ASSIGNMENT 1

ANALYSIS OF
REMEDIES AVAILABLE TO SELLER FOR NON-
PERFORMANCE OF HIS CONTRACTUAL OBLIGATIONS
UNDER INTERNATIONAL TRADE LAW AND SALE OF
GOODS ACT, 1930
NAME: RASHI RATNA BAKSH
ROLL NO: 2017BALLB51
 INTRODUCTION
• An international sales transaction means that parties belong to
different jurisdictions, not only this, parties even belong to different
legal systems due to this there is an increased risk in international
sale transaction than in a domestic sales transaction.
• In case of a dispute between the parties under international law the
CIGS (united nations convention on contracts for international sale of
goods) 1988 and UNIDROIT (international institute for the unification
of private law )1940 principles are not binding on the parties
• They are applicable only if the parties specifically choose to be
governed by it.
• Whereas under the Sale of Goods Act,1930 sections 55 and 56 focus on
seller’s remedies against the buyer and entitles the seller to either
sue for price of the goods or ask for damages for non-performance of
the contract.
 OBLIGATIONS OF THE SELLER UNDER CIGS

 In accordance with article 30 CIGS , the seller must deliver the goods
and transfer the associated documents to the buyer.
 The seller has the obligation to deliver the goods at the place and
time decided in the agreement by the parties.
 However, Convention is not applicable to property-related aspects of
sales contracts.
 The seller must carry the costs incurred in making the goods available to the
buyer at the agreed place of delivery . As per article 79(4) The CISG
requires the seller to give notice to buyer of any impediment to
performance .
 OBLIGATIONS OF SELLER UNDER UNIDROIT PRINCIPLES

 As per Article 18 of UNIDROIT the seller shall affect delivery of the

goods, hand over any documents relating thereto and transfer the
property in the goods, as required by the contract and the present Law,
 Where the contract of sale involves carriage of the goods and no other
place for delivery has been agreed upon, delivery shall be effected by
handing over the goods to the carrier for transmission to the buyer.
 According to Article 20, Where the parties have agreed upon a date for
delivery the seller is bound to deliver the goods at that date.
 Where the date of delivery has not been determined in accordance with the
provisions of Article 20 or 21, the seller shall be bound to deliver the goods
within a reasonable time after the conclusion of the contract.
 OBLIGATIONS OF SELLER UNDER SALE OF GOOD ACT, 1930

 The seller is obligated to make an arrangement for the transfer of

property to the buyer and check whether the goods are delivered
properly or not.
 He is required to pass on the proper title of goods and should deliver
it according to the terms of agreement.
 He should keep the goods in a deliverable state and deliver the goods
when the buyer asks for it within a specific time fixed in the contract.
Remedies available to the seller under
CIGS
The CISG provides a single remedy to the seller in case he fails to fulfil his contractual obligations i.e. force majeure.(an event that can not be anticipated or

controlled) The remedy is given under Art. 79. Para 1 which provides If all the conditions are met, only then the seller would be exempted from his

contractual obligations.
There are few essential like:
1. Existence of an impediment: which means that there must be some obstruction due to which the seller was unable to fulfil his contractual obligations,

2. Impediment must be beyond the control of breaching party: the second condition is that the impediment must be beyond the control of the seller. As

per article 79 every party has a sphere of control and it is expected that they perform the contractual obligations that are under their control.

 
3. The impediment must be unforeseeable: it means that The seller must not have reasonably

taken into account the impediment.

4. the impediment must be unavoidable: means that the seller would not be exempted even if he

was not able to foresee the impediment but was in a condition to overcome or avoid the

consequences that arose due to the impediment.

Para 2 of Art. 79 talks about the situation where the seller has sub contracted full or part
performance of the contract to a third and his failure or non performance is due the failure of
the third party.

• Exemption under Para 1: For claiming exemption under Para 2, the seller must first of
all fulfils the conditions enshrined under Para 1, only then the recourse of Para 2 would
come into picture.

