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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 contracted to deliver 1,000 tonnes of grain to Palmer Inc in three instalments. The first delivery was late but Palmer accepted it. Norvik then told Palmer it would not deliver the remaining instalments at all. Under the CISG, what may Palmer do?

Palmer may declare the contract avoided for the remaining instalments. Under the CISG, where it is clear before performance is due that the other party will commit a fundamental breach, the innocent party may avoid the contract. Norvik's outright refusal to deliver makes this clear, so Palmer need not wait.

  1. AOnly claim damages after waiting until the final delivery date has passed, whatever Norvik says
  2. BDeclare the contract avoided for the remaining instalments if Norvik's clear refusal makes it plain that a fundamental breach will occurCorrect
  3. CCompel Norvik to deliver by applying to the CISG tribunal
  4. DReduce the price of the first delivery only

Explanation

If it is clear before the date for performance that a party will commit a fundamental breach, the other party may declare the contract avoided (anticipatory breach), giving reasonable notice where required. A clear statement of non-delivery is such a case. There is no CISG tribunal, and the buyer need not wait.

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