The next method of limiting damages, provided for in some legal systems and international documents such as the CISG, is the contribution rule. However, it is submitted that except indirectly, the CISG does not deal with the issue of contributory conduct of the aggrieved party which adds to the loss of harm suffered. 810
In this respect, Art. 80 CISG is of particular relevance, which under the general heading of "Exemptions" establishes a general principle concerning the issue of contributory negligence and prescribes that: "A party may not rely on a failure of the other party to perform, to the extent that such failure was caused by the first party's act or omission." This Article states the self-evident proposition that a party cannot rely on another party's failure to perform if the failure was induced by the first party's own conduct e.g., by supplying faulty specifications for the construction of a machine or vessel or instructing the seller to use the paint of a particular manufacturer which proves unsuitable for the purpose for which it is intended. 811
In discussing the contribution rule under Art. 80 CISG, the rule of estoppel or venire contra factum proprium has to be mentioned. This principle is known in German and Swiss law by the maxim non concedit venire contra factum proprium and, in common law countries, as estoppel by representation. It is found in French law in the form of a principle of consistency and has also been recognized in arbitral case law. 812 There is a general principle of law, both international and municipal, i.e. estoppel, which "requires that the party claiming it has relied on a representation by another party with a resulting detrimental consequence to its own interests". 813 "[A] man shall not be allowed to blow hot and cold - to affirm at one time and to deny at another ... Such a principle has its basis in common sense and common justice, and whether it is called estoppel or by any other name, it is one which courts of law have in modern times most usefully adopted." 814 In a word, no one may set himself in contradiction to his own previous conduct. 815 The ICJ has found estoppel to be "numbered among the general principles of law accepted by international law as forming part of the law of nations, and obeying the rules of interpretation relating thereto". 816 Its content is obviously an expression of general principles, in particular that of good faith, respectively a concrete manifestation of it, the prohibition to contradict one's own behaviour (venire contra factum proprium). 817
Applying the principle that a party cannot contradict itself to the detriment of another, Art. 80 CISG was added at the Vienna out of an abundance of caution as a new rule which doesn't appear in the 1978 Draft. 818 Although no match-up of Art. 80 CISG with the 1978 Draft exists, and therefore no its counterpart in the Secretariat Commentary exists, there are various sources helping interpret this article. The general principle established under Art. 80 CISG, restricting remedies where non-performance is partly due to the conduct of the aggrieved party, can also be found in both Art. 7.1.2 UPICC and Art. 8:101(3) PECL. Further, both the UPICC and the PECL deal with the application of this general principle respectively in Art. 7.4.7 and Art. 9:504. All of these sources will do much in my discussions below.
As for the ways of contributing to the harm, it follows from Art. 7.1.2 UPICC, which reads: "A party may not rely on the non-performance of the other party to the extent that such non-performance was caused by the first party's act or omission or by another event as to which the first party bears the risk", that the contribution of the aggrieved party to the harm may consist either in its own conduct or in an event as to which it bears the risk. Art. 7.1.2 UPICC can be regarded as providing two excuses for non-performance. Two distinct situations are contemplated. In the first, one party is unable to perform either wholly or in part because the other party has done something which makes performance in whole or in part impossible. Another possibility is that non-performance may result from an event the risk of which is expressly or impliedly allocated by the contract to the party alleging non-performance. 819
The Official Comment on UPICC Art. 7.4.7 also makes it clear: "The contribution of the aggrieved party to the harm may consist either in its own conduct or in an event as to which it bears the risk. The conduct may take the form of an act (e.g. it gave a carrier a mistaken address) or an omission (e.g. it failed to give all the necessary instructions to the constructor of the defective machinery). Most frequently such acts or omissions will result in the aggrieved party failing to perform one or another of its own contractual obligations; they may however equally consist in tortious conduct or non-performance of another contract. The external events for which the aggrieved party bears the risk may, among others, be acts or omissions of persons for whom it is responsible such as its servants or agents." 820 However, when the contract is being made, a party is normally only fixed with the knowledge imputed to his employees or agents involved in making the contract. The employee or other person must have been someone who was, or who appeared to be, involved in the negotiation or performance of the contract. If a person not so related to the contract knows a relevant fact he may not be able to appreciate its relevance to the contract and thus might not report it. The burden of proving that the person for whom the contracting party is held responsible was not and did not reasonably appear to the other party to be involved in the making or performance of the contract rests on the first party. 821
