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A Study for Fundamental Non-Performance for Termination of Contract in PICC

  • Journal of International Business Transactions Law
  • Abbr : IBT
  • 2017, (18), pp.101-141
  • Publisher : The Institute for Legal Studies Dong-A University
  • Research Area : Social Science > Law > Private Law > International Commercial Transactions Law

Gwak,Minhui 1

1숙명여자대학교

Candidate

ABSTRACT

PICC Art.7.3.1 is one of the most important provision of the PICC. It sets out the requirements which must be met if one party wishes to terminate the contract in response to the other party’s non-performance. Art.7.3.1(1) gives the basic rule: termination will be available as a remedy if the other party’s non-performance amounts to a fundamental non-performance. This provision applies to any type of non-performance. Art.7.3.1(2) provides criteria that may be used to determine whether a non-performance is fundamental. Art.7.3.1 does not attempt to give an exhaustive definition of ‘fundamental non-performance’. Rather, the provision is based upon the assumption that determining whether the non-performance was ‘fundamental’ has to be answered by analysing the specific circumstances of each individual case and by weighing different criteria. Therefore, This article discusses requirements of termination of contract, each factors of ‘fundamental non-performance’. As a result of this review, The following points were identified as follows: The ‘substantial deprivation’ factor in Art. 7.3.1(2)(a) is the most important factor determining whether the non-performance is to be fundamental non-performance. The ‘strict compliance’ factor in 7.3.1(2)(b) emphasizes the nature of the contractual obligation that was breached. The ‘intention’ factor in 7.3.1(2)(c) only concentrates on the non-performing party. The ‘loss of reliance’ factor in 7.3.1(2)(d) addresses the situation where future performances would be due by the non-performing party. Finally, the ‘disproportionate loss’ factor in 7.3.1(2)(e) takes into account the non-performing party’s interest not letting its preparations for performance be frustrated.

Citation status

* References for papers published after 2022 are currently being built.

This paper was written with support from the National Research Foundation of Korea.