of an Offer
104
When a rejection of an offer reaches the offeror, the offer lapses.
105
Article 2:204 (ex art. 5.204) - Acceptance
106
(1) Any form of statement or conduct by the offeree is an acceptance if
it indicates assent to the offer.
107
(2) Silence or inactivity does not in itself amount to acceptance.
108
Article 2:205 (ex art. 5.205) - Time of Conclusion of the Contract
109
(1) If an acceptance has been dispatched by the offeree the contract is
concluded when the acceptance reaches the offeror.
110
(2) In case of acceptance by conduct, the contract is concluded when
notice of the conduct reaches the offeror.
111
(3) If by virtue of the offer, of practices which the parties have
established between themselves, or of a usage, the offeree may accept
the offer by performing an act without notice to the offeror, the
contract is concluded when the performance of the act begins.
112
Article 2:206 (ex art. 5.206) - Time Limit for Acceptance
113
(1) In order to be effective, acceptance of an offer must reach the
offeror within the time fixed by it.
114
(2) If no time has been fixed by the offeror acceptance must reach it
within a reasonable time.
115
(3) In the case of an acceptance by an act of performance under art.
2:205 (3), that act must be performed within the time for acceptance
fixed by the offeror or, if no such time is fixed, within a reasonable
time.
116
Article 2:207 (ex art. 5.208) - Late Acceptance
117
(1) A late acceptance is nonetheless effective as an acceptance if
without delay the offeror informs the offeree that he treats it as
such.
118
(2) If a letter or other writing containing a late acceptance shows
that it has been sent in such circumstances that if its transmission
had been normal it would have reached the offeror in due time, the late
acceptance is effective as an acceptance unless, without delay, the
offeror informs the offeree that it considers its offer as having
lapsed.
119
Article 2:208 (ex art. 5.209) - Modified Acceptance
120
(1) A reply by the offeree which states or implies additional or
different terms which would materially alter the terms of the offer is
a rejection and a new offer.
121
(2) A reply which gives a definite assent to an offer operates as an
acceptance even if it states or implies additional or different terms,
provided these do not materially alter the terms of the offer. The
additional or different terms then become part of the contract.
122
(3) However, such a reply will be treated as a rejection of the offer
if:
123
(a) the offer expressly limits acceptance to the terms of the offer; or
124
(b) the offeror objects to the additional or different terms without
delay; or
125
(c) the offeree makes its acceptance conditional upon the offeror's
assent to the additional or different terms, and the assent does not
reach the offeree within a reasonable time.
126
Article 2:209 (ex art. 5.210) - Conflicting General conditions
127
(1) If the parties have reached agreement except that the offer and
acceptance refer to conflicting general conditions of contract, a
contract is nonetheless formed. The general conditions form part of the
contract to the extent that they are common in substance.
128
(2) However, no contract is formed if one party:
129
(a) has indicated in advance, explicitly, and not by way of general
conditions, that it does not intend to be bound by a contract on the
basis of paragraph (1); or
130
(b) without delay, informs the other party that it does not intend to
be bound by such contract.
131
(3) General conditions of contract are terms which have been formulated
in advance for an indefinite number of contracts of a certain nature,
and which have not been individually negotiated between the parties.
132
Article 2:210 (ex art. 5.211) - Professional's written confirmation
133
If professionals have concluded a contract but have not embodied it in
a final document, and one without delay sends the other a writing which
purports to be a confirmation of the contract but which contains
additional or different terms, such terms will become part of the
contract unless:
134
(a) the terms materially alter the terms of the contract, or
135
(b) the addressee objects to them without delay.
136
Article 2:211 (ex art. 5.212) - Contracts not Concluded through Offer
and Acceptance
137
The rules in this section apply with appropriate adaptations even
though the process of conclusion of a contract cannot be analysed into
offer and acceptance.
138
Section 3 - Liability for negotiations
139
Article 2:301 (ex art. 5.301) - Negotiations Contrary to Good Faith
140
(1) A party is free to negotiate and is not liable for failure to reach
an agreement.
141
(2) However, a party who has negotiated or broken off negotiations
contrary to good faith and fair dealing is liable for the losses caused
to the other party.
142
(3) It is contrary to good faith and fair dealing, in particular, for a
party to enter into or continue negotiations with no real intention of
reaching an agreement with the other party.
143
Article 2:302 (ex art. 5.302) - Breach of Confidentiality
144
If confidential information is given by one party in the course of
negotiations, the other party is under a duty not to disclose that
information or use it for its own purposes whether or not a contract is
subsequently concluded. The remedy for breach of this duty may include
compensation for loss suffered and restitution of the benefit received
by the other party.
145
CHAPTER 3 - AUTHORITY OF AGENTS
146
Section 1 - General Provisions
147
Article 3:101 - Scope of the Chapter
148
(1) This Chapter governs the authority of an agent or other
intermediary to bind its principal in relation to a contract with a
third party.
149
(2) This Chapter does not govern an agent's authority bestowed by law
or the authority of an agent appointed by a public or judicial
authority.
150
(3) This Chapter does not govern the internal relationship between the
agent or intermediary and its principal.
151
Article 3:102 - Categories of Representation
152
(1) Where an agent acts in the name of a principal, the rules on direct
representation apply (Section 2). It is irrelevant whether the
principal's identity is revealed at the time the agent acts or is to be
revealed later.
153
(2) Where an intermediary acts on instructions and on behalf of, but
not in the name of, a principal, or where the third party neither knows
nor has reason to know that the intermediary acts as an agent, the
rules on indirect representation apply (Section 3).
154
Section 2 - Direct Representation
155
Article 3:201 - Express, implied and apparent authority
156
(1) The principal's grant of authority to an agent to act in its name
may be express or may be implied from the circumstances.
157
(2) The agent has authority to perform all acts necessary in the
circumstances to achieve the purposes for which the authority was
granted.
158
(3) A person is to be treated as having granted authority to an
apparent agent if the person'sstatements or conduct induce the third
party reasonably and in good faith to believe that the apparent agent
has been granted authority for the act performed by it.
159
Article 3:202 - Agent acting in exercise of his authority
160
Where an agent is acting within its authority as defined by article
3:201, its acts bind the principal and the third party directly to each
other. The agent itself is not bound to the third party.
161
Article 3:203 - Unidentified Principal
162
If an agent enters into a contract in the name of a principal whose
identity is to be revealed later, but fails to reveal that identity
within a reasonable time after a request by the third party, the agent
itself is bound by the contract.
163
Article 3:204 - Agent acting without or outside his authority
164
(1) Where a person acting as an agent acts without authority or outside
the scope of its authority, its acts are not binding upon the principal
and the third party.
165
(2) Failing ratification by the principal according to article 3:207,
the agent is liable to pay the third party such damages as will place
the third party in the same position as if the agent had acted with
authority. This does not apply if the third party knew or could not
have been unaware of the agent's lack of authority.
166
Article 3:205 - Conflict of Interests
167
(1) If a contract concluded by an agent involves the agent in a
conflict of interest of which the third party knew or could not have
been unaware, the principal may avoid the contract according to the
provisions of articles 4:112 to 4:116.
168
(2) There is presumed to be a conflict of interest where:
169
(a) the agent also acted as agent for the third party; or
170
(b) the contract was with itself in its personal capacity.
171
(3) However, the principal may not avoid the contract:
172
(a) if it had consented to, or could not have been unaware of, the
agent's so acting; or
173
(b) if the agent had disclosed the conflict of interest to it and it
had not objected within a reasonable time.
174
Article 3:206 - Subagency
175
An agent has implied authority to appoint a subagent to carry out tasks
which are not of a personal character and which it is not reasonable to
expect the agent to carry out itself. The rules of this Section apply
to the subagency; acts of the subagent which are within its and the
agent's authority bind the principal and the third party directly to
each other.
176
Article 3:207 - Ratification by Principal
177
(1) Where a person acting as an agent acts without authority or outside
its authority, the principal may ratify the agent's acts.
178
(2) Upon ratification, the agent's acts are considered as having been
authorised, without prejudice to the rights of other persons.
179
Article 3:208 - Third Party's Right with Respect to Confirmation of
Authority
180
Where the statements or conduct of the principal gave the third party
reason to believe that an act performed by the agent was authorised,
but the third party is in doubt about the authorisation, it may send a
written confirmation to the principal or request ratification from it.
If the principal does not object or answer the request without delay,
the agent's act is treated as having been authorised.
181
Article 3:209 - Duration of Authority
182
(1) An agent's authority continues until the third party knows or ought
to know that:
183
(a) the agent's authority has been brought to an end by the principal,
the agent, or both; or
184
(b) the acts for which the authority had been granted have been
completed, or the time for which it had been granted has expired; or
185
(c) the agent has become insolvent or, where a natural person, has died
or become incapacitated; or
186
(d) the principal has become insolvent.
187
(2) The third party is considered to know that the agent's authority
has been brought to an end under paragraph(1) (a) above if this has
been communicated or publicised in the same manner in which the
authority was originally communicated or publicised.
