1. History [1]
2. Overview [2-4]

3. Seller’s failure to perform an obligation – article 45(1) [5-9]
4. Buyer’s Remedies [10-15]

1. History
Compare the history overview at the Pace database http://www.cisg.law.pace.edu/cisg/chronology/chrono45.html.

2. Overview
2. Article 45(1) is the source of the buyer’s remedial rights in articles 46 to 52 and the right to claim damages in articles 74 to 77. These rights are exercisable at the discretion of the buyer.

Article 45(1) (a) is a summary of the various remedies available to the buyer. The buyer can also exercise other remedies. These are remedies under articles 71-73, 78, 80, 86-88. Articles 46-52 regulate buyer’s rights to require performance of the contract, avoid the contract, or price reduction.

Article 45(1) (b) is the source of the buyer’s rights to claim damages in all cases where seller has breached the sales contract or the Convention. The right to claim damages is governed by articles 74-77.

3. Article 45(2) confirms the buyer’s entitlement to claim whatever rights are available to him under the contract and the Convention, and damages. The buyer is not required to prove fault, lack of good faith or breach of an express promise in order to be entitled to claim damages. Damages become available for any loss resulting from seller’s failure to fulfil his obligations (See the Pace Law School Database's Guide to CISG Article 45, quoting from the Secretariat's commentary, at http://www.cisg.law.pace.edu/cisg/text/secomm/secomm-45.html). Articles 74 to 77 deal with damages: article 74 deal with how damages are calculated and its purpose (see CISG article 74); article 75 provides for situations where buyer obtains replacement goods or seller resells the goods (see CISG article 75); article 76 deals with situations where there are varying prices for the goods at the time of avoidance or taking over and contract price (see CISG article 76); while article 77 deals with mitigation of loss (see CISG article 77).

4. Article 45(3) excludes a court or tribunal granting a period of grace to the seller to perform his obligations after the buyer has resorted to a remedy for breach of the sales contract, as provided under national laws based on the French system (see Schlechtriem, Uniform Sales Law - The UN-Convention on Contracts for the International Sale of Goods (1986), p. 74; http://www.cisg.law.pace.edu/cisg/biblio/schlechtriem-45.html).

3. Seller’s failure to perform an obligation – article 45(1)
3.1 Precondition of seller’s liability
5. Seller’s liability arises only where he fails to perform any of his obligations under the contract or convention. This failure gives rise to the buyer’s remedies in articles 46-52, and claim to damages under articles 74-77 (see Chengwei Liu, Editorial Remarks to the Guide to Article 45 on the Pace Law School's CISG website at http://www.cisg.law.pace.edu/cisg/text/peclcomp45.html#er).

6. The seller’s obligations for the purposes of article 45(1) are: To deliver the goods (articles 30-31) in accordance with the contract (articles 30, 35) (see the decision of the district court, Frankfurt of 11 April 2005 translated by Linus Meyer at http://www.cisg.law.pace.edu/cisg/wais/db/cases2/050411g1.html#cx); to transfer the property in the goods (article 30) free from third party rights and claims (article 41); to hand over documents as required by the contract or trade usage (articles 30, 34); to perform other acts as required by the contract; to preserve the goods when buyer delays in taking delivery (article 85) or make a self help sale (article 88(2)).

3.2 Constituents of Failure to Perform
7. What constitutes failure to perform or breach of contract must ‘always be determined by reference to the subject matter of the obligation in question’ (Muller-Chen Markus in Peter Schlectriem & I. Schwenzer, Commentary on the UN Convention on the International Sale of Goods (CISG) para.5 at page 521 (2nd English ed.), 2005). The reasons for seller’s failure to perform by the due date are irrelevant to trigger the buyer’s rights, however the buyer cannot upgrade a minor breach into a fundamental breach so as to entitle the buyer to avoid the contract where otherwise such right would not exist.

8. The seller’s failure to deliver does not presuppose fault on the part of the seller. This implies that even where there may be grounds for exemption under article 79, the seller would still have failed to perform entitling the buyer to all remedies available to him under article 45(1) excluding liability to damages under article 79(5). Where the seller’s failure to perform was because of the buyer’s act or omission, the seller is exempted under article 80. The effect of such article 80 exemptions is to exclude all buyer’s remedies under article 45(1)(a) and his rights to damages under article 45(1)(b).

3.3 Burden of Proof
9. The Convention does not regulate the burden of proving the facts establishing failure to perform. The general principle that each party proves the facts it relies on in proof of its assertions applies. Under the convention the seller remains responsible or liable for breach of the contract unless he can rely on article 79 exemptions. Thus under article 45(1) the burden of proof starts with the buyer who must prove the obligation and its non-performance. This then shifts to the seller to prove that he performed the alleged obligation in accordance with the contract or is entitled to claim exemption under articles 79 and 80.

4. Buyer’s Remedies
4.1 Remedies under article 45(1) (a)
10. Article 45(1)(a) give the buyer the right to:
Require performance under article 46 (subject to article 28);
Avoid the contract under article 49; or
Claim a reduction in price under article 50.
Article 47 ensures the buyer can fix an additional period of time for performance;
Article 48 regulates seller’s right to cure defects; while
Article 51 deals with partial non-performance;
Article 52 deals with premature delivery or delivery of a larger quantity.

11. The buyer’s three remedies under articles 46, 49 and 50 are mutually exclusive because their legal consequences are incompatible. The buyer has a right to elect which remedy to pursue if the preconditions to more than one remedy are satisfied.

4.2 Choice of Remedies by Buyer
12. The buyer is bound by whatever choice he has made, subject to some exceptions. Where the buyer exercises his right to require performance under article 46, he can change his mind except where he has fixed an additional period for performance by the seller according to article 47(2). In such cases the buyer can only elect another remedy after the expiration of the additional time or where the seller has notified him that he will not perform within the additional time fixed. In exercising this right, the buyer must beware not to cause such election to amount to an abuse of rights. An example given by Prof. Mullen-Chen is where the buyer elects delivery where there is fundamental breach of contract, then changes his mind and elects another remedy on short notice after the seller effects delivery (Muller-Chen Markus in Peter Schlectriem & I Schwenzer, Commentary on the UN Convention on the International Sale of Goods (CISG) para.5 page 521 (2nd English ed.), 2005).

4.3 Damages under article 45(1) (b)
13. The right to claim damages is based on the principle that, ‘by operation of law, the seller is subject to general guarantee liability with regard to performance of his contractual obligations’ (Muller-Chen Markus in Schlechtriem (English ed.) at para.15). The seller is assumed liable by simply failing to perform his obligation under the contract. This failure makes the seller liable to the buyer for the loss suffered as a result of his failure to deliver the goods and damages for lack of conformity. This failure to perform must not be of a fundamental nature (which results in the remedy of avoidance). The seller is obligated only to the buyer in damages and not to buyer’s resellers or customers. The obligation to pay damages does not arise in circumstances satisfying the exemptions under articles 79 or 80. Damages are calculated in accordance with articles 74-77 while article 78 deals with interests.

4.4 Damages in addition to other remedies under article 45(2)
14. Article 45(2) grants the buyer the right to claim damages along with other remedies available to him under article 45(1) (a) (i.e. under articles 46-52). This provision is subject to the buyer not being overcompensated. Therefore any claim for damages will be limited to any loss not accounted for under any other head of remedy claimed.

4.5 Period of Grace under article 45(3)
15. Article 45(3) addressed to courts or tribunals clarify the position that under the Convention, where a buyer has resorted to a remedy for breach of contract, a seller cannot be granted a period of grace within which to perform his obligation.