BIBLIOGRAPHY

Introduction

The contracting parties expect that their contract be performed as they contemplate when making the contract. However, when the circumstances change, it is not infrequent that one of the contracting parties seeks to evade performance of his own part in order to flee from a bad bargain. A crucial challenge is therefore to identify the circumstances in which a buyer may be entitled to refuse to perform his contractual obligations and to put an end to the contract where the seller has failed to perform his obligations in accordance with the contract terms.[1] Sometimes, the refusal to perform will be merely a part of, or a step towards, putting an end to the contract, but a failure to perform may also have the less drastic effect of entitling the buyer simply to withhold performance of his reciprocal obligations at least for so long as the seller's failure continues, irrespective of whether or not he is entitled to bring the contract to an end. Termination of contract also raises some further questions.

As will be shown in detail, the question of termination seems somewhat complicated in English law since, for reasons which will be made clear below, English sale of goods law has not clearly distinguished between these two courses of action; the seller's right to cure his non-conforming delivery after the buyer's lawful rejection becomes obscured in this system. Part One of this essay will try first to examine the question whether in English sale of goods law the buyer has two separate rights: the right to withhold performance of his obligations, and the right to terminate the contract.[2] Then, it will discuss the circumstances in which the buyer may be entitled to resort to either or both of these remedies. At the end, an effort will be made to provide a general picture of the response the English sale of goods law provides to questions raised by termination.

The Convention on Contracts for the International Sale of Goods (hereinafter, the Convention) also contains provisions which can be said to allow the buyer to withhold performance of his contractual obligations. Relying on these provisions, some commentators have suggested that a through reading of the remedial provisions of the Convention shows that the buyer is given a general right to "refuse to take delivery" where the seller fails to perform his delivery obligations in accordance with the contract and the Convention.[3] This, as will be seen later, is controversial. However, it seems that, theoretically, there must be a distinction between (a) the remedy under which the buyer is simply given a right to withhold performance as long as the seller has not fulfilled his contractual obligations, and (b) the remedy under which he is entitled to terminate [4] the contract. There can also be found some provisions in the Convention under which the buyer is only given a right to withhold performance of his obligations without being entitled to terminate the contract.Termination in such cases will be justified where certain requirements are satisfied. The second part of this essay will first determine when an injured buyer is entitled simply to refuse to perform his obligations and then ascertain when he is entitled to terminate the contract if the seller fails to perform his delivery obligations in accordance with the contract and the Convention.

Likewise, Iranian Civil Code and Shi'ah jurisprudence have addressed these questions, although in an inadequate way. A general look at the remedial provisions of the Iranian Civil Code [5] and, particularly, what Shi'ah jurists have addressed when dealing with the seller's duty to deliver mabi' (subject-matter of sale) shows that it is a well-accepted rule that the buyer, under certain circumstances, is entitled to withhold payment of the price as long as the seller's refusal continues. The expression haqq-e-habs is used in Iranian civil law [6] and the jurists' terminology to refer to this concept.[7] The Civil Code [8] and Shi'ah jurists have also accepted the view that, in some cases, the buyer may be entitled to reject the seller's non-conforming delivery [9] and, in some other cases, he is free to reject it and bring the contract to an end.[10] The expression haqq-e-radd refers to the first right, [11] and the term haqq-e-faskh [12] is used to describe the second right. However, Iranian Civil Code and Shi'ah jurists have not considered withholding performance as a general remedy separate from termination. They have also not addressed the relationship between this remedy and haqq-e-faskh. This causes the position of the right to cure by the seller to be blurred in the Iranian Civil Code and in Shi'ah jurisprudence. Similarly, the Iranian Civil Code and Shi'ah jurisprudence have not addressed the case where the seller has breached his obligations to hand over the documents in accordance with the requirements of documentary sale contracts. There is also no reported case in which the Iranian courts have considered these issues. The third part of this essay aims to show, where the buyer may be entitled to resort to one or both of these two remedies, how the consequences of the seller's failure to fulfil his duties to tender documents could be analysed under Iranian civil law and Shi'ah jurisprudence, and how one can reconcile the seller's right to cure with the general principles of Iranian and Shi'ah contract law.

Finally, the fourth part will compare Iranian and Shi'ah law with English sale of goods law and the Convention in order to assess Iranian-Shi'ah law, as it stands, and with that which is suggested in this study, and finally to show how much similarity and dissimilarity exists between Iranian-Shi'ah law and the two other systems under consideration.

Although such an evaluation may be carried out by way of a mixed study raising a problem and analysing any particular solution prescribed in a relevant legal system, it seems that the best way for the present study is to first show the approach taken under the developed systems, case by case, and then examine the issue under the undeveloped system, and at the end use these materials as a basis for a comparative assessment. This would help the writer first to show the vacuums in an undeveloped system, and then to consider how the existing gaps can be filled by interpretation of the existing law and giving new suggestions.

For this purpose, in the case of English law, the study will focus on the law regulating the buyer's remedies in light of the Sale of Goods Act 1979 as interpreted and applied in relevant judicial precedents and general principles of contract law, as a primary source, and the commentaries of academic writers in the field of the sale of goods law, as a secondary tool. In performing the English part of the study, much emphasis is placed on the well-established law applicable to the issues in question without getting into much detail, though reference is made to different approaches taken by English commentators in respect of a particular issue where there is no settled law.

Similarly, in respect of the Convention, primary emphasis is placed on the rules prescribed by the Convention with respect to the issues under consideration by way of interpretation of the text of the Convention. However, the history of legislation of any particular provision is not disregarded. Efforts are also made to interpret the text of the Convention in light of its legislative history in order to read the intention of the Convention drafters. In addition, an effort has been made to refer to the courts' and arbitrators' attitudes towards the Convention provisions which are susceptible to different constructions through the Internet (UNCITRAL and Pace University School of Law Home Pages).

A somewhat more complex method is used in the Iranian and Islamic part of the essay. As far as Iranian law is concerned, the primary source is the Iranian Civil Code. However, its relevant provisions are not cited and discussed in the text. They are only referred to in the footnotes. This is because almost all of the relevant provisions of this Code are derived from judgements of Shi'ah jurists'. Accordingly, where there is a relevant provision, it is referred to in the footnote, and, in the case of vagueness or lack of any provision, the case is dealt with on the basis of Shi'ah law, or, as the Iranian Constitution prescribes, on the basis of authoritative Islamic sources and authentic fatawa.[13]

Great efforts are made to access what is law under Shi'ah jurisprudence.[14] Initially, an attempt is made to answer the relevant questions in accordance with the existing law, that is, Shi'ah jurists' judgements.[15] In the absence of express statements of law, an attempt is made to answer the question by interpreting the judgements of the jurists in similar situations and analysing the original authorities upon which the jurists have based their judgements in those cases. When the legal vacuums could not be filled by the foregoing methods, the author has tried to suggest the appropriate law by way of interpretation of the well-accepted general principles.

1. Introduction

In English law, the question whether a party has a right to withhold performance of his obligation and to terminate the contract for the other party's non-conforming performance is analysed in the context of classification of contract terms as either:

• "conditions," breach of which enables the innocent party to refuse to accept the non-conforming performance and terminate the contract;

• "intermediate terms," breach of which entitles him to do so only when it results in serious consequences which will deprive him of substantially the whole benefit which it was the intention of the contracting parties that he should obtain from the contract; or

• "warranties," breach of which enables him to only claim damages for losses arising out of the breach.

The emergence of the new category of "intermediate" terms appears likely to have reduced the number of occasions when a term will be classified as a "warranty" in its Sale of Goods Act sense, so that it has been said that, since the decision of Court of Appeal in the HongKong Fir case, few cases can be found in which the courts have construed a contract term as a warranty.[23]

As regards conditions, although their continued separate existence has been acknowledged by the courts,[24] the courts, before the decision of the House of Lords in the case of Bunge Corp v. Tradax Export,[25] showed a great tendency to regard contract terms as intermediate rather than as conditions.[26] And even in Reardon Smith Line v. Yngvar Hansen-Tangen, Lord Wilberforce suggested that a number of the old cases are "excessively technical" and ought to be re-examined by the House of Lords.[27] The above statements show clearly that the courts during that period showed more of a tendency in favour of the HongKong Fir doctrine.

It seems that this was probably the result of applying the strict test of Diplock LJ in HongKong Fir Shipping Co. Ltd. v. Kawasaki Kisen Kaisha Ltd.[28] However, in Bunge Corp v. Tradax Export S. A. [29] Megaw L.J., in the Court of Appeal, observed that he did not think that the statement of Diplock L.J. in the HongKong Fir case was intended to be a "literal, definitive and comprehensive statement of the requirements of a condition." The House of Lords, approving the judgement of Megaw LJ, held that the "wait and see" method, or, the "gravity of the breach" approach, is not the way to identify a condition in a contract. This is done by construing the contract in the light of surrounding circumstances.[30] By this criterion, the House of Lords did open indeed a path to treat some kinds of contractual terms more easily as conditions.

Under the present law, a term of a contract will generally be regarded as a condition if it has previously been recognised as such by statute,[31] precedent,[32] or if it appears that it was the intention of the parties that a particular term is to be a condition.[33] However, the mere fact that the parties labelled a particular stipulation as a "condition" does not necessarily mean that it is used in its strict sense. The court will usually be disinclined to treat a term as a condition if the result of such a construction would be unreasonable.[34]

The important issue is, therefore, whether a previously unclassified term is to be classified as a "condition" or as an "intermediate" term. This issue is a difficult one, influenced by two competing policies: fairness and certainty. The first policy favours the classification of terms as intermediate, illustrated by HongKong Fir Shipping Co. Ltd. v. Kawasaki Kisen Kaisha Ltd.,[35] whereas, the second policy, emphasising the requirement of commercial certainty and predictability, favours the classification of terms as conditions.[36] Both policies have been supported by judicial decisions.[37] As a matter of policy, English courts are, as will be seen later, more inclined to treat as conditions time stipulations in commercial contracts than other contract terms.[38] However, the court may be reluctant to conclude that a term has been treated as a condition by the parties where that might result in termination for a relatively minor breach.

2. Rejection and Termination

By the express language of the Sale of Goods Act 1979, the buyer is neither entitled to terminate the contract nor even has a right to reject the non-conforming goods where the lack of conformity is caused by breach of "warranty."[39] The same is true where breach of an "intermediate term" does not result in serious consequences. Accordingly, breach of warranty and that of an intermediate term in the above-prescribed form does not cause much difficulty in respect of the issue in question. The controversial issue is the case in which the seller's non-conforming delivery results in breach of a "condition" or an "intermediate term" which causes serious results.

Where the seller's non-conforming delivery is caused by breach of condition, it is commonly said that the buyer is entitled to reject it and treat the contract as repudiated. However, the position of these two rights and their relationship is not quite clear. In the absence of a clear statement of law, the following significant questions arise:

The answer to the latter question throws light on the significant question whether or not the seller, after the buyer's lawful rejection, has a right to "cure" his non-conforming delivery.

Since most arguments arise from the language of the Sale of Goods Act and case law which do not apply to breach of an innominate term, the following discussion will first answer these questions where the seller has committed a breach of a condition. After that, it will examine the question when the buyer will be entitled to reject the seller's non-conforming delivery and terminate the contract if the seller has breached an innominate term. Finally, it will examine some special cases which arise in respect of the question under consideration.

2.1. Breach of Condition

2.1.1. Rejection and Termination, One Remedy or Two?

In spite of the fact that the Sale of Goods Act talks of the right to reject the goods and to treat the contract as repudiated for breach of condition (s. 11(4), which signifies the existence of two possibly distinct rights, the phrase has not been clearly interpreted in English sale of goods law. In this connection, the language of the section, as will be seen below, is unclear. Nowhere else does the Act define these two concepts in precise words. It also fails to state the effect of their exercise on the rights and duties of the parties. Neither the Sale and Supply of Goods Act 1994 nor the Law Commission's Reports which preceded it [40] makes any mention of the buyer's right to terminate the contract. In making their proposals, the Law Commission has never taken into consideration the nature of the buyer's right to reject and its relationship with the right to treat the contract as repudiated. Nor has the question been clearly worked out in the case law. Academic writers, as will be seen below, are of different opinions. Accordingly, the first question is whether breach of condition gives the buyer a right separate from his right to treat the contract as repudiated and to terminate it. The question will be examined in the light of the Sale of Goods Act, case law and academic writings.