188
(3) However, the agent remains authorised for a reasonable time to
perform those acts which are necessary to protect the interests of the
principal or its successors
189
Section 3 - Indirect Representation
190
Article 3:301 - Intermediaries not acting in the name of a Principal
191
(1) Where an intermediary acts:
192
(a) on instructions and on behalf, but not in the name, of a principal,
or
193
(b) on instructions from a principal but the third party does not know
and has no reason to know this,
194
the intermediary and the third party are bound to each other.
195
(2) The principal and the third party are bound to each other only
under the conditions set out in Articles 3:302 to 3:304.
196
Article 3:302 - Intermediary's Insolvency or Fundamental
Non-performance to Principal
197
If the intermediary becomes insolvent, or if it commits a fundamental
non-performance towards the principal, or if prior to the time for
performance it is clear that there will be a fundamental
non-performance:
198
(a) on the principal's demand, the intermediary shall communicate the
name and address of the third party to the principal; and
199
(b) the principal may exercise against the third party the rights
acquired on the principal's behalf by the intermediary, subject to any
defences which the third party may set up against the intermediary.
200
Article 3:303 - Intermediary's Insolvency or Fundamental
Non-performance to Third Party
201
If the intermediary becomes insolvent, or if it commits a fundamental
non-performance towards the third party, or if prior to the time for
performance it is clear that there will be a fundamental
non-performance:
202
(a) on the third party's demand, the intermediary shall communicate the
name and address of the principal to the third party; and
203
(b) the third party may exercise against the principal the rights which
the third party has against the intermediary, subject to any defences
which the intermediary may set up against the third party and those
which the principal may set up against the intermediary.
204
Article 3:304 - Requirement of Notice
205
The rights under Articles 3:302 and 3:303 may be exercised only if
notice of intention to exercise them is given to the intermediary and
to the third party or principal, respectively. Upon receipt of the
notice, the third party or the principal is no longer entitled to
render performance to the intermediary.
206
CHAPTER 4 - VALIDITY
207
Article 4:101 (ex art. 6.101) - Matters not Covered
208
This Chapter does not deal with invalidity arising from illegality,
immorality or lack of capacity.
209
Article 4:102 (ex art. 6.102) - Initial Impossibility
210
A contract is not invalid merely because at the time it was concluded
performance of the obligation assumed was impossible, or because a
party was not entitled to dispose of the assets to which the contract
relates.
211
Article 4:103 (ex art. 6.103) - Mistake as to facts or law
212
(1) A party may avoid a contract for mistake of fact or law existing
when the contract was concluded if:
213
(a) (i) the mistake was caused by information given by the other party;
or
214
(ii) the other party knew or ought to have known of the mistake and it
was contrary to good faith and fair dealing to leave the mistaken party
in error; or
215
(iii) the other party made the same mistake, and
216
(b) the other party knew or ought to have known that the mistaken
party, had it known the truth, would not have entered the contract or
would have done so only on fundamentally different terms.
217
(2) However a party may not avoid the contract if:
218
(a) in the circumstances its mistake was inexcusable, or
219
(b) the risk of the mistake was assumed, or in the circumstances should
be borne, by it.
220
Article 4:104 (ex art. 6.104) - Inaccuracy in communication
221
An inaccuracy in the expression or transmission of a statement is to be
treated as a mistake of the person who made or sent the statement and
Article 4:103 applies.
222
Article 4:105 (ex art. 6.105) - Adaptation of contract
223
(1) If a party is entitled to avoid the contract for mistake but the
other party indicates that it is willing to perform, or actually does
perform, the contract as it was understood by the party entitled to
avoid it, the contract is to be treated as if it had been concluded as
the that party understood it. The other party must indicate its
willingness to perform, or render such performance, promptly after
being informed of the manner in which the party entitled to avoid it
understood the contract and before that party acts in reliance on any
notice of avoidance.
224
(2) After such indication or performance the right to avoid is lost and
any earlier notice of avoidance is ineffective.
225
(3) Where both parties have made the same mistake, the court may at the
request of either party bring the contract into accordance with what
might reasonably have been agreed had the mistake not occurred.
226
Article 4:106 (ex art. 6.106) - Incorrect information
227
A party who has concluded a contract relying on incorrect information
given it by the other party may recover damages in accordance with
Article 4:117(2) and (3) even if the information does not give rise to
a right to avoid the contract on the ground of mistake under Article
4:103, unless the party who gave the information had reason to believe
that the information was correct.
228
Article 4:107 (ex art. 6.107) - Fraud
229
(1) A party may avoid a contract when it has been led to conclude it by
the other party's fraudulent representation, whether by words or
conduct, or fraudulent non-disclosure of any information which in
accordance with good faith and fair dealing it should have disclosed.
230
(2) A party's representation or non-disclosure is fraudulent if it was
intended to deceive.
231
(3) In determining whether good faith and fair dealing required that a
party disclose particular information, regard should be had to all the
circumstances, including:
232
(a) whether the party had special expertise;
233
(b) the cost to it of acquiring the relevant information;
234
(c) whether the other party could reasonably acquire the information
for itself; and
235
(d) the apparent importance of the information to the other party.
236
Article 4:108 (ex art. 6.108) - Threats
237
A party may avoid a contract when it has been led to conclude it by the
other party's imminent and serious threat of an act:
238
(a) which is wrongful in itself, or
239
(b) which it is wrongful to use as a means to obtain the conclusion of
the contract ,
240
unless in the circumstances the first party had a reasonable
alternative.
241
Article 4:109 (ex art. 6.109) - Excessive benefit or unfair advantage
242
(1) A party may avoid a contract if, at the time of the conclusion of
the contract:
243
(a) it was dependent on or had a relationship of trust with the other
party, was in economic distress or had urgent needs, was improvident,
ignorant, inexperienced or lacking in bargaining skill, and
244
(b) the other party knew or ought to have known of this and, given the
circumstances and purpose of the contract, took advantage of the first
party's situation in a way which was grossly unfair or took an
excessive benefit.
245
(2) Upon the request of the party entitled to avoidance, a court may if
it is appropriate adapt the contract in order to bring it into
accordance with what might have been agreed had the requirements of
good faith and fair dealing been followed.
246
(3) A court may similarly adapt the contract upon the request of a
party receiving notice of avoidance for excessive benefit or unfair
advantage, provided that this party informs the party who gave the
notice promptly after receiving it and before that party has acted in
reliance on it.
247
Article 4:110 (ex art. 6.110) -Unfair terms which have not been
individually negotiated
248
(1) A party may avoid a term which has not been individually negotiated
if, contrary to the requirements of good faith and fair dealing, it
causes a significant imbalance in the parties' rights and obligations
arising under the contract to the detriment of that party, taking into
account the nature of the performance to be rendered under the
contract, all the other terms of the contract and the circumstances at
the time the contract was concluded.
249
(2) This Article does not apply to:
250
(a) a term which defines the main subject matter of the contract,
provided the term is in plain and intelligible language; or to
251
(b) the adequacy in value of one party's obligations compared to the
value of the obligations of the other party.
252
Article 4:111 (ex art. 6.111) - Third persons
253
(1) Where a third person for whose acts a party is responsible, or who
with a party's assent is involved in the making of a contract:
254
(a) causes a mistake by giving information, or knows of or ought to
have known of a mistake,
255
(b) gives incorrect information,
256
(c) commits fraud,
257
(d) makes a threat, or
258
(e) takes excessive benefit or unfair advantage,
259
remedies under this Chapter will be available under the same conditions
as if the behaviour or knowledge had been that of the party itself.
260
(2) Where any other third person:
261
(a) gives incorrect information,
262
(b) commits fraud,
263
(c) makes a threat, or
264
(d) takes excessive benefit or unfair advantage,
265
remedies under this Chapter will be available if the party knew or
ought to have known of the relevant facts, or at the time of avoidance
it has not acted in reliance on the contract.
266
Article 4:112 (ex art. 6.112) - Notice of Avoidance
267
Avoidance must be by notice to the other party.
268
Article 4:113 (ex art. 4.113) - Time limits
269
(1) Notice of avoidance must be given within a reasonable time, with
due regard to the circumstances, after the avoiding party knew or ought
to have known of the relevant facts or became capable of acting freely.
270
(2) However, a party may avoid an individual term under Article 4:110
if it gives notice of avoidance within a reasonable time after the
other party has invoked the term.
271
Article 4:114 (ex art. 6.114) - Confirmation
272
If the party who is entitled to avoid a contract confirms it, expressly
or impliedly, after it knows of the ground for avoidance, or becomes
capable of acting freely, avoidance of the contract is excluded.
273
Article 4:115 (ex art. 6.116) - Effect of avoidance
274
On avoidance either party may claim restitution of whatever he has
supplied under the contract or the part of it avoided, provided he
makes concurrent restitution of whatever he has received under the
contract or the part of it avoided. If restitution cannot be made in
kind for any reason, a reasonable sum must be paid for what has been
received.
