Week 6: Contractual Remedies 1

Mapping Tasks: The National Rules on Performance and Remedies under EU Law
French Law Dutch Law German Law English Law EU Law
Under what Concepts Concepts Concepts Concepts Provisions
circumstances Astreinte - court Dwangsom – Ordnungsgeld – A contract is Art. 3 CSD: the
is an action for can impose court can court can seen as an consumer has
performance penalties to impose impose economic certain
available? force party to penalties to penalties to device – if one remedies in
perform force party to force party to assumes that a case the goods
Provisions perform perform contract is that they
Art. 1217: “The Provisions Provisions concluded to receive do not
party against Art. 3:296: §241 (1): “by make a profit, meet the
whom a “Unless virtue of an it is just as conformity
contractual otherwise obligation good to get standards
obligation has provided by law, relationship, the the money required by
not been the nature of an creditor is value as it is to CSD
performed or obligation or a entitled to claim obtain Art. 2 CSD:
has been legal act, he performance performance seller is under
performed who is obliged from the in natura duty to deliver
imperfectly may as against debtor. Provisions goods to
seek specific another to give, §271: “(1) If the Cases consumer
enforcement of to do or not to time for Taylor v which are in
the obligation.” do something is performance is Caldwell conformity
Art. 1221: “The held to do so by neither (1863): court with contract
creditor of an the court at the specified nor held that of sale
obligation may request of he evident from defendant was Art. 2(3): there
after formal who has this the excused for will be no lack
notice seek right.” circumstances, their non- of conformity
performance Art. 6:38: “If no the creditor may performance – where
unless such time has been demand doctrine of consumer at
performance is determined for performance frustration time of
impossible of if the immediately, becomes conclusion of
the cost of such performance, and the debtor default rule in contract was
performance for the obligation may effect it English law aware or could
the debtor in may be immediately. (2) not reasonably
good faith is performed If a time has be unaware of
manifestly immediately, been specified, the lack of
disproportionat and then in case of conformity or
e to the interest performance doubt it must be if the lack of
of the creditor.” may be assumed that conformity
Art. 1195: “If a demanded the creditor may originates in
change of immediately.” not demand the materials
circumstances Art. 6:258: “1. performance supplied by
unforeseeable Upon the prior to that the consumer
at the time of demand of one time, but the
the conclusion of the parties, debtor may
of the contract the court may effect it earlier.”
 renders adapt the §313: “1. If
performance effects of the circumstances
excessively contract or upon which a
onerous for a terminate the contract was
party who had contract in based have
not accepted whole or in part significantly
the risk of such on the basis of changed since
a change, that unforeseen the contract
party may ask circumstances was entered
the other which are of into and if the
contracting such a nature parties would
party to that the other not have
renegotiate the party, according entered into the
contract. The to criteria of contract or
first party must reasonableness would have
continue to and fairness, entered into it
perform his may not expect upon different
obligations that the terms if they
during contract be had foreseen
renegotiation.” maintained in this change,
Cases an unmodified adaptation of
Velhadj v Les form.” the contract
Batisseurs du Cases may be
Grand Delta Multi Vastgoed demanded to
[2005] – family v Nethou, 2001 the extent that,
house built – performance one of the
33cm lower was must in general parties cannot
ordered by entirely match reasonably be
court to be what the parties expected to
demolished agreed upon continue to be
even though it bound to the
was not unfit for contract
its purpose without
adaptation.”
Under what Concepts Concepts Concepts Concepts Concepts
circumstances Provisions Provisions Provisions Provisions Provisions
is an action for Art. 1221: “The Cases §275(2): “The S. 52 Sale of Art. 9:102
perform creditor of an debtor may Goods Act PECL:
unavailable? obligation may refuse 1979: where performance
after formal performance to goods are in can no longer
notice seek the extent it some way be demanded
performance requires unique, it when
unless such expenditure would not be performance
performance is which, taking able to would cause
impossible of if into account the possible to the debtor
the cost of such content of the obtain ‘unreasonable
performance for obligation substitute effort or
the debtor in relationship and performance expense’
 good faith is the on basis of Cases
manifestly requirements of damages
disproportionat good faith, is claim.
e to the interest grossly Cases
of the creditor.” disproportionat Cooperative
Cases e to the interest Insurance
of the creditor Society v Argyll
in Stores Holding
performance.” (1998):
Cases damages
would not be
an adequate
remedy
because of
difficulties
relating to
quantifying
claimant’s loss
over full term
of lease
Liston v SS
Carpathian
[1915] –
impossibility is
a valid excuse
for non-
performance
How can Concepts Concepts Concepts Concepts Concepts
performance Astreinte - court Dwangsom – Ordnungsgeld – Provisions Provisions
be claimed/ can impose court can court can Cases Cases
enforced? penalties to impose impose
force party to penalties to penalties to
perform force party to force party to
Provisions perform perform
Art. L1111-1 Provisions Provisions
French Conde Cases §887(1) German
on Civil Code of Civil
Execution Procedure: if
Procedures: the debtor does
“each creditor not perform,
can, under the the creditor is to
conditions laid be authorized
down by the by the court to
law, force his have
defaulting performance
debtor to rendered at the
perform his expense of the
obligations” debtor
What is the - Art. 2: the seller must deliver the goods to the consumer in conformity with the
system of contract of sale
remedies for - Art. 3 lists the rights of the consumer and gives the consumer the right to
consumers performance by way of repair or replacement in case the original performance
provided by revealed a lack of conformity
Directive
99/44 on sale
of consumer
goods and
associated
guarantees?