2.1.1.1. Sale of Goods Act

Although the Act has made plain that the buyer has neither the right to reject the goods nor to treat the contract as repudiated for breach of a "warranty,"[41] when dealing with the remedies available for breach of a "condition," it merely says that .".. breach ... may give rise to a right to treat the contract as repudiated,"[42] without mentioning the existence of a right to reject. There are similar statements in the sections dealing with the possibility of the buyer's right to "waive the condition," or his election to "treat the breach of condition as a breach of warranty."[43]

On the other hand, ss. 15A and 30 of the Sale of Goods Act, when dealing with the remedies for breach of implied conditions (ss. 13-15) and remedies for delivery of wrong quantity, simply talk of the buyer's entitlement to reject, without referring to the right to treat the contract as repudiated at all. Even s. 53(1) in the same situation in which s. 11(2) mentions the right to treat the contract as repudiated, mentions the right to reject. Likewise, the Act recites the circumstances where the buyer loses the right of rejection, but it does not state the precise meaning of rejection, but only, when it provides that the buyer is under no obligation to return the rejected goods to the seller, refers to the right to refuse to accept delivery of non-conforming goods.[44] The only provision which contains both the buyer's alleged rights, i.e., to reject the goods and treat the contract as repudiated, is s. 11(4). This sub-section provides:

.".. where the contract is not severable and the buyer has accepted the goods or part of them, the breach of a condition to be fulfilled by the seller can only be treated as a breach of warranty and not as a ground for rejecting the goods and treating the contract as repudiated unless there is an express or implied term to that effect." (italics added)[45]

It might be argued that this sub-section by using the conjunction "and" intends to give the aggrieved party two separate rights for breach of condition. However, this interpretation is arguable. "And" is conjunctive, so that one reading of this would be that the two rights are actually one; i.e., the buyer who rejects is automatically treating the contract as repudiated.[46] Alternatively, "and" could be read disjunctively as indicating that there are two rights which may be exercised separately. Thus, "and" is ambiguous.

2.1.1.2. Case Law

Similarly, the question has not been clearly answered by case law. On the one hand, there are several judicial dicta which use one instead of another.[47] A general review of these cases reveals the fact that case law does not clearly show that breach of condition gives the innocent buyer two separate rights: rejection of non-conforming goods and termination of the contract. Even assuming that they regard them conceptually as two distinct rights, it is hard to find a clear statement elucidating the question whether the buyer can reject the goods without having to terminate the contract. In contrast, there can be found some cases in which the buyer is given the right to reject the defective goods without being required to terminate the contract.[48]

2.1.1.3. Academic Writers

The unclear status of the sale of goods legislation and the failure of case law to clarify the language used in the Act has caused academic writers to take two opposing approaches. On the first approach, the remedy of rejection is equated with termination or, it is a component of a single right. Apparently, according to this construction, by the buyer's rejection of the non-conforming goods, the contract would automatically be terminated. The buyer will not have an option to reject the goods without being required to terminate the contract.[49] The opposite approach is that the right of rejection is distinct from the right of termination, although the advocates of the second approach, as will be seen later, differ in permitting the victim of breach to terminate the contract.[50] The latter approach is based on the fact that the term "condition," in the sense accepted in the Act, is used to describe an important term whose full performance is a condition precedent to the buyer's duty to accept the goods the seller delivers in performing the contract.[51] On this interpretation, the seller's delivery of the goods in accordance with the terms of the contract (s. 27 of the Act) is the pre-condition of the buyer's duty to accept and pay in exchange for them. The buyer is deemed liable to the seller for non-acceptance, provided that the seller's delivery has been in accordance with the terms of the contract, express or implied, including the implied conditions. Thus he is required to accept (not to reject) such a delivery. Accordingly, as long as the seller's delivery is not in conformity with the terms of the contract, the buyer is not under any duty to accept it. Under this approach, the right to terminate the contract is a separate right which must be justified on another ground.

2.1.2. Relationship Between the Two Remedies

Assuming that a buyer who is aggrieved by the seller's breach of condition may have two rights -- to reject the non-conforming goods and to treat the contract as repudiated and to terminate it -- a further question is to determine the relationship between these two remedies. Is a buyer who is given a right to refuse to accept the non-conforming goods entitled to terminate the contract immediately after he has rejected the goods?

The Sale of Goods Act fails to determine the relationship between rejection and termination. It only states that breach of condition "may give rise to a right to treat the contract as repudiated" (s. 11(3)). It does not precisely determine the time when a breach of condition would occur, whether it will be when the seller's non-conforming delivery takes place, or when the time for performance has expired, provided that it is of the essence of the contract. Similarly, case law has not made the issue quite clear. On the one hand, there are numerous judicial dicta which say that breach of condition automatically entitles the innocent party to reject the non-conforming goods and treat the contract as repudiated and terminate the contract, without distinguishing clearly between cases of curable and incurable breach, and, between cases in which the time for performance expired and those allowing the breaching seller to remedy his breach within the contract time. Reference can be made to the general statement made by Lord Roskill in Bunge Corpn. v. Tradax Export S.A. In this case, he observed that where an obligation is held to be a condition, any breach of it "will entitle the innocent party to rescind" the contract.[52] Reference can also be made to the f.o.b. case of Compagnie Commerciale Sucres Et Denrees v. C. Czarnikow Ltd. (The Naxos). In this case, Butler Sloss L.J. remarked:

"But if this is a condition, any breach, however trivial, would entitle the party aggrieved to bring the contract to an end."[53]

On the other hand, there are some other cases in which the buyer's termination was not regarded as lawful termination and in which it was held that the seller was entitled to make a second tender. The latter cases are, however, disputable and they will be examined in detail when discussing the seller's right to cure. Equally, some authors have questioned the authority of the former statements in that many of them are obiter, or have been rendered in situations in which the breach was incurable because of its nature or the time for performance had expired.[54]

Because of the unclear status of the issue in sale of goods law, the English commentators are of two different approaches. Some writers took the view that any non-compliance with a condition by the seller would place him in breach of condition and give the buyer a right to reject the non-conforming goods, and treat the contract as repudiated, and terminate the contract immediately.[55] Unlike the language of s. 11(3) which provides that the innocent party, say buyer, may treat the seller's breach of condition as repudiation of the contract, the proponents of this approach argue that not much significance should be attached to the particular word "may" where the contract is non-severable.[56] On this approach, it is argued that it is assumed by the law that non-compliance with a condition always amounts to a repudiation of the contract. That is to say, because of the actual or presumed importance of "condition," delivery of goods which do not comply with it always leads to such a consequence. As a result, the buyer has an option to accept the seller's repudiation and terminate the contract immediately, or to reject the defective delivery and give the seller an opportunity to perform his obligations in compliance with the "condition."[57]

In contrast, some others argue that the mere delivery of goods which do not comply with a condition will not place the seller in breach of condition, so there is no reason to justify the buyer's termination. The seller will only be in breach if defective performance remains incurred at the time when performance is due. There is no breach because the duty of the seller is to tender a correct performance by the contract date.[58] On this view, the buyer's immediate remedy for seller's non-conforming delivery is simply to refuse to accept it. The buyer would be entitled to terminate the contract on account of seller's defective delivery only where:

2.1.3. Seller's Right to Cure

A further question is whether the seller should be given a right to cure his defective performance, and if so, to what extent is such a right defensible in English sale of goods law. The Sale of Goods Act provides no express provision regulating the issue. Case law has also failed to make the issue clear. Academic writers are currently of different opinions. In this respect, while a number of authors are doubtful,[59] some others take the view that the seller, after the buyer's lawful rejection of non-conforming goods, has a general right to cure.[60] Professor Goode is one of the authors who confidently observes that where the buyer lawfully rejects the non-conforming goods, the seller has a general right to cure, provided that it is not too late for him to do so. In justifying the view, he argues that not only is it confirmed in a number of cases,[61] but it is also in accord with legal principle and commercial practice. The consequence of this approach is that, where the seller makes a non-conforming delivery and the buyer refuses to accept it, the seller, in the case of a contract for unascertained goods, can cure by tendering replacement goods. Where the contract is for specific goods, the seller could not, without the buyer's consent, tender substitute goods, since the contract itself identifies and thereby restricts the goods to those named therein.[62] Thus he can only cure by repairing the goods to make them conform to the contract. Although Professor Goode does not say so expressly, it appears that he regards this right as being available even in cases where the seller's breach consists of a breach of the statutory implied conditions.[63] On this view, the buyer can reject a re-tender if, but only if, time for performance is of the essence or, though not originally of the essence, has been made so as the result of notice procedure, or if more than a reasonable period of time has elapsed since the contract date delivery.[64]

Some others,[65] in contrast, have disagreed with this view and suggested that delivery of goods which do not comply with a condition would be a breach of contract and would always entitle the innocent buyer to reject the non-conforming goods, and, in the case of a non-severable contract, it, in itself, amounts to a repudiation of the contract by the seller, entitling the buyer to accept it and terminate the contract. This would be so regardless of whether the buyer could or could not terminate for the failure of the seller to deliver within the contract time. On this view, the seller is not entitled to cure the breach, but if the buyer chooses to reject without terminating, the seller will be entitled to attempt to cure his breach by a fresh delivery.[66]

As regards the cases cited to support the existence of a right to cure by the seller, the advocates of the second view have argued that these cases cannot be authorities to establish a general right to cure.[67] A number of these cases, they argue, can be explained as cases where the sellers had not effectively appropriated goods to the contract. On their view, the case most often cited as authority on the issue, Borrowman Phillips & Co. v. Free & Hollis,[68] does not prove the existence of a general right to cure. This case, they suggest, can only be an authority where the seller has not committed himself as to the appropriation. In such a case, where the goods offered do not correspond with the contract, he has an option to withdraw his tender and to make a fresh offer.[69] It does not apply to a case where the seller has made a binding appropriation, or has actually delivered goods in performance of his delivery obligation, and it turns on the proposition that they are not in conformity with the contract.[70] On this interpretation, a number of cases cited in support of the existence of the right to cure for the seller become doubtful, since the authority cited in these cases is Borrowman.[71] The proponents of the second approach also argue that the cases of Ashmore & Sone v. C.S. Cox & Co.,[72] Brian Smith v. Wheatsheaf Mills [73] and McDougall v Aeromarine of Emsworth [74] can be explained on the same way as Borrowman. Cases such as Agricultores Federados Argentinos v Ampro S.A [75] have also been explained as concerned with the buyer's right to make replacement nominations of vessels under f.o.b. contracts. Such cases can only, they argue, support the right to cure for the seller by way of inference.[76] Similarly, cases such as Longbottom v. Bass Walker [77] have been explained as cases involving instalment deliveries in which different rules may be applicable.[78]

On the second approach, a seller who has made a delivery which does not comply with a "condition" may, however, be entitled to cure his default under the following circumstances.[79] First is where the buyer rejects the non-conforming goods and allows the seller to make a new tender. He may be able to do so where the buyer has lost his right to terminate after rejection. In some cases, the seller may be able to do so under the principle of mitigation. Although the buyer is not required under the general law to accept the seller's offer to make conforming delivery after rejection, the principle of mitigation may require him to accept the seller's offer to cure in order to mitigate his loss.[80] Similarly, the seller of unascertained goods may be entitled to cure as long as his offer to appropriate a particular cargo for the contract has not been unconditionally accepted by the buyer.[81] In this way, one may explain the cases in which a seller was given a right to re-tender correct documents within the contract period when the buyer refused to accept them on the ground that they are not corresponding with the contract.[82]

2.2. Breach of "Intermediate" Term

As indicated before, where breach of a term classified as an intermediate term does not result in serious consequences, the only remedy available for it is to claim damages. Rejection and termination can be justified only when a breach has attained a certain degree of seriousness. As explained in Section 1., supra, the introductory remarks of this part of the text, this is a circumstance which was first recognised in HongKong Fir Shipping Co. Ltd. v. Kawasaki Kisen Kaisha Ltd [83] and its application to sale contracts was confirmed by the Court of Appeal in the Hansa Nord case in 1976.[84]

According to the doctrine of serious breach, the court's duty is, at the first stage, to decide whether or not the broken term, on its true construction, was a condition. If the term broken is held not to be a condition, the court then should look at the breach itself and examine whether it is sufficiently serious to justify termination of the contract on the common law principles.[85] If so, the buyer will be entitled to reject the non-conforming goods and terminate the contract; if not, there will be only a right to claim for damages.

