Transcript recht van de internationale handel

INTERNATIONAL SALES
Conflict rule:
Obligational aspects: see Conflict rules; but see Art. 1 CISG
Transfer of property: lex rei sitae
 Degree of harmonisation :
CISG, Succesful, limited to international business sales of movables
Applicable national law: domestic sales and non-business sales
EU law has harmonised some aspects of consumer sales (and very few
aspects of other sales)
Result: fragmentation of sales law
But influence of CISG on developments outside its scope is huge.
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SALES – UNIFORM LAWS
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Predecessor: ULIS & ULFIS (Hague conventions 1964, Unidroit)
Replaced by Vienna Sales Convention 1980 (Uncitral, 1 convention), in force 1988,
in 2011 already 77 countries (map outdated, i.a. Japan joined)
CISG – SCOPE OF APPLICATION
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Ratione materiae:
A « contract for sale » requires an obligation to transfer property and one to pay a
price (monetary consideration) (no barter)
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Art. 2: This Convention does not apply to sales:
(a) of goods bought for personal, family or household use, unless the seller, at any
time before or at the conclusion of the contract, neither knew nor ought to have
known that the goods were bought for any such use;
(b) by auction;
(c) on execution or otherwise by authority of law;
(d) of stocks, shares, investment securities, negotiable instruments or money;
(e) of ships, vessels, hovercraft or aircraft
(f) of electricity.
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Only corporeal movables; incl. gas
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CISG – MIXED CONTRACTS
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Art. 3 on mixed contracts:
(1) Contracts for the supply of goods to be manufactured or produced are to be
considered sales unless the party who orders the goods undertakes to supply a
substantial part of the materials necessary for such manufacture or production.
> “substantial part of materials”: criterion is economic (value); plans & know how
are as such not materials (CISG advisory council Opinion n° 4)
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(2) This Convention does not apply to contracts in which the preponderant part of
the obligations of the party who furnishes the goods consists in the supply of
labour or other services.
> if preponderant part is labour, services (turn key etc.)
> again “economic” criterion
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Distribution / Agency agreements ?
The framework agreement ≠ actual sale
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CISG – TERRITORIAL
APPLICATION
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Ratione loci: only « international sales », more specifically in 2 cases :
a) Direct application:
parties whose places of business are in different States and both States (of place of
business) are Contracting States (i.e. have ratified CISG), or
b) Indirect application:
when the rules of private international law of the forum lead to the application of
the law of a Contracting State (possible reservations, Art. 95 CISG) (includes the
choice of the law of a contracting state, and usually when sellers place of business
in a contracting state, for the EU see Rome-I-Regulation)
No other requirement (as e.g. cross-border delivery or payment)
Problem of interpretation of place of business (comp. Rome-I-Regulation)
Exception in para (2): different place of business not apparent
More than one place of business > Art. 10
CISG – OPT-OUT &
DEROGATION
Art. 6 : The parties may:
exclude the application of this Convention (opt-out - domestic law then
applies, incl. an optional sales law if domestic law so allows)
or
derogate from or vary the effect of any of its provisions (remaining CISG
articles apply) (no mandatory law in CISG)
CISG – REGULATED MATTERS
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Regulated matters :
Only law of obligations, no property law.
No procedural law, esp. burden of proof
Only formation (incl. question of writing), performance, non-performance
and associated questions.
Does include passing of risk.
Some (deliberate) lacunae such as price revision, interest rate, ...
Some CISG provisions not applicable in certain states because of
reservations made
CISG – REGULATED MATTERS
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Matters of the law of obligations NOT Regulated :
legal capacity
validity and invalidity of the contract (see next slide)
damage consisting of death or personal injury
prescription (separate Convention NY 1974 as modified Vienna 1980)
assignability of rights and effect of assignment in relation to the assigned
debtor (Assignment & Factoring Conventions); subrogation;
set-off;
plurality of debtors;
authority of agents (1983 Unidroit Convention, not in force, 5
ratifications)
Choice of law useful for matters not regulated
CISG – REGULATED MATTERS
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Validity is not regulated by CISG, including
legal capacity
defects of consent, other invalidities (Unidroit Convention without
success; see general contract law principles)
invalidity of specific clauses (nullity of penalties, exemption clauses, unfair
clauses ...)
(except.: writing requirement falls under CISG, art. 11)
Discussion about negative reflex effect of CISG provisions on possibility to
invoke invalidity. esp. non-conformity and mistake/misrepresentation
(comp. Also UPICC art. 3.7)
GENERAL CONTRACT LAW
Conflict rules:
 Most national legal systems have no specific rules for cross-border
transactions or international contracts in general
 International instruments ? Some Conventions on specific transactions, eg
factoring (on assignment)
 Other instruments - Soft law and some model laws on specific questions:
Soft law: Unidroit « Principles », PECL (Lando-commission), possible
Optional instruments*. Conflict rule will determine whether accepted as
« law » or merely as contract clauses
Model laws, e.g. Uncitral model law electronic commerce; Draft Common
Frame of reference (DCFR)
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*Examples of existing optional instruments: CISG, European trademark,
societas europea, international last will, european procedures.
UNIDROIT PICC
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Unidroit Principles for International Commercial contracts
« Principles », i.e. no Convention or Model Law
First edition 1994
Enlarged edition 2004
Endorsed by Uncitral 2007
Intended field of application: international commercial contracts
Regulated matters: Formation (incl. Representation), Validity (defects of
consent, specific clauses), Interpretation, « Contents », Performance Nonperformance and remedies, Set-off, Contractual Assignment of rights,
Transfer of obligations, Limitations of Actions (Prescription)
Additional chapters 2011: conditions, other grounds of invalidity, plurality
of debtors or creditors, restitution after invalidity
Not regulated: non-contractual assignment
UPICC PREAMBLE
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Preamble: Purpose of the Principles)
These Principles set forth general rules for international commercial
contracts.
They shall be applied when the parties have agreed that their contract be
governed by them.
They may be applied when the parties have agreed that their contract be
governed by general principles of law, the lex mercatoria or the like.
They may be applied when the parties have not chosen any law to govern
their contract.
They may be used to interpret or supplement international uniform law
instruments.
They may be used to interpret or supplement domestic law.
They may serve as a model for national and international legislators.
See also 1.4. : applicable insofar as the conflict rule allows it
CISG – INTERPRETATION AND
GAP-FILLING (1)
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First question: matter governed by CISG or not
If not governed by CISG = « external » gap > national law applicable by
virtue of the conflict of law rules
If governed by CISG: either interpretation or « internal» gap
Art. 7 (1) CISG – Autonomous interpretation
- elements: internationality, need for uniformity, promotion of good faith
in international trade
- no duty to act (perform) in good faith ! Good faith only for interpretation
of CISG itself
CISG – INTERPRETATION AND
GAP-FILLING (2)
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Art 7 (2) CISG – Gap-filling (for internal gaps)
1° Usages and practices (Art. 9)
2° Gap can be filled according to Art. 7, 2 on the basis of the
« underlying principles »
3° Gap cannnot be filled on the basis of underlying principles / in the
absence of such principles, applicable national law (e.g. interest rate, ...)
Examples:
Place of payment of compensation: internal gap
Electronic communication as writing ? Internal gap. See CISG Advisory
Council n° 1: yes.
Interest rate: gap; disputed whether internal or external gap
Hardship: disputed, see discussion further
UPICC– INTERPRETATION AND
GAP-FILLING
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Art. 1. 6 (Comp. 7 CISG) – Autonomous interpretation
(Interpretation and supplementation of the Principles)
(1) In the interpretation of these Principles, regard is to be had to their
international character and to their purposes including the need to
promote uniformity in their application.
(2) Issues within the scope of these Principles but not expressly settled by
them are as far as possible to be settled in accordance with their
underlying general principles.
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But ALSO duty to act in good faith: Art. 1.7 (Good faith and fair dealing)
(1) Each party must act in accordance with good faith and fair dealing in
international trade.
