COMPARATIVE PRIVATE LAW NON-PERFORMANCE - LIABILITY University of Oslo Prof. Giuditta Cordero Moss

Case I – Destruction of subject-matter (1) Sale of car components built on specifications An earthquake destroys the facilities and the stored components Delivery cannot be made according to contract Is the seller liable for non-performance?

Destruction of subject-matter (1) Norwegian law: Seller is excused German law: Seller is excused Italian law: Seller is excused English law: Seller is excused UNIDROIT: Seller is excused PECL: Seller is excused CISG: Seller is excused

Case II – Destruction of subject-matter (2) Sale of car components built on specifications A fire destroys the facilities and the stored components The fire alarm had not been installed due to illness of the person in charge of security in the seller’s company Delivery cannot be made according to contract Is the seller liable for non-performance?

Destruction of subject-matter (2) Norwegian law: Seller is not excused German law: Seller is not excused Italian law: Seller is not excused English law: Seller is not excused UNIDROIT: Seller is not excused PECL: Seller is not excused CISG: Seller is not excused

Case III – Act of god (factum principis) (1) Sale of car components built on specifications New governmental regulations forbid export of various technical equipment, i.a. car components Delivery cannot be made according to contract Is the seller liable for non-performance?

Act of god (1) Norwegian law: Seller is excused German law: Seller is excused Italian law: Seller is excused English law: Seller is excused UNIDROIT: Seller is excused PECL: Seller is excused CISG: Seller is excused

Case IV – Act of god (factum principis) (2) Sale of car components built on specifications The seller’s export licence is withdrawn because of the seller’s non-compliance with governmental requiremenets Delivery cannot be made according to contract Is the seller liable for non-performance?

Act of god (2) Norwegian law: Seller is not excused German law: Seller is not excused Italian law: Seller is not excused English law: Seller is not excused UNIDROIT: Seller is not excused PECL: Seller is not excused CISG: Seller is not excused

Case V – Supplier’s failure Sale of car components built on specifications The aluminium supplier fails to deliver aluminium on time for the production of the components The aluminium supplier is a recognised supplier on the market, but due to extraordinary wheather conditions cannot ship on time Delivery cannot be made according to contract Is the seller liable for non-performance?

Supplier’s failure Norwegian law: Seller is excused Italian law: Seller is excused German law: Seller is excused English law: Seller is not excused CISG: Seller is not excused UNIDROIT, PECL: Seller is not excused

Case VI – Sub-contractor’s failure Sale of car components built on specifications A sub-contractor fails to performe properly its part of the production, due to internal reorganisation Delivery cannot be made according to contract Is the seller liable for non-performance?

Sub-contractor failure Norwegian law: Seller is not excused German law: Seller is not excused Italian law: Seller is not excused English law: Seller is not excused UNIDROIT: Seller is not excused PECL: Seller is not excused CISG: Seller is not excused

Case VII – Choice between contracts Sale of car components built on specifications Destruction of part of the seller’s storage Volumes in store sufficient to meet obligations towards one buyer, but not all buyers Delivery cannot be made according to contract Is the seller liable for non-performance?

Choice between contracts Norwegian law: Seller is excused Italian law: Seller is excused German law: Seller is excused CISG: Seller is excused (?) UNIDROIT, PECL: Seller is excused (?) English law: Seller is not excused

Case VIII – Unaffordability (1) Sale of car components built on specifications Due to unexpected weather conditions the ship cannot leave the harbour unless an ice-breaker is especially ordered from abroad Delivery cannot be made according to contract Is the seller liable for non-performance?

Unaffordability (1) Norwegian law: Seller is excused Italian law: Seller is excused German law: Seller is excused (but first: renegotiation) UNIDROIT, PECL: Seller can require renegotiation English law: Seller is not excused CISG: Seller is not excused

Case IX – Unaffordability (2) Sale of car components built on specifications The price of aluminium increases significantly, and sale of the components at the agreed price would result in considerable losses for the seller Delivery “cannot” be made according to contract Is the seller liable for non-performance?

Unaffordability (2) Norwegian law: Seller is not excused Italian law: Seller is not excused German law: Seller is not excused UNIDROIT, PECL: Seller is not excused English law: Seller is not excused CISG: Seller is not excused

Case X – Unaffordability (3) Sale of car components built on specifications The price of aluminium increases significantly, and due to its numerous obligations the seller cannot pay for its raw materials Delivery cannot be made according to contract Is the seller liable for non-performance?

Unaffordability (3) Norwegian law: Seller is not excused Italian law: Seller is not excused German law: Seller is not excused UNIDROIT, PECL: Seller is not excused English law: Seller is not excused CISG: Seller is not excused

Possible aims of rules excusing non-performance Allocate the risk of supervening events Sanction negligence and reward diligence Avoid unfair situations

Norwegian law Kjpl.§ 27 : A party is not liable for failure to perform if due to impediment beyond his control that could not reasonably be taken into account or overcome ”Beyond his control” –Not Directly or indirectly caused by him, but –That could actually be controlled or affected by him

German law §§ 276, 280 BGB: liability assumes negligence (presumed) or wilful misconduct §313: change in circumstances (including economic impossibility) – supervening events, unforeseen

Italian law Art cc: Liability assumes that impediment was not due to the prevented party Art cc: Evidence of diligence is sufficient Art. 1175, 1375: Requesting performance is against good faith if performance is unaffordable Art. 1467: Request termination if unaffordability due to unforseeable, extraordinary supervening event

English law Debtor has absolute obligation to perform accurately Discharge only if supervening events (without default) radically change the nature of the obligations (frustration) Inconvenience or increased onerousness do not qualify Self-induced events do not qualify Expressed provisions are deemed to have allocated the risk

CISG Art. 79: A party is not liable for failure to perform if due to impediment beyond his control that could not reasonably be taken into account or overcome To be constructed narrowly as frustration or flexibly as Norwegian law?

UNIDROIT Art : A party is not liable for failure to perform if due to impediment beyond his control that could not reasonably be taken into account or overcome Art : Change in circumstances – fundamental alteration of contract’s balance due to supervening event, unforeseeable, beyond the control, and no assumption of risk was made in the contract

PECL Art. 8:108: A party is not liable for failure to perform if due to impediment beyond his control that could not reasonably be taken into account or overcome Art : Change in circumstances – contract becomes excessively onerous due to supervening event, unforeseeable, and no assumption of risk was made in the contract

Common features Supervening, external and unforeseeable event that objectively prevents performance excuses

Supervening events that excuse non-performance