THE FUNDAMENTAL BREACH OF CONTRACT OF SALE UNDER THE CISG

Abstract

While a breach of contract implies the failure of one party to fulfil the obligations arising from the contract, the fundamental breach of contract is an aggravated form of breach of contract. The concept of the fundamental breach of contract of sale is recognized in Article 25 of the CISG (UN Convention on Contracts for the International Sale of Goods, 1980). In an ordinary breach of contract of sales, the applicable legal remedies are ordinary legal remedies (such as substitution of goods, damages). In case of a fundamental (substantial) breach, the unilateral declaration of termination of the contract of sale is used as the last resort (to void the contract). Given that it is perceived as a special aggravated type of breach of contract of sale, the fundamental breach has to be carefully analysed in more detail.