Interestingly, Art. 8:101(3) PECL seems to contain only the first situation discussed above when it stipulates that: "A party may not resort to any of the remedies set out in Chapter 9 to the extent that it's own act caused the other party's non-performance." Nonetheless, Art. 9:504 PECL contains an analogous rule, which can be used to fill the gap in Art. 8:101(3) PECL: "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." This Article embodies the principle that an aggrieved party should not recover damages to the extent that its loss is caused by its own unreasonable behaviour. It embraces two distinct situations. The first is where the aggrieved party's conduct was a partial cause of the non-performance; the second, where the aggrieved party, though not in any way responsible for the non-performance itself, exacerbated its loss-producing effects by its behaviour. 822 To the extent that the aggrieved party contributed to the non-performance by its own act or omission he cannot recover the resulting loss. This may be regarded as a particular application of the general rule set out in Art. 8:101 (3). 823
In short, ways of contributing to harm embrace two distinct situations. The first is where the aggrieved party's conduct was a sole or partial cause of the non-performance; the second, where the aggrieved party, though not in any way responsible for the non-performance itself, exacerbated its loss-producing effects by its behavior, i.e. the non-performance is caused by an external event as to which the aggrieved party bears the risk.
The remedies available for non-performance depend upon whether the non-performance results from behaviour of the other party. The fact that the non-performance is caused by the creditor's conduct (act or omission) or the external events as to which it bears the risk, has an effect on the remedies open to the obligee. Generally, this effect may be total, that is to say that the creditor cannot exercise any remedy, or partial. The exact consequence of the creditor's behaviour will be examined with each remedy. 824
There is agreement among the legal systems that a non-performance which is due solely to the other party's wrongful prevention does not give the latter any remedy. These will mostly be breaches of contract on the part of the creditor. In most of the systems the party who has prevented performance will himself be the non-performing party against whom the remedies may be exercised. 825
Enderlein and Maskow submit that: The party in breach can, therefore, not assert any claims because of a breach of contract. It not only has no right to claim damages, as in the event of grounds for exemption in the meaning of Art. 79, it has no right to performance nor to avoidance. When the debtor is hindered in performing in time by the party in breach, e.g. because of belated communication of instructions for dispatch, the seller cannot dispatch the goods, the party in breach will have to accept the late delivery without having the right to require any sanction. When the party in breach has caused the non-conform or defective delivery, e.g. sub-supply of material having non-apparent defects, he cannot require delivery of substitute goods or repair or reduction of the price, etc. The acts by the creditor which cause the breach of contract will generally represent themselves as breach of contract committed by the former so that the debtor being the creditor of those acts can assert the respective claims. He will have the right to claim damages only to the extent to which the party in breach cannot rely on impediments. Among the rest of the claims, which are retained in any case, the right to avoid the contract is of special relevance. In asserting that right, the fate of the blocked contract can be decided once and for all. 826
Peter Schlechtriem confirms: "Article 80 releases a party from his obligations where the other party has impaired his performance. [...] In such cases, an obligor will generally be excused from liability on the basis of Article 79(1). But Article 80 reaches much further. Since Article 80 exempts all claims against the obligor, it gained importance when a proposal was rejected which would have extinguished the right to demand specific performance in a case where Article 79 exempts a party for liability for damages. If the buyer frustrated performance, such as by not providing drawings required for production or by not procuring an import permit, he can neither demand specific performance nor declare an avoidance. He also may not reduce the price for defects caused by mistakes in the drawings he provided. Of course, the obligor is excused only to the extent of the hindrance caused by the obligee. The obligee need not be responsible -- in the sense of Article 79 -- for the impairment he caused." 827
Although it is said that "the view prevailed that it [Art. 80 CISG] is more closely related to exemptions and duty to cooperate in cases of impediments", 828 the Official Comment on Art. 7.1.2 UPICC stresses that, when the interference or contribution rule applies, the relevant conduct doesn't become excused non-performance but loss the quality of non-performance altogether. 829
As discussed above, the conduct of the aggrieved party or the external events as to which it bears the risk may have made it absolutely impossible for the non-performing party to perform. In addition, it is also contemplated there is the possibility of one party's interference acting only as a partial impediment to performance by the other party and in such cases it will be necessary to decide the extent to which non-performance was caused by the first party's interference and to which it was caused by other factors. 830