(2) The parties may not exclude or limit this duty.
And art. 1.9 Usages and practices
CISG – GENERAL PROVISIONS
JURIDICAL ACTS (1)
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No duty to act according to good faith (see Art. 7)
How intention is determined – interpretation of acts : Art. 8
(1) intent known or not unaware of > intent
(2) subsidiary: reasonable person, taking into account all circumstances ,
incl. later conduct (can be excluded: « No Oral Modification » clause in
art. 29, 2 CISG, however, estoppel can apply to that clause)
Not incorporating plain meaning rule, parol evidence rule (CISG AC
Opinion n° 3)
Usages and practices – Art. 9
CISG – GENERAL PROVISIONS
JURIDICAL ACTS (2)
No formal requirements for formation or evidence – Art. 11
But reservation can be made (art. 12) and was made by several countries
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Modification: by mere agreement, Art. 29 (but see 29 II for « no oral
modification clause »)
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Merger clause or Four Corners: is a deviation from CISG default rules
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Other general rules can be deduced from specific ones e.g.:
when notice becomes effective (art. 24, 26, exception in 27),
meaning of silence or inactivity (art. 18,1),
etc.
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UPICC– GENERAL PROVISIONS
JURIDICAL ACTS
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Art. 1.1: Freedom of contract
Art. 1.2: No form required (unless ...)
Art. 1.3: Binding character of contract
Art. 1.7: Duty to act according to good faith & fair dealing; art 1.8.
Estoppel (venire contra factum proprium)
How intention is determined – interpretation of acts: Art. 4.1 and 4.2
(4.1. for contracts, 4.2 for unilateral acts) – Quid merger clause – No oral
modification clause
Usages and practices – Art. 1.9
Rules on notices in 1.10
E-COMMERCE
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Uncitral model law 1996 (1998), i.a.
- « Data messages » cover EDI, e-mail, telegram, telex and telecopy
- Art. 5: Information shall not be denied legal effect merely because it is
in the form of a data message
- Art. 6: Writing < accessible so as to be usable for subsequent reference
- Art. 7: Signature
- Art. 8: Whether a data message can be an « original »
- Art. 13: Attribution of data messages (who is the sender)
- Art. 15: (1) time of dispatch and (2) of receipt
CISG Advisory Council Opinion No. 1
UN Convention on the Use of Electronic Communications in International
Contracts 2005 (not in force)
EU Directive 1999/93 on electronic signatures:
- different degrees of e-signature; legal effects
EU Directive 2000/31, framework directive e-commerce
- Art. 9 Treatment of contracts: equivalence (some exceptions)
- Rules relating to information duties, conclusion contract, receipt, ...
CISG – FORMATION OF
CONTRACT (1)
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Formation of the contract by offer and acceptance (Mirror model)
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Offer: Art. 14 – definition/minimum content. Differs from proposal:
addressed to specific person(s); sufficiently definite (goods and price
determinable, see art. 55 for price determination); intention to be bound
if accepted
«effective» (not necessarily irrevocable) when it reaches the offeree
(unless withdrawal reaches earlier or at the same time) (Art. 15)
But still revocable (until dispatch of acceptance), unless irrevocability
indicated (eg period for acceptance) or reasonably relied upon (Art. 16)
If accepted during period of validity (and before revocation) (rules
concerning the calculation of the period in Art. 20, 21) a contract is
formed when the acceptance becomes effective (Art. 23)
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CISG – FORMATION OF
CONTRACT (2)
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Formation of the contract by offer and acceptance
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Acceptance: not by mere inactivity (Art. 18)
effective when it reaches the offeree; possibly already when an act is
performed;
Modified acceptance (Art. 19): do they « materially» alter the terms of
the offer ? Yes > counter-offer; no > accepted with modifications unless
protest.
No special rules for battle of forms. Case law diverges (art. 19 >< knock
out)
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UPICC– FORMATION OF
CONTRACT
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Very similar to CISG
2.1.1.: conclusion of the contract by offer and acceptance or by
conduct of the parties that is sufficient to show agreement.
Rules on offer and acceptance similar to CISG
Art. 2.1.12 (Writings in confirmation)
Art. 2.1.14 (Contract with terms deliberately left open)
Art. 2.1.17 and 2.1.18 on merger clauses and clauses on
modification in a particular form.
Going beyond CISG: Art. 2.1.15 on liability for negotiations (or
breaking off) in bad faith
Specific rules for battle of forms (2.1.22) (NB. Comparative law:
usually knock out; Engl = last shot; NL = first shot)
UPICC– AUTHORITY OF
AGENTS
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Not in CISG , inspired by Unidroit Convention (not in force)
Deals with authority, i.e. external relationship
Not internal relationship (e.g. agency contract) (2.2.1)
Authority by grant (express or implied) (2.2.2); authority based on
belief caused by the principal (2.2.5 (b))
Direct relationship in case of disclosed agency (2.2.3)
In principle no direct relationship in case of undisclosed agency
(2.2.4)
Liability if the agent acts outside authority: positive interest (2.2.6)
UPICC– AUTHORITY OF
AGENTS
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Art. 2.2.7 on conflicts of interest,
Art. 2.2.9 on ratification
Art. 2.2.10 on effect of internal termination of autority
UPICC– VALIDITY (1)
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Not in CISG
Deals with defects of consent giving rise to a right to avoid (4)
Negative refelex effect of rules on non-performance in Art. 3.7.
Esp. important for sales (CISG rules on non-performance not
displaced by UPICC rules on e.g. mistake)
Mistake (art. 3.4. and 3.5)
4 cases of mistake (shared, caused, left in error, contract not yet
relied upon)
+ requirement of material difference, no gross negligence, risk not
assumed or to be bourne
Error in expression or transmission: treated as mistake of the
sender (3.6)
Fraud (3.8)
UPICC– VALIDITY (2)
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Deals with defects of consent (cont.)
Fraud (3.8) by incorrect information or by withholding information
+ fraudulent intention
Threats (3.9) (comp. « violence »)
Gross disparity or excessive advantage (with abuse of
circumstances) (3.10)
UPICC– VALIDITY (2)
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General rules on « avoidance » and its effects (in CISG avoidance
means termination; here avoidance means annullment)
Attribution of acts or omissions of third parties: 3.11
Exercise of the right:
by unilateral declaration (3.14)
within a reasonable period (3.15)
not anymore after confirmation (3.12)
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Effect= retroactive; restitution = non-contractual obligation
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Possibility of damages in case of culpa in contrahendo (3.18)
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CISG - SELLER’S OBLIGATIONS
(1)
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Art. 30 - Obligations: delivery (incl. documents), transfer of
property, conformity
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Obligation of delivery:
Place of performance (Art. 31)
Carriage involved : first carrier; if not and place of the goods
known: place of the goods (ex works); if not: seller’s place of
busines. See also Incoterms (infra).
Additional duties (Art. 32) related to specification, carriage,
insurance
Time of performance (Art. 33)
Delivery of documents (Art. 34)
Duty to preserve the goods if buyer fails to take delivery (Art. 85
ff.)
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CISG - SELLER’S OBLIGATIONS
(2)
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Obligation of conformity in respect to the goods - Art. 35 –
There is conformity only of the goods are :
1) in conformity with specifications of the contract (quantity, quality,
packaging)
2) fit for ordinary purposes
3) fit for particular purpose made known to seller
4) in conformity with the qualities of the sample
5) adequate packaging
Exception: visible non-conformity at the time of conclusions (35, 3)
CISG - SELLER’S OBLIGATIONS
(3) – PASSING OF RISK
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Unless caused by the buyer itself, conformity has to be present at
the time of passing of risk (Art. 36);
lack of conformity arising later ? Seller liable if consequence of
breach, or if guarantee (to remain fit or maintain qualities for a
period). Implicitly limited to 2 years unless longer contractual
period of guarantee (39, 2)
Relevance of « Passing of risk » is thus 1° risk of force majeure
(Art. 66); 2° time to judge conformity (or rather cause of lack of
conformity) (Art. 36, 1)
When does risk pass ? As agreed;
Otherwise Art. 69: in principle at delivery; if buyer refuses to take
delivery, at that time. Presupposes that the goods are identified to
the contract (67, 2).
Specific rules in case of carriage of the goods (67); in case of
goods sold in transit (68)
CISG - SELLER’S OBLIGATIONS
(4)
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Art. 38: Buyer must examine the goods within a short period (no real
obligation in itself)
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Art. 39 (1): Buyer must give notice of non-conformity (if unknown to
seller) as soon as discovered or ought to have discovered (CISG AC
Opinion 2)
Sanctions: loss of remedies (see infra)
Delivery in parts : examination of each part required
