At the outset, it is to be mentioned that with regard to element of foreseeable substantial detriment, both the UNIDROIT Principles and the PECL adopt a substantially identical approach to the CISG, therefore as far as this element is concerned, the following discussion will focus on CISG Art. 25.
The concept of "fundamental" breach is already to be found in Art. 10 ULIS but was criticised for being too subjective. Then the definition in Art. 25 introduced more objective criteria and can be seen as a compromise between a strict subjective test and a strict objective test. The hypothetical will in Art. 10 ULIS was eliminated and instead a material test was adopted in Art. 25 CISG. 383 However, a "fundamental" breach had to be drafted in general terms since such a concept cannot specify all possible circumstances: 384 "Article 25 does not provide any examples of events that constitute such a fundamental breach. Instead, general terms and phrases are used to define fundamental breach, such as 'detriment', 'substantial deprivation', and 'foreseeability'. These terms hardly allow the parties to a sales contract, in case of dispute, to determine ex ante (before one of the parties deems the contract avoided) whether a breach was fundamental." 385
In such a situation, there is a need for certainty and predictability since parties must use different measures to effect either a contract avoidance or continuance. 386 "As a result, the Convention adopts a solution similar to the one laid down in the German law in § 286(2) and § 326(2) of the German Civil Code (for the special case of delay) and in § 325(1) sentence 2, and has further been developed by courts for other cases of breach of contract: There is a fundamental breach of contract, which justifies avoidance or the demand for substitute goods, if the injured party has no further interest in the performance of the contract after the particular breach. However, the determination of this interest depends entirely on the individual terms of the contract. The question of whether damages caused by a delay in delivery amount to a [fundamental] breach of contract does not depend on the amount of the damages, but rather on the terms in the contract concerning the time of delivery. Non-conforming goods only give rise to a right of avoidance if the contract expressly states that non-conformity is of special interest to the buyer - such as in the case of an express warranty - or if the terms of the contract make this clear. The late delivery of goods with a quoted market price is normally considered a fundamental breach. The question of whether goods which were not packaged according to the agreement presents a fundamental breach depends not only on whether the goods were damaged or at least endangered because of the packaging, but also on whether the packaging explicitly demanded by the buyer was necessary for further shipment or resale. Neglecting to insure the goods during transport, if the seller was obligated to do so by contract, can be a fundamental breach of contract even if the goods were not damaged, if the lack of insurance deprives the buyer of the possibility of reselling the goods in transit" 387
It is also to be noted that the uncertainty created by the definition of fundamental breach can be avoided through a more specific avoidance regime negotiated by the parties or by making use of the Nachfrist avoidance mechanism (see Chapter 4). 388 These opportunities, however, do not resolve the uncertainty inherent in the definition of fundamental breach. Moreover, the aggrieved party cannot anticipate every problem that might arise. Thus, the circumstances which give rise to fundamental breach still must be determined. For this purpose, the definition of fundamental non-performance can be divided in two elements: first, a detriment such as substantially to deprive the other party of what he is entitled to expect under the contract -- the detriment component -- and second, the foreseeability of the detriment -- the foreseeability component. 389
The elements which define a substantial detriment are extremely complex. In this point, the substantial detriment itself is characterized by three aspects: in the end, and that is the decisive element, there has to be a relevant detriment to the aggrieved party; it has to be fundamental; and proportionate to the expectations justified under the contract. 390
The first foundation for a breach being fundamental is that it must cause the non-breaching party detriment. The Convention itself does not contain any definition of the term "detriment". Nor does it give any example of detriment that rises to the level of a fundamental breach.
