Article on the exemption from liability under article 79 of the CISG

The aim of this very brief article, is to analyse the exemptions in the CISG, with a core focus on article 79 and with a comparison of the corresponding legal position in the Danish Sale of Goods Act, including the concept of hardship which underlies the Convention and which, to a certain level, is codified in both the Danish Contract Act and the Danish Sale of Good Act.

The very short exemptions section in the CISG governs the extent to which a party is exempted from its liability. It contains two provisions: failure due to an uncontrollable impediment (article 79) and failure due to one of the parties act or omission (article 80).

Article 79 of the Convention is the principal provision governing exemptions from liability. It corresponds to domestic concepts of e.g. force majeure. But it is not a force majeure clause. The article originates from ULIS article 74[1] that however, did not classify the cause of failure as an impediment, but instead used the more lenient word, circumstances.

Under the article 79, a party to a contract is not liable for a failure to perform any of his obligations if he can prove that the failure was due to an impediment outside his sphere of control. This is not easy to prove and it entails the party in breach to satisfying a long list of restrictive requirements. This list of requirements makes it the longest article in the CISG, and probably the longest article of any internationally recognized Convention. With the word of scholar Harry Fletchner “Whereas proving exemption under Article 79 requires satisfying a long list of requirements that can be difficult to understand, challenging to distinguish, and daunting to apply”[2].

Article 79(5) restricts the exemption from liability to apply only to damages. Nothing prevents the counterparty from exercising any other right under the CISG. This means that the creditor to a contract retains the right to reqiure specific performance, along with other rights, other than the right to damages. Question that this raises, is whether or not the compliance obligation contains a limit of sacrifice? Or whether subsequent impediments that occur after formation of a contract triggers the contract to be amended or renegotiated, the so called hardship? These issues must be left open.

There are similar provisions in the Danish Sale of Goods Act. However, Danish law distinguishes between specific and generic goods, opposite of the Convention. Further, the Danish Sale of Goods Act seperates contractual obligations depending on those involved, e.g. whether or not they are consumers. On this basis, they are not comparable.

Mr Kim Christian Hove Thomse