275
Article 4:116 (ex art. 6.115) - Partial avoidance
276
If a ground of avoidance affects only particular terms of a contract,
the effect of an avoidance is limited to those terms unless, giving due
consideration to all the circumstances of the case, it is unreasonable
to uphold the remaining contract.
277
Article 4:117 (ex art. 6.117) - Damages
278
(1) A party who avoids a contract under this Chapter may recover from
the other party damages so as to put the avoiding party as nearly as
possible into the same position as if it had not concluded the
contract, provided that the other party knew or ought to have known of
the mistake, fraud, threat or taking of excessive benefit or unfair
advantage.
279
(2) If a party has the right to avoid a contract under this Chapter,
but does not exercise its right or has lost its right under the
provisions of Articles 4:113 or 4:114, it may recover, subject to
paragraph (1), damages limited to the loss caused to it by the mistake,
fraud, threat or taking of excessive benefit or unfair advantage. The
same measure of damages shall apply when the party was misled by
incorrect information in the sense of Article 4:106.
280
(3) In other respects, the damages shall be in accordance with the
relevant provisions of Chapter 9, Section 5, with appropriate
adaptations.
281
Article 4:118 (ex. art. 6.118) - Exclusion or restriction of remedies
282
(1) Remedies for fraud, threats and excessive benefit or unfair
advantage-taking, and the right to avoid an unfair term which has not
been individually negotiated, cannot be excluded or restricted.
283
(2) Remedies for mistake and incorrect information may be excluded or
restricted unless the exclusion or restriction is contrary to good
faith and fair dealing.
284
Article 4:119 (ex art. 6.119) - Remedies for non-performance
285
A party who is entitled to a remedy under this Chapter in circumstances
which afford that party a remedy for non-performance may pursue either
remedy.
286
CHAPTER 5 - INTERPRETATION
287
Article 5:101 (Ex art. 7.101/ 101A) - General Rules of Interpretation
288
(1) A contract is to be interpreted according to the common intention
of the parties even if this differs from the literal meaning of the
words.
289
(2) If it is established that one party intended the contract to have a
particular meaning, and at the time of the conclusion of the contract
the other party could not have been unaware of the first party's
intention, the contract is to be interpreted in the way intended by the
first party.
290
(3) If an intention cannot be established according to (1) or (2), the
contract is to be interpreted according to the meaning that reasonable
persons of the same kind as the parties would give to it in the same
circumstances.
291
Article 5:102 (ex art. 7.102) - Relevant Circumstances
292
In interpreting the contract, regard shall be had, in particular, to:
293
(a) the circumstances in which it was concluded, including the
preliminary negotiations;
294
(b) the conduct of the parties, even subsequent to the conclusion of
the contract;
295
(c) the nature and purpose of the contract;
296
(d) the interpretation which has already been given to similar clauses
by the parties and the practices they have established between
themselves;
297
(e) the meaning commonly given to terms and expressions in the branch
of activity concerned and the interpretation similar clauses may
already have received;
298
(f) usages; and
299
(g) good faith and fair dealing
300
Article 5:103 (ex art. 7.103) - Contra Proferentem Rule
301
Where there is doubt about the meaning of a contract term not
individually negotiated, an interpretation of the term against the
party who supplied it is to be preferred.
302
Article 5:104 (ex art. 7.104) - Preference to Negotiated Terms
303
Terms which have been individually negotiated take preference over
those which are not.
304
Article 5:105 (ex art. 7.105) - Reference to Contract as a Whole
305
Terms are interpreted in the light of the whole contract in which they
appear.
306
Article 5:106 (ex art. 7.106) - Terms to Be Given (Full) Effect
307
An interpretation which renders the terms of the contract lawful, or
effective, is to be preferred to one which would not.
308
Article 5:107 (ex art. 7.107) - Linguistic Discrepancies
309
Where a contract is drawn up in two or more language versions none of
which is stated to be authoritative, there is, in case of discrepancy
between the versions, a preference for the interpretation according to
the version in which the contract was originally drawn up.
310
CHAPTER 6 - CONTENTS AND EFFECTS
311
Article 6:101 (ex art. 8.101) - Statements giving rise to contractual
obligation
312
(1) A statement made by one party before or when the contract is
concluded is to be treated as giving rise to a contractual obligation
if that is how the other party reasonably understood it in the
circumstances, taking into account:
313
(a) the apparent importance of the statement to the other party;
314
(b) whether the party was making the statement in the course of
business; and
315
(c) the relative expertise of the parties.
316
(2) If one of the parties is a professional supplier who gives
information about the quality or use of services or goods or other
property when marketing or advertising them or otherwise before the
contract for them is concluded, the statement is to be treated as
giving rise to a contractual obligation unless it is shown that the
other party knew or could not have been unaware that the statement was
incorrect.
317
(3) Such information and other undertakings given by a person
advertising or marketing services, goods or other property for the
professional supplier, or by a person in earlier links of the business
chain, are to be treated as giving rise to a contractual obligation on
the part of the professional supplier unless it did not know and had no
reason to know of the information or undertaking.
318
Article 6:102 (replaces 5.108) - Implied obligations
319
In addition to the express terms, a contract may contain implied terms
which stem from
320
(a) the intention of the parties,
321
(b) the nature and purpose of the contract, and
322
(c) good faith and fair dealing.
323
Article 6:103 - Simulation
324
When the parties have concluded an apparent contract which was not
intended to reflect their true agreement, as between the parties the
true agreement prevails
325
Article 6:104 (ex art. 2.101) - Determination of Price
326
Where the contract does not fix the price or the method of determining
it, the parties are to be treated as having agreed on a reasonable
price.
327
Article 6:105 (ex art. 2.102) - Unilateral Determination by a Party
328
Where the price or any other contractual term is to be determined by
one party whose determination is grossly unreasonable, then
notwithstanding any provision to the contrary, a reasonable price or
other term shall be substituted.
329
Article 6:106 (ex art. 2.103) - Determination by a Third Person
330
(1) Where the price or any other contractual term is to be determined
by a third person, and it cannot or will not do so, the parties are
presumed to have empowered the court to appoint another person to
determine it.
331
(2) If a price or other term fixed by a third person is grossly
unreasonable, a reasonable price or term shall be substituted.
332
Article 6:107 (ex art. 2.104) - Reference to a Non Existent Factor
333
Where the price or any other contractual term is to be determined by
reference to a factor which does not exist or has ceased to exist or to
be accessible, the nearest equivalent factor shall be substituted.
334
Article 6:108 (ex art. 2.105) - Quality of Performance
335
If the contract does not specify the quality, a party must tender
performance of at least average quality.
336
Article 6:109 (ex art. 2.109) - Contract for an Indefinite Period
337
A contract for an indefinite period may be ended by either party by
giving notice of reasonable length.
338
Article 6:110 (ex art. 2.115) - Stipulation in Favour of a Third Party
339
(1) A third party may require performance of a contractual obligation
when its right to do so has been expressly agreed upon between the
promisor and the promisee, or when such agreement is to be inferred
from the purpose of the contract or the circumstances of the case. The
third party need not be identified at the time the agreement is
concluded.
340
(2) If the third party renounces the right to performance the right is
treated as never having accrued to it.
341
(3) The promisee may by notice to the promisor deprive the third party
of the right to performance unless:
342
(a) the third party has received notice from the promisee that the
right has been made irrevocable, or
343
(b) the promisor or the promisee has received notice from the third
party that the latter accepts the right.
344
Article 6:111 (ex art. 2.117) - Change of Circumstances
345
(1) A party is bound to fulfil its obligations even if performance has
become more onerous, whether because the cost of performance has
increased or because the value of the performance it receives has
diminished.
346
(2) If, however, performance of the contract becomes excessively
onerous because of a change of circumstances, the parties are bound to
enter into negotiations with a view to adapting the contract or
terminating it, provided that:
347
(a) the change of circumstances occurred after the time of conclusion
of the contract,
348
(b) the possibility of a change of circumstances was not one which
could reasonably have been taken into account at the time of conclusion
of the contract, and
349
(c) the risk of the change of circumstances is not one which, according
to the contract, the party affected should be required to bear.
350
(3) If the parties fail to reach agreement within a reasonable period,
the court may:
351
(a) terminate the contract at a date and on terms to be determined by
the court; or
352
(b) adapt the contract in order to distribute between the parties in a
just and equitable manner the losses and gains resulting from the
change of circumstances.
353
In either case, the court may award damages for the loss suffered
through a party refusing to negotiate or breaking off negotiations
contrary to good faith and fair dealing.
354
CHAPTER 7 - PERFORMANCE
355
Article 7:101 (ex art. 2.106) - Place of Performance
356
(1) If the place of performance of a contractual obligation is not
fixed by or determinable from the contract it shall be:
357
(a) in the case of an obligation to pay money, the creditor's place of
business at the time of the conclusion of the contract;
358
(b) in the case of an obligation other than to pay money, the obligor's
place of business at the time of conclusion of the contract.
