Europe

Article 1.105 (ex art. 1.103) - Usages and Practices 20

1. The parties are bound by any usage to which they have agreed and by any practice they have established between themselves. 21

2. The parties are bound by a usage which would be considered generally applicable by persons in the same situation as the parties, except where the application of such usage would be unreasonable. 22

Article 6.102 (replaces 5.108) - Implied obligations 318

In addition to the express terms, a contract may contain implied terms which stem from 319

• the intention of the parties, 320
• the nature and purpose of the contract, and 321
• good faith and fair dealing. 322

Article 6.104 (ex art. 2.101) - Determination of Price 325

Where the contract does not fix the price or the method of determining it, the parties are to be treated as having agreed on a reasonable price. 326

Article 6.105 (ex art. 2.102) - Unilateral Determination by a Party 327

Where the price or any other contractual term is to be determined by one party whose determination is grossly unreasonable, then notwithstanding any provision to the contrary, a reasonable price or other term shall be substituted. 328

Article 6.106 (ex art. 2.103) - Determination by a Third Person 329

1. Where the price or any other contractual term is to be determined by a third person, and it cannot or will not do so, the parties are presumed to have empowered the court to appoint another person to determine it. 330

2. If a price or other term fixed by a third person is grossly unreasonable, a reasonable price or term shall be substituted. 331

Article 6.107 (ex art. 2.104) - Reference to a Non Existent Factor 332

Where the price or any other contractual term is to be determined by reference to a factor which does not exist or has ceased to exist or to be accessible, the nearest equivalent factor shall be substituted. 333

Article 6.108 (ex art. 2.105) - Quality of Performance 334

If the contract does not specify the quality, a party must tender performance of at least average quality. 335

Article 6.109 (ex art. 2.109) - Contract for an Indefinite Period 336

A contract for an indefinite period may be ended by either party by giving notice of reasonable length. 337

Article 6.111 (ex art. 2.117) - Change of Circumstances 344 see also Terminatin Remedies

1. A party is bound to fulfil its obligations even if performance has become more onerous, whether because the cost of performance has increased or because the value of the performance it receives has diminished. 345

2. If, however, performance of the contract becomes excessively onerous because of a change of circumstances, the parties are bound to enter into negotiations with a view to adapting the contract or terminating it, provided that: 346

• the change of circumstances occurred after the time of conclusion of the contract, 347
• the possibility of a change of circumstances was not one which could reasonably have been taken into account at the time of conclusion of the contract, and 348
• the risk of the change of circumstances is not one which, according to the contract, the party affected should be required to bear. 349

3. If the parties fail to reach agreement within a reasonable period, the court may: 350

• terminate the contract at a date and on terms to be determined by the court; or 351
• adapt the contract in order to distribute between the parties in a just and equitable manner the losses and gains resulting from the change of circumstances. 352
  In either case, the court may award damages for the loss suffered through a party refusing to negotiate or breaking off negotiations contrary to good faith and fair dealing. 353

CHAPTER 7 - PERFORMANCE 354

Article 7.101 (ex art. 2.106) - Place of Performance 355

1. If the place of performance of a contractual obligation is not fixed by or determinable from the contract it shall be: 356

• in the case of an obligation to pay money, the creditor's place of business at the time of the conclusion of the contract; 357
• in the case of an obligation other than to pay money, the obligor's place of business at the time of conclusion of the contract. 358

2. If a party has more than one place of business, the place of business for the purpose of the preceding paragraph is that which has the closest relationship to the contract, having regard to the circumstances known to or contemplated by the parties at the time of conclusion of the contract. 359

3. If a party does not have a place of business its habitual residence is to be treated as its place of business. 360

Article 7.102 (ex art. 2.107) - Time of Performance 361

A party has to effect its performance: 362

• if a time is fixed by or determinable from the contract, at that time; 363
• if a period of time is fixed by or determinable from the contract, at any time within that period unless the circumstances of the case indicate that the other party is to choose the time; 364
• in any other case, within a reasonable time after the conclusion of the contract. 365

  Article 7.103 - Early performance see also Remedies

  A party may decline a tender of performance made before it is due except where acceptance of the tender would not unreasonably prejudice its interests. 367

  • A party's acceptance of early performance does not affect the time fixed for the performance of its own obligation. 368

  Article 7.104 - Order of performance 369 see also Remedies

  To the extent that the performances of the parties can be rendered simultaneously, the parties are bound to render them simultaneously unless the circumstances indicate otherwise. 370

  Article 7.105 - Alternative performance 371

  1. Where an obligation may be discharged by one of alternative performances, the choice belongs to the party who is to perform, unless the circumstances indicate otherwise. 372

  2. If the party who is to make the choice fails to do so by the time required by the contract, then: 373

  • if the delay in choosing is fundamental, the right to choose passes to the other party; 374
  • if the delay is not fundamental, the other party may give a notice fixing an additional period of reasonable length in which the party to choose must do so. If the latter fails to do so, the right to choose passes to the other party. 375