In application of the general principle established by Art. 7.1.2 UPICC (corresponding to the solution adopted by Art. 80 CISG) which restricts the exercised of remedies where non-performance is in part due to the conduct of the aggrieved party, Art. 7.4.7 UPICC limits the right to damages by providing that: "Where the harm is due in part to an act or omission of the aggrieved party or to another event as to which that party bears the risk, the amount of damages shall be reduced to the extent that these factors have contributed to the harm, having regard to the conduct of each of the parties." This article, together with its Official Comment can therefore be helpful in the interpretation of Art. 74 of the CISG read together with Arts. 77 and 80 in establishing the extent to which the defaulting party is excused from liability for damages due to the conduct of the aggrieved party.
Generally, it would indeed be unjust for an aggrieved party to obtain full compensation for harm for which it has itself been partly responsible. 831 It would be contrary to good faith and fairness for the creditor to have a remedy when it is responsible for the non-performance. The most obvious situation is the so-called mora creditoris, where the creditor directly prevents performance (e.g. access refused to a building site). But there are other cases where the creditor's behaviour has an influence on the breach and its consequences. For example, when there is a duty to give information to the other party, and the information given is wrong or incomplete, the contract is imperfectly performed. In other cases where there is also a non-performance by the debtor, the creditor may exercise the remedies for non-performance to a limited extent. When the loss is caused both by the debtor - which has not performed - and the creditor - which has partially caused the breach by its own behaviour - the creditor should not have the whole range of remedies. 832 It is clear that in such a case the amount of damages ought to be reduced proportionally. Such apportionment of damages will often involve a judicial discretion in weighing the different facts contributing to the eventual damages suffered. 833 However, the determination of each party's contribution to the harm may well prove to be difficult and will to a large degree depend upon the exercise of judicial discretion. In order to give some guidance to the court this article provides that the court shall have regard to the respective behaviour of the parties. The more serious a party's failing, the greater will be its contribution to the harm. 834
More specifically, Enderlein and Maskow present several principles which could, in their view, be inferred from the regulation governing the most important case groups as follows: (a) When the consequences of the different causes can be delimited from one another, every cause has to be attributed to its legal remedy. A distinction will, however, have to be made of what caused the breach of contract. (b) When a breach of contract by the debtor and an act or omission by the creditor act in combination having the same effect, the act or omission of the creditor dominates. But exemption will become effective only in regard to the conduct concerned. The party in breach can, therefore, not claim a breach of contract because of the consequences of the act or omission of the creditor. The result can be a stalemate in which the contract is neither performed nor can it be avoided by any of the parties. (c) The last case to be considered here is the one where the failures of the two parties are so closely interwoven that their effects cannot be delimited and attributed to the breach of contract which is the result of that situation, such as when the buyer provides drawings which cannot, in part, be realized, and the seller, without referring back to the buyer, proceeds with modifications in the realization which do not meet the intentions of the buyer. In their view, it is appropriate in these cases to reduce the legal consequences which would be the result of a breach of contract where the causes of the breach are not taken into consideration. The reduction can be merely quantitative as in the case of damages, insofar also grounds for exemption on the part of the debtor would have to be, taken into account. But it may also take on a qualitative character when the right to avoidance of the contract is turned into a claim for damages, which might then be thwarted because of grounds for exemption, for it is assessed that the breach of contract because of the act or omission of the creditor has passed the threshold toward a fundamental breach. Or, the right to performance may be judged to have elapsed and the part of the debtor in the breach of the contract is paid off because of a claim for damages by the creditor. 835
Finally, it must be noted that Art. 80 CISG covers only one aspect of the issue at stake, which deals with the loss suffered by the aggrieved party which results from his own unreasonable behavior. There is another situation where the loss resulting from the non-performance could have been reduced or extinguished by appropriate steps in mitigation. This is clear from the fact that the issue of contributory conduct is dealt with separately in the UNIDROIT Principles in Art. 7.4.7, whereas the mitigation duty is dealt separately with in Art. 7.4.8 (respectively dealt with in Art. 9:504 and Art. 9:505 PECL) which is to be focused below.