359
(2) If a party has more than one place of business, the place of
business for the purpose of the preceding paragraph is that which has
the closest relationship to the contract, having regard to the
circumstances known to or contemplated by the parties at the time of
conclusion of the contract.
360
(3) If a party does not have a place of business its habitual residence
is to be treated as its place of business.
361
Article 7:102 (ex art. 2.107) - Time of Performance
362
A party has to effect its performance:
363
(1) if a time is fixed by or determinable from the contract, at that
time;
364
(2) if a period of time is fixed by or determinable from the contract,
at any time within that period unless the circumstances of the case
indicate that the other party is to choose the time;
365
(3) in any other case, within a reasonable time after the conclusion of
the contract.
366
Article 7:103 (ex art. 2.108) - Early Performance
367
(1) A party may decline a tender of performance made before it is due
except where acceptance of the tender would not unreasonably prejudice
its interests.
368
(2) A party's acceptance of early performance does not affect the time
fixed for the performance of its own obligation.
369
Article 7:104 - Order of performance
370
To the extent that the performances of the parties can be rendered
simultaneously, the parties are bound to render them simultaneously
unless the circumstances indicate otherwise.
371
Article 7:105 - Alternative performance
372
(1) Where an obligation may be discharged by one of alternative
performances, the choice belongs to the party who is to perform, unless
the circumstances indicate otherwise.
373
(2) If the party who is to make the choice fails to do so by the time
required by the contract, then:
374
(a) if the delay in choosing is fundamental, the right to choose passes
to the other party;
375
(b) if the delay is not fundamental, the other party may give a notice
fixing an additional period of reasonable length in which the party to
choose must do so. If the latter fails to do so, the right to choose
passes to the other party.
376
Article 7:106 (ex art. 2.116) - Performance by a Third Person
377
(1) Except where the contract requires personal performance the obligee
cannot refuse performance by a third person if:
378
(a) the third person acts with the assent of the obligor; or
379
(b) the third person has a legitimate interest in performance and the
obligor has failed to perform or it is clear that it will not perform
at the time performance is due.
380
(2) Performance by the third person in accordance with paragraph (1)
discharges the obligor.
381
Article 7:107 (ex art. 2.110) - Form of Payment
382
(1) Payment of money due may be made in any form used in the ordinary
course of business.
383
(2) A creditor who, pursuant to the contract or voluntarily, accepts a
cheque or other order to pay or a promise to pay is presumed to do so
only on condition that it will be honoured. The creditor may not
enforce the original obligation to pay unless the order or promise is
not honoured.
384
Article 7:108 (ex art. 2.111) - Currency of Payment
385
(1) The parties may agree that payment shall be made only in a
specified currency.
386
(2) In the absence of such agreement, a sum of money expressed in a
currency other than that of the place where payment is due may be paid
in the currency of that place according to the rate of exchange
prevailing there at the time when payment is due.
387
(3) If, in a case falling within the preceding paragraph, the debtor
has not paid at the time when payment is due, the creditor may require
payment in the currency of the place where payment is due according to
the rate of exchange prevailing there either at the time when payment
is due or at the time of actual payment.
388
Article 7:109 (ex art. 2.112) - Appropriation of Performance
389
(1) Where a party has to perform several obligations of the same nature
and the performance tendered does not suffice to discharge all of the
obligations, then subject to paragraph 4 the party may at the time of
its performance declare to which obligation the performance is to be
appropriated.
390
(2) If the performing party does not make such a declaration, the other
party may within a reasonable time appropriate the performance to such
obligation as it chooses. It shall inform the performing party of the
choice. However, any such appropriation to an obligation which:
391
(a) is not yet due, or
392
(b) is illegal, or
393
(c) is disputed,
394
is invalid.
395
(3) In the absence of an appropriation by either party, and subject to
paragraph 4, the performance is appropriated to that obligation which
satisfies one of the following criteria in the sequence indicated:
396
(a) the obligation which is due or is the first to fall due;
397
(b) the obligation for which the obligee has the least security;
398
(c) the obligation which is the most burdensome for the obligor,
399
(d) the obligation which has arisen first.
400
If none of the preceding criteria applies, the performance is
appropriated proportionately to all obligations.
401
(4) In the case of a monetary obligation, a payment by the debtor is to
be appropriated, first, to expenses, secondly, to interest, and
thirdly, to principal, unless the creditor makes a different
appropriation.
402
Article 7:110 (ex art. 2.113) - Property Not Accepted
403
(1) A party who is left in possession of tangible property other than
money because of the other party's failure to accept or retake the
property must take reasonable steps to protect and preserve the
property.
404
(2) The party left in possession may discharge its duty to deliver or
return:
405
(a) by depositing the property on reasonable terms with a third person
to be held to the order of the other party, and notifying the other
party of this; or
406
(b) by selling the property on reasonable terms after notice to the
other party, and paying the net proceeds to that party.
407
(3) Where, however, the property is liable to rapid deterioration or
its preservation is unreasonably expensive, the party must take
reasonable steps to dispose of it. It may discharge its duty to deliver
or return by paying the net proceeds to the other party.
408
(4) The party left in possession is entitled to be reimbursed or to
retain out of the proceeds of sale any expenses reasonably incurred.
409
Article 7:111 (ex art. 2.114) - Money not Accepted
410
Where a party fails to accept money properly tendered by the other
party, that party may after notice to the first party discharge its
obligation to pay by depositing the money to the order of the first
party in accordance with the law of the place where payment is due
411
Article 7:112 - Costs of performance
412
Each party shall bear the costs of performance of its obligations.
413
CHAPTER 8 - NON-PERFORMANCE AND REMEDIES IN GENERAL
414
Article 8:101 (ex art. 3.101) - Remedies Available
415
(1) Whenever a party does not perform an obligation under the contract
and the non-performance is not excused under Article 8:108, the
aggrieved party may resort to any of the remedies set out in Chapter 9.
416
(2) Where a party's non-performance is excused under Article 8:108, the
aggrieved party may resort to any of the remedies set out in Chapter 9
except claiming performance and damages.
417
(3) A party may not resort to any of the remedies set out in Chapter 9
to the extent that its own act caused the other party's
non-performance.
418
Article 8:102 (ex art. 3.102) - Cumulation of Remedies
419
Remedies which are not incompatible may be cumulated. In particular, a
party is not deprived of its right to damages by exercising its right
to any other remedy.
420
Article 8:103 (ex art. 3.103) - Fundamental Non-Performance
421
A non-performance of an obligation is fundamental to the contract if:
422
(a) strict compliance with the obligation is of the essence of the
contract; or
423
(b) the non-performance substantially deprives the aggrieved party of
what it was entitled to expect under the contract, unless the other
party did not foresee and could not reasonably have foreseen that
result; or
424
(c) the non-performance is intentional and gives the aggrieved party
reason to believe that it cannot rely on the other party's future
performance.
425
Article 8:104 (ex art. 3.104) - Cure by Non-Performing Party
426
A party whose tender of performance is not accepted by the other party
because it does not conform to the contract may make a new and
conforming tender where the time for performance has not yet arrived or
the delay would not be such as to constitute a fundamental
non-performance.
427
Article 8:105 (ex art. 3.105) - Assurance of Performance
428
(1) A party who reasonably believes that there will be a fundamental
non-performance by the other party may demand adequate assurance of due
performance and meanwhile may withhold performance of its own
obligations so long as such reasonable belief continues.
429
(2) Where this assurance is not provided within a reasonable time, the
party demanding it may terminate the contract if it still reasonably
believes that there will be a fundamental non-performance by the other
party and gives notice of termination without delay.
430
Article 8:106 (ex art. 3.106) - Notice Fixing Additional Period for
Performance
431
(1) In any case of non-performance the aggrieved party may by notice to
the other party allow an additional period of time for performance.
432
(2) During the additional period the aggrieved party may withhold
performance of its own reciprocal obligations and may claim damages,
but it may not resort to any other remedy. If it receives notice from
the other party that the latter will not perform within that period, or
if upon expiry of that period due performance has not been made, the
aggrieved party may resort to any of the remedies that may be available
under Chapter 9:
433
(3) If in a case of delay in performance which is not fundamental the
aggrieved party has given a notice fixing an additional period of time
of reasonable length, it may terminate the contract at the end of the
period of notice. The aggrieved party may in its notice provide that if
the other party does not perform within the period fixed by the notice
the contract shall terminate automatically. If the period stated is too
short, the aggrieved party may terminate, or, as the case may be, the
contract shall terminate automatically, only after a reasonable period
from the time of the notice.
434
Article 8:107 (ex art. 3.107) - Performance Entrusted to Another
435
A party who entrusts performance of the contract to another person
remains responsible for performance.
436
Article 8:108 (ex art 3.108) - Excuse Due to an Impediment
437
(1) A party's non-performance is excused if it proves that it is due to
an impediment beyond its control and that it could not reasonably have
been expected to take the impediment into account at the time of the
conclusion of the contract, or to have avoided or overcome the
impediment or its consequences.
