International business transactions



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OUTLINE International Business Transactions
Fundamental Breach

  • Art 25  “A breach of contract committed by one of the parties is fundamental if it results in such detriment to the other party as substantially to deprive him of what he is entitled to expect under the contract, unless the party in breach did not foresee and a reasonable person of the same kind in the same circumstances would not have foreseen such a result.”

  • Existence of fundamental breach entitles:

    • The non-defaulting party to avoid the contract [Art 49 for the buyer and Art 64 for the seller]

    • The buyer to reject non-conforming goods and/or require substitute goods [Art 46(2)]

    • Non-defaulting part to recover damages measured by a substitute transaction [Art 75] or in absence of such a substitute transaction, the difference from the current market price [Art 76]

  • Concept of fundamental breach can be ambiguous


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