Discussion Task: Remedies

 What is the approach towards generic goods?
Generic goods are goods that are only defined on the basis of their quantity, type, quality
or weight. In cases of the sale of generic goods, there can never a case of absolute
impossibility, also known as genus non perit. The seller is always expected to find similar
goods, even if the specific goods she had in mind to sell no longer exist.
 What has been the effect of the European Directive in this area?
An EU directive was established to regulate the relationship between business to consumer
contracts. This directive creates a set of minimum rights for consumers that are applicable
no matter in which Member State they purchase their goods. Member States are allowed
to offer more protection – and have often done so – but the rights given by the directive
are what the consumer can in any case rely upon in a B2C-sales contract.
 Can unforeseen circumstances be taken into account, and if so how?
In practice, parties in any commercial contract of some value, in particular if long-term, will
include a clause on the impact of unexpected events, for example a force majeure clause. It
would read this way: ‘A party to this contract shall not be liable in the event of non-
performance of any obligation under this contract by reason of strikes, fire, disease, Act of
God, and any other incident of any nature beyond the control of the relevant party. The
clause could also include an obligation to renegotiate the contract to deal with the
hardship. The English reluctance to allow a party to escape from an onerous contract can
be explained from this: if the parties can contractually provide for unforeseen
circumstances, it comes at their risk if they do not.
 If there is a case of unforeseen circumstances, what consequences could that have for a
contract?
In case of unforeseen circumstances, as these are considered part of the doctrine of
frustration, a contract can lead to the termination of a contract.
Notes for Videos
Video 6.1 – Consumer Sales Directive: Introduction and Conformity
- CSD Art. 1: Directive intends to provide a uniform minimum level of consumer protection
with a view to facilitating internal market
o Relates to certain aspects of contracts of sale relating to consumer goods
o Contract of sale b/w seller and consumer in relation to consumer goods
 Consumer has certain rights that arise out of directive
- Art. 1(2)(a) CSD: consumer is any natural person acting for purposes not related to his
trade, business or profession
 - Art. 1(2)(c) CSD: seller is any natural/legal person who under a contract sells consumer
goods in the course of the trade, business or profession
- Art. 1(2)(b) CSD: consumer goods shall mean any tangible movable item with the exception
of goods sold by way of execution or by authority of law (exception of water or gas and
electricity)
- Art. 3 CSD: the consumer has certain remedies in case the goods that they receive do not
meet the conformity standards required by CSD
- Art. 2 CSD: seller is under duty to deliver goods to consumer which are in conformity with
contract of sale
o Art. 2(2) CSD: goods are presumed to be in conformity with the contract if they:
 (a) comply with the description given by the seller and possess the qualities
of the goods which the seller has held out to the consumer as a sample or a
model.
 (b) are fit for any particular purpose for which the consumer requires them
and which he made known to the seller at time of the conclusion of the
contract.
 (c) are fit for the purposes for which goods of the same type at normally
used.
 (d) show the quality and performance which are normal in goods of the
same type and which. The consumer can reasonably expect given the nature
of the goods and taking into account any public statements on the specific
characteristics of the goods made about them by the seller, the producer or
his representative, particularly in advertising or on labelling.
 Art. 2(4): seller should not be bound by public statements if he
shows that he was not or could not reasonably have been aware of
the statement in question or where he shows that by the time of the
conclusion of the contract the statement had been corrected or that
the decision to buy the consumer goods could not have been
influenced by the statement.
o Art. 2(3): there will be no lack of conformity where consumer at time of conclusion
of contract was aware or could not reasonably be unaware of the lack of conformity
or if the lack of conformity originates in the materials supplied by the consumer
o Art. 2(5): goods that have been incorrectly installed is equivalent to lack of
conformity if the installation forms part of the contract of sale
 Seller is responsible of installation or installation occurred under his
responsibilities, eg. Third party contracted to install goods
 If incorrect installation has been done by consumer due to shortcoming in
installation instructions

