5 Pages

Termination and restitution

Section 3 of Chapter 7 addresses termination for actual or anticipated non-performance. Restitution upon termination is also addressed.

The most important prerequisite enabling termination is that the failure to perform an obligation amounts to a ‘fundamental’ non-performance.144 Unlike the CISG,145 Article 7.3.1(2) provides a non-exclusive list of factors to help determine whether a failure amounts to a fundamental non-performance. Factors range from the substantial deprivation of expected entitlement to a consideration of whether the non-performing party will suffer disproportionate loss if the contract is terminated. In this regard, it can be seen that the provision attempts to strike a fair balance in addressing both party’s interests.