INTRODUCTION TO THE CONCEPT OF “EXEMPTION” IN ARTICLE 79 CISG

Different legal concepts exist in all legal systems dealing with the problem of changed circumstances and excusing a party from performance of its obligations when a contract has become unexpectedly onerous or impossible to perform. Some systems only accept a narrow range of excuses; others are more generous (e.g., the concepts of imprévision or hardship, force majeure, or Wegfall der Geschäftsgrundlage).

The rules dealing with situations of changed or supervening contractual circumstances are based on the two basic concepts of hardship and force majeure – they constitute exceptions to the cardinal canon of pacta sunt servanda and ameliorate its strictness.

Hardship refers to the performance of the disadvantaged party having become much more burdensome, but not impossible, whereas force majeure refers to the performance of one party's obligations that has become impossible, even on a temporary basis.

IS HARDSHIP COVERED UNDER ARTICLE 79 CISG?

The CISG deals with the issue of changed circumstances on an international level by avoiding any reference to existing domestic concepts.

The most difficult question concerning the application of Article 79 CISG is whether situations of hardship (i.e. where the performance by one of the parties has become much more onerous and difficult – but not impossible – usually in financial terms) are covered in the embedded exemption.