• Exemption of third party as well: The 2nd condition states that the seller would be
exempted only if the third party or the sub contractor is exempted from liability in case
the conditions of Para 1 are applied to him.
 Remedies available to the seller under
UNIDROIT Principles
• Under the UNIDROIT principles of International Commercial Contracts 2 remedies are
available to the seller in case he fails to fulfil his contractual obligations.
 Hardship: Para 2 of Art 6.2 gives the definition of hardship. It states that hardship is the
occurrence of certain events that fundamentally alters the equilibrium of the contract
fulfilling conditions stated under Para (a) to (d ).
 The party is bound to perform his contractual obligations even if it has become more onerous
for one of the parties but it is subject to the provisions of hardship. It states that the contract
must be performed as long as it is possible regardless of the burden it may impose on the
performing party. It further states that the terms of the contract must be respected despite the
fact that the performance has become meaningless or the parties would experience heavy
losses instead of expected profits.
 If the performance of contractual obligations become burdensome or onerous to the seller, he
has perform his part of the contract. He has to respect the terms of the contract even if
instead of profits he has to earn losses from the said transaction. But this must be subject to
the provisions of the hardship.
Additional conditions to be met:
 Certain additional conditions have been given under Para (a) to (d) of the
article that must be met for seeking this remedy. The additional conditions are
as follows:
 The events that lead to fundamental alteration of equilibrium would have
occurred or become known to the disadvantaged party (in our case the seller)
only after the conclusion of the contract and not before that.
 The events could not have been foreseen by the disadvantaged party (the
seller) at the time of conclusion of the contract.
 The events must be beyond the control of the disadvantaged party (the seller)
 The risk of the aforesaid events would not have been assumed by the
disadvantaged party (the seller).
Para 3 gives a further remedy. It states that in case the parties fail to reach on an
agreement within reasonable time, then, either of the party may resort to the court.

Para 4 states the remedies that the court may grant in case hardship is found by the court. It
provides for 2 solutions:
 Court can order for termination of the contract on terms fixed by the court and on a
particular date.
 Court can adopt the measures through which the equilibrium of the contract may be
restored.
 FORCE MAJURE: the remedy of force majeure is given under the chapter of non
performance which clearly means that under hardship, the disadvantaged party has to
perform his part of the contract even if at changed terms but under force majeure the
party is absolutely exempted from performance of the contract.
 REMEDIES AVAILABLE UNDER DOMESTIC LAW

• In India, the law relating to the sale and purchase of goods has been codified in the Sale
of Goods Act, 1930. This Act is an extension of and is complimentary to the Indian
Contract Act, 1872. This means that the basic provisions of the Indian Contract Act also
applies to contracts of sale and purchase of goods.
• There is only one remedy that is available under the Indian Contract Act for non-
performance of contract by the seller. The remedy is given under Para 2 of Sec. 56 of
the act. It states when the performance of a contract becomes impossible or unlawful
due to a reason that was beyond the control of the promisor Para 2 of Sec. 56 - Contract
to do act afterwards becoming impossible or unlawful.—A contract to do an act which,
after the contract is made, becomes impossible, or, by reason of some event which the
promisor could not prevent, unlawful, becomes void when the act becomes impossible
or unlawful.
• The concept enshrined under Para 2 of sec.56 is based on the English Law doctrine of
Frustration. It is an English contract law doctrine, which acts as a device to set aside
contracts where an unforeseen event either renders contractual obligations impossible,
or radically changes the party's principal purpose for entering into the contract.
There are two types of remedies which the seller has against the buyer
under The Sale of Goods Act

• Suit for Price: Section 55 of the Sale of Goods Act states two conditions. The
first is that when any goods are passed to the buyer under the contract to a sale,
and the buyer intentionally neglects payment or refuses to pay for the goods
according to the terms stated in the contract, the seller may sue the buyer for
the payment of the price of the goods.
• when payment is due on a particular day, irrespective of whether or not it has
been delivered or not, and the buyer is neglecting the payment or refusing to
pay for the good, the seller may sue the buyer to recover the price of the goods.
• Damage for Non-Acceptance: according to sec.50 of the Act, if the buyer is
intentionally and wrongfully refusing to accept the goods and pay for the same,
the seller may sue the buyer for non-acceptance of goods.
 COMPARISON OF INDIAN LAW AND INTERNATIONAL LAW :
• The very first difference is regarding the applicability. Sec. 56 of ICA is applicable
only in India whereas the CISG and the UNIDROIT principles are applicable
internationally.
Sec. 56 of the ICA has a binding force in India, there is no need to specifically
incorporate in the contract that the contract would be governed by the provision whereas
that is not the case with CISG and the UNIDROIT principles. They don’t have a binding
force and have to be specifically incorporated in the main sales contract that the
transaction would be governed by CISG or the UNIDROIT principles as the case may be.
Sec. 56 of the ICA or the ICA is formulated by the legislature of India whereas the CISG
or the UNIDROIT principles are formulated by the ICC
Sec. 56 is interpreted in accordance with the common law doctrine of frustration, whereas
the CISG or the UNIDROIT principles are not to be interpreted either in accordance with
common law or in accordance with any other notions of law.
conclusion

 it can be concluded that it is not easy to claim these remedies. The seller has to satisfy
the court to a large extent or we can say that the burden of proof on the seller is very
heavy.
 In other words, it can be said that the parties has to fulfil their contractual obligations in
every way possible. Only in exceptional cases, the parties can be exempted from
liability in case they fails to fulfil his contractual obligations.