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Ch.1 General Provisions, General Provisions III: Arts 1.6–1.12—Application of the PICC, Art.1.6 »

Stefan Vogenauer
From: Commentary on the UNIDROIT Principles of International Commercial Contracts (PICC) (2nd Edition)
Edited By: Stefan Vogenauer
This commentary focuses on Article 1.6, which provides a number of broad interpretative guidelines for the interpretation and the supplementation of the UNIDROIT Principles of International Commercial Contracts (PICC). The provision does not purport to set forth a complete set of detailed rules and principles of contractual interpretation. It simply highlights some interpretative elements that are of particular importance in the context of international uniform law. The interpretation of a PICC article is concerned with determining whether a given set of facts falls within the scope of application of such article and therefore triggers the legal consequences spelt out in the provision. Art 1.6 outlines the international character and autonomous interpretation of the PICC, criteria of interpretation, weight of the interpretative criteria, issues within the scope of the PICC but not expressly settled by them, and ‘settling the issue’.

Ch.5 Content, third party rights and conditions, s.3: Conditions, Art.5.3.1 »

Solène Rowan
From: Commentary on the UNIDROIT Principles of International Commercial Contracts (PICC) (2nd Edition)
Edited By: Stefan Vogenauer
This commentary focuses on Article 5.3.1 of the UNIDROIT Principles of International Commercial Contracts (PICC) concerning the types of condition covered by Section 5.3 of the PICC. Art 5.3.1 identifies the two types of condition that are recognized in the PICC: suspensive condition and resolutive condition. Whether a condition is suspensive or resolutive is a question of interpretation of the contractual intention of the parties. A contract or a contractual obligation may be made conditional upon the occurrence of a future uncertain event, so that the contract or contractual obligation only takes effect if the event occurs (suspensive condition) or comes to an end if the event occurs (resolutive condition). This commentary discusses the scope of Section 5.3, the distinction between ‘suspensive’ and ‘resolutive’ conditions, conditions whose fulfilment is entirely dependent on the will of the obligor, time limit stated by the condition, and illegal conditions.

Ch.5 Content, third party rights and conditions, s.3: Conditions, Art.5.3.2 »

Solène Rowan
From: Commentary on the UNIDROIT Principles of International Commercial Contracts (PICC) (2nd Edition)
Edited By: Stefan Vogenauer
This commentary focuses on Article 5.3.2 of the UNIDROIT Principles of International Commercial Contracts (PICC) concerning the effect of suspensive and resolutive conditions. Art 5.3.2 explains how suspensive and resolutive conditions operate. When a suspensive condition is fulfilled, the contract or obligation becomes effective. On the fulfilment of a resolutive condition, the contract or obligation ceases to have effect and the obligation to perform is discharged. Suspensive and resolutive conditions therefore have symmetrically opposite effects. In both cases, however, the binding force of the contract or obligation is at stake. This commentary also discusses non-retroactivity as a principle.

Ch.5 Content, third party rights and conditions, s.3: Conditions, Art.5.3.3 »

Solène Rowan
From: Commentary on the UNIDROIT Principles of International Commercial Contracts (PICC) (2nd Edition)
Edited By: Stefan Vogenauer
This commentary focuses on Article 5.3.3 of the UNIDROIT Principles of International Commercial Contracts (PICC) concerning a contracting party's interference with the fulfilment of a condition. If fulfilment of a condition is prevented by a party, contrary to the duty of good faith and fair dealing or the duty of co-operation, that party may not rely on the non-fulfilment of the condition. If fulfilment of a condition is brought about by a party, contrary to the duty of good faith and fair dealing or the duty of co-operation, that party may not rely on the fulfilment of the condition. This commentary also discusses duty to use all reasonable efforts to cause the condition to be fulfilled and remedies for interference with the fulfilment of a condition.

Ch.5 Content, third party rights and conditions, s.3: Conditions, Art.5.3.4 »

Solène Rowan
From: Commentary on the UNIDROIT Principles of International Commercial Contracts (PICC) (2nd Edition)
Edited By: Stefan Vogenauer
This commentary focuses on Article 5.3.4 of the UNIDROIT Principles of International Commercial Contracts (PICC) concerning the duty to preserve the rights of a party. Art 5.3.4 imposes obligations on the parties during the period of suspension of the condition. It requires the parties not to act, contrary to the duty to act in accordance with good faith and fair dealing, act so as to prejudice the other party's rights in case of fulfilment of the condition. Art 5.3.4 applies to both suspensive and resolutive conditions, but it should arguably apply with less intensity to resolutive conditions. This commentary discusses the prejudicial act that breaches the duty of good faith and fair dealing, the relationship between Arts 5.3.3 and 5.3.4, remedies for breach of Art 5.3.4, and the intensity of the obligation.