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Art. 44: in case of reasonable excuse, limited remedies available (price
reduction, damages)
CISG - SELLER’S OBLIGATIONS
(5) transfer of property
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The seller is obliged to transfer property of the goods
And to transfer them “free from any right or claim of a third party” (Art.
41)
(see additional rules on next slide)
When is the obligation fulfilled ? Requirements for an effective transfer of
property not in CISG, question of (national) property law.
CISG - SELLER’S OBLIGATIONS
(6)
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Obligation of conformity in respect to rights requires also (Art. 41):
“free from any right or claim of a third party based on industrial property
or other intellectual property” under some conditions:
a) IP right in the country of the seller or place of resale if contemplated,
b) (constructive) knowledge of the seller and not of the buyer
c) not resulting from compliance with instructions (drawings etc.) of the
buyer (Art. 42)
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Similar duty to give notice (if unknown to seller) within a reasonable time
after he has become aware or ought to have become aware of the right
or claim (Art. 43). Sanction: loss of some remedies
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Which remedies survive ? In case of reasonable excuse still price
reduction or damages (Art. 44).
CISG – BUYER’S OBLIGATIONS
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Obligations of the buyer :
specify, take delivery, pay the price, examine
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If the contract provides so: specify the form, measurement or other
features of the goods (Art. 65)
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Taking delivery (Art. 60).
Place & time, see supra delivery.
Buyer may refuse or accept early delivery (52, 2).
Buyer may accept (and pay) or refuse excess quantity (52, 2)
CISG – BUYER’S OBLIGATIONS
(2)
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Payment of the price:
Price not fixed nor mode of determination ? Normal price (Art. 55)
Place of payment (Art. 57): seller’s place c.q. place of handing over
Time: when control given to buyer, if opportunity to examine (Art. 58)
concrete rule will depend on clauses (often payment against documents)
Payment instruments: no provisions in CISG. See further.
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Examination & notice, see supra.
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Duty to preserve the goods if buyer intends to reject them (Art. 86-88)
SALES -Incoterms
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« International commercial terms »: standard abbreviations, often three
letter words (FOB, CIF, etc.)
Defined as usages by the ICC (sinds 1936, several revisions; since Jan 1,
2011 : version 2010 (schemes on next slides are version 2000)
Now (2011) 11 Incoterms (version 2000: 13 terms)
Each summarising obligations of the parties in relation to 10 typical points
Applicable when inserted in the contract, expressly or impliedly
Four basic categories :
C-terms : seller pays carrier to agreed destination, but does not bear risk
during carriage (attention: in CIF buyer must pay before inspection)
D-terms: sellers bears cost of carriage and risk until arrival at agreed
destination – thus some « arrival duties » on the seller
E-terms: ex works of the seller
F-terms: delivery to the person paid by the buyer
SALES –Incoterms 2010
Rules for any mode of transport:
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EXW
Ex Works
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FCA
Free Carrier
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CPT
Carriage Paid To
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CIP
Carriage And Insurance Paid To
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DAT
Delivered At Terminal
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DAP
Delivered At Place
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DDP
Delivered Duty Paid
Rules for sea and inland waterway transport:
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FAS
Free Alongside Ship
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FOB
Free On Board
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CFR
Cost And Freight
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CIF
Cost, Insurance and Freight
SALES -Incoterms
Each term summarising the obligations of (A) the seller and (B) the buyer
in relation to 10 typical points:
 1. main obligation: provision of goods, payment of the price
 2. licenses, authorisations and formalities
 3. contracts of carriage and insurance
 4. delivery and taking delivery
 5. transfer of risks
 6. division of costs
 7. notices to be given
 8. proof of delivery, transport document
 9. checking, packaging, marking, inspecting
 10. other
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UPICC– CONTENTS OF
CONTRACTS IN GENERAL
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Various rules
Under interpretation: supplying an omitted term (Art. 4.8) where
important for the determination of their rights and duties
Art. 5.1.2: implied obligations stem from (a) the nature and
purpose of the contract; (b) practices established between the
parties and usages; (c) good faith and fair dealing; (d)
reasonableness.
Art. 5.1.3. Duty to co-operate
Art. 5.1.4. Distinction duty result / merely best efforts
Art. 5.1.7. Price determination mechanisms: normal price;
unilateral unless manifestly unreasonable; third party decision
Art. 5.1.8. Contract for an indefinite period: ending by notice with
reasonable time
Art. 5.2.1. ff. Contracts in favour of third parties; rule on defences
UPICC– CONTRACT IN FAVOUR
OF THIRD PARTY
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Art. 5.2.1. ff. Contracts in favour of third parties; rule on defences
---
stipulator
beneficiary
(3rd party)
(provision) (original
contract)
promisor
resulting relationship
UPICC - PERFORMANCE
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Modalities of (performance) of the obligation:
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Time of performance (Art. 6.1.1.)
Order of performance (Art. 6.1.4.) in principle simultaneous
Place of performance (Art. 6.1.6)
- Money: creditor’s place (« obligee »)
- Other: debtor’s place (« obligor »)
Monetary obligations: means of payment, currency etc. (6.1.7 ff.)
Rules where public permission required for performance
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Hardship (change of circumstances) Art.: 6.2.1 ff.
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Performance as extinction of an obligation
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Art. 6.1.12-13: imputation of performance
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CISG – REMEDIES - OVERVIEW
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Overview of remedies for non-performance:
Specific performance
Suspend performance
Avoidance and price reduction
Damages
General principles
Free choice, no hierarchy of remedies (« pari passu ») (but sometimes
fundamental breach required)
Combinability, esp. of damages and other remedies
Largely self-help (unilateral declaration)
By notification (usually within a reasonable time)
UPICC – REMEDIES FOR NONPERFORMANCE
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Overview of remedies for non-performance:
Withholding performance
Specific performance
Termination and price reduction
Damages
General principles:
Free choice, no hierarchy of remedies (« pari passu ») (but sometimes
fundamental breach required)
Combinability, esp. of damages and other remedies
Largely self-help (unilateral declaration)
By notification (usually within a reasonable time)
CISG – GENERAL RULES ON
NON-PERFORMANCE
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Remedies for non-performance: separately mentioned for buyer and
seller. But basically a unitary concept of non-performance (« breach »).
Some remedies require a « fundamental breach » (Art. 25).
Interpretation: CISG AC Opinion n° 5
Fault or strict liability ?
- damages excluded if exemption: failure due to an impediment beyond
control (art. 79) (+ give notice to other party). Hardship ? See next slide.
- other remedies: strict liability
- a party may not rely on a failure of the other party to perform, to the
extent that such failure was caused by the first party's act or omission
(Art. 80).
CISG – HARDSHIP
Does art. 79 include a rule on hardship ?
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Hardship is a « matter governed by CISG », but disputed whether:
a) excluded by Art. 79 (Cass.Fr. 2004, Behr v. Romay in a specific case: third
party buyer no longer interested);
b) included in Art. 79 but gap as to more precise rules (Cass.B. 19 June 2009 –
steel price plus 70 %) – in line with CISG AC Opinion n° 7
c) internal gap which can be filled by principles;
d) internal gap which can not be filled by principles.
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Which principles: only « internal » to CISG, or also « external » such as UPICC
? (Cass. B. 19 June 2009: also UPICC)
UPICC – GENERAL RULES ON
NON-PERFORMANCE (Cont.)
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« Non-performance » of an obligation as general (unitary) concept) (Art.
7.1.1, shift from «(breach of) contract» to « obligation »)
In view of the available remedies distinction between:
- non-performance caused by the creditor itself (7.1.2): no remedy
- non-performance excused under 7.1.7 (force majeure): only withholidng
performance, termination and interest on money due
- non-performance cured without delay (7.1.4): only withholding
performance, damages
- non-performance not excused: all remedies
Rule on exemption clauses: only if not grossly unfair (7.1.6)
CISG –
SPECIFIC PERFORMANCE