438
(2) Where the impediment is only temporary the excuse provided by this
article has effect for the period during which the impediment exists.
However, if the delay amounts to a fundamental non-performance, the
obligee may treat it as such.
439
(3) The non-performing party must ensure that notice of the impediment
and of its effect on its ability to perform is received by the other
party within a reasonable time after the non-performing party knew or
ought to have known of these circumstances. The other party is entitled
to damages for any loss resulting from the non-receipt of such notice.
440
Article 8:109 (ex 3.109) - Clause Limiting or Excluding Remedies
441
Remedies for non-performance may be excluded or restricted unless it
would be contrary to good faith and fair dealing to invoke the
exclusion or restriction.
442
CHAPTER 9 - PARTICULAR REMEDIES FOR NON-PERFORMANCE
443
Section 1 - Right to Performance
444
Article 9:101 (ex art. 4.101) - Monetary Obligations
445
(1) The creditor is entitled to recover money which is due.
446
(2) Where the creditor has not yet performed its obligation and it is
clear that the debtor will be unwilling to receive performance, the
creditor may nonetheless proceed with its performance and may recover
any sum due under the contract unless:
447
(a) it could have made a reasonable substitute transaction without
significant effort or expense; or
448
(b) performance would be unreasonable in the circumstances.
449
Article 9:102 (ex art. 4.102) - Non-monetary Obligations
450
(1) The aggrieved party is entitled to specific performance of an
obligation other than one to pay money, including the remedying of a
defective performance.
451
(2) Specific performance cannot, however, be obtained where:
452
(a) performance would be unlawful or impossible; or
453
(b) performance would cause the obligor unreasonable effort or expense;
or
454
(c) the performance consists in the provision of services or work of a
personal character or depends upon a personal relationship, or
455
(d) the aggrieved party may reasonably obtain performance from another
source.
456
(3) The aggrieved party will lose the right to specific performance if
it fails to seek it within a reasonable time after it has or ought to
have become aware of the non-performance.
457
Article 9:103 (ex art 4.103) - Damages Not Precluded
458
The fact that a right to performance is excluded under this Section
does not preclude a claim for damages.
459
Section 2 - Right To Withhold Performance
460
Article 9:201 (ex art 4.201) - Right to Withhold Performance
461
(1) A party who is to perform simultaneously with or after the other
party may withhold performance until the other has tendered performance
or has performed. The first party may withhold the whole of its
performance or a part of it as may be reasonable in the circumstances.
462
(2) A party may similarly withhold performance for as long as it is
clear that there will be a non-performance by the other party when the
other party's performance becomes due.
463
Section 3 - Termination Of The Contract
464
Article 9:301 (ex art. 4.301) - Right to Terminate the Contract
465
(1) A party may terminate the contract if the other party's
non-performance is fundamental.
466
(2) In the case of delay the aggrieved party may also terminate the
contract under Article 8:106 (3).
467
Article 9:302 (ex art 4.302) - Contract to be Performed in Parts
468
If the contract is to be performed in separate parts and in relation to
a part to which a counter-performance can be apportioned, there is a
fundamental non-performance, the aggrieved party may exercise its right
to terminate under this Section in relation to the part concerned. It
may terminate the contract as a whole only if the non-performance is
fundamental to the contract as a whole.
469
Article 9:303 (ex art. 4.303) - Notice of Termination
470
(1) A party's right to terminate the contract is to be exercised by
notice to the other party.
471
(2) The aggrieved party loses its right to terminate the contract
unless it gives notice within a reasonable time after it has or ought
to have become aware of the non-performance.
472
(3) (a) When performance has not been tendered by the time it was due,
the aggrieved party need not give notice of termination before a tender
has been made. If a tender is later made it loses its right to
terminate if it does not give such notice within a reasonable time
after it has or ought to have become aware of the tender.
473
(b) If, however, the aggrieved party knows or has reason to know that
the other party still intends to tender within a reasonable time, and
the aggrieved party unreasonably fails to notify the other party that
it will not accept performance, it loses its right to terminate if the
other party in fact tenders within a reasonable time.
474
(4) If a party is excused under Article 8:108 through an impediment
which is total and permanent, the contract is terminated automatically
and without notice at the time the impediment arises.
475
Article 9:304 (ex art. 4.304) - Anticipatory Non-Performance
476
Where prior to the time for performance by a party it is clear that
there will be a fundamental non-performance by it the other party may
terminate the contract.
477
Article 9:305 (ex art. 4.305) - Effects of Termination in General
478
(1) Termination of the contract releases both parties from their
obligation to effect and to receive future performance, but, subject to
Articles 9:306 to 9:308, does not affect the rights and liabilities
that have accrued up to the time of termination.
479
(2) Termination does not affect any provision of the contract for the
settlement of disputes or any other provision which is to operate even
after termination.
480
Article 9:306 (ex art. 4.306) - Property Reduced in Value
481
A party who terminates the contract may reject property previously
received from the other party if its value to the first party has been
fundamentally reduced as a result of the other party's non-performance.
482
Article 9:307 (ex art. 4.307) - Recovery of Money Paid
483
On termination of the contract a party may recover money paid for a
performance which it did not receive or which it properly rejected.
484
Article 9:308 (ex art 4.308) - Recovery of Property
485
On termination of the contract a party who has supplied property which
can be returned and for which it has not received payment or other
counter-performance may recover the property.
486
Article 9:309 (ex art. 4.309) - Recovery for Performance that Cannot be
Returned
487
On termination of the contract a party who has rendered a performance
which cannot be returned and for which it has not received payment or
other counter-performance may recover a reasonable amount for the value
of the performance to the other party.
488
Section 4 - Price Reduction
489
Article 9:401 (ex art 4.401) - Right to Reduce Price
490
(1) A party who accepts a tender of performance not conforming to the
contract may reduce the price. This reduction shall be proportionate to
the decrease in the value of the performance at the time this was
tendered compared to the value which a conforming tender would have had
at that time.
491
(2) A party who is entitled to reduce the price under the preceding
paragraph and who has already paid a sum exceeding the reduced price
may recover the excess from the other party.
492
(3) A party who reduces the price cannot also recover damages for
reduction in the value of the performance but remains entitled to
damages for any further loss it has suffered so far as these are
recoverable under Section 5 of this Chapter.
493
Section 5 - Damages and Interest
494
Article 9:501 (ex art. 4.501) - Right to Damages
495
(1) The aggrieved party is entitled to damages for loss caused by the
other party's non-performance which is not excused under Article 8:108.
496
(2) The loss for which damages are recoverable includes:
497
(a) non-pecuniary loss; and
498
(b) future loss which is reasonably likely to occur.
499
Article 9:502 (ex art 4.502) - General Measure of Damages
500
The general measure of damages is such sum as will put the aggrieved
party as nearly as possible into the position in which it would have
been if the contract had been duly performed. Such damages cover the
loss which the aggrieved party has suffered and the gain of which it
has been deprived.
501
Article 9:503 (ex art. 4.503) - Foreseeability
502
The non-performing party is liable only for loss which it foresaw or
could reasonably have foreseen at the time of conclusion of the
contract as a likely result of its non-performance, unless the
non-performance was intentional or grossly negligent.
503
Article 9:504 - Loss Attributable to Aggrieved Party (new; previously
part of 4.504)
504
The non-performing party is not liable for loss suffered by the
aggrieved party to the extent that the aggrieved party contributed to
the non-performance or its effects.
505
Article 9:505 - Reduction of loss (previously part of 4.504)
506
(1) The non-performing party is not liable for loss suffered by the
aggrieved party to the extent that the aggrieved party could have
reduced the loss by taking reasonable steps.
507
(2) The aggrieved party is entitled to recover any expenses reasonably
incurred in attempting to reduce the loss.
508
Article 9:506 (ex art. 4.505) - Substitute Transaction
509
Where the aggrieved party has terminated the contract and has made a
substitute transaction within a reasonable time and in a reasonable
manner, it may recover the difference between the contract price and
the price of the substitute transaction as well as damages for any
further loss so far as these are recoverable under this Section.
510
Article 9:507 (ex art. 4.506) - Current Price
511
Where the aggrieved party has terminated the contract and has not made
a substitute transaction but there is a current price for the
performance contracted for, it may recover the difference between the
contract price and the price current at the time the contract is
terminated as well as damages for any further loss so far as these are
recoverable under this Section.
512
Article 9:508 (ex art. 4.507) - Delay in Payment of Money
513
(1) If payment of a sum of money is delayed, the aggrieved party is
entitled to interest on that sum from the time when payment is due to
the time of payment at the average commercial bank short-term lending
rate to prime borrowers prevailing for the contractual currency of
payment at the place where payment is due.
514
(2) The aggrieved party may in addition recover damages for any further
loss so far as these are recoverable under this Section.