Ch.5 Content, third party rights and conditions, s.3: Conditions, Art.5.3.5 »

Solène Rowan
From: Commentary on the UNIDROIT Principles of International Commercial Contracts (PICC) (2nd Edition)
Edited By: Stefan Vogenauer
This commentary focuses on Article 5.3.5 of the UNIDROIT Principles of International Commercial Contracts (PICC) concerning restitution in case of fulfilment of a resolutive condition. A contract or obligation that is subject to a resolutive condition comes into existence and effect from the moment the contract is formed. It operates largely in the same way as a contract or obligation that is not conditional, except that it is susceptible to being discharged upon the fulfilment of the condition. If the condition is fulfilled, the suspension comes to an end. The contractor obligation that had hitherto been in force ceases to have effect. Art 5.3.5 deals with the restitutionary consequences of a contract or obligation being discharged in such circumstances. This commentary discusses the scope of Art 5.3.5, restitution where the resolutive condition operates prospectively or retroactively, and the meaning of the phrase ‘with appropriate adaptations’.

Ch.6 Performance, s.1: Performance in general, Art.6.1.1 »

Yesim Atamer
From: Commentary on the UNIDROIT Principles of International Commercial Contracts (PICC) (2nd Edition)
Edited By: Stefan Vogenauer
This commentary focuses on Article 6.1.1 of the UNIDROIT Principles of International Commercial Contracts (PICC) concerning the time of performing a contractual obligation. Art 6.1.1 determines when a party has to perform its contractual obligations. This is the time, or within the period of time, explicitly or impliedly stipulated in the contract within a reasonable time after the conclusion of the contract. This commentary discusses the notion of timely performance and the consequences of untimely performance, time of performance fixed by the parties, time of performance according to the default rule, obligee's failure to co-operate in regard to timely performance, changes in time of performance, and the burden of proof relating to time of performance.

Ch.6 Performance, s.1: Performance in general, Art.6.1.2 »

Yesim Atamer
From: Commentary on the UNIDROIT Principles of International Commercial Contracts (PICC) (2nd Edition)
Edited By: Stefan Vogenauer
This commentary focuses on Article 6.1.2 of the UNIDROIT Principles of International Commercial Contracts (PICC) concerning performance of a contractual obligation at one time or in instalments. Whenever the obligor is given the right to perform its contractual obligations during a certain period of time, the question arises whether the obligor has to perform at one single moment during this period or whether it may choose to perform in lots. According to Art 6.1.2, the principle is performance at one time. The legitimate interest of the obligee not to be disturbed repeatedly for the same obligation seems to prevail over the interest of the obligor to offer its obligation in portions. This commentary discusses performance at one time as a rule, performance in instalments as an exception to the rule, effect of performance in instalments on counter-performance, and burden of proof relating to performance of a contractual obligation at one time or in instalments.

Ch.6 Performance, s.1: Performance in general, Art.6.1.3 »

Yesim Atamer
From: Commentary on the UNIDROIT Principles of International Commercial Contracts (PICC) (2nd Edition)
Edited By: Stefan Vogenauer
This commentary focuses on Article 6.1.3 of the UNIDROIT Principles of International Commercial Contracts (PICC) concerning partial performance of a contractual obligation. Art 6.1.3 addresses the question of whether the obligee has the right to reject partial performance or, conversely, whether the obligor has the right to discharge itself at least partly when the time of performance is due. This commentary discusses the content and scope of application of Article 6.1.3, definition of partial performance with regard to contractual obligations, right of the obligee to reject partial performance and obligation to accept partial performance, and legal consequences of acceptance or rejection of partial performance. It also considers the right of rejection in case of only partly possible performance, defective performance, and performance in excess. Finally, it looks at burden of proof as it relates to partial performance.

Ch.6 Performance, s.1: Performance in general, Art.6.1.4 »

Yesim Atamer
From: Commentary on the UNIDROIT Principles of International Commercial Contracts (PICC) (2nd Edition)
Edited By: Stefan Vogenauer
This commentary focuses on Article 6.1.4 of the UNIDROIT Principles of International Commercial Contracts (PICC) concerning order of performance of a contractual obligation. Art 6.1.4 deals with the sequence of performance and counter-performance if the parties have undertaken reciprocal obligations in a bilateral contract. This commentary discusses the content and scope of application of Art 6.1.4, the role of Art 6.1.4 in determining the time of performance for the counter-performance and in determining the order of performance of due contractual obligations, performances to be taken into consideration when determining the time and order of performance, legal consequences of disregarding the order of performance, and burden of proof relating to order of performance.