2.2.1. Description of the Doctrine

Notwithstanding that justifying termination on account of the theory of serious breach is a well-accepted rule now, there is no generally accepted terminology to describe the breach satisfying the requirements of the doctrine. Various expressions are used to refer to this doctrine. For instance, in the leading case of HongKong Fir itself, Upjohn L.J. described the breach satisfying the requirement of the doctrine as one which goes "so much to the root of the contract that it makes further commercial performance of the contract impossible, or in other words where the whole contract is frustrated."[86] Diplock L.J., on the other hand, described it as a breach which results in an event which deprives an innocent party "of substantially the whole benefit which it was the intention of the parties as expressed in the contract that he should obtain as the consideration for performing" the contract.[87] In subsequent application or affirmation of the doctrine, the courts have described the breach giving rise to a right of termination under this doctrine in various terms.[88] It has sometimes been described as a breach which "goes to the root" of the contract,[89] or as being "fundamental,"[90] or which "destroys the consideration which he gave."[91]

However, what is certain is that these are not really different tests but are different ways of saying the same thing. Thus a breach which "goes to the root of the contract" is "fundamental" (going to the root); a breach which deprives a party of the whole benefit destroys the consideration he gave (by depriving him of the consideration he was to receive) and, from the innocent party's point of view, frustrates the commercial purpose by affecting the substance of the contract.

2.2.2. Operation of the Doctrine

Before the HongKong Fir doctrine comes into operation, it must be proved that the broken term is a term which does not fall into the category of condition or warranty. If so, although every breach of such a term may give rise to a right to claim damages, the right to reject and terminate will arise only where it is proved that the breach attains a certain degree of seriousness. The difficult step for the operation of the doctrine is to establish that the breach is sufficiently serious. Three factors have been considered by the courts for this purpose the nature of the breach, its foreseeable consequences,[92] and the nature of event resulting from the breach.[93]

2.2.2.1. Actual and Foreseeable Consequences

In order to establish that the breach is sufficiently serious as to justify the buyer's termination, the injured buyer may rely, not only on the actual events caused by the breach, but also on the foreseeable consequences of the breach. He may also be entitled to rely on the doctrine when the addition of foreseeable consequences to the actual consequences satisfies the requirement of the doctrine, even if neither, when considered alone, would be sufficient. However, since termination of the contract may have prevented the foreseeable consequences from actually occurring, the buyer in such a situation may need to rely on the consequences which would have occurred but for termination.

No clear authority can be found to explain what actual or foreseeable effects of breach can be relied upon to show that the breach is sufficiently serious. However, some authors have suggested that a distinction should be made between actual and foreseeable consequences.[94] When the actual consequences of the breach are relied on, what is required is that the injured buyer has to prove that those consequences are caused by the seller's breach even though they were not foreseeable at the time of breach. Beyond causation, there is no further requirement in this respect. But in the case of foreseeable consequences, he cannot invoke them unless they were foreseeable at the time of termination. The same author continues to suggest that the fact that an injured buyer had foreseen that the breach would be sufficiently serious cannot be conclusive. The effects of breach should be foreseeable by a reasonable person. The injured party's view may be relevant to what a reasonable person in his position would have foreseen.[95]

However, this suggestion does not explain whether those consequences should be foreseeable by the seller in breach. And if so, at what time should they be foreseeable? Can the buyer rely on those consequences which were not reasonably foreseeable by the seller when the contract was made? As will be seen in a separate comparative study of damages, the buyer can only recover damages for those results which were foreseeable by the seller at time of the contract. Hence, one may argue that how can a buyer terminate the contract on account of results for which he cannot claim damages?

The question has not expressly been addressed by the courts. However, Professor Carter suggests that applying a very strict test and requiring substantial deprivation from the contract as the most likely consequences of the breach is more doubtful.[97] As regards the other test, i.e., being the likely consequences of the breach, Carter also argues that the position is not quite clear. In HongKong Fir, although the Court of Appeal did not expressly refer to the issue, when considering whether the delay which was likely to occur as a consequence of the shipowner's default, their Lordships observed that the delay would not have been sufficiently serious since the vessel's engine crew had been replaced. It might be therefore argued, Carter says, that a foreseeable consequence of the shipowner's breach was serious delay, but this was not a likely consequence of the breach because in all likelihood the replacement engine crew would be competent.[98]

In contrast, Lord Devlin has suggested that physical injury should be distinguished from economic loss.[99] Where physical injury is a foreseeable consequence of the seller's breach, this should give rise to a right to terminate the contract notwithstanding that the chances of physical injury are fairly remote. On the other hand, where, as in the HongKong Fir case, the foreseeable consequences of the default are economic loss, it is appropriate to apply a stricter criterion, that is, the injured buyer has to prove that those consequences would be likely to occur as a result of seller's default.[100]

2.2.2.2. Degree of Seriousness

As indicated above, the remedy of termination on the basis of the HongKong Fir doctrine is only available if the breach attains a certain degree of seriousness. The most significant stage in applying the doctrine is, therefore, to determine what degree of seriousness the breach must attain so that the doctrine could operate and give rise to a right to terminate the contract.

Whether the breach of an intermediate term is sufficiently serious to give rise to a right to terminate the contract is a complex question. Thus, the innocent buyer who is seeking to rely on the doctrine so as to justify his termination has a difficult task to satisfy the court that the seller's breach has attained, or will be likely to attain, the sufficient degree of seriousness. In order to determine whether the breach of an intermediate term is sufficiently serious, some criterion is required. When dealing with the expressions used to describe the doctrine, we saw that the courts have referred to the requisite criterion by using various phrases such as, breach resulting in a "substantial deprivation" of the party not in breach from the whole benefit of the contract, or in such a result which "frustrates his purpose in making the contract," and a breach going to "the root of the contract."

However, these phrases are not particularly helpful in analysing the law or in predicting the course of the courts' decisions. Description of the test by some vague phrases does not give a useful guideline to the judge to assess whether the breach resulted in serious consequences. It is also very difficult for the injured buyer or his legal adviser to predict at what degree the breach will be regarded as sufficiently serious and will satisfy the court to treat the buyer's termination as a justified termination. This is perhaps the main reason why the doctrine has been the subject of strong criticisms in that it places the innocent party in an uncertain position and promotes inefficiency by rewarding the incompetent promisor.[101]

It seems that these various expressions, as pointed out above, are all metaphors which mean much the same. What they indicate is that a breach of an intermediate term must be particularly serious before an aggrieved party is entitled to terminate the contract in accordance with the HongKong Fir doctrine. However, for the particular nature of the test of such a kind, the judges are indeed seeking to retain a degree of discretionary control over the issue. The question of what degree of breach will be regarded as sufficiently serious to justify termination is therefore left to the court to decide on the basis of the circumstances of each particular case.

     (I) Seriousness as a Question of Fact. Accordingly, although the question whether an injured buyer was entitled to terminate the contract on account of the seller's breach of an intermediate term is a question of law, the question whether a particular breach is sufficiently serious to justify termination of the contract is a matter of fact which is to be decided on the basis of the circumstances of each case. Thus it is not an issue that can be determined in advance by fixed rules. When applying the general requirement of "sufficiently serious breach," the courts classify a failure in performance with an eye to the nature of the breach and its actual and foreseeable consequences, considering all the circumstances surrounding the contract, the subject-matter, the position of the party in breach and other relevant factors.

     (II) Relevant Factors. In order to determine whether the breach committed by the seller attains a "sufficient degree of seriousness" to give rise to the right of termination, regard can obviously be had to any factor shown to have relevance to the circumstances of the case. However, case law shows that there are certain factors which are more likely to be relevant. These include factors [102] such as loss or detriment suffered or likely to be suffered by the buyer as a result of the seller's breach, loss of benefits which were expected from the performance of the contract,[103] the adequacy of damages,[104] any offer to remedy,[105] and motives for termination.[106]

In this regard, they also look at the express, implied terms of the contract and relevant customs in order to determine what the buyer was legitimately entitled to obtain from the contract. A particular expectation of the aggrieved buyer would be taken into account if it is indicated by the contract. The court would then compare the consequences caused by the breach with the contractual expectation of the injured buyer and decide whether the breach has deprived (or will deprive) him substantially of that contract entitlement. In this connection, the courts are usually influenced by the parties' conflict of interests in terminating the contract. For this reason, they consider, on the one hand, whether termination is necessary to protect the injured buyer and, on the other, the prejudice which termination will cause the defaulting seller. If, on balancing the above-mentioned factors, they conclude that the injured buyer should be allowed to terminate, they will classify the failure in performance as "substantial" in order to produce the desired result; and conversely.[107]

2.3. Special Cases

Although the general rules described above are applicable to the cases discussed below, for the reasons which will be made clear it seems appropriate to address them separately to assess how these rule are applied to these cases.

2.3.1. Breach of Severable Contracts

English sale of goods law makes a distinction between severable and non-severable contracts.[108] Where the contract is construed as severable, the seller's breach of condition or an intermediate term, even satisfying the requirement of seriousness in respect of one or more instalment deliveries, does not necessarily entitle the buyer to terminate the contract as a whole. In such a situation, the buyer may terminate the contract as a whole only where the seller's defective performance in respect of one or more instalments amounts to a repudiation of the whole contract. Accordingly, the crucial issue is to determine whether or not the seller's non-conforming delivery in respect of one or more instalments has amounted to a repudiation of the contract as a whole.

The seller under a severable contract will certainly be guilty of repudiation of the whole contract when his non-conforming delivery with respect to one or more instalments is associated with an express refusal to perform or refusal to perform except in a manner which is substantially different from that bargained for.[109] The difficult case is, however, where repudiation has to be inferred from the present or past defective performance of a seller who is not expressing his intention in this way. Is the buyer entitled in such circumstances to reject the non-conforming deliveries and treat the whole contract as repudiated or is he entitled only to reject that part in respect of which there is a breach, or is he confined to a claim for damages? The question is addressed by s. 31(2) of the Sale of Goods Act but it does not answer the question: When does the seller's making defective deliveries in respect of one or more instalments amount to a repudiation of the contract as a whole? It refers the case to the court to decide on the basis of "the terms of the contract and the circumstances of the case."[110]

2.3.1.1. Terms of the Contract

The first factor referred to in section 31(2) of the Act is a consideration of the terms of the contract. Thus the court, in deciding whether the seller's making non-conforming delivery in respect of one or more instalments amounts to a repudiation of the entire contract, is to look first at the terms of the contract itself and determine whether or not non-compliance with those terms is such as to amount to a repudiation of the contract as a whole. The parties may contemplate particular provisions dealing with the circumstances under which one of the parties is entitled to terminate the contract for the other party's non-conforming deliveries. However, discussion of this issue is beyond the scope of the present research which deals with the position of general law of remedies for breach of contractual terms.

2.3.1.2. Circumstances of the Case

The second factor referred to in s. 31(2) is a consideration of the circumstances of the case. Under this provision, for a seller to be treated as repudiating the contract as a whole it is not necessary to prove that he has intimated to the buyer his intention no longer to be bound by the contract. He will be guilty of repudiation if his default goes to the root of the contract. In deciding whether the default has such an effect, the court must consider "first, the ratio quantitatively which the breach bears to the contract as a whole, and secondly, the degree of probability and improbability that such a breach will be repeated."[111] Relying on these criteria, in Maple Flock Co. Ltd. v. Universal Furniture Products (Wembley) Ltd,[112] the seller was held not repudiating the contract as a whole where, under a contract to be performed by some 66 deliveries, one out of the first 19 was defective. On the other hand, in Robert A. Munro & Co. Ltd. v. Meyer,[113] where the buyer agreed to purchase from the seller 1,500 tons of meat and bone meal to be delivered at the rate of 125 tons per month and, after about half of the total contract quantity had been delivered by the seller, the buyer realised that those were seriously defective and purported to treat the contract as repudiated, the court held that the buyer was entitled to do so.[114]

On the basis of what has been said above, it can be said that whereas under a non-severable contract the Sale of Goods Act, as most English writers suggest, seems to give an innocent buyer an option to treat the seller's breach of a condition as a repudiation of the contract, in the case of a severable contract it does not recognise such a presumption. Accordingly, where the seller is, for example, late in tendering one instalment, or tenders an instalment which does not correspond with a condition, it will not normally constitute a repudiation of the contract as a whole, but will do so only if it is made in such circumstances as to lead a reasonable person to conclude either an intention to repudiate or an inability to perform the contract as a whole,[115] or its effect is so serious as to go to the root of the contract.[116] Individual terms qualifying the seller's delivery obligation will therefore not be conditions in the sense that the seller's failure to comply with them in tendering an instalment amounts to a repudiation of the whole contract. The seller's compliance with them is a condition precedent to the buyer's liability in respect of that particular instalment. Thus, where time is of the essence, the seller's late delivery as regards one instalment will only affect the innocent buyer's liability in respect of that particular instalment. The same is true where the seller tenders an instalment which is not in accordance with the other terms of the contract.