  Article 7.106 (ex art. 2.116) - Performance by a Third Person 376 see also Parties Termination

  1. Except where the contract requires personal performance the obligee cannot refuse performance by a third person if: 377

  • the third person acts with the assent of the obligor; or 378
  • the third person has a legitimate interest in performance and the obligor has failed to perform or it is clear that it will not perform at the time performance is due. 379
  • Performance by the third person in accordance with paragraph (1) discharges the obligor. 380

  [stronger nexus with parties - third parties]

  Article 7.107 (ex art. 2.110) - Form of Payment 381

  1. Payment of money due may be made in any form used in the ordinary course of business. 382

  2. A creditor who, pursuant to the contract or voluntarily, accepts a cheque or other order to pay or a promise to pay is presumed to do so only on condition that it will be honoured. The creditor may not enforce the original obligation to pay unless the order or promise is not honoured. 383

  Article 7.108 (ex art. 2.111) - Currency of Payment 384

  1. The parties may agree that payment shall be made only in a specified currency. 385

  2. In the absence of such agreement, a sum of money expressed in a currency other than that of the place where payment is due may be paid in the currency of that place according to the rate of exchange prevailing there at the time when payment is due. 386

  3. If, in a case falling within the preceding paragraph, the debtor has not paid at the time when payment is due, the creditor may require payment in the currency of the place where payment is due according to the rate of exchange prevailing there either at the time when payment is due or at the time of actual payment. 387

  Article 7.109 (ex art. 2.112) - Appropriation of Performance 388

  1. Where a party has to perform several obligations of the same nature and the performance tendered does not suffice to discharge all of the obligations, then subject to paragraph 4 the party may at the time of its performance declare to which obligation the performance is to be appropriated. 389

  2. If the performing party does not make such a declaration, the other party may within a reasonable time appropriate the performance to such obligation as it chooses. It shall inform the performing party of the choice. However, any such appropriation to an obligation which: 390

  • is not yet due, or 391
  • is illegal, or 392
  • is disputed, 393 is invalid. 394

  In the absence of an appropriation by either party, and subject to paragraph 4, the performance is appropriated to that obligation which satisfies one of the following criteria in the sequence indicated: 395

  • the obligation which is due or is the first to fall due; 396
  • the obligation for which the obligee has the least security; 397
  • the obligation which is the most burdensome for the obligor, 398
  • the obligation which has arisen first. 399
    If none of the preceding criteria applies, the performance is appropriated proportionately to all obligations. 400

  4. In the case of a monetary obligation, a payment by the debtor is to be appropriated, first, to expenses, secondly, to interest, and thirdly, to principal, unless the creditor makes a different appropriation. 401

  Article 7.110 (ex art. 2.113) - Property Not Accepted 402

  1. A party who is left in possession of tangible property other than money because of the other party's failure to accept or retake the property must take reasonable steps to protect and preserve the property. 403

  2. The party left in possession may discharge its duty to deliver or return: 404

  • by depositing the property on reasonable terms with a third person to be held to the order of the other party, and notifying the other party of this; or 405
  • by selling the property on reasonable terms after notice to the other party, and paying the net proceeds to that party. 406

  3. Where, however, the property is liable to rapid deterioration or its preservation is unreasonably expensive, the party must take reasonable steps to dispose of it. It may discharge its duty to deliver or return by paying the net proceeds to the other party. 407

  4. The party left in possession is entitled to be reimbursed or to retain out of the proceeds of sale any expenses reasonably incurred. 408

  Article 7.111 (ex art. 2.114) - Money not Accepted 409

  Where a party fails to accept money properly tendered by the other party, that party may after notice to the first party discharge its obligation to pay by depositing the money to the order of the first party in accordance with the law of the place where payment is due 410

  Article 7.112 - Costs of performance 411

  Each party shall bear the costs of performance of its obligations. 412

  Article 8.107 (ex art. 3.107) - Performance Entrusted to Another 434 see also Parties

  A party who entrusts performance of the contract to another person remains responsible for performance. 435

  Article 8.108 (ex art 3.108) - Excuse Due to an Impediment 436 see also Termination Remedies

  1. A party's non-performance is excused if it proves that it is due to an impediment beyond its control and that it could not reasonably have been expected to take the impediment into account at the time of the conclusion of the contract, or to have avoided or overcome the impediment or its consequences. 437

  2. Where the impediment is only temporary the excuse provided by this article has effect for the period during which the impediment exists. However, if the delay amounts to a fundamental non-performance, the obligee may treat it as such. 438

  3. The non-performing party must ensure that notice of the impediment and of its effect on its ability to perform is received by the other party within a reasonable time after the non-performing party knew or ought to have known of these circumstances. The other party is entitled to damages for any loss resulting from the non-receipt of such notice. 439