In the absence of a precise definition, Jafarzadeh interprets the term "detriment" in light of the Convention's legislative history as well as its intended purpose. He quotes the Working Group report stressing that the term detriment "had to be interpreted in a broader sense and set against the objective test of the contents of the contract itself"; infers from the Secretariat Commentary that it is possible to conclude that the drafters intended the word "detriment" to be synonymous with "injury" and "harm", and it can also be exemplified by monetary harm and interference with the other activities; and further clarifies the term by considering its purpose, i.e. simply to allow the injured party to terminate the contract, demand substitute goods, or to prevent the risk of loss from passing to the buyer, that these purposes clearly require a broad sense which is beyond the realm of compensation for damages. Accordingly, Jafarzadeh submits that, keeping in mind both its history and purpose, the term has to be interpreted in a broad sense and any narrow construction must be excluded. 391
In other words, a definition of "detriment" cannot be confined to an actual material loss or damage but has to be interpreted in a broader sense including also immaterial detriments such as losing a customer, losing resale possibilities or being brought into disrepute etc. 392 "Detriment basically means that the purpose the aggrieved party pursued with the contract was foiled and, therefore, led to his losing interest in the performance of the contract [...]. From this follows his interest in avoiding the contract. Though in commercial relations most things can be reduced to a damage, this is not the central issue here. On the contrary, when compensation for damages can serve as the adequate remedial action, this should be an indication of the fact that there is no detriment in the meaning of the Convention. It will be the case, however, when the aggrieved party in remaining bound to the contract is hindered in his commercial or manufacturing activities in such a way that he can no longer be expected to continue holding on to it. Hence, detriment can be a very complex phenomenon. But it must be in existence at the time of the avoidance of the contract. What matters most in commercial relations are economic results and not formal fulfilment of obligations." 393
In short, it is possible to conclude that the CISG drafters simply and naturally intended the word "detriment" to be interpreted in a broader sense, and that the determination of a fundamental breach was to be made on a case-by-case basis. Detriment just fills the modest function of filtering out certain cases, as for example where breach of a fundamental obligation has occurred but not caused injury.
The second major requirement for a breach to be regarded as substantial detriment is that the detriment caused by the breach must have some degree of seriousness so that it substantially deprives the victim of breach of what he is entitled to expect under the contract. Unlike the nature of detriment, which was not much at issue either by UNCITRAL's Working Group or in the Diplomatic Conference, determining "substantiality" causes major problems because it is open to various interpretations and each interpretation may conflict with certain provisions in the Convention or render them meaningless.
For instance, it was even argued that to define "fundamental" by "substantial" is an idem per idem definition and therefore mere tautology: "As to the substantiality, there is, no doubt, a tautology between substantial and fundamental as characterizing a breach of contract. That repetition seems to have been unavoidable to ensure congruence of the definiens and the definiendum." 394 Another commentator submits, however, that Arts. 71 and 72 distinguish between a threat of a fundamental breach and a threatened failure to perform a "substantial part" of contractual obligations. The latter triggers only a right to suspend performance whereas the former gives the more radical power to avoid the contract, suggesting that a breach may be "substantial" without being "fundamental". 395 Despite these ambiguities, it will become obvious that the relevant detriment is not a static element, but in many instances occurs only when the breach of contract continues. Hence, one of the greatest difficulties in analyzing the fundamentality of a breach is to determine the time when the detriment has become so great that the prerequisites are met. 396
Anyway, the term "substantial" detriment is not sufficiently clear and the Convention seems to have left the question of determining the sufficient substantial deprivation of the aggrieved party from his contractual expectations to the tribunals to decide in the light of the circumstances surrounding any particular case. Therefore, it is eventually for the courts to develop rules in their case law that can be relied on by the parties. In some cases, courts determining fundamental breach have in particular looked at the gravity of the consequences of the breach in the light of: (a) the contract's overall value and the monetary loss suffered by the aggrieved party; (b) the fitness of the goods for the intended purpose and (c) whether or not an award of damages would adequately protect the aggrieved party, and other interference caused by the breach into his activities. 397 Of course, the international origin of the CISG and the fact that the "international legislator" attempted to find autonomous, original terms without using a single system of laws or legal terminology, and the need to promote uniformity in its application, make an autonomous method of interpretation necessary. This means, above all, not to proceed to interpret it from national juridical constructions and terms. 398
