Principles of International Commercial Contracts, 1994 - UNIDROIT
Principles of International Commercial Contracts, 1994 - UNIDROIT
UNIDROIT Principles of International Commercial Contracts 1994
"...The objective of the UNIDROIT Principles is to establish a balanced set of rules designed for use throughout the world irrespective of the legal traditions and the economic and political conditions of the countries in which they are to be applied...
...
In offering the UNIDROIT Principles to the international legal and business communities, the Governing Council is fully conscious of the fact that the Principles, which do not involve the endorsement of Governments, are not a binding instrument and that in consequence their acceptance will depend upon their persuasive authority. There are a number of significant ways in which the UNIDROIT Principles may find practical application, the most important of which are amply explained in the Preamble. ..."
Extract from the Introduction of the Governing Council of UNIDROIT, Rome, 1994
Reproduced from the UNIDROIT Principles of International Commercial Contracts, published by the International Institute for the Unification of Private Law (UNIDROIT), Rome, Italy, Copyright UNIDROIT 1994, by permission of UNIDROIT. Readers are reminded that the official version of the UNIDROIT Principles of International Commercial Contracts also includes the Commentary thereto. The integral edition of the English, French, German, Italian and Spanish versions may be ordered directly from UNIDROIT Publications, Via Panisperna 28, 00184 Italy (fax +(39-06) 69 94 13 94). The English version may also be ordered from Transnational Publishers.
The Working Group for the formulation of the UNIDROIT Contract was Chaired by Professor Michael Joachim Bonell.
Reproduced with the kind permission of UNIDROIT. For further information on the UNIDROIT Contract Principles visit http://www.unidroit.org/unidroit/english/principles/pr-main.htm or contact Paula Howarth - unidroit.rome@unidroit.org.
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Principles of International Commercial Contracts, 1994 - UNIDROIT { 1 }
Preamble - Purpose of the Principles { 2 }
Chapter 1 - General Provisions { 9 }
Article 1.1 - Freedom of Contract { 10 }
Article 1.2 - No Form Required { 12 }
Article 1.3 - Binding Character of Contract { 14 }
Article 1.4 - Mandatory Rules { 16 }
Article 1.5 - Exclusion or Modification by the Parties { 18 }
Article 1.6 - Interpretation and supplementation of the Principles { 20 }
Article 1.7 - Good Faith and Fair Dealing { 23 }
Article 1.8 - Usages and Practices { 26 }
Article 1.9 - Notice { 29 }
Article 1.10 - Definitions { 34 }
Chapter 2 - Formation { 40 }
Article 2.1 - Manner of Formation { 41 }
Article 2.2 - Definition of Offer { 43 }
Article 2.3 - Withdrawal of Offer { 45 }
Article 2.4 - Revocation of Offer { 48 }
Article 2.5 - Rejection of Offer { 53 }
Article 2.6 - Mode of Acceptance { 55 }
Article 2.7 - Time of Acceptance { 59 }
Article 2.8 - Acceptance Within a Fixed Period of Time { 61 }
Article 2.9 - Late Acceptance. Delay in Transmission { 64 }
Article 2.10 - Withdrawal of Acceptance { 67 }
Article 2.11 - Modified Acceptance { 69 }
Article 2.12 - Writings in Confirmation { 72 }
Article 2.13 - Conclusion of Contract Dependent on Agreement on Specific Matters or in a Specific Form { 74 }
Article 2.14 - Contract with Terms Deliberately Left Open { 76 }
Article 2.15 - Negotiations in Bad Faith { 81 }
Article 2.16 - Duty of Confidentiality { 85 }
Article 2.17 - Merger Clause { 87 }
Article 2.18 - Written Modification Clause { 89 }