Ch.1 General Provisions, General Provisions III: Arts 1.6–1.12—Application of the PICC, Art.1.7 »

Stefan Vogenauer
From: Commentary on the UNIDROIT Principles of International Commercial Contracts (PICC) (2nd Edition)
Edited By: Stefan Vogenauer
This commentary focuses on Article 1.7, which obliges the parties to a contract to ‘act in accordance with good faith and fair dealing’. The imposition of this duty corresponds to a global trend towards an increasing role for the standard of good faith in contract law that has been emerging for several decades. To a certain extent, the UNIDROIT Principles of International Commercial Contracts (PICC) help to reinforce this trend. Art 1.7 spells out the scope of the obligation to act in accordance with good faith and fair dealing; standard of good faith and fair dealing, including ethical standard and standard employed ‘in international trade’; consequences of failure to act in accordance with good faith and fair dealing; and burden of proof.

Ch.6 Performance, s.1: Performance in general, Art.6.1.5 »

Yesim Atamer
From: Commentary on the UNIDROIT Principles of International Commercial Contracts (PICC) (2nd Edition)
Edited By: Stefan Vogenauer
This commentary focuses on Article 6.1.5 of the UNIDROIT Principles of International Commercial Contracts (PICC) concerning early performance of a contractual obligation. Art 6.1.5(1) stipulates that the obligor is not entitled to early performance. Early performance is equated with non-performance and may be rejected by the obligee without any further justification. The problem of premature performance only arises if the parties have fixed a date or a period of performance with a definite starting date. This commentary discusses the rule disallowing early performance of contractual obligations, an exception to the rule, and consequences of acceptance of early performance with particular emphasis on additional expenses, remedies for non-performance, right of obligor to discount, and time of counter-performance.

Ch.6 Performance, s.1: Performance in general, Art.6.1.6 »

Yesim Atamer
From: Commentary on the UNIDROIT Principles of International Commercial Contracts (PICC) (2nd Edition)
Edited By: Stefan Vogenauer
This commentary analyses Article 6.1.6 of the UNIDROIT Principles of International Commercial Contracts (PICC) concerning the place of performance of a contractual obligation. The place of performance is the place at which the obligor has to perform the acts necessary to honour its obligation. According to Art 6.1.6, monetary obligations must be discharged at the place of business of the obligee and non-monetary obligations at the place of business of the obligor. This commentary discusses the relevance of place of performance, problems related to interpretation of stipulations regarding place of performance, default rule for determining place of performance, place of performance for non-performance and restitution claims, the notion of place of business and consequences of a change in place of business or a change of parties, legal consequences related to performance at a wrong place, and burden of proof relating to place of performance.

Ch.6 Performance, s.1: Performance in general, Art.6.1.7 »

Yesim Atamer
From: Commentary on the UNIDROIT Principles of International Commercial Contracts (PICC) (2nd Edition)
Edited By: Stefan Vogenauer
This commentary analyses Article 6.1.7 of the UNIDROIT Principles of International Commercial Contracts (PICC) concerning payment by cheque or other instrument. According to Art 6.1.7, payment may be made in any form used in the ordinary course of business at the place for payment. However, an obligee who accepts a cheque, any other order to pay or a promise to pay, is presumed to do so only on condition that it will be honoured. This commentary discusses cashless payment in general and the payment methods accepted by the PICC, the structure of cashless payment methods and their systematization, payment through ‘push-orders’ and ‘pull-orders’, effects of acceptance of a pull-order on the payment obligation, place and time of performance of pull-order, risk of loss or theft of pull-order, and risk of pull-orders being dishonoured.

Ch.6 Performance, s.1: Performance in general, Art.6.1.8 »

Yesim Atamer
From: Commentary on the UNIDROIT Principles of International Commercial Contracts (PICC) (2nd Edition)
Edited By: Stefan Vogenauer
This commentary analyses Article 6.1.8 of the UNIDROIT Principles of International Commercial Contracts (PICC) concerning payment by funds transfer. According to Art 6.1.8, payment may be made by a transfer to any of the financial institutions in which the obligee has an account. In case of payment by a transfer, the obligor's obligation is discharged when the transfer to the obligee's financial institution becomes effective. From the moment the funds transfer to the obligee's financial institution becomes effective, the obligation becomes extinct and the obligor's liability for loss or delay ends. This commentary discusses place of performance for fund transfers,, time when the obligation is discharged, timely performance, countermand, and delay or loss in the process of transferring funds.

