CHAPTER 9: PARTICULAR REMEDIES FOR NON-PERFORMANCE
Section 1 : Right to Performance
Article 9:101 (ex art. 4.101): Monetary Obligations
(1) The creditor is entitled to recover money which is due.
(2) Where the creditor has not yet performed its obligation and it is clear that the debtor will be unwilling to receive performance, the creditor may nonetheless proceed with its performance and may recover any sum due under the contract unless:
(a) it could have made a reasonable substitute transaction without significant effort or expense; or
(b) performance would be unreasonable in the circumstances.
Article 9:102 (ex art. 4.102): Non-monetary Obligations
(1) The aggrieved party is entitled to specific performance of an obligation
other than one to pay money, including the remedying of a defective performance.
(2) Specific performance cannot, however, be obtained where:
(a) performance would be unlawful or impossible; or
(b) performance would cause the obligor unreasonable effort or expense; or
(c) the performance consists in the provision of services or work of a personal character or depends upon a personal relationship, or
(d) the aggrieved party may reasonably obtain performance from another source.
(3) The aggrieved party will lose the right to specific performance if
it fails to seek it within a reasonable time after it has or ought to have
become aware of the non-performance.
Article 9:103 (ex art 4.103): Damages Not Precluded
The fact that a right to performance is excluded under this Section does
not preclude a claim for damages.
Section 2 : Right To Withhold Performance
Article 9:201 (ex art 4.201): Right to Withhold Performance
(1) A party who is to perform simultaneously with or after the other party
may withhold performance until the other has tendered performance or has
performed. The first party may withhold the whole of its performance or
a part of it as may be reasonable in the circumstances.
(2) A party may similarly withhold performance for as long as it is clear
that there will be a non-performance by the other party when the other party's
performance becomes due.
Section 3 : Termination Of The Contract
Article 9:301 (ex art. 4.301): Right to Terminate the Contract
(1) A party may terminate the contract if the other party's non-performance
is fundamental.
(2) In the case of delay the aggrieved party may also terminate the contract
under Article 8:106 (3).
Article 9:302 (ex art 4.302): Contract to be Performed in Parts
If the contract is to be performed in separate parts and in relation to
a part to which a counter-performance can be apportioned, there is a fundamental
non-performance, the aggrieved party may exercise its right to terminate
under this Section in relation to the part concerned. It may terminate the
contract as a whole only if the non-performance is fundamental to the contract
as a whole.
Article 9:303 (ex art. 4.303): Notice of Termination
(1) A party's right to terminate the contract is to be exercised by notice
to the other party.
(2) The aggrieved party loses its right to terminate the contract unless it gives notice within a reasonable time after it has or ought to have become aware of the non-performance.
(3) (a) When performance has not been tendered by the time it was due, the aggrieved party need not give notice of termination before a tender has been made. If a tender is later made it loses its right to terminate if it does not give such notice within a reasonable time after it has or ought to have become aware of the tender.
(b) If, however, the aggrieved party knows or has reason to know that the other party still intends to tender within a reasonable time, and the aggrieved party unreasonably fails to notify the other party that it will not accept performance, it loses its right to terminate if the other party in fact tenders within a reasonable time.
(4) If a party is excused under Article 8:108 through an impediment which
is total and permanent, the contract is terminated automatically and without
notice at the time the impediment arises.
Article 9:304 (ex art. 4.304): Anticipatory Non-Performance
Where prior to the time for performance by a party it is clear that there
will be a fundamental non-performance by it the other party may terminate
the contract.
Article 9:305 (ex art. 4.305): Effects of Termination in General
(1) Termination of the contract releases both parties from their obligation to effect and to receive future performance, but, subject to Articles 9:306 to 9:308, does not affect the rights and liabilities that have accrued up to the time of termination.
(2) Termination does not affect any provision of the contract for the
settlement of disputes or any other provision which is to operate even after
termination.
Article 9:306 (ex art. 4.306): Property Reduced in Value
A party who terminates the contract may reject property previously received
from the other party if its value to the first party has been fundamentally
reduced as a result of the other party's non-performance.
Article 9:307 (ex art. 4.307): Recovery of Money Paid
On termination of the contract a party may recover money paid for a performance
which it did not receive or which it properly rejected.