Article 2.19 - Contracting Under Standard Terms { 91 }
Article 2.20 - Surprising Terms { 94 }
Article 2.21 - Conflict Between Standard Terms and Non-Standard Terms { 97 }
Article 2.22 - Battle of Forms { 99 }
Chapter 3 - Validity { 101 }
Article 3.1 - Matters Not Covered { 102 }
Article 3.2 - Validity of Mere Agreement { 107 }
Article 3.3 - Initial Impossibility { 109 }
Article 3.4 - Definition of Mistake { 112 }
Article 3.5 - Relevant Mistake { 114 }
Article 3.6 - Error in Expression or Transmission { 121 }
Article 3.7 - Remedies for Non-Performance { 123 }
Article 3.8 - Fraud { 125 }
Article 3.9 - Threat { 127 }
Article 3.10 - Gross Disparity { 129 }
Article 3.11 - Third Persons { 135 }
Article 3.12 - Confirmation { 138 }
Article 3.13 - Loss of Right to Avoid { 140 }
Article 3.14 - Notice of Avoidance { 143 }
Article 3.15 - Time Limits { 145 }
Article 3.16 - Partial Avoidance { 148 }
Article 3.17 - Retroactive Effect of Avoidance { 150 }
Article 3.18 - Damages { 153 }
Article 3.19 - Mandatory Character of the Provision { 155 }
Article 3.20 - Unilateral Declarations { 157 }
Chapter 4 - Interpretation { 159 }
Article 4.1 - Intention of the Parties { 160 }
Article 4.2 - Interpretation of Statements and Other Conduct { 163 }
Article 4.3 - Relevant Circumstances { 166 }
Article 4.4 - Reference to Contract or Statement as a Whole { 174 }
Article 4.5 - All Terms to be Given Effect { 176 }
Article 4.6 - Contra Proferentem Rule { 178 }
Article 4.7 - Linguistic Discrepancies { 180 }
Article 4.8 - Supplying an Omitted Term { 182 }
Chapter 5 - Content { 189 }
Article 5.1 - Express and Implied Obligations { 190 }
Article 5.2 - Implied Obligations { 192 }
Article 5.3 - Co-operation between the Parties { 198 }
Article 5.4 - Duty to Achieve a Specific Result. Duty of Best Efforts { 200 }
Article 5.5 - Determination of Kind of Duty Involved { 203 }
Article 5.6 - Determination of Quality of Performance { 209 }
Article 5.7 - Price Determination { 211 }
Article 5.8 - Contract for an Indefinite Period { 216 }
Chapter 6 - Performance { 218 }
Section 1 - Performance in General { 219 }
Article 6.1.1 - Time of Performance { 220 }
Article 6.1.2 - Performance at one Time or in Instalments { 225 }
Article 6.1.3 - Partial Performance { 227 }
Article 6.1.4 - Order of Performance { 230 }
Article 6.1.5 - Earlier Performance { 233 }
Article 6.1.6 - Place of Performance { 237 }
Article 6.1.7 - Payment by Cheque or other Instrument { 242 }
Article 6.1.8 - Payment by Funds Transfer { 245 }
Article 6.1.9 - Currency of Payment { 248 }
Article 6.1.10 - Currency Not Expressed { 255 }
Article 6.1.11 - Costs of Performance { 257 }
Article 6.1.12 - Imputation of Payments { 260 }
Article 6.1.13 - Imputation of Non-Monetary Obligations { 269 }
Article 6.1.14 - Application for Public Permission { 271 }
Article 6.1.15 - Procedure in Applying for Permission { 275 }
Article 6.1.16 - Permission Neither Granted Nor Refused { 278 }
Article 6.1.17 - Permission Refused { 281 }
Section 2 - Hardship { 284 }
Article 6.2.1 - Contract to be Observed { 285 }
Article 6.2.2 - Definition of Hardship { 287 }
Article 6.2.3 - Effects of Hardship { 293 }
Chapter 7 - Non-Performance { 300 }
Section 1 - Non-Performance in General { 301 }
Article 7.1.1 - Non-Performance Defined { 302 }
Article 7.1.2 - Interference by the Other Party { 304 }
Article 7.1.3 - Withholding Performance { 306 }
Article 7.1.4 - Cure by Non-Performing Party { 309 }
Article 7.1.5 - Additional Period for Performance { 319 }
Article 7.1.6 - Exemption Clauses { 324 }
Article 7.1.7 - Force Majeure { 326 }
Section 2 - Right to Performance { 331 }
