AN ASSESSMENT OF THE EFFICIENCY OF REMEDIES FOR BREACH OF CONTRACTS OF SALE UNDER THE CISG AND OHADA UAGCL

ABSTRACT

In the international sale of goods, goods are generally commercialized through contracts of sale wherein parties in such a contract have obligations toward each other and if one party fails to respect his obligation per the terms of the contract, the party is in breach which warrants the injured party to seek for legal redress under the CISG and OHADA UAGCL. Apparently, remedies under the consistent scheme for contracts of sale is to determine the available efficient remedies for breach of contracts of sale.

The problem however is the failure of one party to perform his own part of the contract to completion per the contract stipulations. When one party doesn’t perform his own part of the contract he is in breach. Parties mutually agree on the terms of a contract and have obligations towards each other. Basically, these rights and duties of buyer and seller to a contract have to be fulfilled in its true spirit. The contract between the buyer and the seller creates reciprocal rights and obligations whereby, breach by one, either party will warrant appropriate remedies to satisfy the other. It is always the intention of parties to carry out their transactions without squabbles but as it has been shown in many cases, there are always some situations where one of the parties may not transact in consonance with the express and implied terms of the contracts of sale.

The study finds the CISG and OHADA playing a very greater role in regulating breach of contract so that one party is not made better off and another worse off, thereby protecting an injured party. This has stimulated the candidate to investigate if there exist some elements of remedies under the two legal system that can satisfy a non-breaching party. The study is carried out specifically in international sale of goods and it employs both the primary and secondary sources of information. Findings reveal that there exists an institutions to protect and satisfy injured parties in contracts. This institution are the courts. Worthy of note is the fact that in spite of the availability of the State court institutions, the attempt to satisfy an injured party is unfounded and wanting.

This has led to dare consequences on the injured party in contracts of sale. Thus, this study upholds the policy of paying particular attention to the rights of non-breaching parties in contracts of sale. Hence, this study will stipulate positive action in the management of breach in contracts of sale and to improve the existing machinery for acquiring remedies when breach occurs. This research will to this extent contribute to the introduction of reforms in the domain of international contracts of sale to eradicate future dispute between contracting parties by the current failure to perform in a contract of sale.

CHAPTER ONE

GENERAL INTRODUCTION

BACKGROUND TO THE STUDY

After the First World War, as the international trade community was redeveloping, it was observed by the famous German jurist Rabel that an international uniform sales law was needed. Whilst each state had its own national sales laws, in principle no other state was oblige to recognise or even apply them. Further since international commercial transactions involved more than one jurisdiction, perhaps because the parties were from different states and also because the place of performance would likely be in a third state, determining the applicable substantial law was far from straight forward. Moreover, the party’s rights and obligation varied depending on the law of the state applicable to the contract. However, the parties could avoid such uncertainty by including a choice-of-law clause in their contract, but the clause was again subject to private international law. Nevertheless, the fact was that at least one of the parties would be faced with the application of a foreign legal system of which it might have little or no knowledge.[1]In the words of Rabel:

To avoid this complication and to substitute a reasonably concise body of clear and simple written rules could not be a loss, and still less would it be a loss to have to consult only one law commented on by the courts and scholars of the world instead of innumerable different foreign legislations.[2]

As international trade and other cross-border commercial activities began expanding around the first half of the 20^th century, due to improvement in transport and communication, there was a great need to establish a unified legal framework to regulate international sale of goods [thereafter, referred as CISG or convention] was created in April 1980 in Vienna, and went to force on January 1^st, 1988.

The convention of international sale of goods is the most successful international instrument in the field of commercial law. It was drafted by the united Nation commission for international trade law [UNCITRAL] in 1980. Since then, it has been enacted by 76 contracting states, among them are major trading nations such as the USA, China, India, Germany, and Russia. The CISG[3]covers, in principle, approximately 80percent of all international sale contracts.[4]

An estimated 3.000 published court decisions and arbitral award and abundance scholarly writing, numerous conferences and other events show the prominent role the CISG play in legal practice, legal science and legal education.

Furthermore, the CISG has influence many international and national laws. at the international level, the UNIDROIT principle of international commercial contracts, the principles of European contract law [PECL], the EC directives on certain aspects of the sale of consumer goods [5].

The United Nations Convention on Contracts for the International Sale of Goods applies to sales contracts and between parties whose places of business are in different States. This convention does not apply to sales of goods bought for personal, family or household use, unless the seller, at any time before or at the conclusion of the contract, neither knew nor ought to have known that the goods were bought for any such use.

Under the CISG, a breach of contract committed by one of the parties is fundamental if it results in such detriment to the other party as substantial 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.

Despite the remarkable achievement and worldwide recognition, many still wonder why a lot of African countries are not part of the convention. In fact, only 13 countries out of 54 in the continent have ratified it.[6]Amongst trading nations, the most prominent African countries that are non-members include; the Republic of South Africa, Nigeria, Kenya. In fact, many Africans are of the view that unification of laws could be more effective if done at the regional levels, rather than in a general global context.