515
Article 9:509 (ex art. 4.508) - Agreed Payment for Non-performance
516
(1) Where the contract provides that a party who fails to perform is to
pay a specified sum to the aggrieved party for such non-performance,
the aggrieved party shall be awarded that sum irrespective of its
actual loss.
517
(2) However, despite any agreement to the contrary the specified sum
may be reduced to a reasonable amount where it is grossly excessive in
relation to the loss resulting from the non-performance and the other
circumstances.
518
Article 9:510 (ex art. 4.509) - Currency by which Damages to be
Measured
519
Damages are to be measured by the currency which most appropriately
reflects the aggrieved party's loss.
520
THE PRINCIPLES OF EUROPEAN CONTRACT LAW - Part III, 2002
521
CHAPTER 10: Plurality of parties*
522
Section 1 - Plurality of debtors*
523
Article 10:101 Solidary, Separate and Communal Obligations
524
(1) Obligations are solidary when all the debtors are bound to render
one and the same performance and the creditor may require it from any
one of them until full performance has been received.
525
(2) Obligations are separate when each debtor is bound to render only
part of the performance and the creditor may require from each debtor
only that debtor's part.
526
(3) An obligation is communal when all the debtors are bound to render
the performance together and the creditor may require it only from all
of them.
527
Article 10:102 When Solidary Obligations Arise
528
(1) If several debtors are bound to render one and the same performance
to a creditor under the same contract, they are solidarily liable,
unless the contract or the law provides otherwise.
529
(2)* *Solidary obligations also arise where several persons are liable
for the same damage.
530
(3)* *The fact that the debtors are not liable on the same terms does
not prevent their obligations from being solidary.
531
Article 10:103 Liability Under Separate Obligations
532
Debtors bound by separate obligations are liable in equal shares unless
the contract or the law provides otherwise.
533
Article 10:104 Communal Obligations: Special Rule when Money Claimed
for Non-Performance
534
Notwithstanding Article 10:101 (3), when money is claimed for
non-performance of a communal obligation, the debtors are solidarily
liable for payment to the creditor.
535
Article 10:105 Appointment Between Solidary Debtors
536
(1)* *As between themselves, solidary debtors are liable in equal
shares unless the contract or the law provides otherwise.
537
(2) If two or more debtors are liable for the same damage under Article
10:102 (2), their share of liability as between themselves is
determined according to the law governing the event which gave rise to
the liability.
538
Article 10:106 Recourse Between Solidary Debtors
539
(1)* *A solidary debtor who has performed more than that debtor's share
may claim the excess from any of the other debtors to the extent of
each debtor's unperformed share, together with a share of any costs
reasonably incurred.
540
(2)* *A* *solidary debtor to whom paragraph (1) applies may also,
subject to any prior right and interest of the creditor, exercise the
rights and actions of the creditor, including accessory securities, to
recover the excess from any of the other debtors to the extent of each
debtor's unperformed share.
541
(3)* *If a solidary debtor who has performed more than that debtor's
share is unable, despite all reasonable efforts, to recover
contribution from another solidary debtor, the share of the others,
including the one who has performed, is increased proportionally.
542
Article 10:107 Performance, Set-Off and Merger in Solidary Obligations
543
(1)* *Performance or set-off by a solidary debtor or set-off by the
creditor against one solidary debtor discharges the other debtors in
relation to the creditor to the extent of the performance or set--off.
544
(2)* *Merger of debts between a solidary debtor and the creditor
discharges the other debtors only for the share of the debtor
concerned.
545
Article 10:108 Release or Settlement in Solidary Obligations
546
(1)* *When the creditor releases, or reaches a settlement with, one
solidary debtor, the other debtors are discharged of liability for the
share of that debtor.
547
(2) The debtors are totally discharged by the release or settlement if
it so provides.
548
(3) As between solidary debtors, the debtor who is discharged from that
debtor's share is discharged only to the extent of the share at the
time of the discharge and not from any supplementary share for which
that debtor may subsequently become liable under Article 10:106 (3).
549
Article 10:109 Effect of Judgment in Solidary Obligations
550
A decision by a court as to the liability to the creditor of one
solidary debtor does not affect: (a) the liability to the creditor of
the other solidary debtors; or (b) the rights of recourse between the
solidary debtors under Article 10:106.
551
Article 10:110 Prescription in Solidary Obligations
552
Prescription of the creditor's right to performance ("claim") against
one solidary debtor does not affect: (a) the liability to the creditor
of the other solidary debtors; or (b) the rights of recourse between
the solidary debtors under Article 10:106.
553
Article 10:111 Opposability of other Defences in Solidary Obligations
554
(1) A solidary debtor may invoke against the creditor any defence which
another solidary debtor can invoke, other than a defence personal to
that other debtor. Invoking the defence has no effect with regard to
the other solidary debtors.
555
(2) A debtor from whom contribution is claimed may invoke against the
claimant any personal defence that that debtor could have invoked
against the creditor.
556
Section 2 - Plurality of creditors*
557
Article 10:201 Solidary, Separate and Communal Claims
558
(1) Claims are solidary when any of the creditors may require full
performance from the debtor and when the debtor may render performance
to any of the creditors.
559
(2) Claims are separate when the debtor owes each creditor only that
creditor's share of the claim and each creditor may require performance
only of that creditor's share.
560
(3) A claim is communal when the debtor must perform to all the
creditors and any creditor may require performance only for the benefit
of all.
561
Article 10:202 Apportionment of Separate Claims
562
Separate creditors are entitled to equal shares unless the contract or
the law provides otherwise.
563
Article 10:203 Difficulties of Executing a Communal Claim
564
If one of the creditors in a communal claim refuses, or is unable to
receive, the performance, the debtor may discharge the obligation to
perform by depositing the property or money with a third party
according to Articles 7:110 or 7:111 of the Principles.
565
Article 10:204 Apportionment of Solidary Claims
566
(1)* *Solidary creditors are entitled to equal shares unless the
contract or the law provides otherwise.
567
(2)* *A creditor who has received more than that creditor's share must
transfer the excess to the other creditors to the extent of their
respective shares.
568
Article 10:205 Regime of Solidary Claims
569
(1)* *A* *release granted to the debtor by one of the solidary
creditors has no effect on the other solidary creditors
570
(2) The rules of Articles 10:107, 10:109, 10:110 and 10:111 (1) apply,
with appropriate adaptations, to solidary claims.
571
CHAPTER 11. Assignment of Claims*
572
Section 1 - General Principles*
573
Article 11:101 Scope of Chapter
574
(1) This Chapter applies to the assignment by agreement of a right to
performance ("claim") under an existing or future contract.
575
(2) Except where otherwise stated or the context otherwise requires,
this Chapter also applies to the assignment by agreement of other
transferable claims.
576
(3) This Chapter does not apply: (a) to the transfer of a financial
instrument or investment security where, under the law otherwise
applicable, such transfer must be* *by entry in a register maintained
by or for the issuer; or (b) to the transfer of a bill of exchange or
other negotiable instrument or of a negotiable security or a document
of title to goods where, under the law otherwise applicable, such
transfer must be by delivery (with any necessary indorsement).
577
(4) In this Chapter "assignment" includes an assignment by way of
security.
578
(5) This Chapter also applies, with appropriate adaptations, to the
granting by agreement of a right in security over a claim otherwise
than by assignment.
579
Article 11:102 Contractual Claims Generally Assignable
580
(1) Subject to Articles 11:301 and 11:302, a party to a contract may
assign a claim under it.
581
(2) A future claim arising under an existing or future contract may be
assigned if at the time when it comes into existence, or at such other
time as the parties agree, it can be identified as the claim to which
the assignment relates.
582
Article 11:103 Partial Assignment
583
A claim which is divisible may be assigned in part, but the assignor is
liable to the debtor for any increased costs which the debtor thereby
incurs.
584
Article 11:104 Form of Assignment
585
An assignment need not be in writing and is not subject to any other
requirement as to form. It may be proved by any means, including
witnesses.
586
Section 2 - Effects of Assignment As Between Assignor and Assignee*
587
Article 11:201 Rights Transferred to Assignee
588
(1) The assignment of a claim transfers to the assignee: (a) all the
assignor's rights to performance in respect of the claim assigned; and
(b) all accessory rights securing such performance.
589
(2) Where the assignment of a claim under a contract is associated with
the substitution of the assignee as debtor in respect of any obligation
owed by the assignor under the same contract, this Article takes effect
subject to Article 12:201.
590
Article 11:202 When Assignment Takes Effect
591
(1) An assignment of an existing claim takes effect at the time of the
agreement to assign or such later time as the assignor and assignee
agree.
592
(2) An assignment of a future claim is dependent upon the assigned
claim coming into existence but thereupon takes effect from the time of
the agreement to assign or such later time as the assignor and assignee
agree.
593
Article 11:203 Preservation of Assignee's Rights Against Assignor
594
An assignment is effective as between the assignor and assignee, and
entitles the assignee to whatever the assignor receives from the
debtor, even if it is ineffective against the debtor under Article
11:301 or 11:302.