Article 7.2.1 - Performance of monetary Obligation { 332 }
Article 7.2.2 - Performance of Non-Monetary Obligation { 334 }
Article 7.2.3 - Repair and Replacement of Defective Performance { 341 }
Article 7.2.4 - Judicial Penalty { 343 }
Article 7.2.5 - Change of Remedy { 346 }
Section 3 - Termination { 349 }
Article 7.3.1 - Right to Terminate the Contract { 350 }
Article 7.3.2 - Notice of Termination { 359 }
Article 7.3.3 - Anticipatory Non-Performance { 362 }
Article 7.3.4 - Adequate Assurance of Due Performance { 364 }
Article 7.3.5 - Effects of Termination in General { 366 }
Article 7.3.6 - Restitution { 370 }
Section 4 - Damages { 373 }
Article 7.4.1 - Right to Damages { 374 }
Article 7.4.2 - Full Compensation { 376 }
Article 7.4.3 - Certainty of Harm { 379 }
Article 7.4.4 - Foreseeability of Harm { 383 }
Article 7.4.5 - Proof of Harm in case of Replacement Transaction { 385 }
Article 7.4.6 - Proof of Harm by Current Price { 387 }
Article 7.4.7 - Harm Due in Part to Aggrieved Party { 390 }
Article 7.4.8 - Mitigation of Harm { 392 }
Article 7.4.9 - Interest for Failure to Pay Money { 395 }
Article 7.4.10 - Interest on Damages { 399 }
Article 7.4.11 - Manner of Monetary Redress { 401 }
Article 7.4.12 - Currency in which to Access Damages { 404 }
Article 7.4.13 - Agreed Payment for Non-Performance { 406 }
Principles of International Commercial Contracts, 1994 - UNIDROIT
{ 1 }
Preamble - Purpose of the Principles
{ 2 }
These Principles set forth general rules for international commercial contracts.
{ 3 }
They shall be applied when the parties have agreed that their contract be governed by them.
{ 4 }
They may be applied when the parties have agreed that their contracts be governed by general principles of law, the lex mercatoria or the like.
{ 5 }
They may provide a solution to an issue raised when it proves impossible to establish the relevant rule of applicable law.
{ 6 }
They may be used to interpret or supplement international uniform law instruments.
{ 7 }
They may serve as a model for national and international legislators.
{ 8 }
Chapter 1 - General Provisions
{ 9 }
Article 1.1 - Freedom of Contract
{ 10 }
The parties are free to enter into a contract and determine its content.
{ 11 }
Article 1.2 - No Form Required
{ 12 }
Nothing in these Principles requires a contract to be concluded in or evidenced by writing. It may be proved by any means, including witnesses.
{ 13 }
Article 1.3 - Binding Character of Contract
{ 14 }
A contract validly entered into is binding upon the parties. It can only be modified or terminated in accordance with its terms or by agreement or as otherwise provided in these Principles.
{ 15 }
Article 1.4 - Mandatory Rules
{ 16 }
Nothing in these Principles shall restrict the application of mandatory rules, whether of national, international or supranational origin, which are applicable in accordance with the relevant rules of private international law.
{ 17 }
Article 1.5 - Exclusion or Modification by the Parties
{ 18 }
The parties may exclude the application of these Principles or derogate from or vary the effect of any of their provisions, except as otherwise provided in the Principles.
{ 19 }
Article 1.6 - Interpretation and supplementation of the Principles
{ 20 }
(1) In the interpretation of these Principles, regard is to be had to their international character and to their purposes including the need to promote uniformity in their application.
{ 21 }
(2) Issues within the scope of these Principles but not expressly settled by them are as far as possible to be settled in accordance with their underlying general principles.