Videos 6.2 – Consumer Sales Directive – Remedies

- Art. CSD states requirements for conformity/lack of conformity
- Art. 3 CSD: rights of consumer
o What consumer can do in case of lack of conformity
o Art. 3(1): seller shall be liable to consumer for any lack of conformity that exists at
the time that the goods were delivered – “legal guarantee”
o Art. 3(2): in case of lack of conformity, consumer shall be entitled to have the good
brought into conformity free of charge by repair or replacement or to have an
appropriate reduction made in the price or to have the contract rescinded
  1. Repair or replacement (performance orientated)
 2. Price reduction
 3. Rescission (termination)
o Art. 3(3): in first place, consumer may require seller to repair the goods or may
require the seller to replace them, always free of charge unless this would be
impossible or disproportionate
 Factors to be considered when considering whether repair or replacement is
disproportionate:
 Values of good if no lack of conformity
 Significance of lack of conformity
 Whether alternative remedy could be completed without significant
inconvenience to consumer
 Art. 3(5) consumer may require an appropriate reduction of the price or
have the contract rescinded: if the consumer is entitled neither repair or
replacement or if the seller has not completed the remedy of repair or
replacement within a reasonable time, or if the seller has not completed the
remedy of repair or replacement without significant inconvenience to
consumer
o Art. 3(6): rescission is not available where lack of conformity is minor

Videos 6.3 – Consumer Sales Directive: Guarantees

- Art. 5: seller shall be held liable under art. 3 where lack of conformity becomes apparent
within two years from delivery of goods
o Art. 5(2): consumer may be required to notify seller of lack of conformity within two
months of discovering lack of conformity of goods
o Art. 5(3): unless otherwise provided, any lack of conformity which becomes
apparent within six months of the delivery of the goods shall be presumed to have
existed at the time of delivery unless presumption is incompatible with nature of
goods or nature of lack of conformity
 After six months, up to consumer to prove lack of conformity in accordance
with directive
- Art. 6 CSD: any additional undertaking given by a seller/producer over and above legal
rules governing sale of consumer goods to reimburse the purchase price to exchange,
repair or handle a product in any way in the case of lack of conformity of product with
contract – contractual terms that a seller or producer may provide to consumer
o Seller/producer is bound by any guarantee that they provide
o Guarantee shall state that consumer has legal rights under applicable national
legislation
 Legal rights are not affected by contractual guarantees
o Art. 6(2): guarantee provided by seller/producer sets out in plain, intelligible
language the contents of the guarantee and the essential particulars necessary for
making claims under the guarantee
 Notably duration and territorial scope
 Name and address of guarantor
- Art. 7: directive contains mandatory law – any contractual terms or agreements concluded
with seller before lack of conformity brought to sellers’ attention which directly or
indirectly waive or restrict the rights resulting from this directive shall as provided for by
national law not be binding on the consumer
 o Not possible for seller to contract out of these legal rights that consumer has in
these contracts for consumer goods
Videos 6.4 – Remedies: Performance - Civil Law
- When looking at performance and remedies, there is a difference b/w civil and common
law
- In civil law jurisdictions, the right to performance is primary remedy
o In English law, performance is an exceptional rule or a discretionary remedy –
secondary remedy in case of breach of contract
 Specific performance is equitable remedy – only available when common
law remedy of damages in inadequate
- Right to performance in different jurisdictions:
o §241 BGB: “by virtue of an obligation relationship, the creditor is entitled to claim
performance from the debtor.
o Art. 1217 c. civil: “The party against whom a contractual obligation has not been
performed or has been performed imperfectly may seek specific enforcement of
the obligation.”
o Art. 1221 c. civil: “The creditor of an obligation may after formal notice seek
performance unless such performance is impossible of if the cost of such
performance for the debtor in good faith is manifestly disproportionate to the
interest of the creditor.”
o Dutch law generally recognizes that where contract has been validly formed the
parties have a right to obtain performance from other party
 Art. 3:296 BW: “Unless otherwise provided by law, the nature of an
obligation or a legal act, he who is obliged as against another to give, to do
or not to do something is held to do so by the court at the request of he
who has this right.”
 Procedural basis on which to initiate claim for performance
- In case of defective performance or faulty performance, first thing claimant will do is
contact other party to seek performance
o If party refuses to performance obligation, possible for claimant to seek court order
commanding performance of debtor of obligation
- If party refuses to perform despite court order, possible for bailiff to seize property of
debtor to fulfil court order
- Courts may incentivize debtors to perform by placing penalties
o Astreinte – French law
o Ordnungsgeld – German law
o Dwangsom – Dutch law