595
Article 11:204 Undertakings by Assignor
596
By assigning or purporting to assign a claim the assignor undertakes to
the assignee that: (a) at the time when the assignment is to take
effect the following conditions will be satisfied except as otherwise
disclosed to the assignee: (i) the assignor has the right to assign the
claim; (ii) the claim exists and the assignee's rights are not affected
by any defences or rights (including any right of set-off) which the
debtor might have against the assignor; and (iii) the claim is not
subject to any prior assignment or right in security in favour of any
other party or to any other incumbrance; (b) the claim and any contract
under which it arises will not be modified without the consent of the
assignee unless the modification is provided for in the assignment
agreement or is one which is made in good faith and is of a nature to
which the assignee could not reasonably object; and (c) the assignor
will transfer to the assignee all transferable rights intended to
secure performance which are not accessory rights.
597
Section 3 - Effects of Assignment As Between Assignee and Debtor*
598
Article 11:301 Contractual Prohibition of Assignment
599
(1) An assignment which is prohibited by or is otherwise not in
conformity with the contract under which the assigned claim arises is
not effective against the debtor unless: (a) the debtor has consented
to it; or (b) the assignee neither knew nor ought to have known of the
non-conformity; or (c) the assignment is made under a contract for the
assignment of future rights to payment of money.
600
(2) Nothing in the preceding paragraph affects the assignor's liability
for the non-conformity.
601
Article 11:302 Other Ineffective Assignments
602
An assignment to which the debtor has not consented is ineffective
against the debtor so far as it relates to a performance which the
debtor, by reason of the nature of the performance or the relationship
of the debtor and the assignor, could not reasonably be required to
render to anyone except the assignor.
603
Article 11:303 Effect on Debtor's Obligation
604
(1) Subject to Articles 11:301, 11:302, 11:307 and 11:308, the debtor
is bound to perform in favour of the assignee if and only if the debtor
has received a notice in writing from the assignor or the assignee
which reasonably identifies the claim which has been assigned and
requires the debtor to give performance to the assignee.
605
(2) However, if such notice is given by the assignee, the debtor may
within a reasonable time request the assignee to provide reliable
evidence of the assignment, pending which the debtor may withhold
performance.
606
(3) Where the debtor has acquired knowledge of the assignment otherwise
than by a notice conforming to paragraph (1), the debtor may either
withhold performance from or give performance to the assignee.
607
(4) Where the debtor gives performance to the assignor, the debtor is
discharged if and only if the performance is given without knowledge of
the assignment.
608
/ /Article 11:304 PROTECTION OF DEBTOR
609
A debtor who performs in favour of a person identified as assignee in a
notice of assignment under Article 11:303 is discharged unless the
debtor could not have been unaware that such person was not the person
entitled to performance.
610
Article 11:305 Competing Demands
611
A debtor who has received notice of two or more competing demands for
performance may discharge liability by conforming to the law of the due
place of performance, or, if the performances are due in different
places, the law applicable to the claim/./
612
Article 11:306 Place of Performance
613
(1) Where the assigned claim relates to an obligation to pay money at a
particular place, the assignee may require payment at any place within
the same country or, if that country is a Member State of the European
Union, at any place within the European Union, but the assignor is
liable to the debtor for any increased costs which the debtor incurs by
reason of any change in the place of performance.
614
(2) Where the assigned claim relates to a non-monetary obligation to be
performed at a particular place, the assignee may not require
performance at any other place.
615
Article 11:307 Defences and Rights of Set-Off
616
(1) The debtor may set up against the assignee all substantive and
procedural defences to the assigned claim which the debtor could have
used against the assignor.
617
(2) The debtor may also assert against the assignee all rights of
set-off which would have been available against the assignor under
Chapter 13 in respect of any claim against the assignor: (a) existing
at the time when a notice of assignment, whether or not conforming to
Article 11:303 (1), reaches the debtor; or (b) closely connected with
the assigned claim.
618
Article 11:308 Unauthorised Modification Not Binding on Assignee
619
A modification of the claim made by agreement between the assignor and
the debtor, without the consent of the assignee, after a notice of
assignment, whether or not conforming to Article 11:303 (1), reaches
the debtor does not affect the rights of the assignee against the
debtor unless the modification is provided for in the assignment
agreement or is one which is made in good faith and is of a nature to
which the assignee could not reasonably object.
620
Section 4 - Order of Priority between Assignee and Competing Claimants*
621
Article 11:401 Priorities
622
(1) Where there are successive assignments of the same claim, the
assignee whose assignment is first notified to the debtor has priority
over any earlier assignee if at the time of the later assignment the
assignee under that assignment neither knew nor ought to have known of
the earlier assignment.
623
(2) Subject to paragraph (1), the priority of successive assignments,
whether of existing or future claims, is determined by the order in
which they are made.
624
(3) The assignee's interest in the assigned claim has priority over the
interest of a creditor of the assignor who attaches that claim, whether
by judicial process or otherwise, after the time the assignment has
taken effect under Article 11:202.
625
(4) In the event of the assignor's bankruptcy, the assignee's interest
in the assigned claim has priority over the interest of the assignor's
insolvency administrator and creditors, subject to any rules of the law
applicable to the bankruptcy relating to: (a) publicity required as a
condition of such priority; (b) the ranking of claims; or (c) the
avoidance or ineffectiveness of transactions in the bankruptcy
proceedings.
626
CHAPTER 12. Substitution of New Debtor: Transfer of Contract*
627
Section 1 - Substitution of New Debtor*
628
Article 12:101 Substitution: General Rules
629
(1) A third person may undertake with the agreement of the debtor and
the creditor to be sub-sti-tuted as debtor, with the effect that the
original debtor is discharged.
630
(2) A creditor may agree in advance to a future substitution. In such a
case the substitution takes effect only when the creditor is given
notice by the new debtor of the agreement between the new and the
original debtor.
631
Article 12:102 Effects of Substitutions on Defences and Securities
632
(1) The new debtor cannot invoke against the creditor any rights or
defences arising from the relationship between the new debtor and the
original debtor.
633
(2) The discharge of the original debtor also extends to any security
of the original debtor given to the creditor for the performance of the
obli-ga-tion, unless the security is over an asset which is transferred
to the new debtor as part of a transaction between the original and the
new debtor.
634
(3) Upon discharge of the original debtor, a security granted by any
person other than the new debtor for the per-formance of the
obli-ga-tion is released, unless that other person agrees that it
should continue to be available to the creditor.
635
(4) The new debtor may invoke against the creditor all de--fences which
the original debtor could have invoked against the creditor.
636
Section 2 - Transfer of Contract*
637
Article 12:201 Transfer of Contract
638
(1) A party to a contract may agree with a third person that that
person is to be sub-sti-tu-ted as the contracting party. In such a case
the substitution takes effect only where, as a result of the other
party's assent, the first party is discharged.
639
(2) To the extent that the substitution of the third person as a
contracting party involves a transfer of rights to performance
("claims"), the provisions of Chapter 11 apply; to the extent that
obligations are transferred, the provisions of Section 1 of this
Chapter apply.
640
CHAPTER 13. Set-Off*
641
Article 13:101 Requirement for Set-Off
642
If two parties owe each other obligations of the same kind, either
party may set off that party's right to performance ("claim") against
the other party's claim, if and to the extent that, at the time of
set-off, the first party: (a) is entitled to effect performance; and
(b) may demand the other party's performance.
643
Article 13:102 Unascertained Claims
644
(1) A debtor may not set off a claim which is unascertained as to its
existence or value unless the set-off will not prejudice the interests
of the other party.
645
(2) Where the claims of both parties arise from the same legal
relationship it is presumed that the other party's interests will not
be prejudiced.
646
Article 13:103 Foreign Currency Set-Off
647
Where parties owe each other money in different currencies, each party
may set off that party's claim against the other party's claim, unless
the parties have agreed that the party declaring set-off is to pay
exclusively in a specified currency.
648
Article 13:104 Notice of Set-Off
649
The right of set-off is exercised by notice to the other party.
650
Article 13:105 Plurality of Claims and Obligations
651
(1) Where the party giving notice of set-off has two or more claims
against the other party, the notice is effective only if it identifies
the claim to which it relates.
652
(2) Where the party giving notice of set-off has to perform two or more
obligations towards the other party, the rules in Article 7:109 apply
with appropriate adaptations.
653
Article 13:106 Effects of Set-Off
654
Set-off discharges the obligations, as far as they are coextensive, as
from the time of notice.
655
Article 13:107 Exclusion of Right of Set-Off
656
Set-off cannot be effected: (a) where it is excluded by agreement; (b)
against a claim to the extent that that claim is not capable of
attachment; and (c) against a claim arising from a deliberate wrongful
act.
657
CHAPTER 14. Prescription*
658
Section 1 - General Provision*
659
Article 14:101 Claims Subject to Prescription
660
A right to performance of an obligation ("claim") is subject to
prescription by the expiry of a period of time in accordance with these
Principles.