810. Supra. note 35.
811. See Jacob S. Ziegel in "Report to the Uniform Law Conference of Canada on Convention on Contracts for the International Sale of Goods". Available online at ‹http://www.cisg.law.pace.edu/cisg/text/ziegel80.html›
812. See Fouchard, Gaillard, Goldman, International Commercial Arbitration, Emmanuel Gaillard and John Savage ed., The Hague (1999); p. 820. TLDB Document ID: 130600.
813. See ICC Award No. 6363, YCA 1992, p. 201; TLDB Document ID: 206363. For more on the interpretation of estoppel, see Black, Henry Campell, Black's Law Dictionary, 6th ed., St. Paul (1990); TLDB Document ID: 100700.
814. See English Court of Exchequer, Cave v. Mills (1862), Hurlstone and Norman, 913 at 927.
815. Principle No. I.7 of the TLDB List.
816. See ICJ North Sea Continental Shelf Case, Separate Opinion of Judge Fouad Ammoun, ICJ Rep. (1969); pp. 120-121. TLDB Document ID: 300300.
817. Supra. note 8, p. 335.
818. This provision is based on a proposal by the German Democratic Republic. See A.Conf. 97/C.1/L.217 (O.R. 134). This provision resembles ULIS Art. 74 (3) which states: "The relief provided by this Article for one of the parties shall not exclude the avoidance of the contract under some other provision of the present Law or deprive the other party of any right which he has under the present Law to reduce the price, unless the circumstances which entitled the first party to relief were caused by the act of the other party or of some person for whose conduct he was responsible."
819. See Comments 1, 2 on Art. 7.1.2 UPICC.
820. See Comment 2 on Art. 7.4.7 UPICC.
821. See Comment and Notes to the PECL: Art. 1:305. Comment C. Available online at ‹http://www.cisg.law.pace.edu/cisg/text/peclcomp80.html›
822. See Comment and Notes to the PECL: Art. 9:504. Comment A. Available online at ‹http://www.cisg.law.pace.edu/cisg/text/peclcomp74.html›
823. Ibid., Comment B.
824. See Comment and Notes to the PECL: Art. 8:101. Comment B(iii). Available online at ‹http://www.cisg.law.pace.edu/cisg/text/peclcomp80.html›
825. Ibid., Note 3.
826. Supra. note 8, p. 336.
827. Supra. note 5, p. 105-106.
828. See Jelena Vilus in "Provisions Common to the Obligations of the Seller and the Buyer": Petar Sarcevic and Paul Volken eds., International Sale of Goods: Dubrovnik Lectures, Oceana (1986); p. 256. Available online at ‹http://www.cisg.law.pace.edu/cisg/biblio/vilus.html›
829. See Comment 1 on Art. 7.1.2 UPICC.
831. See Comment 1 on Art. 7.4.7 UPICC.
832. Supra. note 62.
833. Supra. note 35.
834. Supra. note 64.
835. Supra. note 8, pp. 338-339.
Eric von Hippel
Erik S. Raymond