2.3.1.3. Effects of Repudiatory Breach

Where the seller's non-conforming delivery in respect of some instalments amounts to a repudiation of the contract as a whole, the buyer will be entitled to accept it and terminate the contract. If the seller's repudiatory breach is accepted by the buyer, it would entitle him to reject the present defective tender and treat himself as discharged from liability in respect of all further performance. He can do so even where he has previously accepted some instalments. However, the question arises here whether the buyer is entitled to reject the prior instalments. The language of s. 31(2) is not quite clear. But some academic authors suggest that the language of the section is concerned with the future performance, so that the buyer can refuse to perform outstanding obligations. In addition, the buyer's severable obligations to accept previous conforming instalments have already been fulfilled and can be no longer be undone.[117] However, it has been suggested [118] that where the instalments already accepted constitute parts of an indivisible whole, e.g., individual volumes of a set of books, parts of a machine, or a suit of clothes, the buyer will be entitled to reject the previously accepted instalments. Of course, in such cases the contract is ab initio rescinded by returning the instalments already delivered, and he will be entitled to recover the whole, or any part, of the price paid.[119]

2.3.1.4. Effects of Non-Repudiatory Breach

Where the lack of conformity of some instalments has not constituted a repudiation of the contract as a whole, the buyer is not allowed to terminate the contract as a whole.[120] Under such circumstances, the seller is entitled to require the buyer to accept and pay for each instalment tendered or which will be tendered in conformity to the contract. The buyer will not be entitled to refuse to accept and pay for an instalment because of a defect in or a short or late delivery of an earlier instalment; nor is he allowed to insist on waiting to see whether the seller will make proper delivery of subsequent instalments before he accepts and pays for an instalment.[121]

However, the Sale of Goods Act has not made clear what remedy the buyer will have where the lack of conformity in respect of some instalments has not amounted to a repudiatory breach. S. 31(2) of the Act speaks only of "a severable breach giving rise to a claim for compensation." It does not say whether the buyer may be entitled to reject the non-conforming instalments in circumstances where he is not able to terminate the contract as a whole. The language of s. 31 of the Act is not quite clear. It appears that the section assumes that where the seller's making non-conforming delivery as regards one or more instalments does not amount to a repudiation of the entire contract, the buyer has only one option, i.e., to claim for damages. The sub-section, as Professor Atiyah suggests,[122] does not seem to contemplate the possibility of permitting the buyer to reject that particular delivery while keeping the contract on foot. Under such a language, it might be said that the Act treats compliance of an instalment with the terms of contract as a warranty breach of which, under the Act, may only give rise to a right to claim damages. On the other hand, compliance of substantial parts of all instalments with the contract terms is a condition precedent for the buyer's duty to accept and pay for them. Despite the imprecision of s. 31(2), some authors have suggested that "there is a considerable case law support for the buyer's right to reject non-conforming instalments, even if the buyer has lost the right to terminate the contract or has not yet acquired it."[123] In addition, s. 35A(2) of the Sale of Goods Act, which permits the buyer to accept the conforming instalments and reject the non-conforming instalments, would support severable rejection rights.[124]

Likewise, the Act provides no clear provisions regulating the circumstances where the buyer will be entitled to reject some instalments which do not conform with the contract terms. The question, therefore, arises: Under what circumstances may the seller's breach of contractual obligations as regards one instalment entitle the buyer to refuse to accept a non-conforming instalment? In the absence of a clear law statement, some authors have suggested that the general principles applicable to non-severable contract should apply to each instalment.[125] That is to say, for remedial purposes, each instalment is to be regarded as the subject of a distinct contract, although within a main contract, and the principles applied to a contract containing a single delivery obligation should be applied to such a subsidiary contract. As a result, the different approaches rendered in relation to breach of a condition under a non-severable contract arise in this connection. That is, where the broken term is classified as a warranty or an intermediate term whose breach has not resulted in serious consequences with respect to that particular instalment, the buyer's remedy is only to claim for damages. Whereas, if the broken term is treated as a condition, any breach by the seller in respect of a particular instalment will (subject to s. 15A) entitle the buyer to reject that particular part. After the buyer has lawfully rejected the non-conforming instalment, if one accepts that the seller has a general right to cure, he is entitled to cure the default by delivering a substitute instalment in conformity with the contract, provided that he does so within the time limited for delivery of that instalment.[126] According to the other view previously analysed, the seller's defective delivery (assuming that it does not amount to a repudiation of the whole contract) entitles the buyer to reject it and give the defaulting seller the opportunity to make a fresh tender, or to immediately terminate that subsidiary contract. Under this approach, breach of a condition or an intermediate term satisfying the requirement of seriousness in respect of a particular instalment would strike that subsidiary contract out of the main contract, which is pro tanto terminated.[127] This is true according to the former view where the time fixed for delivery of an instalment has expired and has been of the essence. Where the buyer has exercised his severable rejection right in this way, the seller will not be entitled afterwards to claim to deliver, nor will the buyer be entitled to have the instalment in respect of which the seller has made defective delivery. The sole remedy of the buyer will lie in damages.[128]

2.3.2. Breach of Time Stipulation

2.3.2.1. Sketch of Discussion

Failure to perform a stipulation as to time for performance of an obligation does not differ intrinsically from any other failure to perform. As with the terms concerning the goods themselves, it is not breach of any stipulation as to time for performance, but only of some which may give rise to a right to terminate the contract. However, time provisions have a history and terminology of their own in English law; and for this reason, perhaps, are usually considered separately.[129]

2.3.2.2. Classification and Terminology

Notwithstanding that the Sale of Goods Act contains a particular provision for stipulations about time of performance, it fails to make clear what consequences will follow if a time provision is broken. The only thing which it provides is that the court should decide whether or not the infringed stipulation was of the "essence of the contract."[130] In this respect, s. 10(2) provides that whether any stipulation as to time other than that of payment [131] is or is not "of the essence of the contract" depends on the terms of the contract.[132] The Act also fails to make clear the position of the case where a particular time provision is not fixed by the contract. Accordingly, as regards the time for performance of a particular obligation, two general possibilities may arise: first, where the time for performance is fixed by the contract; and second, where no particular time provision is specified in the contract. In both cases, this question may arise whether or not time for performance is of the essence of the contract.

     (I) Time Is of the Essence. The question whether a stipulation as to time is of the essence may be resolved first by the terms of the contract itself.[133] A time stipulation will be regarded as the essence of contract where the parties have expressly provided that strict compliance is essential.[134] In the absence of such an express provision, the question whether time is of the essence of the contract is one of construction, that is, it is the court's duty to determine whether the nature of the subject-matter of the contract or other surrounding circumstances indicate that the parties should have intended time to be essential.[135] The court may also reach the same result by another way, that is, whether even a brief postponement of the performance at the stipulated time would deprive the claimant of "substantially the whole benefit that it was intended that he should obtain from the contract."[136]

Notwithstanding that the Sale of Goods Act remits the question whether a time stipulation in a sale contract is of the essence to the discretion of the court to decide, on the basis of construction of the contract, English courts have made efforts to formulate some general principles governing the legal classification of stipulations as to time. In this way it has been said, on the one hand, that "in modern English law time is prima facie not of the essence of a contract;"[137] and, on the other hand, that "broadly speaking time will be considered of the essence in 'mercantile' contracts."[138] Nevertheless, in the case of contracts for the sale of goods, the courts have taken a more specific view as to the seller's delivery obligation, and, in the words of McCardie J.,[139] "In ordinary commercial contracts for the sale of goods the rule is clearly that time is prima facie of the essence with respect to delivery."[140]

It is commonly said that the question whether the time specified for performance of a particular obligation is essential is to be based on consideration of commercial convenience and certainty applicable in the particular context, rather than on any general principle or presumption as to time being, or not being, of the essence.[141] For this reason, it is said that general statements such as those quoted in preceding paragraphs do not prove that this is a presumption or rule of law, but there is apparently a presumption of fact about the intention of the parties in the paramount interests of commercial certainty,[142] or in the language of Lord Lowry "treatment of time limits as conditions in mercantile contracts does not appear ... to be justifiable by any presumption of fact or rule of law, but rather to be a practical expedient founded on and dictated by the experience of businessmen ..."[143] On this basis, the mere fact that the contract can be labelled "mercantile" or "commercial" does not, in itself, determine the issue.[144] To find the commercial significance of the term, therefore, the court must look "at the contract in the light of surrounding circumstances, and then make up its mind about the intention of the parties, as gathered from the instrument itself."[145] Alternatively, if the exercise has already been gone through by arbitrators, their finding about the commercial significance of the term will be adopted by the court.[146]

By way of summary, in three cases a stipulation as to time for performance is commonly regarded as of the essence of the contracts.[147] First, where the courts have held it to be so.[148] Secondly, when a term has to be performed by one party as a condition precedent to the ability of the other party to perform another term.[149] Thirdly, where the contract says so. Beyond these, it is all a matter of substantial deprivation and the circumstances of the case which are to be relied on in this connection.

Time provisions are important to the argument that in the case of a non-conforming delivery, the seller has a right to make a fresh tender. On this view, the seller must do so within the contract period if time is of the essence; making cure beyond that period would discharge the buyer from his primary obligations under the contract at that point and entitle him to terminate the contract. As a result, the seller is deprived of the right to cure, in the sense that the seller cannot insist that the buyer accept a substitute performance at the moment when the time for performance has expired.

     (II) Time Is Not of the Essence. Where the time is not of the essence, the seller's failure to perform by the specified date will not entitle the buyer to terminate the contract at that date,[152] although he will be entitled to damages for delay beyond the specified date. The question arisen here is: How long does the seller have to perform his obligation before the buyer is entitled to terminate the contract on account of late performance? Does the seller have only a "reasonable time period" after the expiration of the specified date within which he was required to perform his obligation,[153] or can he do so until such a time as the delay goes to the root of the contract and frustrates the commercial purpose of the contract?[154]

At first sight, the distinction between a "reasonable time" and a "frustrating time" period may seem semantic. However, there is a considerable difference between these two time periods: it is quite possible that the seller may perform his obligation within a time which is regarded as unreasonable, having regard to relevant factors, yet such an unreasonable delay may not frustrate the purpose of the contract.[155] In addition, these two periods involve different factors. "Reasonable time" is governed by what remains to be done by the seller in breach, how hard he has been pressed by the buyer previously, and other such factors, whereas "frustrating time" is determined by the effect on the innocent party: Does the delay deprive him of substantially the whole benefit of the contract?[156]

It has been thought [157] that McDougall v. Aeromarine of Emsworth Ltd.[158] could be the strongest authority for the former time period. Under a clause in a contract to build and supply [159] a yacht, the suppliers undertook to use their "best endeavours" to complete the construction and fitting out by a certain date but, owing to the effect of delays and shortages, such delivery date could not be guaranteed. Diplock, J., held that a clause in this form placed on the sellers a duty to deliver within a reasonable time of the specified date, and the obligation to deliver within a reasonable time after the certain period of date was a condition.[160] Thus, the seller had a reasonable time within which to perform his obligation, because the buyer could terminate after a reasonable time had expired.

However, it could be argued that the case was not basically concerned with the issue in question. In that case, there was effectively no contractually delivery date; Diplock J. was therefore not concerned with the right to terminate but with the prior question, when the boat should have been delivered. He did not need to decide whether time was of the essence until he had decided what the delivery date was, which in this case he held was "within a reasonable time." At the second stage, Diplock J. held that this period was a condition and, since the seller did not deliver within that period, the buyer was entitled to terminate the contract.

Moreover, there are a number of authorities which support the view that the buyer can only terminate when the delay becomes so long as to frustrate the commercial purpose of the contract. For instance, in Universal Cargo Carriers Corp. v. Citati,[161] the charterer's obligation to complete loading within the lay times (the time permitted for loading) was held not to be of the essence of the contract, so that its breach did not entitle the owner to terminate, but gave rise to a claim for damages only. In this case, Devlin, J., held that the owners could terminate the contract only if the delay went to the root of the contract. What yardstick should be used to determine whether it went to the root of the contract? The arbitrator had held that the delay must have been for a reasonable time. Devlin J., however, rejected this criterion and held that the proper test in order to decide whether delay in fulfilling obligations under a contract amounts to a right of termination is that the given delay was so grave as to frustrate the commercial purpose of the contract.