{ 22 }
Article 1.7 - Good Faith and Fair Dealing
{ 23 }
(1) Each party must act in accordance with good faith and fair dealing in international trade.
{ 24 }
(2) The parties may not exclude or limit this duty.
{ 25 }
Article 1.8 - Usages and Practices
{ 26 }
(1) The parties are bound by any usage to which they have agreed and by any practices which they have established between themselves.
{ 27 }
(2) The parties are bound by a usage that is widely known to and regularly observed in international trade by parties in the particular trade concerned except where the application of such usage would be unreasonable.
{ 28 }
Article 1.9 - Notice
{ 29 }
(1) Where notice is required it may be given by any means appropriate to the circumstances.
{ 30 }
(2) A notice is effective when it reaches the person to whom it is given.
{ 31 }
(3) For the purpose of paragraph (2) a notice “reaches” a person when given to that person orally or delivered at that person’s place of business or mailing address.
{ 32 }
(4) For the purpose of this article “notice” includes a declaration, demand, request or any other communication of intention.
{ 33 }
Article 1.10 - Definitions
{ 34 }
In these Principles
{ 35 }
- "court" includes an arbitral tribunal;
{ 36 }
- where a party has more than one place of business the relevant "place of business" is that which has the closest relationship to the contract and its performance, having regard to the circumstances known to or contemplated by the parties at any time before or at the conclusion of the contract;
{ 37 }
- "obligor" refers to the party who is to perform an obligation and "obligee" refers to the party who is entitled to performance of that obligation.
{ 38 }
- "writing" means any mode of communication that preserves a record of the information contained therein and is capable of being reproduced in tangible form.
{ 39 }
Chapter 2 - Formation
{ 40 }
Article 2.1 - Manner of Formation
{ 41 }
A contract may be concluded either by the acceptance of an offer or by conduct of the parties that is sufficient to show agreement.
{ 42 }
Article 2.2 - Definition of Offer
{ 43 }
A proposal for concluding a contract constitutes an offer if it is sufficiently definite and indicates the intention of the offeror to be bound in case of acceptance.
{ 44 }
Article 2.3 - Withdrawal of Offer
{ 45 }
(1) An offer becomes effective when it reaches the offeree.
{ 46 }
(2) An offer, even if it is irrevocable, may be withdrawn if the withdrawal reaches the offeree before or at the same time as the offer.
{ 47 }
Article 2.4 - Revocation of Offer
{ 48 }
(1) Until a contract is concluded an offer may be revoked if the revocation reaches the offeree before it has dispatched an acceptance.
{ 49 }
(2) However, an offer cannot be revoked
{ 50 }
(a) if it indicates, whether by stating a fixed time for acceptance or otherwise, that it is irrevocable; or
{ 51 }
(b) if it was reasonable for the offeree to rely on the offer as being irrevocable and the offeree has acted in reliance of the offer.
{ 52 }
Article 2.5 - Rejection of Offer
{ 53 }
An offer is terminated when a rejection reaches the offeror.
{ 54 }
Article 2.6 - Mode of Acceptance
{ 55 }
(1) A statement made by or other conduct of the offeree indicating assent to an offer is an acceptance. Silence or inactivity does not in itself amount to acceptance.
{ 56 }
(2) An acceptance of an offer becomes effective when the indication of assent reaches the offeror.
{ 57 }
(3) However, if, by virtue of the offer or as a result of practices which the parties have established between themselves or of usage, the offeree may indicate assent by performing an act without notice to the offeror, the acceptance is effective when the act is performed.
{ 58 }
Article 2.7 - Time of Acceptance
{ 59 }
An offer must be accepted within the time the offeror has fixed or, if no time is fixed, within a reasonable time having regard to the circumstances, including the rapidity of the means of communication employed by the offeror. An oral offer must be accepted immediately unless the circumstances indicate otherwise.
