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

Alba Ltd (seller) and Brenner GmbH (buyer) are in different Contracting States and have a contract governed by the CISG. Before the delivery date, Alba tells Brenner it will not deliver the goods because it has found a better-paying customer. Which statement best describes Brenner's position under the CISG?

Brenner may declare the contract avoided, because the CISG allows avoidance before the performance date where it is clear the other party will commit a fundamental breach. A clear refusal to deliver qualifies, and avoidance is effected by notice, not by court order.

  1. ABrenner must wait until the delivery date has passed before it can take any remedy
  2. BBrenner may declare the contract avoided if the seller's declared non-performance would amount to a fundamental breachCorrect
  3. CBrenner may only claim damages and can never avoid the contract
  4. DBrenner must first obtain a court order to avoid the contract

Explanation

Under the CISG, where it is clear before the date for performance that a party will commit a fundamental breach, the other party may declare the contract avoided. A flat refusal to deliver is such a case. Waiting until delivery date is not required, and no court order is needed because avoidance is by notice.

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