(Specific) performance requested by buyer:
Whether buyer can claim specific performance depends upon domestic
law of the forum (art. 28)
Lost if incompatible remedy requested before (46,1)
If specific performance is available, it includes claiming a) substitute
goods if breach is fundamental, or b) repair if not unreasonable (Art. 46)
If seller offers repair (« cure »): Art. 48
Seller can claim specific performance: payment and taking delivery (62)
Creditor can fix an additional period of reasonable length for cure
(function: termination allowed afterwards) (« Nachfrist « ) (Art. 47 & 63)
If buyer does not give specifications: seller may specify (Art. 65)
UPICC – SPECIFIC
PERFORMANCE

Right to (enforce) (specific) performance
- always for monetary obligations (7.2.1) (no exception for cases where
you can sell it elsewhere)
- in principle for other obligations (7.2.2) unless impossible or unlawful,
unreasonably burdensome, reasonably available elsewhere, strictly
personal character; must be requested within a reasonable time
CISG – REMEDIES:
SUSPENSION


-
Order of performance: in principle at the same time
> Suspension of performance (as long as other party does not perform)
> Suspension also in case of anticipatory breach (Art. 71), but give
notice; suspension no longer allowed if adequate assurance of
performance
UPICC – REMEDIES :
WITHHOLDING PERFORMANCE

Withholding performance (7.1.3.)
(the rule on anticipatory breach as in CISG is missing) (but implied in
7.3.3)
CISG – REMEDIES
« AVOIDANCE » (1)


Termination, called « avoidance » (misleading term)
Requirements (Art. 49 & 64)
- either « fundamental breach » or still in breach after the additional
period granted for performance
- definition of fundamental breach in Art. 25
- also in case of anticipatory breach (if fundamental) (Art. 72)
- fault not required; but events after passing of risk are for the risk of the
buyer
CISG – REMEDIES
« AVOIDANCE » (2)