{ 60 }
Article 2.8 - Acceptance Within a Fixed Period of Time
{ 61 }
(1) A period of time for acceptance fixed by the offeror in a telegram or a letter begins to run from the moment the telegram is handed in for dispatch or from the date shown on the letter or, if no such date is shown, from the date shown on the envelope. A period of time for acceptance fixed by the offeror by means of instantaneous communication begins to run from the moment that offer reaches the offeree.
{ 62 }
(2) Official holidays or non-business days occurring during the period for acceptance are included in calculating the period. However, if a notice of acceptance cannot be delivered at the address of the offeror on the last day of the period because that day falls on an official holiday or a non-business day at the place of business of the offeror, the period is extended until the first business day which follows.
{ 63 }
Article 2.9 - Late Acceptance. Delay in Transmission
{ 64 }
(1) A late acceptance is nevertheless effective as an acceptance if without undue delay the offeror so informs the offeree or gives notice to that effect.
{ 65 }
(2) If a letter or other writing containing a late acceptance shows that it has been sent in such circumstances that if its transmission had been normal it would have reached the offeror in due time, the late acceptance is effective as an acceptance, unless without undue delay, the offeror informs the offeree that it considers the offer as having lapsed.
{ 66 }
Article 2.10 - Withdrawal of Acceptance
{ 67 }
An acceptance may be withdrawn if the withdrawal reaches the offeror before or at the same time as the acceptance would have become effective.
{ 68 }
Article 2.11 - Modified Acceptance
{ 69 }
(1) A reply to an offer which purports to be an acceptance but contains additions, limitations or other modifications is a rejection of the offer and constitutes a counter-offer.
{ 70 }
(2) However, a reply to an offer which purports to be an acceptance but contains additional or different terms which do not materially alter the terms of the offer constitutes an acceptance, unless the offeror without undue delay, objects to the discrepancy. If the offeror does not object, the terms of the contract are the terms of the offer with the modifications contained in the acceptance.
{ 71 }
Article 2.12 - Writings in Confirmation
{ 72 }
If a writing which is sent within a reasonable time after the conclusion of the contract and which purports to be a confirmation of the contract contains additional or different terms, such terms become part of the contract, unless they materially alter the contract or the recipient, without undue delay, objects to the discrepancy.
{ 73 }
Article 2.13 - Conclusion of Contract Dependent on Agreement on Specific Matters or in a Specific Form
{ 74 }
Where in the course of negotiations one of the parties insists that the contract is not concluded until there is agreement on specific matters or in a specific form, no contract is concluded before agreement is reached on those matters or in that form
{ 75 }
Article 2.14 - Contract with Terms Deliberately Left Open
{ 76 }
(1) If the parties intend to conclude a contract, the fact that they intentionally leave a term to be agreed upon in further negotiations or to be determined by a third person does not prevent a contract from coming into existence.
{ 77 }
(2) The existence of the contract is not affected by the fact that subsequently
{ 78 }
(a) the parties reach no agreement on the terms; or
{ 79 }
(b) the third person does not determine the term, provided that there is an alternative means of rendering the term definite that is reasonable in the circumstances, having regard to the intention of the parties.
{ 80 }
Article 2.15 - Negotiations in Bad Faith
{ 81 }
(1) A party is free to negotiate and is not liable for failure to reach an agreement.
{ 82 }
(2) However, a party who negotiates or breaks off negotiations in bad faith is liable for the losses caused to the other party.
{ 83 }
(3) It is bad faith, in particular, for a party to enter into or continue negotiations when intending not to reach an agreement with the other party.
{ 84 }
Article 2.16 - Duty of Confidentiality
{ 85 }
Where information is given as confidential by one party in the course of negotiations, the other party is under a duty not to disclose that information or to use it improperly for its own purposes, whether or not a contract is subsequently concluded. Where appropriate, the remedy for breach of that duty may include compensation based on the benefit received by the other party.
{ 86 }
Article 2.17 - Merger Clause
{ 87 }
A contract in writing which contains a clause indicating that the writing completely embodies the terms on which the parties have agreed cannot be contradicted or supplemented by evidence of prior statements or agreements. However, such statements or agreements may be used to interpret the writing.
