Corporate and Business Law (Global) · Obligations of the seller and buyer, and provisions common to both

Anticipatory Breach and Instalment Contracts under CISG

Updated 11 October 2026 · Fact-checked

Anticipatory breach is a breach that has not happened yet but is clearly coming. Under the CISG, Article 71 lets you suspend performance if the other party will not perform a substantial part. Article 72 allows avoidance if breach is clearly fundamental. Article 73 covers instalment contracts.

Understand Anticipatory Breach and Instalment Contracts

Normally you act on a breach after it happens. The CISG also protects you before the due date, when it is clear the other side will not perform. These rules are in Articles 71 to 73.

Start with the difference. An actual breach has already occurred: the goods are late, defective or unpaid. An anticipatory breach is a breach that is expected. Your remedy depends on how strong the evidence is and how serious the expected breach would be.

There are two levels of response. Suspension (Article 71) is the mild one. You may hold back your own performance if, after the contract is made, it becomes apparent that the other party will not perform a substantial part of its obligations. The reason must be a serious deficiency in its ability to perform or in its creditworthiness, or its conduct in preparing to perform or in performing. Avoidance (Article 72) is the strong one. You may declare the contract avoided if it is clear before the date for performance that the other party will commit a fundamental breach.

Suspension comes with duties. You must give notice of suspension to the other party immediately. You must continue with performance if the other party gives adequate assurance of its performance. If the seller has already dispatched the goods before the grounds become apparent, it may prevent them being handed to the buyer, even if the buyer holds a document entitling it to them. This right concerns only the rights between seller and buyer. For avoidance under Article 72, you must give reasonable notice so the other party can give adequate assurance, unless that party has declared it will not perform.

Instalment contracts (Article 73) cover goods delivered in separate lots. If a failure to perform one instalment is a fundamental breach of that instalment, the other party may avoid the contract for that instalment. If it gives good grounds to conclude a fundamental breach will occur for future instalments, the party may avoid the contract for the future, provided it does so within a reasonable time. A buyer who avoids an instalment may also avoid earlier or future deliveries if they are interdependent, so that they cannot be used for the purpose the parties contemplated when they made the contract.

Key formulas to remember

Article 71: suspension: Suspend if it becomes apparent that the other party will not perform a substantial part of its obligations; Grounds: serious deficiency in ability to perform or creditworthiness, or its conduct in preparing to perform or performing. Notice must be given immediately.
Article 71: duty to continue: Suspension ends if the other party gives adequate assurance of performance; The suspending party must then continue with performance.
Article 72: avoidance before the due date: Avoid if it is clear that the other party will commit a fundamental breach; Give reasonable notice so assurance can be offered, unless the other party has declared it will not perform.
Article 73(1): current instalment: Fundamental breach of one instalment → avoid that instalment; The test is fundamental breach in relation to that instalment.
Article 73(2): future instalments: Good grounds to conclude fundamental breach of future instalments → avoid for the future; Declare avoidance within a reasonable time.
Article 73(3): interdependence: Avoid delivered or future instalments if they are interdependent; Interdependent means they cannot be used for the purpose the parties contemplated at contract.

How to solve Anticipatory Breach and Instalment Contracts questions

Use this order for any scenario question on anticipatory breach or instalments.

1Check whether the breach has already happened. If yes, it is an actual breach and the usual remedies apply. If no, move to Articles 71 to 73.
2Check whether the contract is for a single delivery or for instalments. If instalments, go to Article 73.
3For a single delivery, judge the seriousness: a substantial part not performed points to suspension (Article 71); a clearly fundamental breach points to avoidance (Article 72).
4Check the grounds for Article 71: ability to perform, creditworthiness, or conduct. The problem must have become apparent after the contract was made.
5Check the procedure: immediate notice for suspension; reasonable notice for avoidance unless the other party has declared it will not perform.
6Ask whether the other party has given adequate assurance. If so, suspension must end and performance continue.
7For instalments, test each instalment separately for fundamental breach, then future instalments (good grounds, reasonable time), then interdependence.
8State a clear conclusion and name the Article.

Quickest way: Three-question shortcut

When to use it: Use it on Section A and Section B objective questions when time is short.