661
Section 2 - Periods of Prescription and their Commencement*
662
Article 14:201 General Period
663
The general period of prescription is three years.
664
Article 14:202 Period for a Claim Established by Legal Proceedings
665
(1) The period of prescription for a claim established by judgment is
ten years.
666
(2) The same applies to a claim established by an arbitral award or
other instrument which is enforceable as if it were a judgment.
667
Article 14:203 Commencement
668
(1) The general period of prescription begins to run from the time when
the debtor has to effect performance or, in the case of a right to
damages, from the time of the act which gives rise to the claim.
669
(2) Where the debtor is under a continuing obligation to do or refrain
from doing something, the general period of prescription begins to run
with each breach of the obligation.
670
(3) The period of prescription set out in Article 14:202 begins to run
from the time when the judgment or arbitral award obtains the effect of
res judicata, or the other instrument becomes enforceable, though not
before the debtor has to effect performance.
671
Section 3 - Extension of Period*
672
Article 14:301 Suspension in Case of Ignorance
673
The running of the period of prescription is suspended as long as the
creditor does not know of, and could not reasonably know of: (a) the
identity of the debtor; or (b) the facts giving rise to the claim
including, in the case of a right to damages, the type of damage.
674
Article 14:302 Suspension in Case of Judicial and Other Proceedings
675
(1) The running of the period of prescription is suspended from the
time when judicial proceedings on the claim are begun.
676
(2) Suspension lasts until a decision has been made which has the
effect of res judicata, or until the case has been otherwise disposed
of.
677
(3) These provisions apply, with appropriate adaptations, to
arbitration proceedings and to all other proceedings initiated with the
aim of obtaining an instrument which is enforceable as if it were a
judgment.
678
Article 14:303 Suspension in Case of Impediment Beyond Creditor's
Control
679
(1) The running of the period of prescription is suspended as long as
the creditor is prevented from pursuing the claim by an impediment
which is beyond the creditor's control and which the creditor could not
reasonably have been expected to avoid or overcome.
680
(2) Paragraph (1) applies only if the impediment arises, or subsists,
within the last six months of the prescription period.
681
Article 14:304 Postponement of Expiry in Case of Negotiations
682
If the parties negotiate about the claim, or about circumstances from
which a claim might arise, the period of prescription does not expire
before one year has passed since the last communication made in the
negotiations.
683
Article 14:305 Postponement of Expiry in Case of Incapacity
684
(1) If a person subject to an incapacity is without a representative,
the period of prescription of a claim held by or against that person
does not expire before one year has passed after either the incapacity
has ended or a representative has been appointed.
685
(2) The period of prescription of claims between a person subject to an
incapacity and that person's representative does not expire before one
year has passed after either the incapacity has ended or a new
representative has been appointed.
686
Article 14:306 Postponement of Expiry: Deceased's Estate
687
Where the creditor or debtor has died, the period of prescription of a
claim held by or against the deceased's estate does not expire before
one year has passed after the claim can be enforced by or against an
heir, or by or against a representative of the estate.
688
Article 14:307 Maximum Length of Period
689
The period of prescription cannot be extended, by suspension of its
running or postponement of its expiry under these Principles, to more
than ten years or, in case of claims for personal injuries, to more
than thirty years. This does not apply to suspension under Article
14:302.
690
Section 4 - Renewal of Periods*
691
Article 14:401 Renewal by Acknowledgement
692
(1) If the debtor acknowledges the claim, vis-?-vis the creditor, by
part payment, payment of interest, giving of security, or in any other
manner, a new period of prescription begins to run.
693
(2) The new period is the general period of prescription, regardless of
whether the claim was originally subject to the general period of
prescription or the ten year period under Article 14:202. In the latter
case, however, this Article does not operate so as to shorten the ten
year period.
694
Article 14:402 Renewal by Attempted Execution
695
The ten year period of prescription laid down in Article 14:202 begins
to run again with each reasonable attempt at execution undertaken by
the creditor.
696
Section 5 - Effects of Prescription*
697
Article 14:501 General Effect
698
(1) After expiry of the period of prescription the debtor is entitled
to refuse performance.
699
(2) Whatever has been performed in order to discharge a claim may not
be reclaimed merely because the period of prescription had expired.
700
Article 14:502 Effect on Ancillary Claims
701
The period of prescription for a right to payment of interest, and
other claims of an ancillary nature, expires not later than the period
for the principal claim.
702
Article 14:503 Effect on Set-Off
703
A claim in relation to which the period of prescription has expired may
nonetheless be set off, unless the debtor has invoked prescription
previously or does so within two months of notification of set-off.
704
Section 6 - Modification by Agreement*
705
Article 14:601 Agreements Concerning Prescription
706
(1) The requirements for prescription may be modified by agreement
between the parties, in particular by either shortening or lengthening
the periods of prescription.
707
(2) The period of prescription may not, however, be reduced to less
than one year or extended to more than thirty years after the time of
commencement set out in Article 14:203.
708
CHAPTER 15. Illegality*
709
Article 15:101 Contracts Contrary to Fundamental Principles
710
A contract is of no effect to the extent that it is contrary to
principles recognised as fundamental in the laws of the Member States
of the European Union.
711
Article 15:102 Contracts Infringing Mandatory Rules
712
(1) Where a contract infringes a mandatory rule of law applicable under
Article 1:103 of these Principles, the effects of that infringement
upon the contract are the effects, if any, expressly prescribed by that
mandatory rule.
713
(2) Where the mandatory rule does not expressly prescribe the effects
of an infringement upon a contract, the contract may be declared to
have full effect, to have some effect, to have no effect, or to be
subject to modification.
714
(3) A decision reached under paragraph (2) must be an appropriate and
proportional response to the infringement, having regard to all
relevant circumstances, including: (a) the purpose of the rule which
has been infringed; (b) the category of persons for whose protection
the rule exists; (c) any sanction that may be imposed under the rule
infringed; (d) the seriousness of the infringement; (e) whether the
infringement was intentional; and (f) the closeness of the relationship
between the infringement and the contract.
715
Article 15:103 Partial Ineffectiveness
716
(1) If only part of a contract is rendered ineffective under Articles
15:101 or 15:102, the remaining part continues in effect unless, giving
due consideration to all the circumstances of the case, it is
unreasonable to uphold it.
717
(2) Articles 15:104 and 15:105 apply, with appropriate adaptations, to
a case of partial ineffectiveness.
718
Article 15:104 Restitution
719
(1) When a contract is rendered ineffective under Articles 15:101 or
15:102, either party may claim restitution of whatever that party has
supplied under the contract, provided that, where appropriate,
concurrent restitution is made of whatever has been received.
720
(2) When considering whether to grant restitution under paragraph (1),
and what concurrent restitution, if any, would be appropriate, regard
must be had to the factors referred to in Article 15:102 (3).
721
(3) An award of restitution may be refused to a party who knew or ought
to have known of the reason for the ineffectiveness.
722
(4) If restitution cannot be made in kind for any reason, a reasonable
sum must be paid for what has been received.
723
Article 15:105 Damages
724
(1) A party to a contract which is rendered ineffective under Articles
15:101 or 15:102 may recover from the other party damages putting the
first party as nearly as possible into the same position as if the
contract had not been concluded,/ /provided that the other party knew
or ought to have known of the reason for the ineffectiveness.
725
(2) When considering whether to award damages under paragraph (1),
regard must be had to the factors referred to in Article 15:102 (3).
726
(3) An award of damages may be refused where the first party knew or
ought to have known of the reason for the ineffectiveness.
727
CHAPTER 16. Conditions*
728
Article 16:101 Types of Condition
729
A contractual obligation may be made conditional upon the occurrence of
an uncertain future event, so that the obligation takes effect only if
the event occurs (suspensive condition) or comes to an end if the event
occurs (resolutive condition).
730
Article 16:102 Interference with Conditions
731
(1) If fulfilment of a condition is prevented by a party, contrary to
duties of good faith and fair dealing or co-operation, and if
fulfilment would have operated to that party's disadvantage, the
condition is deemed to be fulfilled.
732
(2) If fulfilment of a condition is brought about by a party, contrary
to duties of good faith and fair dealing or co-operation, and if
fulfilment operates to that party's advantage, the condition is deemed
not to be fulfilled.
733
Article 16:103 Effect of Conditions
734
(1) Upon fulfilment of a suspensive condition, the relevant obligation
takes effect unless the parties otherwise agree.
735
(2) Upon fulfilment of a resolutive condition, the relevant obligation
comes to an end unless the parties otherwise agree.
736
CHAPTER 17. Capitalisation of Interest*
737
Article 17:101 When Interest to be Added to Capital
738
(1) Interest payable according to Article 9:508 (1) is added to the
outstanding capital every 12 months.
739
(2) Paragraph (1) of this Article does not apply if the parties have
provided for interest upon delay in payment.