On this authority, a "reasonable time" is something less than the period required for the delay to "frustrate the charterparty," and therefore does not amount to a delay long enough to justify termination.[162] It could only be accepted as the test where the period regarded as reasonable time was the same as the period necessary to frustrate.[163] Accordingly, in such cases the victim of breach can only terminate the contract if the seller's delay would deprive him of substantially the whole benefit of the contract. It is consistent with the Hong Kong Fir test; where the time has not been regarded as the essence of the contract, it would be an innominate term the breach of which amounts to a right of termination provided that the delay is so grave as to frustrate the commercial purpose of the contract.[164]

     (III) No Time Is Specified. Where the contract is silent as to the time for performance, the court will imply a term that performance must be made within a reasonable time.[165] In such a case, the seller's failure to deliver the goods or to cure the defect in them (assuming he has such a right) within a reasonable time will amount to a breach of contract, entitling the buyer to claim for damages. The question arises here whether such an implied time is a condition so that the seller's failure to perform his obligation within the period gives rise to a right of termination. In this respect, it has been submitted that where there is no time limit for delivery, the contract continues until its purpose is frustrated.[166]

The suggested view seems sound. This is because the rationale for the general rule that time is of the essence is the need for certainty, while where no time for performance has been fixed, there is no certainty. Accordingly, where no time is specified in the contract, time is not normally of the essence in the first instance. In such cases, in the absence of special circumstances indicating otherwise, the buyer should only be entitled to terminate the contract if the delay is such as to frustrate the commercial purpose of the contract. This is because, although there may well be cases where special circumstances indicate that a failure to perform within a reasonable time is to be regarded as a breach of condition entitling the buyer to terminate,[167] in the absence of such special circumstances, it is difficult to accept that, where no time is specified under the contract, the parties would have intended that time would be of the essence.

2.3.3. Breach of Quantity Stipulation

A particular provision is set out by s. 30 of the Sale of Goods Act where the seller delivers the wrong quantity of goods. Under this section, where the seller delivers to the buyer a quantity of goods less than he contracted to sell, the buyer may reject them. The same right is given to the buyer where the seller delivers to the buyer a quantity of goods larger than he contracted to sell. In the latter case, the buyer may accept the goods included in the contract and reject the rest, or he may reject the whole.

However, the Act does not make clear whether delivery of the wrong quantity is breach of a "condition" which, as already discussed, gives the buyer two separate rights: to reject the goods and to terminate the contract. Although the new sub-section (2A) inserted by the Sale and Supply of Goods Act 1994 has restricted the buyer's right to reject the whole of the goods delivered,[168] it does not say whether he has a separate right to terminate the contract. Similarly, it does not make clear whether the buyer is entitled to refuse to perform his obligation as to the missing part and terminate the contract in respect of that part, as the Convention seems to suggest (Art. 51). As far as the first question is concerned, some authors have suggested that giving the buyer a right "to reject the whole of the goods delivered in the circumstances dealt with by s. 30 means that, in substance, the seller in such cases is treated as though he commits a breach of condition by delivering the wrong quantity."[169]

2.3.4. Documentary Sales: Breach of the Duty to Tender Shipping Documents

A further question is the application of the general rules explained above to the case where the seller has to perform his delivery obligations by tendering to the buyer (or to his bank) some documents representing the purchased goods. In contracts of such type (such as c.i.f. and sometimes in f.o.b.) the seller is obliged to tender shipping documents, consisting essentially of a bill of lading, insurance policy and sale invoice [170] in accordance with the requirements stated in the contract of sale.

As a general rule, where the documents accord with the contract, the buyer or his bank must accept and pay the price in accordance with the contract.[171] However, as in the case of the goods themselves, the seller may tender the shipping documents in a way which does not conform to the contract requirements. Where the tendered documents do not correspond with the contract, it is the settled law that the buyer (and in the case of payment through documentary credit, his bank) is entitled to reject and refuse to pay for them.[172] The rule has been justified on the general principles already explained, that, as in the case of the buyer's obligation to accept the goods delivered to him by the seller, his duty to accept the relevant documents is subject to the condition that the seller's delivery has been in conformity with the terms of the contract. Therefore, where the documents tendered are not in accordance with the requirements stated in the contract, the buyer (or his bank) is entitled to refuse to accept them and to refuse to pay the price. For instance, in the case of James Finlay and Co. Ltd. v. N. V. Kwik Hoo Tong Handel Maatschappij [173] where goods were shipped out of time under a bill of lading incorrectly dated to show the timely shipment, the seller was regarded as guilty of breach of contract entitling the buyer to reject them.

In a documentary sale contract, in addition to the right to reject the non-conforming documents, the buyer is given a further right to reject the goods substituting the subject of the documents on arrival where he learns that goods do not conform to the contract. The existence of two rights, -- the right of rejecting the documents and the right of rejecting the goods -- is based on the fact that, under a documentary sale contract, the seller's duty to deliver includes a duty to ship goods (or to appropriate to the contract goods already afloat, which the seller may have shipped himself or bought directly or indirectly from the shipper), and a duty to tender proper shipping documents in accordance with the terms of the contract. In such cases, the seller may fail to perform one or both of these duties, and the buyer may be entitled to reject in respect of any such failure.

The authority which clearly recognised two separate duties for a c.i.f. seller, i.e., the duty to ship conforming goods, and to tender conforming documents, as well as two separate rights to reject non-conforming goods and documents, is Kwei Tek Chao v. British Traders & Shippers Ltd.[174] In that case, Devlin J. was of the view that the right to reject non-conforming goods is distinct from the right to reject non-conforming documents; the former arises when the goods have been taken up and found after examination to be not in conformity with the contract, and the latter on tender of the documents.[175] Accordingly, the documents may be rejected if they are defective on their face, for instance, by being wrongly dated or by indicating that the goods were not in good order and condition. The goods may also be rejected, even though the documents are in order and have been taken up and paid for, if they themselves are defective, for example, by being of unsatisfactory quality, provided that the defect was not apparent on the face of the documents.

On this view, where the seller fails to tender the shipping documents in accordance with the requirements stated in the contract, the buyer may be entitled to reject them even though the goods themselves are perfectly in accordance with the contract. Thus, if the contract provides that the goods are to be shipped, and the bill of lading is to be dated in January, the buyer can reject a bill dated in February, even though the goods were actually shipped in January.[176] Similarly, he can reject a bill of lading for a quantity of goods in excess of the contractual limits, even though the goods actually shipped are within these limits.[177] He may also be entitled to reject the documents even though the defect on its face would not, of itself, have justified rejection of the goods.[178]

Another consequence of the separation of documents and goods is that the right to reject the non-conforming goods is not necessarily impaired by the acceptance of the documents.[179] Thus, where the buyer accepts the bill of lading and later it turns out that the goods constituting its subject are not in accordance with the contract conditions, he will not be prevented from refusing to accept the goods on discharge from the ship on arrival, although he may lose his right to reject the bill of lading on the doctrine of "waiver."[180] Furthermore, if the documents reveal that the goods are not in conformity with the contract and the buyer nevertheless accepts the documents, he cannot then reject the goods themselves on the basis of that non-conformity, but he can still reject the goods if a different defect, or non-conformity, not revealed by the documents, becomes apparent on delivery.[181] However, if the defect giving rise to both rights of rejection is a single breach, for example, the goods are shipped late and this fact appears from the documents, acceptance of the documents may well be treated as waiver [182] of the buyer's right to reject the documents as well as the goods constituting their subject, so that the buyer is bound to accept the goods on arrival.[183]

From the above discussion, it has been made clear that a buyer may be entitled to refuse to accept the documents tendered to him by the seller where they are not in conformity with the contract requirements. In other words, contractual terms requiring the seller to provide and tender documents conforming with the contract are "conditions," breach of which gives the buyer an immediate right to reject them. The buyer's right to terminate the contract on account of a tender of non-conforming documents is subject to the seller's right to cure discussed above. As has been seen before, there are certain judicial authorities which clearly state that following the buyer's lawful rejection, the seller under certain circumstances has a right to make a sound tender, provided that he can do so within the contract time. Beyond that limited right to cure, the buyer will be entitled to terminate the contract immediately without being required to wait for the goods to be landed.

3. Mechanism of Termination

3.1. No Automatic Termination

As a general rule, under English law termination of contract for breach of contract is regarded as a matter of "election." That is, a discharging breach does not automatically bring the contract to an end,[184] but gives the aggrieved party an option either to terminate the contract or to continue performance [185] if he wishes, and to claim damages for losses suffered as a result of the breach.[186] This principle is of a general nature in the sense that it applies to all contracts including the contract of sale.[187]

The principle has been justified on the basis that the law should not allow the defaulting party to rely on his own default to obtain a benefit under the contract, to excuse his own failure of further performance, or in some other way to prejudice the injured party's legal position under the contract.[188] On the basis of this principle, it has been said that the defaulting party should not be allowed to rely on his breach so as to prevent the injured party from enforcing provisions in the contract [189] or the chance of claiming specific relief,[190] since the contract may contain provisions highly favourable to the aggrieved party, and it would be unjust to allow the other party by breaching the contract to bring about an automatic termination and so to deprive the aggrieved party of the benefits of those provisions.

3.2. Election of the Remedies

In English law, when a buyer is given a right to terminate for breach of contract, it is always at his option. Thus, in terminating the contract, he is not required to apply for a court judgement even though he may sometimes need the court's decision to the effect that he was entitled to terminate the contract.[191] In the latter case, the court simply declares whether termination was justified or not when the party in breach has disputed it. The contract would be effectively terminated from the time when the buyer terminates it, not from the time at which the court confirms termination. Accordingly, where a breach giving rise to a right to elect is committed by one of the contracting parties, the other is faced with two inconsistent rights: either to terminate the contract or to affirm his obligation to perform. He must choose between these two inconsistent rights.[192] When he elects for one option, he loses the other.

However, the questions remain: How must that option be exercised? Is the buyer who wishes to elect termination required to declare his intention of election to terminate the contract? Is the declaration of termination to be communicated to the defaulting party? When is the option of termination lost?

3.2.1. Election of Termination

The Sale of Goods Act does not lay down any procedure for the election to treat the contract as terminated. The Act, in respect of breach of condition, simply provides that it "may give rise to a right to treat the contract as repudiated." Nevertheless, since the Act does no more than codify the common law rules, the process of termination is therefore governed, in the absence of specific contractual terms, by the common law rules on election of remedies.

3.2.1.1. Declaration of Termination

Generally, at common law, there is one clear requirement for exercising the option: there must be "unequivocal words or conduct" on the part of the non-defaulting party showing that he has elected to terminate or to affirm the contract.[193] The use of the term "unequivocal words or conduct" does not, however, mean that there must be express words or conduct.[194] The requirement will be satisfied if, by words or actions, the non-defaulting party makes plain [195] that he intends to terminate the contract. Accordingly, the requirement does not necessarily depend upon the terms of one communication alone. It is necessary to consider the whole of the relevant communications and the buyer's conduct generally.[196] The requirement may also be met by actions such as rejection of the seller's defective performance, or the making of an alternative contract.[197]

No particular form is required.[198] A written or oral statement is therefore sufficient. The buyer is also not required to use the particular term "termination." Accordingly, the use of any word or phrase which clearly shows that the buyer has declared the contract terminated would be sufficient.[199] Although the mere "silence and inactivity" on the part of the non-defaulting party has been said not to suffice;[200] it may be construed, in certain circumstances, as an affirmation of the contract depriving him of the right of termination.[201] In other words, if a buyer who has a right of option unnecessarily delays in taking his decision, he may no longer be entitled to resort to termination.[202]

To put the requirement in a short phrase, a party who wishes to exercise his option to elect his remedies must declare his intention in a proper way by which a reasonable person is able to readily understand what he intends. Accordingly, there must be at least some notice by which the right to terminate is exercised, though it does not have to be in a particular form. The party giving notice need not, as a general rule, even specify in the notice the ground on which the contract is terminated.[203] If the ground stated in the notice does not in law justify termination, the notice may nevertheless be valid so long as a ground which does justify termination actually exists.[204] However, the question remains whether for a termination to be effective, it is essential that the party in breach has received the notice of termination.