Therefore, as Jafarzadeh does with the term "detriment" mentioned above, the term "substantially" should also be autonomously interpreted in the light of the Convention's legislative history, as well as its intended purpose. In the light of the legislative history and its intended purpose of the CISG, the degree of seriousness of the detriment resulting from the breach "should be considered as having quantitative as well as qualitative meaning". 399 The Secretariat Commentary also might shed the light on the meaning of "substantial detriment": "The basic criterion for a breach to be fundamental is that 'it results in substantial detriment to the injured party'. The determination whether the injury is substantial must be made in the light of the circumstances of each case, e.g., the monetary value of the contract, the monetary harm caused by the breach, or the extent to which the breach interferes with other activities of the injured party." 400 In this point, however, "[o]ne must consider that the Secretariat Commentary was written prior to the introduction of the refined expectation interest of Article 25. For the breach to be fundamental under Article 25, the aggrieved party must suffer a detriment which must be such as to 'substantially to deprive him of what he is entitled to expect under the contract'. From the history of Article 25 it is clear that -- unlike the drafts -- it does not refer to the extent of the damage, but instead to the importance of the interests which the contract and its individual obligations actually create for the promisee." 401 In other words, the final formulation of Art. 25 has to be understood not as relying on the amount of actual damages, but rather as meaning that the special interests of the creditor should be the yardstick to measure the seriousness of the breach. 402 This means that there is a fundamental breach of contract, if the injured party has no further interest in the performance of the contract after the particular breach; and thus suggests not merely a substantial or material breach of contract, or one which substantially impairs the value of the contract to the injured party, but a breach which goes "to the root" of the contract. 403
However, on the one hand, in determining the substantiality of the detriment one factor which should be taken into account is the extent to which the detriment to the aggrieved party is the result of its own conduct. If the detriment was substantially due to its own conduct it might be inappropriate to say that the non-performance was fundamental. In other cases it may be appropriate to permit termination but to hold that the aggrieved party's conduct amounted to a non-performance itself for which the other party may claim damages. 404 On the other hand, although the right to termination remains unimpaired even in case of impediments where the non-performing party is excused (the right is given there above all when there is a fundamental breach of contract), it is not excluded that the existence of impediments is taken into consideration where a breach of contract is classified as fundamental. From a doctrinal point of view, this may be substantiated by the principle of good faith. A point in favour of this opinion is furthermore that the definition of a fundamental breach of contract in Art. 25 in a certain way refers to the conduct of the party in breach, even though it relates mainly to the effects the breach of contract has on the other party. The expectations of the latter, which is to be discussed below, may, however, be influenced by the possibility of impediments. 405
After all above, the main question still remains: At what point does deprivation resulting from detriment reach the threshold of substantial deprivation? The legislative history of the provision shows that it was controversial. 406 Eventually, in order to reconcile the different proposals, it was decided that for a breach to be fundamental, it must result in such detriment as substantially to deprive the victim of breach of what he is entitled to expect under the contract.
According to Art. 25 CISG, the fundamentality test is satisfied if the aggrieved party can prove that a substantial deprivation of his expectation from the performance of the contract has occurred or will occur because of the breach. The major emphasis is laid upon the contractual expectation of the injured party: "of what he is entitled to expect under the contract". The expectation of a party under a contract is a central criterion to the determination whether a breach of contract is detrimental. The expectation interest adds an objective criterion to the definition since it is the contract that determines the party's obligations and it is also the contract that determines the importance of these duties. Consequently, it is not the personal and subjective interest of the injured party that matters but the expectation that can be assessed by looking at the contract itself. 407 Thus, to meet the substantial deprivation component, the expectations of the aggrieved party have to be discernible from the contract. In other words, to determine the degree of a given detriment, to draw the line between substantial and insubstantial, is no longer left to the judges' sole and sovereign appreciation, but tied to the expectation of the injured party, while those expectations, in turn, are not left to the party's inner feelings but instead tied to the terms of the existing contract. 408
However, in relying on the phrase "of what he is entitled to expect under the contract", one should be careful. The extent to which a party suffers an injury to its expectations will be found not only in the language of the contract but in the circumstances surrounding the contractual relationship of the parties. The terms of the contract is not the only source for the aggrieved party's expectation interests. For instance, as mentioned above, the aggrieved party's expectations may be influenced by the possibility of impediments. Nonetheless, it does not mean that the assessment of the existence of substantial detriment will depend on the circumstances of any individual case, even those circumstances take place after the time of making the contract. If some particular circumstances are significant for a contracting party, he should bring them into the other party's attention at the time of contract. As will be seen in detail below, the test of the aggrieved party's expectations is further limited by the qualification, which takes account of what the non-performing party could reasonably foresee. Accordingly, it is fair to say that the Convention has not left the determination of the degree of a given detriment, and drawing the line between substantial and insubstantial deprivation, to the judge's sole and sovereign appreciation, but requires him to decide in the framework of the contract and the circumstances that existed at the time it was made. 409
As discussed above, where the effect of non-performance is substantially to deprive the aggrieved party of the benefit of its bargain, so that it loses its interest in performing the contract, then in general the non-performance is fundamental. This is not the case, however, where the non-performing party did not foresee and could not reasonably have foreseen those consequences. According to the second part of Art. 25, a breach of contract causing material prejudice is not fundamental if the party in breach "did not foresee and a reasonable person of the same kind in the same circumstances would not have foreseen such a result". This means that where a breach of contract is classified as fundamental the non-performing party must have foreseen the detriment, as well as a reasonable person of the same kind in the same circumstances.