Scope: depends on whether contract is divisible or indivisible; see Art. 51
and 73 (instalment contracts)
Exercise and loss:
- by notice (Art. 26)
- within reasonable time (Art. 49,2 & 64, 2)
- buyer loses remedy if restitution in substantially the same condition
made impossible (Art. 82)
For the buyer also Price reduction (Art. 50) (proportionate to value reuction according to value at delivery)
CISG – REMEDIES
« AVOIDANCE » (3)



-
Effects of « avoidance » on the terminated contract or part(s) of the
contract:
CISG does not deal with effect on transfer of property (whether avoidance
has propietary effect or not)
Obligational effects:
a) remaining obligations are terminated (« release ») (Art. 81,1,1)
b) except surviving clauses: clauses relating to settlement of disputes
(forum & arbitration etc.); clauses on effects of termination (eg damages)
(Art. 81,1,2)
c) obligation of restitution of whatever supplied or paid (Art. 81, 2).
Includes interest on payment c.q. benefits derived from the goods (Art.
84)
d) rights to damage already accrued survive (CISG AC Opinion n° 9, 1)
A whole series of additional interpretative rules in CISG AC Opinion n° 9.
UPICC – REMEDIES :
TERMINATION (1)


Grounds for termination:
- fundamental non-performance (7.3.1. (1) (2))
- after an additional period granted for performance (Nachfrist, 7.1.5. and
7.3.1 (3))
- in case of anticipatory fundamental non-performance: 7.3.3. and 7.3.4.
Mode of termination (7.3.2):
- by notice
- in case of late or defective performance: within a reasonable time
UPICC – REMEDIES :
TERMINATION (2)



Scope of termination: all obligations, unless extended over time and
divisible (7.3.6 (2))
? Price reduction
Effects of termination:
- release from (outstanding) obligations (7.3.5 (1))
- restitution of performances (in kind or in money) (7.3.6. (1))
- surviving clauses (7.3.5 (3))
- damages reserved (7.3.5 (2))
CISG – REMEDIES
DAMAGES






-
-
Damages (compensation of damage):
General: requires breach (not exempted by art. 79), damage and causal
link
Includes lost profit (Art. 74,1). Interpreted in CISG AC Opinion n° 6
Only damage foreseeable when contract concluded (Art. 74,2)
Duty to mitigate damage (Art. 77)
Calculation of damage:
Late payment: interest (plus further damage) (Art. 78; dies interpellat pro
homine) / Interest rate ? lacuna > national law (or: Unidroit Principles
7.4.9 ?)
Buyer or seller made a reasonable substitute transaction: price difference
(plus further damage) (Art. 75)
Current price (Art. 76)
Art. 75 and 76 interpreted in CISG AC Opinion n° 8
No rule on validity of penalty clauses
UPICC – REMEDIES : DAMAGES




Except where non-performance is excused (7.4.1.)
General measure of damage:
- positive interest (see 7.4.2 (1), incl. lost profit)
- includes non-pecuniary loss (7.4.2. (2))
- includes loss of a chance (7.4.3.)
- limited by foreseeability test (7.4.4)
- restriction where due to creditor or non-mitigation (7.4.7, 7.4.8)
- includes costs of mitigation (7.4.8 (2))
Calculation of damage:
Late payment: interest (plus further damage) (Art. 7.4.9); interest rate in
7.4.9 (2, place of payment); dies interpellat pro homine (7.4.10)
reasonable substitute transaction: price difference (plus further damage)
(Art. 7.4.5)
current price (Art. 7.4.6)
Agreed payment for non-performance: clauses binding unless grossly
excessive in relation to actual harm (7.4.13)
UPICC – SET-OFF





Obligations of the same kind between 2 parties
Different models in national laws: either automatic if stricter conditioons
are met, or by unilaterla declaration. UPICC chooses last model.
Can be set-off by notice by one party where:
- its own obligation is payable (entitled to perform)
- the obligation of the other party is (a) due and (b) ascertained or arising
from the same contract
No « retroactive » effect (but in some cases a partly similar rule, cfr. setoff & prescription; set-off & assignment)
There can also be contractual set-off (netting)
SALES - NY LIMITATION
CONVENTION (1)







New York Convention 1974, amended 1980
22 ratifications for amended version + 7 for old version only
Basic period: 4 years (Art. 8)
Independent from notice periods (Art. 9)
Period commences at breach, for lack of conformity at delivery of goods
(10), except fraud (10 (3))
If guarantee period (express undertaking): commences at notification, but
not later than end of guarantee period (Art. 11)
Buyer who has resold goods cannot wait until its buyer makes a claim for
asserting a claim agianst the original seller.
SALES - NY LIMITATION
CONVENTION (2)






-
The period ceases to run when judicial or equivalent procedures are
started (Art. 13 ff.); if no decision on the merits, period runs but is
extended to 1 year after ending procedures (Art. 17)
Acts in the debtor’s state restart prescription according to local law (Art.
19, esp. Acts of enforcement)
Acknowledgment of the right restarts prescription in 2 cases (Art. 20, 1
and 2)
Force majeure: Extension with 1 year after its ending (Art. 21)
long stop 10 years after commencement (Art. 23)
Effects:
« weak effect » (Art. 25/26)
Effect on set-off : 25 (2)
Not to be invoked by the judge ex officio
UPICC – LIMITATION OF
ACTIONS





System of a double period: 3 / 10 years (10.2)
- 3 years from (constructive) knowledge
- 10 years from the day the right can be exercised
Renewal of limitation period by acknowledgment (irrespective of 10
years) (10.4)
Suspension in case of proceedings (judicial, arbitral and similar): 10.5 to
10.7 – without a one year extension !?
Prolongation until one year after impediment (force majeure) ceases:
10.8
Effects of expiration:
- « weak effect » (art. 10.9); no restitution because not « undue »
(10.11)
- set-off possible until assertion of prescription (10.10)
- not ex officio
Proprietary security of the seller
Reservation of title




Seller’s security under most continental systems:
Before delivery: right to suspend performance (effective against third
parties)
Termination for non-performance: proprietary effect under some legal
systems if exercised before insolvency
In some systems also automatic seller’s lien (privilege) on the goods after
delivery and transfer of title
If stipulated, retention of title (in principle effective in insolvency)
Applicable law: lex rei sitae
Extensions of retention of title (not widely recognised) :
Extended into the buyer’s right to payment after resale
Extended into the product
Broadened to other claims (all moneys clause)
Harmonisation and recognition ? Model rules in DCFR IX
65
Factoring
= Transfer (assignment) of rights to payment («receivables») for the
purpose of financing and/or credit security; factor may provide additional
services
 Master agreement determines which receivables the factor undertakes to
take over from the assignor and on which conditions (often credit line with
a ceiling)
 True factoring = No recourse factoring: factor bears the credit risk, except
in specific cases where he has a right to recourse (against the assignor) :
Assignment in bad faith (buyer already insolvent)
Buyer refuses to pay because of non-performance of seller
Some other risks not covered
 Spurious factoring = recourse factoring: factor has recourse against the
assignor when debtor does not pay. Rather a mandate to collect (pro
solvendo) + additional services.