3.2.1.2. Communication of Termination to the Defaulting Party

The question has not been clearly answered. There can be found some authorities which suggest that communication is a general requirement of the election.[205] In contrast, there are many cases which do not insist on this requirement.[206] The idea of necessity of communication of election to the party in breach is probably based on the view that the decision of termination is an "acceptance" of the defaulting party's "offer" to put an end to the contract.[207] Accordingly, as in considering the rules of acceptance in the context of formation of the contract, the acceptance on the part of the offeree must be communicated to the offeror;[208] in the case of election of termination, acceptance must also be communicated to the party in breach.[209] On the other hand, it has been argued that election is "an effect which the law annexes to conduct which would be justifiable only if an election had been made one way or the other."[210]

3.2.2. Election of Affirmation

When the seller's non-conforming delivery constitutes a breach giving rise to the right to elect, the injured buyer has also an alternative right to accept the non-conforming delivery if he prefers, and to claim for damages. The significant aspect of the rule is that, under certain circumstances the law recognises a presumed affirmation on the part of the buyer who has an option to elect remedies for breach of contract. Where he elects or is deemed to have affirmed the contract, he will lose his right to reject the non-conforming delivery and terminate the contract.[211] The rule can be justified on the principle that a person cannot take up inconsistent positions: once a choice has been made or deemed to have been made, that party will usually be bound by that election.[212]

Since affirmation usually precludes subsequent termination, a crucial issue is: At what point will the buyer be deemed to have affirmed the contract and as a result have lost his right to reject the non-conforming delivery and to terminate the contract? In general, a buyer may be deemed to have elected to affirm his duty to perform the contract when that intention can be attributed to him. In this connection, the Sale of Goods Act has provided certain rules regulating the circumstances under which the buyer may affirm or is deemed to have affirmed the contract and consequently has lost his right to reject the non-conforming delivery and to terminate the contract.[213]

3.2.2.1. Concept and Terminology

The circumstances under which an aggrieved buyer may affirm or is deemed to have affirmed the contract are comprised under the heading of "acceptance."[214] In this respect, section 11(2), as a general principle, provides that a buyer may waive a condition that has to be fulfilled by the seller, electing instead to treat it as warranty. When this sub-section is read with the provisions under s. 35, and, sub-section 11(4) which provides that the buyer may lose his right to reject the non-conforming delivery and to terminate the contract once he has accepted the seller's non-conforming delivery, acceptance can be explained as behaviour by the buyer that objectively demonstrates an election to seek his remedy only in damages.

3.2.2.2. Methods and Requirements of Acceptance

The Sale of Goods Act provides three general methods under which the buyer may lose his right to reject and terminate the contract. These methods of acceptances are recited in s. 35 as the buyer's (a) intimating to the seller that he has accepted the goods, (b) after the seller's delivery, doing an act inconsistent with the seller's ownership, and (c) retaining the goods beyond a reasonable time without giving the seller a notice of rejection.

     (I) Intimation of Acceptance. The first method by which the buyer may be taken to have accepted the seller's delivery is his intimation to the seller that he has accepted the goods (s. 35(1)(a)). However, any word or conduct made by the buyer will amount to an intimation of acceptance only when he has had a reasonable opportunity to examine them.[215] This method of acceptance includes not only cases of express intimation, but also those where it may be inferred from the buyer's conduct, although such an intimation of acceptance must be clear.[216] For this reason, in Varley v. Whipp,[217] the buyer's "grumbling" letter requesting the seller to arrange a meeting with him in order to discuss the dispute and find a solution was held not to be an acceptance, though there was no express statement of intention to reject.

     (II) Act Inconsistent with Seller's Ownership. The second statutory method by which the buyer may be taken to have accepted the seller's delivery is where after the seller has delivered the goods, he has done an act which is inconsistent with the seller's ownership [218] (s. 35(1)(b)). The buyer will only lose his right under this method where he has had a reasonable opportunity to examine the goods.[219] Case law suggests that acts such as selling the goods or other dispositions of them may be treated as acts inconsistent with the seller's ownership. Similarly, consumption of the goods by the buyer or using them in a way which makes the physical return of the goods impossible could be placed into this category.[220] However, the buyer is not to be taken to have accepted the non-conforming goods:

"merely because (a) he asks for, or agrees to, their repair by or under an arrangement with the seller, or (b) the goods are delivered to another under a sub-sale or other disposition."[221]

But, as the language of this new provision shows, the above provision applies to cases where the buyer has repaired the goods under the arrangement with the seller; it does not apply to cases where the buyer has tried to repair the goods or to have them repaired without making any agreement or arrangement with the seller.

It might at first be argued that since the goods have not actually been delivered to the buyer, the case did not come under the heading of the phrase "acts inconsistent with the seller's ownership." However, the answer seems arguable. It is true that the goods actually have not been delivered, but the documents representing the goods had, and this would often amount to delivery of goods. Moreover, the goods might be regarded as having been delivered by being entrusted to a carrier.[222]

The courts, facing with the problem, answered the question by way of recognising two separate rights of rejection of documents and goods and distinguishing between these two rights.[223] Upon this, it is said that in the case of documentary sales, any disposition of the documents is only a disposition of the conditional property which the buyer had received, and that a pledge or sale of the documents does not amount to an act inconsistent with the seller's ownership within s. 35 of the 1979 Act. On this rule, a dealing with the documents might deprive the buyer of his right to reject the documents, but could not deprive him of the right to reject the goods.[224]

     (III) Lapse of Reasonable Time. The third method by which a buyer may be taken to have accepted the seller's non-conforming delivery is retention of the goods for more than a reasonable time without intimating to the seller that he has rejected them (s. 35(4)). In the absence of a contract time limit for rejection, the buyer will lose his right to reject after the lapse of a reasonable time. The rule has been justified on the grounds that there must come a time when the seller is entitled to regard the transaction as closed and assume that he is safe from a claim for a refund.[225]

What is reasonable is a question of fact depending on the circumstances of any particular case.[226] The court, in determining whether a reasonable time has elapsed will take into account different factors [227] including the nature of the goods, conduct of the parties, the custom of the particular trade, market conditions, and whether the buyer has had a reasonable time to examine the goods.[228]

Unlike the two other methods, this method is not subject to the qualification that the buyer must have an opportunity to examine before he has been taken to have accepted the seller's non-conforming delivery. The Act simply provides that, in assessing whether a reasonable time has elapsed, the court has to take into account whether the buyer has had a reasonable opportunity of examining the goods,[229] but it does not absolutely prevent a finding that the buyer has accepted despite his not having had a reasonable opportunity to examine.[230]

     (IV) Conclusion. As a conclusion, under the first two methods, the buyer is not deemed to have accepted the goods until he has had a reasonable opportunity of examining them at the place contemplated for the examination of the goods for the purpose of ascertaining whether they are in conformity with the contract, or, in the case of a contract for sale by sample, of comparing the bulk with the sample unless the right of examination has been exercised, or waived in accordance with the general principles. However, under the third method, the question whether he has had such an opportunity is material only in determining whether a reasonable time has elapsed. But, in all three cases, it is the opportunity of discovering the defect, rather than its actual discovery, which is the crucial factor, so that a buyer may be deemed as having "accepted" before discovering the truth.[231]

Accordingly, the doctrine of acceptance comes into play even where the buyer has been unaware of his right to reject and the facts giving rise to the right.[232] Similarly, it is not necessary for the seller to know of the buyer's acts or to have detrimentally relied on, or altered his position in consequence of the buyer's behaviour.[233] But it would be sufficient if the buyer's behaviour objectively demonstrates that he wishes to elect his remedy only in damages.

3.2.2.3. Effects of Acceptance

By virtue of s. 11(4) of the Sale of Goods Act, where a buyer has expressly accepted, or is taken to have accepted non-conforming goods or part of them he will lose his right to reject them and to terminate the contract. However, this general rule is subject to the overriding provision of s. 35A, which gives the buyer a right of partial rejection. Under this provision, where the buyer who "has the right to reject the goods by reason of a breach on the part of the seller that affects some or all of them"[234] accepts some of them, he will not lose the right to reject the rest (s. 35A(1)). The restriction is, however, subject to the qualification that the goods unaffected by the breach were included in those goods he has accepted. On this provision, where all of the goods delivered by the seller are affected by the breach, the buyer has an option either to choose to reject some or all of them, but in a case where the seller has delivered goods only part of which do not conform to the contract he may (1) reject all of the goods, or (2) reject some or all of defective goods and keep those which conform to the contract.

Similarly, where the contract is severable the buyer will not be prevented from rejecting the goods delivered in one instalment simply because he has accepted a previous instalment. Therefore, the buyer can reject an individual defective instalment, either on general principle prescribed under s. 11(4) or by virtue of the right of partial rejection provided in s. 35A. In addition, the right of partial rejection under s. 35A applies to each instalment of a severable contract and, as a result, the buyer will have the same options he has in respect of non-severable contract. That is, where the whole instalment is affected by the breach, he has the option either to reject all or reject some and accept the remainder. In a case where only some of the goods in an individual instalment are defective, he may reject some or all of those affected by the breach and keep the remainder.

Accordingly, under the current provisions, the question of acceptance will only arise in respect of the very goods accepted. Thus, in a non-severable contract, the buyer who has accepted the goods cannot reject them and the buyer who has accepted a part or an instalment of the goods cannot reject that part or that instalment. In short, the buyer will only lose his right to reject by accepting all of the goods, or by accepting goods included in the same "commercial unit,"[235] or (in the case of the severable contract), by accepting the non-conforming goods which he could otherwise have rejected.

4. Effects of Termination

Sale of goods legislation does not provide particular provisions regulating the effects which follow from termination of the contract. Accordingly, the question is to be answered in accordance with the general law of contract. In general, when election of termination for breach of contract validly takes place, it affects both the contract and relations of the parties from that time.

4.1. Effects on the Contract

One of the general questions which is often discussed in each legal system, in particular in civil law systems, is whether termination has retrospective or prospective effects on the contract. With respect to English law, it is usually said that it is a general rule of the English law of contract that termination of the contract by the innocent party on the footing of the other party's breach operates prospectively and not retrospectively.[236] Retrospective effects are confined to the cases where the contract is rescinded on account of invalidating matters such as mistake and misrepresentation. For this reason, it is said that by termination of the contract on the basis of breach, only future primary obligations are discharged, and that even the aggrieved party remains liable in damages for his own pre-termination breaches.[237]

Illustration of such an effect of termination can be found in a severable contract in the meaning already discussed. Suppose, for example, that the seller breaches the contract in respect of one or more deliveries; in that case, the buyer may be entitled to terminate the contract in relation to the future deliveries without affecting deliveries already made. Thus, it is clear that termination in such a case does not affect the whole contract, but only part of it.[238]

4.2. Effects on Rights and Obligations

Generally speaking, a valid termination of the contract releases not only the victim of breach but also the party in breach from their primary obligations to perform in the future.[239] However, the defaulting party is not totally discharged from any liabilities, but may be liable to pay damages [240] and that liability may relate both to breaches committed before termination and to losses suffered by the injured party as a result of the defaulting party's repudiation of future obligations.[241]

One explanation of the survival of the right to damages draws on a distinction between primary and secondary contractual obligations.[242] The breach of a primary contractual obligation, that is, the failure to perform a duty expressly or impliedly created by the contract, gives rise to a secondary obligation to pay damages. This secondary obligation will arise by operation of law unless the contract itself deals with the matter.[243]

1. Withholding Performance

1.1 Introduction

1.1.1. Concept of the Right

Withholding performance under the Convention, as in English law, means that the buyer is entitled to refuse to perform his obligation without being required or even being entitled to terminate [avoid] the contract. Obviously, if the requisites for the latter remedy are met and the buyer, before fulfilling his obligations, has declared the contract avoided in accordance with Arts. 49, 51, 72 or 73 of the Convention, he is no longer obliged to perform his obligations (Art. 81(1)). But such requisites may not be met or the buyer may not wish to declare the contract terminated, but rather demand goods fully conforming with the contract.

In the provisions regulating the buyer's remedies for seller's breach, although the Convention gives specific rights to withhold performance in certain cases, it does not make a general statement that the buyer is entitled to withhold performance of his obligations.[244] The question is, therefore, whether the buyer has a general right to withhold performance of his obligations under the contract where the seller has performed his delivery obligations in a way which does not correspond with the contract or the Convention.

In this respect, some commentators have tried to infer from the Convention's provisions that the buyer should be given a general right to refuse to take delivery.[245] But it seems that they have failed to distinguish between the buyer's right to refuse to recognise goods the seller delivers as the contract goods and his right to refuse to take delivery and, consequently, they have relied on the provisions which concern the former rather than the latter. It is probably for the reason that the Convention does not expressly impose, as English law does, on the buyer a duty to accept what the seller delivers as the contract goods. It is, however, proposed to examine these two possible rights separately. Although in practice both may often arise at the same time, in some cases, the right to refuse to accept arises where the buyer has already performed his duty to take over the goods as defined in Art. 60.