Has the breach happened? No means Articles 71 or 72. Instalments mean Article 73.
How bad? Substantial part not performed means suspend. Clearly fundamental means avoid.
Is the process right? Immediate notice for suspension. Adequate assurance stops suspension. Reasonable notice for avoidance.

Common mistakes in Anticipatory Breach and Instalment Contracts

Treating suspension and avoidance as the same remedy.
Both apply to expected breach, so they blur together.
Fix: Suspension only pauses your performance. Avoidance ends the contract. Avoidance needs a clearly fundamental breach.
Forgetting the duty to give notice of suspension.
Students focus on the right and skip the conditions.
Fix: Always state that notice must be given immediately, and that performance resumes on adequate assurance.
Applying Article 71 where the problem existed when the contract was made.
Students read it as any doubt about the other party.
Fix: The deficiency must become apparent after the contract was concluded.
Avoiding the whole contract for one late instalment without testing it.
Students treat instalments as one contract.
Fix: Test each instalment for fundamental breach. Avoid the whole only for future instalments with good grounds or interdependence.
Ignoring the time limit for future instalments.
The words 'reasonable time' are easy to skip.
Fix: Note that avoidance for the future must be declared within a reasonable time.

Worked examples

Example 1

Alpha Ltd agrees to sell machinery to Beta Inc, payable on delivery. Before the delivery date, Alpha learns that Beta has been placed in a financial crisis and cannot pay its debts. Can Alpha stop preparing the goods, and what must it do?

Show the solution

The breach has not yet happened, so this is anticipatory breach.
Beta's inability to pay is a serious deficiency in its creditworthiness that became apparent after the contract was made.
Non-payment would be a failure to perform a substantial part of its obligations, so Article 71 applies.
Alpha may suspend performance, but must give Beta immediate notice.
If Beta gives adequate assurance, such as a bank guarantee, Alpha must continue.

Answer: Alpha may suspend performance under Article 71, provided it notifies Beta immediately, and must continue if Beta gives adequate assurance of payment.

Example 2

A seller must deliver 100 tonnes of steel in four monthly instalments. The second instalment is defective so that it is a fundamental breach of that instalment. The steel in the third and fourth instalments is of the same type and each load can be used separately. The buyer wants to avoid the whole contract. What is the position?

Show the solution

This is an instalment contract, so Article 73 applies.
The defect in the second instalment is a fundamental breach of that instalment, so the buyer may avoid that instalment under Article 73(1).
For future instalments, the buyer may avoid if it has good grounds to conclude that fundamental breach will occur, and it declares avoidance within a reasonable time.
The facts show a single defect and no good grounds about future loads, so avoidance of the third and fourth instalments is not justified on that basis.
Article 73(3) covers interdependent deliveries, which cannot be used for the contemplated purpose. Each load can be used separately, so they are not interdependent.

Answer: The buyer may avoid the second instalment only. It cannot avoid the whole contract unless it has good grounds about future breach or the instalments are interdependent.

Exam tips

Always name the Article: 71 for suspension, 72 for avoidance before due date, 73 for instalments.
In objective cases, look for the trigger word: creditworthiness points to suspension; clearly fundamental breach points to avoidance.
Check whether notice was given. Many wrong options fail on this point.
For instalments, test each lot separately before looking at the whole contract.
In written answers, apply the rule to the facts in short steps and end with a clear conclusion.

Practice questions from Obligations of the seller and buyer, and provisions common to both

Anticipatory Breach and Instalment Contracts in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Anticipatory Breach and Instalment Contracts: frequently asked questions

What is anticipatory breach under the CISG?

It is a situation where one party's breach has not yet occurred but is expected. Articles 71 and 72 allow the other party to suspend performance or avoid the contract, depending on how serious and how clear the expected breach is.

What is the difference between anticipatory breach and actual breach under the CISG?

Actual breach has already happened, such as late delivery or non-payment. Anticipatory breach is expected before performance is due. The remedies for anticipatory breach are suspension and avoidance under Articles 71 and 72.

Must I give notice before suspending performance under Article 71?

You must give notice of suspension to the other party immediately. If the other party then gives adequate assurance of performance, you must continue.

When can I avoid an instalment contract under the CISG?

You may avoid a single instalment if its breach is fundamental. You may avoid future instalments if you have good grounds to conclude fundamental breach will occur and act within a reasonable time. Interdependent deliveries can also be avoided together.