{ 88 }
Article 2.18 - Written Modification Clause
{ 89 }
A contract in writing which contains a clause requiring any modification or termination by agreement to be in writing may not be otherwise modified or terminated. However, a party may be precluded by its conduct from asserting such a clause to the extent that the other party has acted in reliance on that conduct.
{ 90 }
Article 2.19 - Contracting Under Standard Terms
{ 91 }
(1) Where one party or both parties use standard terms in concluding a contract, the general rules of formation apply, subject to Articles 2.20 - 2.22.
{ 92 }
(2) Standard terms are provisions which are prepared in advance for general and repeated use by one party and which are actually used without negotiation with the other party.
{ 93 }
Article 2.20 - Surprising Terms
{ 94 }
(1) No term contained in standard terms which is of such a character that the other party could not reasonably have expected it, is effective unless it has been expressly accepted by that party.
{ 95 }
(2) In determining whether a term is of such a character regard is to be had to its content, language and presentation.
{ 96 }
Article 2.21 - Conflict Between Standard Terms and Non-Standard Terms
{ 97 }
In case of conflict between a standard term which is not a standard term the latter prevails.
{ 98 }
Article 2.22 - Battle of Forms
{ 99 }
Where both parties use standard terms and reach agreement except on those terms, a contract is concluded on the basis of the agreed terms and of any standard terms which are common in substance unless one party clearly indicates in advance, or later and without undue delay informs the other party, that it does not intend to be bound by such a contract.
{ 100 }
Chapter 3 - Validity
{ 101 }
Article 3.1 - Matters Not Covered
{ 102 }
These Principles do not deal with invalidity arising from
{ 103 }
(a) lack of capacity;
{ 104 }
(b) lack of authority;
{ 105 }
(c) immorality or illegality.
{ 106 }
Article 3.2 - Validity of Mere Agreement
{ 107 }
A contract is concluded, modified or terminated by the mere agreement of the parties, without any further requirements.
{ 108 }
Article 3.3 - Initial Impossibility
{ 109 }
(1) The mere fact that at the time of the conclusion of the contract the performance of the obligation assumed was impossible does not affect the validity of the contract.
{ 110 }
(2) The mere fact that at the time of the conclusion of the contract a party was not entitled to dispose of the assets to which the contract relates does not affect the validity of the contract.
{ 111 }
Article 3.4 - Definition of Mistake
{ 112 }
Mistake is an erroneous assumption relating to facts or to law existing when the contract was concluded.
{ 113 }
Article 3.5 - Relevant Mistake
{ 114 }
(1) A party may only avoid the contract for mistake if, when the contract was concluded, the mistake was of such importance that a reasonable person in the same situation as the party would not have concluded it at all if the true state of affairs had been known, and
{ 115 }
(a) the other party made the same mistake, or caused the mistake, or knew or ought to have known of the mistake and it was contrary to reasonable commercial standards of fair dealing to leave the mistaken party in error; or
{ 116 }
(b) the other party had not at the time of avoidance acted in reliance on the contract
{ 117 }
(2) However, a party may not avoid the contract if
{ 118 }
(a) it was grossly negligent in committing the mistake; or
{ 119 }
(b) the mistake relates to a matter in regard to which the risk of mistake was assumed or, having regard to the circumstances, should be borne by the mistaken party.
{ 120 }
Article 3.6 - Error in Expression or Transmission
{ 121 }
An error occurring in the expression or transmission of a declaration is considered to be a mistake of the person from whom the declaration emanated.
{ 122 }
Article 3.7 - Remedies for Non-Performance
{ 123 }
A party is not entitled to avoid the contract on the ground of mistake if the circumstances on which that party relies afford, or could have afforded, a remedy for non-performance.
{ 124 }
Article 3.8 - Fraud
{ 125 }
A party may avoid the contract when it has been led to conclude the contract by the other party’s fraudulent representation, including language or practices, or fraudulent non-disclosure of circumstances which, according to reasonable commercial standards of fair dealing, the latter party should have disclosed.