Videos 6.5 – Remedies: Performance and Impossibility

- Claim to performance is not available where performance would be impossible
- Two main categories of impossibility:
o Absolute impossibility
 Objectively impossible to perform
 Distinction between generic v non-generic goods
 Generic goods  claim for absolute impossibility not available –
always obtain generic goods from another supplier
 Non-generic goods  specific unique goods that cannot be acquired
from alternative supplier absolute impossibility can arise
 o Relative impossibility
 Good reasons to regard performance as good as impossible to perform –
good reasons not to require debtor to perform obligations
 Three subcategories:
 Practical impossibility
o Although performance is possible, it would cause
unreasonable effort or expense to debtor
 §275(2) BGB
 Art. 1221 c. civil
 Moral impossibility
o Although performance is possible, requiring performance
would be unreasonable because it would bring danger to
person’s freedom
 Legal impossibility
o After conclusion of law, it is legally impossible to perform
contract
o Contract performance would be prohibited due to public
policy/good morals
- Limitations to claim to perform are found in contracts for personal services
o Contracts where services to be rendered can only be rendered by specific
contracting party
 Eg. Contract with author to write book
 Eg. Contract with band to perform at concert
o Law will generally not enforce contract where personal character of contracting
party is essential for party
 Unreasonable to enforce contract as it infringes on person’s liberty
 Where person is forced to perform work, unlikely to deliver work of high
quality
 Difficult for court to determine whether or not party has actually performed
to required quality of contract

Videos 6.6 – Remedies: Performance - English Law

- Primary remedy in English law is claim for damages
- Claim to performance arises out of equity
o Equitable remedies are discretionary/exceptional
 Depend on whether or not remedy at common law would lead to equitable
result
- Claim to specific performance arise only when damages would be inadequate remedy for
breach
o Cases where it is not possible using damages awarded to claim substitute
performance elsewhere
 S. 52 Sale of Goods Act 1979: where goods are in some way unique, it would
not be able to possible to obtain substitute performance on basis of
damages claim.
 Court may exercise discretion and order specific performance
o Contracts relating to land
 All land is considered to be unique by law
  Claim to specific performance arises because even if buyer of land would be
awarded damages and could buy land elsewhere, the land would not be the
same as he would be able to acquire under contract of sale
 Damages are inadequate remedy for land
o Where quantification of damages is difficult
 Where courts find it difficult to assess what measure of damages should be
in case of breach
 Cooperative Insurance Society v Argyll Stores Holding (1998): damages
would not be an adequate remedy because of difficulties relating to
quantifying claimant’s loss over full term of lease
- No general claim to performance in English law
o Party to contract may try to excuse non-performance on basis of frustration
o Doctrine of frustration:
 Paradine v Jane: court denied that there was general excuse of non-
performance n case of frustration – where contracting parties enter into a
contract, they are strictly liable for the performance of the contract -where
they do not perform the contract there will be a claim for damages
 Taylor v Caldwell (1863): court held that defendant was excused for their
non-performance
 LJ Blackburn: “where from the nature of the contract it appears that
the parties must from the beginning have known that it could not be
fulfilled unless when the time for fulfilment of the contract arrived
some particular specified thing continued to exist so that when
entering into the contract they must have contemplated such
existence as the foundation of what was to be done, there in the
absence of any expresso r implied warranty that the things shall
exist, the contract is not to be construed as a positive contract but as
subject to an implied condition that the parties shall be excused in
case before breach performance becomes impossible from the
perishing of the thing without default of the contractor”
 Frustration doctrine is doctrine of excuse – default rule
 Effect of doctrine of frustration is that it brings the contract to an end

Class notes
- Must be breach of contract for remedies
o Minor defect is still a breach
- Three types of remedies:
o Performance
 CSD is only for B2C contracts
o Damages
 For B2B and C2C contracts, must use civil codes
o Termination
- Partial performance: performance is carried out but not completely
- Defective performance: performance that has a defect
- English Law:
o Primary remedy: damages
o Secondary remedy: performance
  Performance based in equity: when damages are inadequate to compensate
loss
 Specific goods
 Damages are difficult to quantify
 Land
 Not awarded if personal services
 Not awarded if frustration of contract
 Frustration relates to “absolute impossibility”
o Taylor v Caldwell
 Frustration relates to unforeseen circumstances
o Krell v Henry
 Frustration simply leads to termination of contract
o No damages or performance
- Civil Law:
o Primary remedy: performance
 Not awarded if performance is impossible
 Absolute
o Generic
o Non-generic
 Rare/quantity
 Specific characteristics
 Relative
 Not awarded if contract relates to personal services
 Not awarded if contract needs constant supervisions/ continuous duties
o Secondary remedy: damages
- Absolute impossibility only in Civil Law
- Frustration only in Common Law
- Basic requirements for unforeseen circumstances:
o Unforeseen/unforeseeable circumstances at time of conclusion
o Creates onerous duties for party to performance
o Party did not accept risk