SIMILARITIES BETWEEN THE COUNTERPART PROVISIONS ON THE EFFECT OF CONTRACTUAL AVOIDANCE IN THE CISG AND THE PECL

The operation of CISG Article 81

In Section IV of the Convention, entitled Effects of Avoidance, Article 81 provides that an avoidance of the contract allows parties to terminate their respective obligations arising out of the contract: “Avoidance is a process through which an aggrieved party, by notice to the other side, terminates the contractual obligations of the parties. If the contract is not avoided, the Convention contemplates that the basic exchange of goods and price will be completed despite a breach, with damages or other remedies to compensate for defects in the exchange.”

“The primary effect of the avoidance of the contract by one party is that both parties are released from their obligations to carry out the contract. The seller need not deliver the goods, and the buyer need not take delivery or pay for them.” However, avoidance of a contract does not affect any provision of the contract that governs the rights and obligations of the parties subsequent to the avoidance of the contract, nor does it eliminate the right to seek damages for breach of the contract. Furthermore, the enumeration in Article 81(1) of two typical contract clauses that are not terminated by the avoidance of the contract is not exhaustive. Some continuing obligations are set forth in other CISG provisions, whereas others may be found in the contract itself or may arise out of fairness considerations.