The United Nations Convention on Contracts for the International Sale of Goods, 1980 (UN CISG) inter alia defines obligations of the buyer and seller in contracts for the international sale of goods. The CISG provides various remedies to the aggrieved parties, including the option of avoidance of contract. A party may avoid a contract if the other party has committed a breach of contract or any obligations under the Convention. However, there are pre-conditions for avoiding the contract, such as the breach must be fundamental, foreseeable to the breaching party and the damaged party must suffer a detriment such that it is substantially deprived of what it could have expected under the contract. The analysis of CISG provisions and review of decided case laws indicate that the breach is fundamental or not has to be determined based on the facts and circumstances of each case. The objective of this paper is to analyze the statutory provisions applicable for avoidance of contract and to identify the circumstances in which a party may avoid a contract under CISG.

The United Nations Convention on Contracts for the International Sale of Goods, 19801 (hereinafter referred to as CISG) applies to contracts of sale of goods between the parties whose places of business are in different states and when the states are contracting parties.2 The CISG governs the formation of contracts for the international sale of goods and the rights and obligations of parties to these sales contracts.3 It provides several remedies to the aggrieved parties in case of breach of contract or obligations under the Convention. The remedies for the buyer are available under Articles 45-52 and for the seller under Articles 61-65 of CISG. Articles 71-88 deal with obligations common to the seller and the buyer.

Non-performance of a contract, in international sales practice, entails a variety of legal consequences for the parties involved.4 The non-breaching party to the contract may seek different remedies provided under the CISG, including avoidance of the contract for ‘fundamental breach’. The CISG distinguishes between a general and a fundamental breach. While a general breach entitles the aggrieved party to claim damages, the party is only entitled to the remedies of contract avoidance or the delivery of substitute goods if it can prove that the breach is fundamental.5 A fundamental breach requires, first, that the seller or buyer has violated a duty it was obliged to perform under the contract or according to either trade usages or practices established between the parties, or under the Convention.

Law Review Journal, The United Nations Convention on Contracts for the International Sale of Goods, 1980 (UN CISG), Fundamental Breach, Avoidance, Contract, Fundamental Breach, United Nations Convention, Contracts, International Sale of Goods.