{ 126 }
Article 3.9 - Threat
{ 127 }
A party may avoid the contract when it has been led to conclude the contract by the other party’s unjustified threat which, having regard to the circumstances, is so imminent and serious as to leave the first party no reasonable alternative. In particular, a threat is unjustified if the act or omission with which a party has been threatened is wrongful in itself, or is wrong to use it as a means to obtain the conclusion of the contract.
{ 128 }
Article 3.10 - Gross Disparity
{ 129 }
(1) A party may avoid the contract or an individual term of it if, at the time of the conclusion of the contract, the contract term unjustifiably gave the other party an excessive advantage. Regard is to be had, among other factors, to
{ 130 }
(a) the fact that the other party has taken unfair advantage of the first party’s dependence, economic distress or urgent needs, or of its improvidence, ignorance, inexperience or lack of bargaining skill; and
{ 131 }
(b) the nature and purpose of the contract.
{ 132 }
(2) Upon the request of the party entitled to avoidance, a court may adapt the contract or term in order to make it accord with reasonable commercial standards of fair dealing.
{ 133 }
(3) A court may also adapt the contract or term upon the request of the party receiving notice of avoidance, provided that that party informs the other party of its request promptly after receiving such notice and before the other party has acted in reliance on it. The provisions of Article 3.13(2) apply accordingly.
{ 134 }
Article 3.11 - Third Persons
{ 135 }
(1) Where fraud, threat, gross disparity or a party’s mistake is imputable to, or is known or ought to be known by, a third person for whose acts the other party is responsible, the contract may be avoided under the same conditions as if the behaviour or knowledge had been that of the party itself.
{ 136 }
(2) Where fraud, threat or gross disparity is imputable to a third person for whose acts the other party is not responsible, the contract may be avoided if that party knew or ought to have known of the fraud, threat or disparity, or has not at the time of avoidance acted in reliance on the contract.
{ 137 }
Article 3.12 - Confirmation
{ 138 }
If the party entitled to avoid the contract expressly or impliedly confirms the contract after the period of time for giving notice of avoidance has begun to run, avoidance of contract is excluded.
{ 139 }
Article 3.13 - Loss of Right to Avoid
{ 140 }
(1) If a party is entitled to avoid the contract for mistake but the other party declares itself willing to perform or performs the contract as it was understood by the party entitled to avoidance, the contract is considered to have been concluded as the latter party understood it. The other party must make such a declaration or render such performance promptly after having been informed of the manner in which the party entitled to avoidance had understood the contract and before that party has acted in reliance on a notice of avoidance.
{ 141 }
(2) After such a declaration or performance the right to avoidance is lost and any earlier notice of avoidance is ineffective.
{ 142 }
Article 3.14 - Notice of Avoidance
{ 143 }
The right of a party to avoid the contract is exercised by notice to the other party.
{ 144 }
Article 3.15 - Time Limits
{ 145 }
(1) Notice of avoidance shall be given within a reasonable time, having regard to the circumstances, after the avoiding party knew or could not have been unaware of the relevant facts or became capable of acting freely.
{ 146 }
(2) Where an individual term of the contract may be avoided by a party under Article 3.10, the period of time for giving notice of avoidance begins to run when that term is asserted by the other party.
{ 147 }
Article 3.16 - Partial Avoidance
{ 148 }
Where a ground of avoidance affects only individual terms of the contract, the effect of avoidance is limited to those terms unless, having regard to the circumstances, it is unreasonable to uphold the remaining contract.
{ 149 }
Article 3.17 - Retroactive Effect of Avoidance
{ 150 }
(1) Avoidance takes effect retroactively.
{ 151 }
(2) On avoidance either party may claim restitution of whatever is supplied under the contract or the part of it avoided, provided that it concurrently makes restitution of whatever it has received under the contract or the part of it avoided or, if it cannot make restitution in kind, it makes an allowance for what it has received.