66
Factoring

Assignment
(valuta) + transfer
of property
assignor
assignee
(substituted
creditor)
(provision) (original
contract)
resulting relationship
(substituted creditor)
debitor cessus
67
Factoring



-
International factoring
Was often a case of refactoring: the export factor assigns to an import
factor (system of « indirect factoring »). When factor present in both
countries (international group) usually direct factoring. In case of indirect
factoring a contract between both factors governs their internal relationship
(who bears which risk)
Applicable law ? Different conflict rules for different aspects !
Factoring agreement: lex contractus
Relationship with the debtor: lex causae
Proprietary aspects (property rights in the receivable): different solutions
possible (eg. Lex causae, country of debtor) - now often country of the
assignor
68
Factoring








International factoring – uniformisation of the law ?
Ottawa-convention 1988 on international factoring (into force in 8 count.)
Scope of application: only assignment of receivables (right to payment of
price) arising out of international sales (art. 1 and 2)
Despite the name, it deals not with the factoring agreement but with the
assignment
One of the critical questions: effect of no-assignment clauses.
Why do buyer stipulate them ?
- Can disregard notices of assignment
- maintain future rights of set-off
National law often gives effect to such clauses. Even recent restrictions
leave the 2 mentioned interests of the buyer untouched (eg German HGB)
Ottawa Convention : no-assignment clauses are overruled (art.6). But
reservation in 4 countries (i.a. Belgium)
69
Factoring





Ottawa-convention
Relationship debtor-assignee:
The debtor of the assigned right (buyer) retains all other defences arisen
out of the sales contract (provision relationship) (art. 9), incl. any set-off
already available.
But in principle no right to reimbursement from the factor in case of nonperformance of the seller (with 2 exceptions in art. 10 (2) where there is a
right to reimbursement against the factor).
Art. 8 determines under which conditions the debtor is under a duty to pay
the assignee (instead of the seller): if notified by the supplier (or with his
authority) in writing and no older right has been notified earlier.
70
IX Forfeiting
Forfeiting:
 Comp. a no recourse factoring for a single transaction
 Supplier assigns its right to payment against the buyer to a forfeiter, usually
by endorsing bills of exchange drawn upon the buyer for successive terms
of payment (usually every 6 months during 2 to 5 year)
 Forfeiter bears the credit risk and waivers its recourse against the drawer
(exporter) (NB. Under the Geneva Convention on Bills of Exchange such a
waiver cannot be binding upon any other holder of the bill)

71
UPICC – ASSIGNMENT OF
RIGHTS



Assignment = transfer of a right (property)
Scope of Ch 9.1:
- contractual assignment of rights
- not in a negotiable instrument (9.1.2.)
Limits to assignability
- where significantly more burdensome (9.1.3.)
- partially assignable ? If divisible (9.1.4)
- no-assignment clauses have NO effect (1) for rights to payment of
money and (2) in case of good faith of assignee (9.1.9)
UPICC – ASSIGNMENT OF
RIGHTS




Requirements for assignment:
- existence of the right ? For future rights assignment takes place with
retroactive effect as soon as right comes into existence (9.1.5)
- mere agreement assignor / assignee (neither notice nor consent
required for the transfer as such) (9.1.7)
Duty to perform of the debtor:
- according to (order of ) notice and
- in case of notice by assignee may demend adequate proof of
assignment (9.1.10, 9.1.11, 9.1.12)
UPICC – ASSIGNMENT OF
RIGHTS

All defences available + set-off available at time of notice (9.1.13)
(valuta) + transfer
of property
assignor
assignee
(substituted
creditor)
(provision) (original
contract)
debitor cessus
resulting relationship
(substituted creditor)
UPICC – NEW DEBTORS




Ch. 9.2. Substitution or addition of debtor.
3 Types:
- substitution: original debtor discharged
- subsidiary liability of the original debtor
- solidary liability of old & new debtor (« joint and several » in Eng. law)
Several more specific institutions or instruments can be classified in this
scheme.
Independent new debtors ? See infra: documentary credit, independent
guarantees
IX Leasing
Finance leasing: 3 party operation:
The (prospective) user negotiates with a supplier the sale of equipment
Leasing contract between the user as lessee and a financer as lessor
Lessor buys upon instruction of the lessee and becomes owner(= security)
Lessee leases for a fixed term. Usually with an option to purchase at the
end of the term (for the residual value)
 Leveraged leasing:
Lessor itself is partly financed by a bank (investment credit granted by bank
to lessor); lessor assigns the rights to payment against the lessee to the
bank (by way of security assignment); sometimes additionally a security
right in the equipment.
 Risks in international leasing ? Especially recognition of proprietary rights
(lex rei sitae)

76
IX Leasing
International leasing: also an Unidroit convention Ottawa 1988
 Scope of application: « international » & « leasing » (art. 1)
 Recognition of the right of ownership of the lessor (art. 7)
 Obligations of the parties :
- Lessee may refuse to accept equipment in case of non-conformity (and
terminate contract if not remedied) (art. 12)
But the lessor is not liable in respect of the equipment (art. 8); lessee must
go directly against the supplier (on the basis of the sales contract). Lessee
cannot terminate the sales contract without consent of the lessor, but has
other remedies (art. 10)
Duty of the lessee to take proper care of the equipment (art. 9)
Remedies in case of default (non-payment) of the lessee, including
possibility of termination (art. 13)
Lessor may assign its rights, but remains liable for its obligations (art. 14)
Lessee may transfer its rights only with consent of lessor (art. 14)


Unidroit model law 2008
77
IX Project financing
Very large projects entail specific risks for financer; apart form the credit
risk also exploitation risk, market risk, exchange risk, political risks... Output
of the project is essential.
 A particular form is BOT (« build operate transfer »): foreign supplier (or
consortium of suppliers) participates in the capital of the exploitation
company (at least initial years)
 Often financed by a syndicate of suppliers and/of financial institutions


