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

Vantor Ltd, a seller, failed to deliver on time because its own supplier, a third party hired to produce a component, defaulted. The supplier's default was not itself caused by any impediment beyond the supplier's control. Vantor wishes to rely on the CISG impediment exemption. What is the position?

Vantor cannot rely on the exemption. Where failure is caused by a third party engaged to perform, the seller is exempt only if both it and the third party would be exempt, and the supplier's ordinary default does not qualify.

  1. AVantor is exempt only if the supplier would itself also have been exempt, so Vantor cannot rely on the exemption hereCorrect
  2. BVantor is automatically exempt because a third party caused the failure
  3. CVantor is exempt if it notifies the buyer within a reasonable time, regardless of the supplier's position
  4. DVantor is exempt because third-party defaults are always an impediment beyond its control

Explanation

Under Article 79(2) CISG, where non-performance is due to a third party engaged to perform the contract, the party is exempt only if both it and the third party would be exempt. The supplier had no impediment beyond its control, so the test fails. Notice is also needed but cannot alone create an exemption.

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