It is assumed that a party who knows the far-reaching consequences of a breach of contract for the other party, if he is not sure of his possibility to fulfil, either does not conclude the contract at all or makes increased efforts to prevent its violation. Therefore, the fundamentality of a breach is made dependent not only on its consequences but also on its foreseeability by the other party. The same consideration can be found in Art. 74 regarding the determination of the amount of damages. The rights of the aggrieved party are thus limited in the event that the other party did not foresee special consequences which make up the fundamentality of the breach of contract. It results that the parties should draw their respective attention to such consequences either in the contract itself or through additional information to be given in principle until the conclusion of the contract, e.g. particularly serious consequences in the case of acceptance not in time because of lack of storage facilities, substantiality of proof of technical check-up for re-sale of the goods. 410
This second part of Art. 25 is composed of a subjective and an objective test of foreseeability; it is meant to eliminate a "fundamental" breach where the substantial detriment occurs unexpectedly.
The concept of foreseeability developed out of Art. 10 of ULIS which completely based fundamental breach on the foreseeability of events. Art. 25 of the present Convention, however, adds an objective test into the determination of whether a breach is fundamental by asking two questions: (a) Did the party in breach foresee that the breach of contract would result in a substantial deprivation of the non-breaching party? and (b) Would a "reasonable person of the same kind in the same circumstances" have foreseen such a result? These two questions will require the court to view the contract from the subjective perspective of the party-in-breach, as well as from the objective perspective of a reasonable merchant of the same kind in the circumstances of the party in breach. These subjective and objective elements are cumulative, not alternative. The outcome is that a breach would be regarded as fundamental only where courts or tribunals are satisfied that both elements are proved. 411
The first requirement for negativing the claim for breach under Art. 25 is whether or not the party in breach actually foresaw the harm caused by the given breach. Whether the detriment caused by the breach was actually foreseeable by the non-performing party depends on his knowledge of the facts surrounding the contract. Generally, foreseeability may depend on the party's knowledge and evaluation of the relevant facts, his experience, his perception of the circumstances, etc. 412 However, this requirement is a purely subjective one which focuses solely on the personal position of the breaching party. It cannot be inferred that one party indeed did not foresee the serious consequences of his breach of contract because this could be considered as professional competence below average. An objectivization is, therefore, made here. 413 As parties in breach are not likely to admit that they foresaw the detrimental result, the objective criterion of a "reasonable person standard" was introduced. Here the question has to be asked whether a "reasonable person of the same kind in the same circumstances would not have foreseen the result". This is an objective test requiring the party in breach to show that a reasonable person of the same kind in his circumstances would not have foreseen that the given default would have caused the injuries in question to the innocent buyer. Although this test is meant to add objectivity to the definition, it remains rather vague since numerous characteristic features have to be taken into account to determine a person of the same kind and it is suggested that the whole socio-economic background including religion, language, etc. must be taken into consideration. 414
In particular, since parties to international sales contracts are presumed to be merchants, a "reasonable person" can be construed as a reasonable merchant. A reasonable merchant would include "all merchants that satisfy the standards of their trade and that are not intellectually or professionally substandard". The features that may characterise reasonable merchants include: (a) The merchant's degree of skill and professional qualifications (for example specialized licenses); (b) The merchant's professional associations or affiliations which may set competency standards; (c) The length of the merchant's business experience; and (d) The geographic region in which the merchant does business. The phrase "of the same kind" is the first element of precision intended to mitigate the effects of subjectivity of the first criterion of foreseeability. The meaning of the phrase has to be apparently inferred from the purpose of the clause. It is provided to tailor a reasonable person to the likeness of the party in breach. The hypothetical merchant ought to be engaged in the same line of trade, doing the same function or operations as the party in breach. Not only must business practices be taken into account, but the whole socio-economic background as well, including average professional standards. A further element is also provided by Art. 25 for the purpose of precision. Under this requirement, the court must take into account the reasonable merchant "in the same circumstances", in which the party in breach was. By this requirement, the whole range of facts such as conditions on world and regional markets, national legislation, prior trade usage between the parties, etc. must be taken into account to determine whether a reasonable person would have foreseen a detrimental result. 415