UNCITRAL Model Legislative Provisions on Privately Financed Infrastructure Projects
78
IX Project financing
Financers try to limit risks by different structures or techniques, eg:
Security provided by or on behalf of sponsors (states or international
institutions); eg completion guarantee, cost overrun undertaking,
repayment guarantee, etc.
long term unconditional commitments from buyers (possiby incl. suppliers
of materials) to purchase the products or services; purchase obligations
possibly guaranteed by security. May include a take-or-pay contract.
Contract manufacturing: products manufactured are property of the
supplier / financer who sells them to purchasers (possibly with a long-term
purchase agreement)
 Eg. Eurotunnel

79
Documentary credits

Purpose: to organise payment against delivery in international sales

Technique (simple case):
- a bank
- acting on instructions of a principal (« applicant », usually buyer)
- undertakes an obligation to pay a beneficiary (usually seller)
- against delivery by the beneficiary of the agreed documents (including a
document representing the goods*)
-
* concept of negotiable instrument: the right out of the document follows
the right to the document.
80
Documentary credits

-
-
Order of acts:
Underlying contract (usually sale) determines the payment conditions –
more specifically which l/c the buyer will have to obtain for the benefit of
the seller before the seller ships
Applicant (buyer) contracts with a bank to undertake a « credit » = issue
such a l/c (in favour of the seller)
Issuing bank issues a l/c; this is notified to the beneficiary (seller)
Seller sends / ships the goods
Seller presents the documents to the issuing bank (presentation)
Bank examines the documents (examination, 5 days) and honours (pays) or
refuses
Bank reclaims payment from its client (buyer) (recourse) and transfers the
documents to the client (against payment)
81
Documentary credits
seller
(creditor)
valuta
(sales contract)
buyer
(delegating
debtor)
letter of
credit
issuing bank
(delegated
debtor))
(provision)
82
Documentary credits

Applicable rules of law:

Conflict of law rule: 3 separate relationships. To each of them is applied its
own lex contractus (chosen law; subsid. characteristic performance)

Relationship issuer / beneficiary :
codified «customs & practices » (UCP). Since 2007 version 600.
applicable by virtue of a reference in the contract or l/c; in some countries
accepted as customary law; very succesful - but less in the USA (application
of the UCC)
UCP do not regulate all issues; national law applies to other issues.
DCFR has a model law for all independent guarantees (incl. documentary
credits) in Book IVG Section 3.
-
83
Documentary credits
Legal effects between bank (delegated debtor) and beneficiary (usually
seller)
 Art. 4 UCP (« credits v. contracts »)
- Independent from the relationship bank / applicant (« provision
relationship ») (so-called abstraction)
- Independent from the underlying relationship between applicant (usually
buyer) / beneficiary (usually seller) («valuta relationship », usually a
contract of sale): « even if any reference is included in the credit »
- « Separate »: determined only by its own modalities (next slide)

84
Documentary credits
Legal effects of the l/c between bank (delegated debtor) and and
beneficiary (usually seller (cont.)
 In principle irrevocable (art. 7b) (analysed either as a contract or a binding
unilateral promise)
 In principle not transferable (infra, art. 38 UCP) (but beneficiary can
transfer the proceeds, art. 39)

85
Documentary credits


-
-
*


Legal effects of the l/c between bank (delegated debtor) and and
beneficiary (usually seller (cont.)
Duty to pay (or honour otherwise) only:
upon presentation* of complying documents (complying presentation);
strict interpretation; detailed default rules in the UCP concerning the
requirements for the various types of documents commonly required
(infra); conditions without stipulated documents are disregarded (art. 14 h)
and if presented before the expiry date and
at the agreed place for presentation (or one of the places for presentation)
For electronic presentation, see the eUCP supplement to the UCP
Standard for examination: art. 14. According to 14 b, the period for
examination is 5 days.
In case of refusal, duty to notify discrepancies to the presenter (art. 16 c)
86
Documentary credits

Independence is exceptionally set aside in case of manifest fraud.
«Manifest» means: proven by present evidence (DCFR IVG-3:105)

Undertaking to «honour» - modes for honouring the credit :
a) immediate payment (at sight), b) deferred payment (promise to pay with
a term), c) by acceptance of a draft (bill of exchange) drawn by the
beneficiary
Alternative: undertaking to «negotiate», i.e. purchase of a draft (bill of
exchange) drawn on another bank. The issuer will pay in exchange for a
draft.
UCP 600, art. 6 c: «a credit must not be issued available by a draft drawn
on the applicant».

Effect upon the rights & obligations of the client: can not attach (seize) the
beneficiary’s right against the bank
87
Documentary credits




-



-
Art. 5 « Banks deal with documents, not with goods »
Documents dealt with in detail by the UCP:
Commercial invoice (art. 18)
Transport documents. More specifically:
Bill of lading (cognossement) (art. 20)
Charter party bill of lading (art. 22)
Non-negotiable Waybill (art. 21)
Multimodal transport document (art. 19), ….
General requirement: transport document must be « clean » (art. 27)
Insurance documents (covering the goods) (art. 28)
Not defined in UCP but also frequently used:
Storage certificates (issued by bailee)
Certificates of origin, composition or quality, compliance with norms, etc.
88
Documentary credits

-
-
-
Effects in the internal relationship applicant / bank (delegated debtor)
Contract for (financial) services determines which l/c the bank undertakes
to issue
Bank must notify applicant of the presentation of documents; has a duty of
reasonable care in examining the documents (no stricter liability) (more
detailed rules in art. 14 UCP); must notify applicant of performance or
refusal
After performance by the bank to the presenter: recourse of the bank
against the applicant (DCFR IVG-3:109) (even if national law grants
subrogation, bank is not interested in it)
Documents remain in the hands of the bank as security for reimbursement
(recourse)
89
Documentary credits

-

Effects in the relationship beneficiary (seller) / applicant (buyer)
Seller does not have to ship before l/c is issued
During the term for presentation: right to payment against the buyer is
suspended (comp. UPICC 6.1.7 (2) and DCFR III-2:108)
After undue payment: buyer must demand reimbursement from the seller
(only)
Dispute settlement mechanism organised by the ICC: « DOCDEX ». Expert
opinion (binding or not) in very short period of time by anonymous expert
90
Documentary credits

Complex forms – intervention of more than 1 bank
Bank of (country of) the seller is merely an advising bank (see art. 9 UCP):
gives advice on required formulation of the l/c, verifies the l/c issued,
transmits the l/c of the issuing bank to the beneficiary; may be authorised
by the issuing bank to examine the documents and to honour; agent of the
issuing bank (no proper undertaking); demands reimbursement from
issuing bank after payment.
 Bank of (country of) the seller «confirms» (confirming bank): own
obligation (see art. 8 UCP); beneficiary has a joint and several right against
both banks, but has to address the confirming bank first
 Bank of (country of) the seller guarantees the obligation of the issuing
bank: dependent personal security (suretyship), no independent obligation.

