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by Joseph Lookofsky
In light of the decision by the
Belgian Supreme Court in Scafom International v. Lorrain Tubes (2009), American
contract law practitioners need to be aware of the relationship between an
exemption from liability for non-performance under CISG Article 79 and the more
fluid concept of financial "hardship" as recognized in Belgium and a
number of other CISG Contracting States. The case is discussed in this article
by Professor Joseph Lookofsky.
The United Nations Convention
on Contracts for the International Sale of Goods (CISG) is currently in force
in the United States, as well as more that 75 other CISG Contracting States. In
light of the controversial decision by the Belgian Supreme Court in Scafom
International v. Lorrain Tubes (2009) American contract law practitioners
must be aware of the relationship between an exemption from liability for
non-performance under CISG Article 79 and the more fluid concept of financial
"hardship" as recognized in Belgium and a number of other CISG
Impracticability under the UCC
Although the concept of hardship is largely foreign to American legal doctrine,
commercial practitioners in the U.S. are likely to be familiar with UCC §
2-615, which provides authority to relieve a non-performing seller by reason of
impracticability. These practitioners know that American courts apply § 2-615
with caution and that they are highly unlikely to excuse a non-performing
seller by reason of changed economic circumstances, such as increased
Liability Exemptions under the CISG
If a merchant based in California buys goods - say 10 dozen dresses or 1,000
pounds of cheese - from a seller in France, that contract is governed by the
CISG (by default), 7 simply
because the parties have their places of business in different CISG Contracting
States. That French seller is of course bound to deliver the goods as promised,
just as the California buyer is bound to pay the price agreed. In exceptional
circumstances, however, a CISG seller who does not perform as promised might
seek a liability "exemption" - this by virtue of an "impediment"
which (allegedly) renders performance impossible (or at least impracticable, to
borrow a UCC term). Paragraph 1 of CISG Article 79 provides:
A party is not liable
for a failure to perform any of his obligations if he proves that the failure
was due to an impediment beyond his control and that he could not reasonably be
expected to have taken the impediment into account at the time of the
conclusion of the contract or to have avoided or overcome it or its
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Joseph Lookofsky is Professor of Commercial Law at the University of Copenhagen.
He is a native of New York and studied law at the New York University School of
Law (J.D. 1971). After his admission to the New York State Bar, he served as
in-house legal counsel for United Artists Corporation. Later, Mr. Lookofsky
relocated in Denmark and studied law at the University of Copenhagen where he
received his Danish degrees (cand.jur. 1981; dr.jur. 1989). His numerous books
and articles comprise topics within the law of Contracts, Domestic and
International Sales, Transnational Litigation & Commercial Arbitration,
Conflict of Laws, and Comparative Law.