1.1.2. Importance of the Right

From the buyer's point of view, the existence of the right to refuse to recognise the goods offered as the contract goods seems important, since the buyer will thus be entitled to resort to the remedies provided under Art. 46(2) or (3). But what significance follows from the right to refuse to take delivery? It seems that the existence of the right to refuse to take delivery would also be significant for the buyer, not only in respect of the link between delivery and payment (Art. 58(1), (2)), but also in regard to the passing of the risk (at least where the case falls into the scope of Art. 69). That is to say, as long as the seller does not deliver the goods in accordance with the contract and the Convention, the buyer can refuse to take delivery and thereby return the risk to the seller. The seller would face delay, and in order to avoid the undesirable consequences of delay, he would strengthen his efforts to perform. Since taking delivery and payment of the price generally are linked, the buyer would have the further advantages of paying later and not for non-conforming goods, for the seller who wants to obtain payment must take action against the buyer.

More importantly, the right will be significant where the seller fails to fulfil his obligations with respect to the place of delivery (Art. 31),[246] or to specify the goods by notice (Art. 32(1)).[247] The significance of the right is for the reason that the remedy prescribed under Art. 46(2), (3) does not apply here, since it only relates to the seller's obligation to deliver conforming goods under Art. 35 and probably Arts. 41 and 42. In such cases, if the buyer has such a right he can refuse to take delivery and subsequently require performance according to Art. 46(1), and fix an additional period of time in accordance with Art. 47(1).[248]

The remedy will also be significant for the buyer where the seller partially or fully fails to perform his obligations relating to the quantity, quality and other description required by the contract (Art. 35) or fails to fulfil his duty under Arts. 41 and 42, that is where the goods delivered are not free of the rights or claims of third parties. In such cases, the right to refuse to take delivery would be useful for the buyer where he wishes to require the seller to repair the non-conformity under Art. 46(3). In such situations, the buyer can, if he is entitled, by turning the risk of the goods to the seller persuade him to cure the non-conformity as quickly as possible. Accordingly, in the case of the seller's failure to deliver goods in accordance with Arts. 35, 41 and 42, the buyer is not required to take delivery of them in order to have them cured later, but he can refuse to take delivery until cure is made.

Having considered the concept and importance of the remedy, the following discussion will try first to answer the question whether the Convention has recognised a general right to withhold performance and then to ascertain how the given right will work in different types of failure by the seller to perform his obligations.

1.2. Withholding Performance as a General Right?

A close examination of the Convention provisions clearly shows, it is suggested, that the Convention has recognised the right to withhold performance for an aggrieved buyer in some occasions. However, in some cases the Convention has expressly applied the rule and in others it has impliedly recognised it.

1.2.1. Prospective Non-Performance

The Convention has expressly applied the right to withhold performance in Art. 71(1) under the heading of the right to "suspend the performance of obligations."[249] Under this provision, whenever it is apparent that a party, say the seller, will not be able to deliver goods or documents, the buyer is given a right to suspend the required steps leading to payment, such as the establishment of a letter of credit (Art. 54). However, the provision comes into operation only where it becomes apparent that the seller is about to commit non-performance of a substantial part of his obligations;[250] it does not concern where the seller has performed his delivery obligations in a way which does not correspond with the contract requirements.

For the provision to be applied, certain requirements are to be satisfied.

1.2.2. Actual Non-Performance

The right to withhold performance is also impliedly recognised by Art. 58(1)[251] of the Convention. Under this provision, where the contract is silent as to the time of payment, the buyer is under the duty to pay only when the seller places the goods or the documents controlling their disposition at the disposal of the buyer. Hence, where the seller has failed to place the goods or documents at the buyer's disposal, the latter is entitled to refuse to pay as long as the seller's failure continues.

Similarly, it seems that the Convention has also accepted the right to withhold performance where the seller has delivered non-conforming goods. In that event, the buyer is impliedly given a right to refuse to recognise the seller's non-conforming delivery as a conforming delivery. The buyer's entitlement to refuse to accept the seller's non-conforming delivery can be inferred when it is proved that under the Convention the buyer is under a further duty to accept what the seller delivers in performance of the contract. The Convention provides no clear provision for this purpose. It simply provides: "The buyer must pay the price for the goods and take delivery of them as required by the contract and the Convention" (Art. 53).

What is certain is that recognising the goods delivered as conforming to the contract is not the same as taking delivery, or even taking over the goods as prescribed by Art. 53. The duty to take delivery is defined by Art. 60. Under this Article the buyer's duty to take delivery consists of two elements: The first element is that he must do "all the acts which could reasonably be expected of him in order to enable the seller to make delivery." For example, if the contract requires him to arrange for the carriage of the goods (as is often the case under the terms of an f.o.b. contract), he is bound to make the necessary contracts of carriage in order to enable the seller to deliver (hand the goods over to the first carrier for transmission to the buyer (Art. 31(a)). The second element of the buyer's duty to take delivery is to take over the goods. It is the case where the seller is bound under the contract to make delivery by placing the goods at the buyer's disposal at a particular place or at the seller's place of business (Art. 31(b) and (c). In such cases, the buyer will be regarded as having taken delivery when he has physically removed the goods from that place.[252]

As is seen, taking delivery, as defined under Art. 60, is not inconsistent with the case where the buyer has done all the acts which enabled the seller to make the delivery but the buyer is nonetheless required to accept the goods in the sense that he is not allowed to reject them. This is where the buyer after receiving the goods when examining them (Art. 38) has realised that they are in conformity with the contract and the Convention. Accordingly, taking delivery does not include what is called here the duty to accept the goods. Under this interpretation, the buyer is under two separate duties: to take delivery of the goods and to accept (not reject) them if they are in conformity with the contract.

This duty is clearly inferable from the provisions of Arts. 46(2) and 49(1)(a). The first provision gives the buyer a right to require the seller to tender replacement goods, and the second entitles him to avoid the contract provided that the seller's breach amount to a fundamental breach. Similarly, Art. 46(3) enables the buyer to demand that the seller repair the lack of conformity where it is reasonable having regard to all the circumstances. Beyond these circumstances, the buyer is not entitled to resort to these remedies but he has to accept them as the contract goods, otherwise he will be in breach of the contract. Accordingly, the buyer is under the duty to accept the seller's delivery where the lack of conformity does not fall into the foregoing circumstances.

Assuming that the buyer is under a reciprocal duty to accept the seller's delivery where it accords with the contract and the Convention, he will be entitled to refuse to accept where it does not conform to the contract terms and the Convention.[253] This right not only corresponds with commercial practice,[254] but can clearly be inferred from the provisions allowing the buyer to require the seller to tender substitute goods or to repaire them (Art. 46(2) and (3)). These provisions, by allowing the buyer to require the seller to make a fresh tender or cure the non-conformity by way of repair (as the case may be) where the seller has delivered goods which do not conform with the contract and this Convention, presuppose that the buyer is entitled to refuse to accept them as the contract goods. Accordingly, it is quite possible for the buyer to retain his right under Art. 46(2), (3) after having taken delivery or taken the goods over. This is the reason why Art. 86(1) speaks of the buyer's right to reject after he has received the goods from the seller.

1.2.3. Early or Excessive Delivery

A further application of the right to withhold performance can be found under Art. 52.[255] Under this provision, where the seller has made an early delivery, the buyer is entitled to refuse to take delivery of such a delivery (Art. 52(1)). He is also given a right to refuse to take delivery of the excess quantity where the seller has delivered greater than the contract quantity (Art. 52(2)).

1.2.4. Buyer's Right to Refuse to Take Delivery as a General Remedy

Although the refusal to take delivery under this Article is mentioned in the catalogue of the buyer's remedies in Art. 45, it can only be exercised in reference to the special case of early or excess quantity delivery under Art. 52. No clear provision is provided by the Convention to determine whether the buyer is entitled to refuse to take delivery of the goods delivered to him by the seller where they do not accord with the contract terms and the Convention, such as the cases where the seller has failed to perform his duty under Arts. 31, 32(1), 35, 41 and 42.

Some commentators, as already pointed out, have suggested [256] that such a right, to some extent, can be inferred from the interpretation of the relevant provisions of the Convention. In justifying the view, they argue that this rule can be inferred not only from the express granting of that right under Art. 52 for cases of early delivery and delivery of excess quantity, but also from the fact that Art. 86(1) presupposes the existence of a right to reject.[257] The advocates of the existence of this general remedy have also resorted to the link between payment and delivery (Art. 58(1), (2)) and the right of the buyer to examine the goods under Art. 58(3),[258] and to Arts. 46(1)[259] and 47(1)[260] by saying that they are at least consistent with the assumption of the buyer's right to refuse the taking delivery under certain conditions.[261]

However, it seems that, although the view can be supported under the Convention, the provisions referred to above do not help to establish such a rule. This is because, first, although the first paragraph of Art. 52 can be relied on for this purpose, it is only applied to the case of early delivery. The second paragraph is entirely irrelevant. It simply provides that the buyer can refuse to accept the seller's offer of an extra quantity where he has delivered a quantity of goods greater than that provided for in the contract. It does not say that the buyer is entitled to refuse to take delivery of the whole goods the seller has delivered as contract goods. Secondly, Art. 86 presupposes that the buyer who has received the goods which do not correspond with the contract requirements is entitled to reject them. Such a statement, as indicated previously, is consistent with the principle that he can refuse to accept them as contract goods, not that he is entitled to refuse to take delivery which this Article presupposes has taken place in advance. This is the reason why these two Articles used different terminologies.

Nevertheless, it can be said that the Convention has impliedly recognised a right to refuse to take delivery for an aggrieved buyer under certain circumstances. This rule is inferable from taking into consideration the question in the light of the principles of the Convention upon which it is based. Under these principles, it might be concluded that the buyer is not obliged to take delivery where the seller's delivery is not in conformity with the contract and the Convention. For it is one of the principles of the Convention that the seller has to deliver in full conformity with his obligations and the buyer is only required to take delivery of such a performance. This principle can be inferred through the examination of the relationship between the main duties of the parties under the Convention. The essential duties of both the seller and the buyer, i.e., delivery, taking delivery of the goods and payment of the price, are provided by Arts. 30 and 53 of the Convention. Although the relationship between the buyer's duty to take delivery and the seller's obligation to deliver goods is not expressly defined by the Convention, it seems that these two duties are interdependent. Some commentators have argued that such a relationship can be inferred from Art. 58(1) and (2) by saying that this Article qualifies the buyer's duty to pay the price to the condition that the seller's delivery is to be in accordance with the contract and the Convention.[262] However, it seems that Art. 58 is provided only to state that the seller's duty to deliver and the buyer's duty to pay the price are concurrent obligations and they are to be performed at the same time when the contract is silent as to the time of payment. It is not intended to define the main duties of the parties. The main obligations of the parties are defined by Arts. 30 and 53. Although these two Articles do not expressly refer to each other, it is suggested that they must be read in connection with each other. Thus, the seller is obliged to deliver the goods, provided that the buyer is ready and willing to pay the price for the goods and take delivery of them "as required by the contract and this Convention", and the buyer is bound to pay and take delivery, provided that the seller is ready and willing to deliver the goods "as required by the contract and this Convention." Accordingly, the buyer's duty under Art. 53, i.e., taking delivery and paying in exchange for the seller's delivery, is conditioned by the qualification that the seller's delivery conforms with the terms of the contract and this Convention. In accordance with this interpretation. the buyer's duty to take delivery and pay the price under Art. 53 may be re-phrased as follows:

It is the buyer's duty to take delivery of goods delivered to him by the seller provided they are delivered in accordance with the terms of the contract and this Convention.

On this interpretation, where the seller has delivered goods in a way which does not conform with the contract terms and the Convention, the buyer is not in principle bound to take delivery of them. In more clear words, as long as the seller has not fulfilled his duty to deliver in accordance with the contract and the Convention, the buyer's duty to take delivery has not indeed arisen. He is, therefore, under no obligation to perform his duty to take delivery under Art. 53.

1.2.5. Grounds for the Right

In the absence of an express statement by the Convention, in describing the right, its legal basis must be identified by interpreting the provisions of the Convention and taking into account the general principles upon which it is based. As pointed out above, the Convention, when supplying the provision regulating the timing of the performance, has at least implicitly referred to the interdependence of the seller's obligation to deliver and the buyer's duty to pay. In that case, Art. 58(1) provides that the buyer, unless otherwise agreed, "must pay the price when the seller places either the goods or the documents controlling their disposition at the buyer's disposal in accordance with the contract and this Convention." It seems that this sub-paragraph intends to state that the seller's obligation to deliver the goods and hand over the documents controlling their disposition and the buyer's duty to pay the price are tied together so that failure of one party to perform his duty would entitle the other to rely on the rule. A close examination of Arts. 46, 52, 58 and 71 of the Convention leads one to the conclusion that the Convention has based the right to withhold performance on the theory of "reciprocal obligations." It is under this rule that the obligations are to be exchanged for each other's performance at the same time, and refusal of one party justifies the other party's refusal to perform as long as the defaulting party continues his refusal.