91
Documentary credits





Particular forms:
Transferable documentary credit: art. 38 UCP 600
Back-to-back-credit: l/c on application by the seller for the benefit of its
seller; second bank takes the first l/c as credit security.
Effect: second bank in possession of the documents and demands
reimbursement from the first bank on the basis of the first l/c.
Revolving credit (with a ceiling): credit which can be used for several l/c’s.
Each payment by the buyer is credited to the current account of the seller
so that new credit can be drawn in favour of the seller.
Red clause: bank is authorised to pay in advance (before presentation)
usually upon presentation of a provisional document (eg storage certificate)
92
Documentary credits
Standby l/c: is rather a kind of independent guarantee (s. further), which
can be called (demand) by presenting agreed documents (in principle
proving the right to payment of the beneficiary).
 Standard practices are codified in the « ISP », now ISP 1998

93
Independent guarantees



-


Independent guarantee: 3 party relationship (type delegatio solvendi)
Underlying contract requires the debtor to obtain a guarantee
On application of that debtor, bank (guarantor) issues a guarantee :
in the form of a (conditional) promise
to pay a sum of money to a beneficiary
on demand by the beneficiary in conformity with the terms and conditions
of the guarantee incl. at least a declaration that the debtor defaults on its
obligations (supporting statement)
Independent from the underlying contract (valuta relationship, such as sale,
construction contract, etc)
Independent from the internal relationship bank / applicant (provision
relationship, a financial service contract).
94
Independent guarantees

Independent guarantees
beneficiary
(creditor)
valuta
(sales, services or
other contract)
client
(delegating
debtor)
(provision)
demand
guarantee
issuing bank
(garantor,
delegated
debtor))
95
Independent guarantees

-
-
Examples:
Tender guarantee (bid bond)
Performance bond
Advance payment guarantee = repayment guarantee
Maintenance guarantee
Payment guarantee
Retention money guarantee
96
Independent guarantees
Applicable rules
 Conflict of law rule: chosen law, otherwise place of guarantor ...

UN Convention independent guarantees & standby l/c (in force, but only 8
countries)
 Standard conditions drafted by the ICC:
Uniform rules for demand guarantees (URDG) (v. 758 replaces v. 458 since
1 July 2010), better coordinated with UCP
applicable if the guarantee refers to them (art. 1 URDG);
default rules (« except so far as the guarantee modifies or excludes
them »);
not yet sufficiently succesful to be considered as customs;
can be used for domestic or international relations
 National law remains applicable by default or where mandatory. Art. 34
URDG contains choice of the country where issued
 International Standby Practices (ISP 1998)

97
Independent guarantees

Main rules in the URDG (NB. Wording in v.758 aligned with UCP)
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Issued on demand of a principal/applicant (or its agent - the instructing
party) (definitions of parties in art. 2)
Binding as soon as it leaves the control of the guarantor (art. 4 a)
Guarantee not transferable (unless otherwise agreed) (art. 33) (variations
in national law as to the effect of such a no-assignment clause – comp.
discussion under Factoring)
Irrevocable (art. 4b)
Independent from any other relationship (art. 5); guarantor deals with
documents, not with goods (art. 6); disregarding conditions which are not
documentary (art. 7) with a list of exceptions (esp. externally verifiable
facts or index)
If no expiry date, expires after 3 years (art. 25 c) (in the UN Convention 6
years)
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98
Independent guarantees

Relationship guarantor – beneficiary:
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Payment requires presentation of a written « demand » and documents
specified in the guarantee
usually at least a declaration by the beneficiary that the principal is in
breach of obligation, art. 15 – « supporting statement », unless the
guarantee is explicitly merely « on first demand »
guarantee may contain further conditions for demand (if further documents
are required, usually called a standby l/c). Art. 8 (« content of instructions
and guarantees ») contains a checklist of possible requirements
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99
Independent guarantees

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Relationship guarantor – beneficiary (cont.)
Procedure
- presentation of the « demand » before expiry date (presentation, art. 14
ff.)
- partial demands and multiple demands are possible (art. 17)
- guarantor must inform the applicant/principal (art. 16) and transmit
copies of a complying demand (art. 22)
- examination by guarantor with reasonable care (art. 19) whether it
appears to be on its face a complying demand
- within 5 working days (art. 20a) (in UN Convention 7 days)
- in case of a demand « extend or pay », guarantor may wait 30 days (art.
23)
- in case of complying demand: pay (art. 20 b)
- in case of refusal to pay: notify beneficiary (art. 24) stating reasons for
refusal (discrepancies) – otherwise guarantor must pay !
- payment in the indicated place (art. 20)
100
IX Independent guarantees

Effects in the internal relationship between applicant/principal and
guarantor:
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Contract between applicant/principal and beneficiary determines which
guarantee the guarantor will issue (useful checklist in art. 8); duty to inform
/ advice of bank towards applicant/principal;
Duty of guarantor to inform applicant/principal in case of demand; duty of
reasonable care in examination of the demand
No extension of term (« extend or pay ») without consent of the
applicant/principal (art. 23)
After payment: recourse against the applicant/principal (under Belgian law
traditionally no subrogation)
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101
Independent guarantees
Complex guarantees, esp. With counter-guarantee:
- bank of the applicant/principal issues a guarantee in favour of the bank of
the beneficiary (corresponding bank);
corresponding bank issues a guarantee in favour of beneficiary. First
guarantee is a « counter-guarantee ».
guarantee and counter-guarantee are independent from each other (art. 5)


Possibility of an advising bank (art. 10)
102
IX Independent guarantees

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Refusal c.q prohibition to pay (stop-payment order) in the following
situations:
Guarantee conditions not fulfilled
Underlying contract (valuta relationship) manifestly contrary to the
(international) public order
Manifest fraud
Manifest abuse of right.
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Fraud is more specifically described in art. 19 Uncitral convention
- Provisional order possible of « highly probable » on the basis of
« immediately available strong evidence » (art. 20 Uncitral convention)
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Comp. Aslo DCFR
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103
IX Accessory guarantees

E.g. Uniform Rules for Contract Bonds (URCB):
Usually a guarantee by an insurer
Comparable to suretyship (dependant personal security); the obligation is
dependent upon the valuta relationship (between main debtor and
creditor).
104
IX Accessory guarantees
creditor
(beneficiary)
(valuta)
delegating
debtor
delegated
debtor
(provision)
105