In short, in order to determine foreseeability, the subjective and objective perspective of the party in breach must be considered. Additionally, the objective perspective of the reasonable merchant in the breaching party's position is relevant. In other words, the party in breach is considered to have been able to foresee the consequences of the breach if, when objectively viewed, it is determined that he could or should have known them. But what happens when the breaching party had special knowledge and thus could have foreseen more than the average merchant? The conjunction and, makes it possible to conclude that such special knowledge cannot be taken into account, allowing the breaching party to escape a finding of fundamental breach by hiding behind the paradigm of the reasonable person of the same kind in the same circumstances. 416
Unlike Art. 10 ULIS which was quite clear that the time point should have been "the time of the conclusion of the contract", the language of Art. 25 does not specify when the result of a fundamental breach should be or should have been foreseen, and it remains uncertain whether the time of the contract conclusion is crucial to assess foreseeability or whether foreseeability of a detrimental result occurring after the conclusion of contract also has to be taken into consideration.
Again, Art. 25 is open for interpretation on this point and has generated much controversy. It has been suggested that if a detrimental result was not foreseeable at the time of the conclusion of contract, and becomes foreseeable after that, the party in breach cannot claim that the detrimental result was unforeseeable. According to this view any foreseeability of a substantial detriment before the time of breach but after the time of conclusion is to be taken into consideration. Others suggest that foreseeability of detrimental results after the conclusion of contract can only be taken into consideration in exceptional cases and only up to the time when the preparations for performance of the contract performance started. These views consider the overall situation of the contract and leave room for a more individual evaluation of the circumstances. The relevant information often might be passed on to the party in breach after the conclusion of the contract and it is argued that the drafters of the Convention meant to provide courts with a rather flexible provision. The legislative history demonstrates that the omission was intentional, designed to permit courts to decide the issue on a case by case basis. 417
In other words, while it is held that generally the time of the conclusion of the contract should be referred to, it is considered possible that in exceptional cases subsequent information should be taken into account as well. There is no reason to impose an interpretation on Art. 25's foreseeability requirement that ignores post-formation developments. Such information could be given until the actual and/or required commencement of the preparation in view of performance so that the other party can still adapt itself to it. This seems justified because it can be doubted that the information available at the time of the conclusion of the contract has really made possible the foreseeability or required foresight of the consequences. This doubt may be removed when subsequent information is taken account of. When, for instance, in the case of a contract for delivery of consumer goods to be manufactured the buyer signals immediately after the conclusion of the contract that the imprint of agreed data on the packaging is of decisive importance because the goods otherwise could not be sold in the envisaged sales area, this will have to be regarded as sufficient for the violation of the respective obligation to be characterized as fundamental. 418
In short, foreseeability can be determined at any time up to the point of breach, and not only at the time of contract formation. The point at which foreseeability is determined could be when: (a) the contract is concluded; (b) performance begins; or (c) the defaulting party decides to breach. Unlike Art. 74, which deals with damages, Art. 25 was never drafted with the following words: "at the time of the conclusion of the contract". The absence of such words was not due to an inadvertent omission, because the drafters specifically rejected a proposal to make the "vantage point" for foreseeability only at the time of contracting. This clearly indicates that the point for foreseeability in Art.25 is not limited to when the contract is formed. 419 Accordingly, one may argue that the question was deliberately left unanswered because the working groups could not agree on the answer. They therefore left the question to the courts again.