One reason for the success of the convention is the way in which its provisions on remedies are structured. An approach was chosen in the convention which focuses on the consequences of breach rather than on its origin. The starting point is ‘‘failure to perform any of [one’s] obligations under the contract or this convention’’[7] This failure to perform may consist of late performance, lack of conformity of the goods, breach of duties of information or duties of care. The convention uses one single formula to describe the violation of contractual obligations. The only additional element used to qualify the breach of contract relates to its severity; if the breach is fundamental[8]. The aggrieved party may choose from a larger palette of remedies than if the breach is a ‘‘simple’ ’one.

The integrative terminology which has been chosen by the convention avoids overly theoretical debates about the causes of the breach and turns the attention to the question which is the really important one in legal practice the rights available to either of the parties in case of breach of contracts

The way in which the remedies are chosen, structure, and conceptualised in the convention is a real master piece. The convention was the first legal instrument to introduce certain key elements which, since then, have been applied and copied with great success, such as a clear-cut remedies concept, a fortunate combination of civil law and common law approaches, simple terminology, and an avoidance of overly formal procedures. Moreover, the remedies system of the CISG is regarded as providing a fair balancing of the parties’ interest and has won favour with many domestic laws and international unification projects[9]

From the regional level under the OHADA UAGCL[10], the system of remedies follows to a greater extent the civil law system of remedies[11] whereby upon breach of contract, specific performance is the primary remedy available to the aggrieved party aim at compelling the breaching party to perform his/her obligations. it is only when all attempts to compel performance turn to be ineffective or inadequate that the judicial decree will be granted either for reward of damages or the avoidance of the contract. Generally, the purpose of awarding relief upon breach of contract is to put the parties in the situation they would have been, if the contract was properly performed. Under the UAGCL, the remedies of specific performance are broad, this kind of remedy is strongly in favour of the buyer, where it could be exercised in situations where the seller happens to fail in all his or her obligations under a contract of sale. In applying for specific performance, the buyer may require the seller to repair the goods[12] or to substitute them[13]or to withhold performance[14] an additional period of time may be granted for the seller to complete performance of his obligations[15] the buyer has the right at some points to reduce the price[16]

In another instance, under the UAGCL, when the breach of contract is so severe so much such that a contracting party will be substantially deprived[anticipatory breach][17] or is substantially deprived [ actual breach] of what he is expecting under the contract, the remedy of avoidance is the appropriate remedy. As a general rule, one’s fundamental breach is satisfied, the aggrieved party is entitled to the remedy of avoidance.

Moreover, under the UAGCL, upon exercising any of the remedy available due to breach of contract, the buyer may still have the right to claim damages alongside.

However, it should be noted that the seller will be exonerated from the breach of contract if the failure is caused by force majeure[18], an act of a third party or an impediment beyond his/her control. In fact, the Uniform Act on General Commercial Law date December 15, 2010 entered into force in May 2011 and, from that date on, fully replaced the previous Act dated April 17, 1997. Broadly, this Act covers those matters of business law which do not fall within the ambit of the other uniform Acts. Commercial law is designed to embrace special rules applicable to business operators and business transactions. This law is special because of particularity of applicable procedures and accomplished actions. On daily basis, the business activity life is essentially organized around the commercial law which is mostly composed with professionals and consumers. Their actions contribute to the effectiveness of free commerce principle guaranteed by the constitution.

This study therefore provides a critical review of the obligations of parties and the efficiency of remedies for breach in a contract of sale wherein principles governing an award of remedies to an aggrieved party for breach of contract of sale of goods under the CISG and OHADA UAGCLwill be reviewed. Basically, it will start by critically examining the obligations of parties in a contract sale, then probe next into the available remedies offered to both parties under the CISG and OHADA UAGCL, the third part will dwell on how satisfactory or efficient are the remedies to an aggrieved party. The lastly possible recommendations.

1.2 STATEMENT OF THE PROBLEM

Contracts of sale occupy a predominant place in international sale of goods, under the United Nations Convention for the Contracts of International Sale of Goods (CISG) and OHADA, Goods are generally commercialised through the medium of contracts, the CISG brings in risk through its article 11, which says that contract of sale need not be in writing and is not subject to any other requirement as to form which therefore leads to uncertainty, when one party doesn’t perform his own part of the contract he is in breach. Parties mutually agree on the terms of a contract and have obligations towards each other. Basically, these rights and duties of buyer and seller to a contract have to be fulfilled in its true spirit. The contract between the buyer and the seller creates reciprocal rights and obligations whereby, breach by one, either party will warrant appropriate remedies to satisfy the other. It is always the intention of parties to carry out their transactions without squabbles but as it has been shown in many cases, there are always some situations where one of the parties may not transact in consonance with the express and implied terms of the contracts of sale.

1.3 RESEARCH QUESTIONS

Based on the above-mentioned problem, this study seeks to address the following questions.

1.3.1 Main research questions

Are remedies provided for breach of contracts of sale under the CISG and UAGCL efficient?

1.3.2 Specific research questions

• What constitute breach and parties performance in contracts of sale?
• What are the available remedies offered to both parties under CISG and UAGCL in case of a breach?
• To what extent are these remedies efficient?
• What are the possible recommendations

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