{ 152 }
Article 3.18 - Damages
{ 153 }
Irrespective of whether or not the contract has been avoided, the party who knew or ought to have known of the ground for avoidance is liable for damages so as to put the other party in the same position in which it would have been if it had not concluded the contract.
{ 154 }
Article 3.19 - Mandatory Character of the Provision
{ 155 }
The provisions of this Chapter are mandatory, except insofar as they relate to the binding force of mere agreement, initial impossibility or mistake.
{ 156 }
Article 3.20 - Unilateral Declarations
{ 157 }
The provisions of this Chapter apply with appropriate adaptations to any communication of intention addressed by one party to the other.
{ 158 }
Chapter 4 - Interpretation
{ 159 }
Article 4.1 - Intention of the Parties
{ 160 }
(1) A contract shall be interpreted according to the common intention of the parties.
{ 161 }
(2) If such an intention cannot be established, the contract shall be interpreted according to the meaning that reasonable persons of the same kind as the parties would give to it in the same circumstances.
{ 162 }
Article 4.2 - Interpretation of Statements and Other Conduct
{ 163 }
(1) The statements and other conduct of a party shall be interpreted according to that party’s intention if the other party knew or could not have been unaware of that intention.
{ 164 }
(2) If the preceding paragraph is not applicable, such statements and other conduct shall be interpreted according to the meaning that a reasonable person of the same kind as the other party would give to it in the same circumstances.
{ 165 }
Article 4.3 - Relevant Circumstances
{ 166 }
In applying Articles 4.1 and 4.2, regard shall be had to all the circumstances, including
{ 167 }
(a) preliminary negotiations between the parties;
{ 168 }
(b) practices which the parties have established between themselves;
{ 169 }
(c) the conduct of the parties subsequent to the conclusion of the contract;
{ 170 }
(d) the nature and purpose of the contract;
{ 171 }
(e) the meaning commonly given to terms and expressions in the trade concerned;
{ 172 }
(f) usages.
{ 173 }
Article 4.4 - Reference to Contract or Statement as a Whole
{ 174 }
Terms and expressions shall be interpreted in the light of the whole contract or statement in which they appear.
{ 175 }
Article 4.5 - All Terms to be Given Effect
{ 176 }
Contract terms shall be interpreted so as to give effect to all the terms rather than to deprive some of them of effect.
{ 177 }
Article 4.6 - Contra Proferentem Rule
{ 178 }
If contract terms supplied by one party are unclear, an interpretation against that party is preferred.
{ 179 }
Article 4.7 - Linguistic Discrepancies
{ 180 }
Where a contract is drawn up in two or more language versions which are equally authoritative there is, in case of discrepancy between the versions, a preference for the interpretation according to a version in which the contract was originally drawn up.
{ 181 }
Article 4.8 - Supplying an Omitted Term
{ 182 }
(1) Where the parties to a contract have not agreed with respect to a term which is important for a determination of their rights and duties, a term which is appropriate in the circumstances shall be supplied.
{ 183 }
(2) In determining what is an appropriate term regard shall be had, among other factors to
{ 184 }
(a) the intention of the parties;
{ 185 }
(b) the nature and purpose of the contract;
{ 186 }
(c) good faith and fair dealing;
{ 187 }
(d) reasonableness.
{ 188 }
Chapter 5 - Content
{ 189 }
Article 5.1 - Express and Implied Obligations
{ 190 }
The contractual obligations of the parties may be express or implied.
{ 191 }
Article 5.2 - Implied Obligations
{ 192 }
Implied obligations stem from
{ 193 }
(a) the nature and purpose of the contract;
{ 194 }
(b) practices established between the parties and usages;
{ 195 }
(c) good faith and fair dealing;
{ 196 }
(d) reasonableness.
{ 197 }
Article 5.3 - Co-operation between the Parties
{ 198 }
Each party shall co-operate with the other party when such co-operation may reasonably be expected for the performance of that party’s obligations.
{ 199 }
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