Finally, it is important to mention that the burden to prove unforeseeability lies with the breaching party. The mere allegation, however, does not suffice but, as explained below, the party in breach must prove his allegation.
The legislative history of Art. 25 reveals that the burden of proving unforeseeability of loss was originally on the party in breach. There was a consensus that this burden should be on the party in breach because of the logical difficulty of requiring the non-breaching party to prove what the party in breach actually foresaw or a reasonable man in its position could have foreseen. As was seen, a party alleged to be in breach thus has a difficult burden, but if he can show that he did not foresee the drastic effects of his default, and can prove that a reasonable merchant facing the same market conditions would not have foreseen such results, then the party claiming breach will not be able to rely on the other party's breach for termination. 420
Thus, it is the responsibility of the aggrieved party to prove that he suffered a detriment that substantially deprived him of what he is entitled to expect under the contract. Where such detriment and substantial deprivation are established, the burden of proof is said to shift to the party in breach. To successfully invoke unforeseeability, the party in breach should prove two points: first, that he himself in no way anticipated the substantial detriment caused by the breach; and second, that a reasonable person in his place would not have done so. If the party in breach can prove that he did not foresee the substantial loss of expectation interest that the breach caused the non-breaching party, and can prove that a reasonable person similarly situated, facing the same market conditions, would not have foreseen that the breach would cause a substantial loss of expectation interests, there is no fundamental breach. 421 It appears that the foreseeability element has two functions: "first, a substantive function, i.e., the breaching party's knowledge or foreseeability of the harsh consequences of the breach; secondly, a procedural function, since the element of foreseeability shifts the burden of proof to the party in breach when that party claims that neither he nor any reasonable person of a similar class and in the same circumstances could have foreseen the result." 422
In short, the aggrieved party cannot terminate the contract if the non-performing party can show that it did not foresee, and could not reasonably have foreseen, that the non-performance was fundamental for the other party. 423
383. Supra. note 2. Art. 10 ULIS reads: "For the purposes of the present Law, a breach of contract shall be regarded as fundamental wherever the party in breach knew, or ought to have known, at the time of the conclusion of the contract, that a reasonable person in the same situation as the other party would not have entered in to the contract if he had foreseen the breach and its effects."
384. See John HONNOLD, Uniform Law for International Sales under the 1980 United Nations Convention, 2nd edition, Deventer-Boston (1991); p. 181.
385. Supra. note 1, pp. 185-186.
386. The mercantile need for predictability and certainty is emphasized by Kenneth C. Randall and John E. Norris in "A New Paradigm for International Business Transactions": 71 Wash. U.L.Q. (1993); p. 599, 609.
387. See Peter Schlechtriem, Uniform Sales Law - The UN-Convention on Contracts for the International Sale of Goods, Manz, Vienna (1986); pp. 59-60. Available online at ‹http://www.cisg.law.pace.edu/cisg/biblio/schlechtriem-25.html›
388. Supra. note 1, p. 187.
389. See BABIAK, Andrew in "Defining 'Fundamental Breach' under the United Nations Convention on Contracts for the International Sale of Goods": 6 Temple International Law Journal (1992); p. 113, 118.
390. Supra. note 4.
391. See Mirghasem Jafarzadeh in "Buyer's Right to Withhold Performance and Termination of Contract: A Comparative Study Under English Law, Vienna Convention on Contracts for the International Sale of Goods 1980, Iranian and Shi'ah Law" (2001). Available online at ‹http://www.cisg.law.pace.edu/cisg/biblio/jafarzadeh1.html›
392. See M. WILL in Commentary on the International Sales Law: The 1980 Vienna Sale Convention, Cesare Massimo Bianca and Michael Joachim Bonell eds. (1987) [hereinafter Bianca and Bonell]; p. 209.
