5.4 EFFECTS OF EFFECTIVE NOTICE

5.4.1 Right to Inquire vs. Duty to Accept Cure

As discussed above, the right to cure under CISG Art. 48(1) theoretically could be cancelled by the buyer's avoidance of the contract. The language of Arts. 48(1), 49(2)(b)(iii) and 50 as well as the legislative history of the provision demonstrates that, even in such a situation where the buyer has not declared the contract terminated and the seller, after becoming aware of the defect, informs the buyer of his readiness to cure, the buyer is entitled to disregard the seller's offer to cure and terminate the contract on account of seller's fundamental breach. Thus, under the CISG when the buyer has the right to avoid a contract but does not exercise it, the seller is left with uncertainty.  ²⁸⁰ 

Therefore, Art. 48(2) provides that: "If the seller requests the buyer to make known whether he will accept performance and the buyer does not comply with the request within a reasonable time, the seller may perform within the time indicated in his request". Thus the seller intending to cure may end the uncertainty by sending a request (which is effective upon receipt) to the buyer to ask for clarification as to whether the buyer will accept the cure. Furthermore, Art. 48(3) CISG stipulates: "A notice by the seller that he will perform within a specified period of time is assumed to include a request, under the preceding paragraph, that the buyer make known his decision." Thus, the assumed interest of the seller also serves to retain the contract. The buyer has to respond to the communication of the seller, even if no request in accordance with Art. 48(2) was added to it.  ²⁸¹  If the buyer does not answer within a reasonable time, the seller has the right to perform and the buyer has an obligation to accept performance within the time indicated in the seller's request.  ²⁸² 

By contrast, the UNIDROIT Principles doesn't require the non-performing party to inquire the aggrieved party whether the latter will accept the cure. Insofar as the non-performing party has the right to cure there should be no need to request information as to whether the aggrieved party will accept performance. The aggrieved party is in that case obliged to accept the cure. This is especially confirmed by the fact that the non-performing party's right to cure is not precluded by notice of termination under the UNIDROIT Principles. Under the UNIDROIT Principles, the decision to invoke Art. 7.1.4 rests on the non-performing party. Once the aggrieved party receives effective notice of cure, it must permit cure and, as provided in Art. 5.3, cooperate with the non-performing party. For example, the aggrieved party must permit any inspection that is reasonably necessary for the non-performing party to effect cure. If the aggrieved party refuses to permit cure when required to do so, any notice of termination is ineffective. Moreover, the aggrieved party may not seek remedies for any non-performance that could have been cured.  ²⁸³ 

5.4.2 Suspension of Inconsistent Remedies

The second sentence of Art. 48(2) CISG requires: "The buyer may not, during that period of time, resort to any remedy which is inconsistent with performance by the seller." Similarly, Art. 7.1.4(3) UPICC stipulates: "Upon effective notice of cure, rights of the aggrieved party that are inconsistent with the non-performing party's performance are suspended until the time for cure has expired."

Thus, when a notice of cure (or request as to whether the buyer will accept the cure) from the non-performing party has been given and gets effective upon its reaching the other party (if he is a party to a CISG contract, only if he has not declared avoidance or remains silent on the former's request), the aggrieved party may not exercise any remedies inconsistent with the non-performing party's right to cure during the period indicated in the request or notice until it becomes clear that a timely and proper cure has not been or will not be effected. Inconsistent remedies include giving notice of termination, entering into replacement transactions and seeking damages or restitution.  ²⁸⁴ 

In this way the aggrieved party is, at least temporarily, deprived of his right to invoke certain remedies such as termination. He cannot declare the contract avoided during the period of time offered by the non-performing party. This rule clearly shows the underlying idea of the right of the non-performing party, i.e. to keep to the contract, if possible and thus balance interests of both parties and avoid unnecessary waste.

5.4.3 Retained Rights of the Aggrieved Party

The second sentence of Art. 48(1) CISG stipulates that "the buyer retains any right to claim damages as provided for in this Convention". Thus, the right to claim damages, e.g. as a result of delay, does not lapse on the ground that the seller has performed in the end. But the curing of a failure to perform may have an influence on the amount of the damage claimed. Also in the case of a cure, damage may be claimed to compensate for a possible stoppage in production.  ²⁸⁵ 

Similarly, Art. 7.1.4(5) UPICC reads: "Notwithstanding cure, the aggrieved party retains the right to claim damages for delay as well as for any harm caused or not prevented by the cure." Under this provision, even a non-performing party who successfully cures is liable for any harm that, before cure, was occasioned by the non-performance, as well as for any additional harm caused by the cure itself or by the delay or for any harm which the cure does not prevent.  ²⁸⁶ 

Finally, in accordance with Art. 7.1.4(4) UPICC, the aggrieved party may "withhold performance pending cure". Although the CISG is silent on this issue, it is logically inferred that the buyer may withhold his own performance during the time for the seller's cure.