Article 9:308 (ex art 4.308): Recovery of Property
On termination of the contract a party who has supplied property which can
be returned and for which it has not received payment or other counter-performance
may recover the property.
Article 9:309 (ex art. 4.309): Recovery for Performance that Cannot be
Returned
On termination of the contract a party who has rendered a performance which
cannot be returned and for which it has not received payment or other counter-performance
may recover a reasonable amount for the value of the performance to the
other party.
Section 4 : Price Reduction
Article 9:401 (ex art 4.401): Right to Reduce Price
(1) A party who accepts a tender of performance not conforming to the contract
may reduce the price. This reduction shall be proportionate to the decrease
in the value of the performance at the time this was tendered compared to
the value which a conforming tender would have had at that time.
(2) A party who is entitled to reduce the price under the preceding paragraph and who has already paid a sum exceeding the reduced price may recover the excess from the other party.
(3) A party who reduces the price cannot also recover damages for reduction
in the value of the performance but remains entitled to damages for any
further loss it has suffered so far as these are recoverable under Section
5 of this Chapter.
Section 5 : Damages and Interest
Article 9:501 (ex art. 4.501): Right to Damages
(1) The aggrieved party is entitled to damages for loss caused by the other
party's non-performance which is not excused under Article 8:108.
(2) The loss for which damages are recoverable includes:
(a) non-pecuniary loss ; and
(b) future loss which is reasonably likely to occur.
Article 9:502 (ex art 4.502): General Measure of Damages
The general measure of damages is such sum as will put the aggrieved party
as nearly as possible into the position in which it would have been if the
contract had been duly performed. Such damages cover the loss which the
aggrieved party has suffered and the gain of which it has been deprived.
Article 9:503 (ex art. 4.503): Foreseeability
The non-performing party is liable only for loss which it foresaw or could
reasonably have foreseen at the time of conclusion of the contract as a
likely result of its non-performance, unless the non-performance was intentional
or grossly negligent.
Article 9:504: Loss Attributable to Aggrieved Party (new; previously
part of 4.504)
The non-performing party is not liable for loss suffered by the aggrieved
party to the extent that the aggrieved party contributed to the non-performance
or its effects.
Article 9:505: Reduction of loss (previously part of 4.504)
(1) The non-performing party is not liable for loss suffered by the aggrieved
party to the extent that the aggrieved party could have reduced the loss
by taking reasonable steps.
(2) The aggrieved party is entitled to recover any expenses reasonably
incurred in attempting to reduce the loss.
Article 9:506 (ex art. 4.505): Substitute Transaction
Where the aggrieved party has terminated the contract and has made a substitute
transaction within a reasonable time and in a reasonable manner, it may
recover the difference between the contract price and the price of the substitute
transaction as well as damages for any further loss so far as these are
recoverable under this Section.
Article 9:507 (ex art. 4.506): Current Price
Where the aggrieved party has terminated the contract and has not made a
substitute transaction but there is a current price for the performance
contracted for, it may recover the difference between the contract price
and the price current at the time the contract is terminated as well as
damages for any further loss so far as these are recoverable under this
Section.
Article 9:508 (ex art. 4.507): Delay in Payment of Money
(1) If payment of a sum of money is delayed, the aggrieved party is entitled
to interest on that sum from the time when payment is due to the time of
payment at the average commercial bank short-term lending rate to prime
borrowers prevailing for the contractual currency of payment at the place
where payment is due.
(2) The aggrieved party may in addition recover damages for any further
loss so far as these are recoverable under this Section.
Article 9:509 (ex art. 4.508): Agreed Payment for Non-performance
(1) Where the contract provides that a party who fails to perform is to
pay a specified sum to the aggrieved party for such non-performance, the
aggrieved party shall be awarded that sum irrespective of its actual loss.
(2) However, despite any agreement to the contrary the specified sum
may be reduced to a reasonable amount where it is grossly excessive in relation
to the loss resulting from the non-performance and the other circumstances.
Article 9:510 (ex art. 4.509): Currency by which Damages to be Measured
Damages are to be measured by the currency which most appropriately reflects
the aggrieved party's loss.