393. Supra. note 4, p. 113.
395. See Harry M. Flechtner in "Remedies Under the New International Sales Convention: The Perspective from Article 2 of the U.C.C.": 8 Journal of Law and Commerce (1988); pp. 53-108. Available online at ‹http://www.cisg.law.pace.edu/cisg/biblio/flecht.html›
396. Supra. note 15.
397. Supra. note 1, pp. 238 - 245.
398. See Hossam El-Saghir in "Fundamental breach: Remarks on the manner in which the Principles of European Contract Law may be used to interpret or supplement Article 25 CISG" (2000). Available online at ‹http://www.cisg.law.pace.edu/cisg/text/peclcomp25.html›
399. See Anna Kazimierska in "The Remedy of Avoidance under the Vienna Convention on the International Sale of Goods": Pace Review of the Convention on Contracts for the International Sale of Goods, Kluwer (1999-2000); p. 106. Available online at ‹http://www.cisg.law.pace.edu/cisg/biblio/kazimierska.html›
400. See Secretariat Commentary on Art. 23 of the 1978 Draft [draft counterpart of CISG Art. 25], Comment 3. Available online at ‹http://www.cisg.law.pace.edu/cisg/text/secomm/secomm-25.html› (One should note, however, significant changes were made to Art. 23 of the 1978 Draft. Accordingly, the Secretariat Commentary on 1978 Draft Art. 23 should not be regarded as entirely relevant to the interpretation of CISG article 25. See the match-up, available online at ‹http://www.cisg.law.pace.edu/cisg/text/matchup/matchup-d-25.html)›
401. Supra. note 20.
402. See Peter Schlechtriem in "Uniform Sales Law - The Experience with Uniform Sales Laws in the Federal Republic of Germany ": Juridisk Tidskrift (1991/92); pp. 1-28. Available online at ‹http://www.cisg.law.pace.edu/cisg/text/schlechtriem25.html›
403. Supra. note 20.
404. See Comment and Notes to the PECL: Art. 9:301. Comment D. Available online at ‹http://www.cisg.law.pace.edu/cisg/text/peclcomp49.html›
405. Supra. note 4, p. 332.
406. Examination of the legislative history of Art. 25 shows that it was first suggested that to ascertain whether breach was fundamental, it should have been proved that the detriment caused by the breach was substantial and the Committee welcomed that proposal and inserted it into the definition of fundamental breach. In the Diplomatic Conference, however, the debate on the words "substantial detriment to the other party" was extensive. Some delegations labelled it something between "vague", "subjective" and "objective and flexible". The main objection to the "substantial" criterion was that "substantial" as an adjective caused as much uncertainty as "fundamental" itself, and, therefore, required an objective yardstick. Various proposals were offered for this purpose. (Supra. note 4.)
407. Supra. note 2.
408. Supra. note 14, p. 210.
409. Supra. note 13.
410. Supra. note 4, p. 115.
411. Supra. note 13.
412. Supra. note 30.
413. Supra. note 4, p. 116.
414. Supra. note 2.
415. Supra. note 13.
416. Supra. note 1, p. 265.
417. Supra. note 13.
418. Supra. note 35; see also supra. notes 13, 17.
419. See Jianming Shen in "Declaring the Contract Avoided: The U.N. Sales Convention in the Chinese Context"; New York International Law Review, Vol. 10, No. 1, New York State Bar Association (Winter 1997); pp. 18-19. Available online at ‹http://www.cisg.law.pace.edu/cisg/biblio/shen.html› Nevertheless, there is the possibility of arguing in support of the first approach. As explained when dealing with the concept of the injured party's expectations under the contract, whether or not the injured party was entitled to expect to have a particular benefit should be ascertained within the contract terms and other circumstances which came to the attention of the party in breach at the time of making the contract. The same analysis seems to be applicable to the measurement of foreseeability of the consequences of the breach. It can even go further and argue that the language of Art. 25 is in line with this approach, since it defines the consequences relevant to the determination of fundamental breach in terms of what a party "is entitled to expect under the contract" and the second sentence of the Article refers to the foreseeability of "such result" by the party in breach. Accordingly, as contractual expectations are formed at the time of contracting, foreseeability of substantial deprivation of those expectations by the reason of breach should also be measured at that time. (Supra. note 11.)
420. Supra. note 13.
421. Supra. note 20.
422. Supra. note 1, pp. 229.
423. See Comment 3(a) on Art. 7.3.1 UPICC.
Eric von Hippel
Erik S. Raymond