Ch.6 Performance, s.1: Performance in general, Art.6.1.9 »

Yesim Atamer
From: Commentary on the UNIDROIT Principles of International Commercial Contracts (PICC) (2nd Edition)
Edited By: Stefan Vogenauer
This commentary analyses Article 6.1.9 of the UNIDROIT Principles of International Commercial Contracts (PICC) concerning currency of payment. Art 6.1.9 addresses the problems that can arise if the required currency for payment (‘currency of account’) and the legal currency at the place of payment differ; that is, if a foreign money obligation features in the contract. The main questions that arise from such a scenario are whether there is a right of conversion — the right to effect or ask for payment in the legal currency of the place of payment — and, if so, which party is entitled to exercise that right and which is the applicable rate of conversion. This commentary discusses the obligor's right to pay in either contractual or legal currency, the obligee's right to request payment in either contractual or legal currency, application of exchange rate when payment is on time and when the obligor is in default, problems related to devaluation or revaluation, and burden of proof with respect to currency of payment.

Ch.6 Performance, s.1: Performance in general, Art.6.1.10 »

Yesim Atamer
From: Commentary on the UNIDROIT Principles of International Commercial Contracts (PICC) (2nd Edition)
Edited By: Stefan Vogenauer
This commentary analyses Article 6.1.10 of the UNIDROIT Principles of International Commercial Contracts (PICC) concerning monetary obligation that is not expressed in a particular currency. In principle, the parties define in their contract in which currency the debt is to be calculated. If the contract is silent in this respect and the common intention of the parties cannot be established by interpretation, Art 6.1.10 stipulates that the currency at the place of performance is decisive. The need to apply the subsidiary rule of Art 6.1.10 arises, for example, when parties have not fixed the price at all. If it is not clear under the contract which currency is contracted for, the burden of proof falls on the party that claims that it is a currency other than the currency at the place of performance.

Ch.6 Performance, s.1: Performance in general, Art.6.1.11 »

Yesim Atamer
From: Commentary on the UNIDROIT Principles of International Commercial Contracts (PICC) (2nd Edition)
Edited By: Stefan Vogenauer
This commentary analyses Article 6.1.11 of the UNIDROIT Principles of International Commercial Contracts (PICC) concerning the costs of performance of an obligation. Art 6.1.11 balances the interests of the parties and burdens each party with the costs of its own performance. According to this provision, each party shall bear the costs of performance of its obligations. This commentary considers costs of performance in cases where place of performance lies with the obligor or the obligee, or where place of performance is a third place. It also addresses costs due to changes in the place of performance and the right of a party to claim reimbursement of costs.

Ch.6 Performance, s.1: Performance in general, Art.6.1.12 »

Yesim Atamer
From: Commentary on the UNIDROIT Principles of International Commercial Contracts (PICC) (2nd Edition)
Edited By: Stefan Vogenauer
This commentary analyses Article 6.1.12 of the UNIDROIT Principles of International Commercial Contracts (PICC) concerning imputation of payments. Art 6.1.12 addresses the problems that arise when the obligor has more than one debt with the same obligee but the sum paid is not sufficient to cover all debts. In that case, the obligee must know which of the several obligations are to be discharged. This commentary discusses the scope of application and taxonomy of Art 6.1.12 with regard to imputation of payments, the obligor's right to impute, the obligee's subsidiary right to impute, imputation by law, applicability of Art 6.1.12 in the case of partial payment, and burden of proof relating to imputation of payments.

Ch.6 Performance, s.1: Performance in general, Art.6.1.13 »

Yesim Atamer
From: Commentary on the UNIDROIT Principles of International Commercial Contracts (PICC) (2nd Edition)
Edited By: Stefan Vogenauer
This commentary analyses Article 6.1.13 of the UNIDROIT Principles of International Commercial Contracts (PICC) concerning imputation of non-monetary obligations. In most jurisdictions, there is no special provision regarding the imputation of non-monetary obligations. Either the statutory provisions are formulated to cover all fungible obligations, be they monetary or otherwise, or the courts accept an analogous application of the imputation rule for monetary obligations. In contrast, Art 6.1.13 clarifies that such imputation rules can be applied mutatis mutandis to all other fungible obligations. If, for example, the obligor has to deliver identical cargoes of cement under different contracts, appropriation is first made according to the specifications of the obligor. In the absence of such specifications, Art 6.1.12(2) stipulates that the right of imputation should pass to the obligee.