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ACCA Applied Skills · Corporate and Business Law (Global) · Introduction to the UN Convention on Contracts for the International Sale of Goods and ICC Incoterms

Norvik Ltd agreed to sell 10 identical machines to Taska Inc under the CISG, delivery in one lot. Norvik delivered the machines on time, but one machine was defective in a way that was not a fundamental breach of the whole contract. Taska wants to cancel the whole contract. What is the position?

Taska may avoid the contract only for a fundamental breach, meaning substantial deprivation of what it was entitled to expect. A defect in one machine that is not fundamental does not qualify, though Taska keeps other remedies such as damages or repair.

  1. ATaska may avoid the whole contract, because any defect allows avoidance
  2. BTaska may avoid the contract only if the failure amounts to a fundamental breach, which this one does notCorrect
  3. CTaska may not claim any remedy because the delivery was on time

Explanation

Avoidance is a last-resort remedy available only for a fundamental breach, meaning substantial detriment that deprives the buyer of what it expected under the contract. A defect in one of ten machines that is not fundamental does not meet this test. Taska can still seek other remedies such as damages or repair, so the third option is wrong.

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