SIGNIFICANCE OF A BREACH BEING FUNDAMENTAL
The CISG uses the term “fundamental breach” in various settings. This concept is a milestone in its remedial provisions. Its most important role is that it constitutes the usual precondition for the contract to be avoided (CISG Art. 49(1)(a), Art. 51, Art. 64(1)(a), Art. 72(1), and Art. 73).
In addition, where the goods do not conform to the contract, a fundamental breach can give rise to a requirement to deliver substitute goods. (CISG Art. 46(2)). Furthermore, a fundamental breach of contract by the seller leaves the buyer with all of his remedies intact, despite the risk having passed to him (CISG Art. 70).
DEFINING FUNDAMENTAL BREACH
Article 25 attempts to define fundamental breach in terms of (foreseeable) “substantial detriment.” This chapter focuses on the meaning of substantial detriment and foreseeabilty, as understood by Article 25.
Under the CISG, the basic criterion for a breach to be fundamental is that “it results in substantial detriment to the injured party.” The substantial detriment test is one of the innovations of the Convention as compared with the ULIS. However, the CISG does not define the term “detriment.” Van der Velden argues that
A paraphrase of detriment, acceptable for international use could … be the one given by the Corpus Juris Secundum, namely: … in its technical use it has been said that the detriment need not be real and need not involve actual loss, [n]or does it necessarily refer to material disadvantage to the party suffering it, but means a legal detriment as distinguished from a detriment in fact and has been defined as giving up something which one had the right to keep, or doing something which he had the right not to do [C.J.S., Volume 26a, p.984]