The question which arises here is: What degree of lack of conformity enables the buyer to refuse to perform his duty to accept and take delivery of the goods? No clear provision can be found under the Convention for this purpose. It can be said, however, that since the buyer by refusing to accept and take delivery of the non-conforming performance simply refuses to perform his counter-obligation, his option to do so need not be based on a showing of "fundamental breach." He is only required to demonstrate that the seller's delivery is not in accordance with the contract and the Convention. This is because the right of refusal is based on the theory of reciprocity of the parties' obligation rather than the theory of fundamental breach.[263] However, in granting the right to refuse, one cannot be generous. Accordingly, the substance and the limits of the right to refuse to accept and take delivery have to be determined in detail according to the system of the buyer's remedies under the Convention. The proposition would not, therefore, be acceptable that the goods should be in conformity of the contract in every aspect, otherwise there shall seemingly be a right of refusal.[264] Such a broad proposition seems to undermine the system of remedies prescribed by the Convention. In one case, the Convention has referred to the criterion upon which the buyer may withhold performance (Art. 71(1)). In that case, it provides that the buyer will be entitled to do so where the seller's non-performance relates to a "substantial part of his obligations." However, it is not clear what lack of conformity will enable the buyer to refuse to accept the goods in the case of delivery of non-conforming goods. It seems that the buyer is certainly not entitled to refuse to accept the goods for minor non-conformity. This right may be available for him where the seller's failure to perform his obligations in accordance with the contract terms and the Convention has attained a certain degree of seriousness.[265] Close consideration of Arts. 46(2), (3) and 71(1) of the Convention supports this restriction. Moreover, it accords with the principles of good faith (Art. 7(1))[266] and mitigation (Art. 77).[267]

1.3. Special Cases

1.3.1. Partial Delivery and Partial Non-Conforming Delivery

Although Art. 52(2) entitles the buyer to refuse to take delivery of the excess quantity, it does not make clear whether the buyer has the right to refuse to take delivery where the seller delivers less than the contract quantity. It could be argued that according to the principles already dealt with, the buyer can refuse to perform his obligations on account of the seller's partial non-delivery. The view can also be supported by the fact that short delivery gives the buyer the right to terminate the contract in its entirety in certain circumstances (Art. 51(2) which includes the right to refuse to perform his obligations insofar as this has not taken place. The same logic justifies the buyer's right to refuse to perform until complete delivery in conformity with the contract is offered.

A further question is: "Does the buyer have the option to refuse to perform in respect of the missing part or non-conforming part where the seller has delivered goods some part of which conform with the contract?" Art. 51(1) seems to enable the buyer to treat the missing and the non-conforming part (as the case may be) as the subject of separate contracts for the purpose of remedy and to resort to his remedies under Arts. 46-50. But those provisions do not include such an option. Can the buyer treat the missing or non-conforming part as the subject of a separate contract for the purpose of the right to refuse to perform for the proportion of the missing or the non-conforming part? Since he is entitled to terminate the contract with respect to the missing or the non-conforming part if the requirements of fundamental breach or Nachfrist notice procedure are satisfied, it can be said, by analogy, that he is entitled to refuse to perform the contract to the proportion of the missing part. The view can also be supported by Art. 58(1) which provides that the buyer is not bound to pay only when the seller places the goods at the buyer's disposal in accordance with the contract. By analogy, the same rule is applicable where only part of the goods is in conformity with the contract. The same rule would be applicable to an instalment where the seller has delivered a defective instalment, since Arts. 51 and 73 are in fact concerned with a similar case, i.e., where the contract is severable.

1.3.2. Tender of Non-Conforming Documents

Although the Convention has referred to the seller's duty to deliver goods and documents in accordance with the contract terms (Arts. 30 and 34), it does not deal properly with the issue. It is therefore not quite clear whether the buyer has two separate rights to refuse to accept non-conforming documents and goods, and if so, what relation there is between these two rights. It appears that the issue must be examined according to the same principles as elaborated for goods.

According to the principles explained above, it seems that where the seller fails to tender the shipping documents, the buyer is entitled to refuse to pay the price, since where the contract does not specify otherwise, the buyer is under the duty to pay the price only "when the seller places the ... documents controlling their disposition at the buyer's disposal" (Art. 58(1). In other words, the seller's duty to hand over the documents controlling the disposition of the goods at the buyer's disposal and the buyer's duty to pay the price are to be fulfilled at the same time. However, it seems that the rule prescribed under Art. 58(1) would not be applicable to all shipping documents, since the Convention qualifies the non-defaulting buyer's right to withhold performance of his obligation to pay the price with the qualification that the documents should be those "controlling their disposition." Accordingly, the seller's failure to tender documents which lack this qualification is to be placed within the category of defective delivery rather than non-delivery.

Where the seller tenders documents which do not correspond with the contract requirements, the buyer is not required to take delivery [268] and pay the price in exchange for such documents, since, as the last phrase of Art. 30 and Art. 58(1) provides, the seller must tender documents which are in conformity with the contract, otherwise the buyer is not obliged to accept and pay for them. Furthermore, it seems that the right to refuse to take over the documents could be inferred from the obligation of the seller under Art. 34.[269] Under this Article, the seller is obliged to hand over the documents at the time and place and in the form required by the contract.[270] In addition, rejection of non-conforming documents is a well-accepted customary law which is to be given effect under Art. 9.[271] Accordingly, where documents tendered by the seller do not show the respective conditions in respect of the goods and documents, the buyer would be entitled, under some circumstances, to refuse to accept them.[272]

It seems that since the seller's duties to deliver the goods and the relevant documents are two separate obligations (Arts. 30-34), breach of each would give rise to a separate right to refuse to accept. Accordingly, the buyer should be given the right to refuse to accept the goods when they arrive. He should also be entitled to reject documents which do not comply with the contract even though the goods themselves are perfectly in accordance with the contract.[273]

On the above interpretation, the question arises whether the right of rejection of non-conforming goods is impaired by the acceptance of the documents. What is certain is that where the given defect is reflected on the documents, the buyer's acceptance may be treated as a waiver of his right to reject for the defect in the goods. But where the buyer accepts the documents, for example, a bill of lading, which turns out to have been falsely dated, it would not, it seems, prevent him refusing to take delivery of the goods on discharge from the ship. Although, the question is not expressly addressed by the Convention, it can be argued that, under the Convention, the buyer would lose the right to rely on the lack of conformity of the goods only "if he does not give notice to the seller specifying the nature of the lack of conformity within a reasonable time after he discovered it or ought to have discovered it" (Art. 39(1)).[274] Therefore, he can rely on an unspecified defect if at the time of acceptance he had neither knowledge nor means of knowledge of it. He can also rely on the non-conformity of the goods, even if at the time of acceptance of the documents with a minor defect he had neither knowledge nor means of knowledge of another defect in respect of the goods.

2. Termination [Avoidance] of Contract

2.1. Introduction

In the preceding part, it was seen that the Convention has given the buyer a right to withhold performance of his obligations as long as the seller has not fulfilled his delivery obligations in accordance with the contract and the Convention. This remedy, as already indicated, is distinguishable from the remedy of termination [avoidance] in terms both of the ground on which it is available and its effects. Withholding performance is based on the theory of "reciprocity of obligations" and will be justified where the lack of conformity is not minor, while termination [275] is primarily based on the doctrine of "fundamental breach." Termination, as will be seen below, will bring the contract to an end, while withholding performance will not affect the legal existence of the contract.

The following discussion first examines the circumstances in which the buyer will be entitled to terminate the contract for the seller's non-conforming delivery and then addresses the mechanism of exercising the right and the circumstances in which the buyer may lose his right to terminate. Finally, it takes a short look at the effects termination may have on the rights and liabilities of the parties.

2.2. Grounds for Termination

General Review. As a general rule, the Convention grants an aggrieved buyer the right to declare the contract terminated provided that the failure by the seller to perform any of his obligations amounts to a "fundamental breach of contract" as defined in Art. 25. However, the buyer may also be entitled to terminate the contract without being required to rely on the doctrine of "fundamental breach." This possibility arises where the buyer resorts to the provision authorising him to request the seller to perform within a specified additional period of time of reasonable length (commonly referred to in the literature as the Nachfrist notice) (Art. 47). As will be seen, failure to comply with this request may be regarded as another ground upon which the buyer's termination may be justified (Art. 49(1)(b)).

2.2.1. Fundamental Breach

2.2.1.1. Significance and Concept of the Test

"Fundamental breach" is one of the pillars of the Convention because various sanctions available to the buyer and seller, as well as certain aspects of the passing of risk, depend on this concept.[276] Above all, the concept of fundamental breach is a key to the system of termination under the Convention. The Convention in several places bases the buyer's right of termination on the fundamental breach test.[277] Accordingly, the main question is: What is fundamental breach? Art. 25 of the Convention defines it in the following terms:

"A breach of contract committed by one of the parties is fundamental if it results in such detriment to the other party as substantially to deprive him of what he is entitled to expect under the contract, unless the party in breach did not foresee and a reasonable person of the same kind in the same circumstances would not have foreseen such a result."[278]

In international sale contracts, it is a "fresh legal concept, born from compromise"[279] and open to different interpretations.[280] It should therefore be interpreted in its own context by taking into account the legislative history of its development.

2.2.1.2. Elements Constituting the Test

Art. 25 of the Convention sets up two major criteria for defining "fundamental breach." First, the breach must result in a detriment to the innocent party; second, it must substantially deprive the innocent party of what he is entitled to expect under the contract. The last phrase of the Article also provides for the party in breach an avenue to escape from the drastic effects of his breach, if he can prove that he did not foresee (or could not have foreseen) the consequences of his breach. Meditation over the key words of definition employed in Art. 25: "detriment," "substantial" and "foreseeability," gives rise to some constructive questions: What is detriment? What detriment is substantial? and When is the foreseeability test applied?

     (I) Detriment. The first foundation for a breach being fundamental is that it must cause the non-breaching party detriment. The Convention itself does not contain any definition of the term "detriment." Nor does it give any example of detriment that rises to the level of a fundamental breach. Confronted with such a "newcomer"[281] word in the field of international sale, commentators have taken diverging views in its interpretation.[282]

In the absence of precise definition, it seems that the term must be interpreted in light of the Convention's legislative history as well as its intended purpose. The legislative history of Art. 25 shows that the test developed out of the debate over the weaknesses of the 1964 Uniform Law on the International Sale of Goods (hereinafter, ULIS)'s criterion for defining the "fundamental breach" doctrine. The draftsmen, in avoiding the difficulty of subjectivity of the ULIS test, accepted the "detriment" criterion so as to present an objective test for determining the fundamentality of the breach.[283] But the history of the word "detriment" is short. It was proposed in the sixth session of the UNCITRAL Working Group in 1975, and was retained in the 1978 Draft proposal.[284] The nature and concept of the term has not been examined, either during the UNCITRAL Working Group's sessions nor in the 1980 Diplomatic Conference.[285] The only thing said with respect to the term "detriment" was that the Working Group report was quoted as pointing out the advantage of stressing that the term detriment "had to be interpreted in a broader sense and set against the objective test of the contents of the contract itself."[286]

However, an unofficial commentary by the UNCITRAL Secretariat on Art. 23 of the 1978 Draft Convention may provide some guidance as to the meaning and application of this term. The Secretariat Commentary stated that "[t]he determination whether the injury is substantial must be made in the light of the circumstances of each case, e.g., the monetary value of the contract, the monetary harm caused by the breach, or the extent to which the breach interferes with other activities of the injured party."[287] From this comment, it is possible to conclude that the drafters intended the word "detriment" to be synonymous with "injury" and "harm," and it can also be exemplified by monetary harm and interference with the other activities.[288]

The term can be further clarified by considering its purpose. The purpose is simply to allow the injured party to terminate the contract, demand substitute goods, or to prevent the risk of loss from passing to the buyer.[289] These purposes, as will be seen later, clearly require a broad sense which is beyond the realm of compensation for damages.[290] Accordingly, keeping in mind both its history and purpose, the term has to be interpreted in a broad sense and any narrow construction must be excluded.

     (II) Substantial Deprivation. The second major requirement for a breach to be regarded as fundamental is that the detriment caused by the breach must have some degree of seriousness so that it substantially deprives the victim of breach of what he is entitled to expect under the contract. Unlike the nature of detriment, which was not much at issue either by UNCITRAL's Working Group or in the Diplomatic Conference, the degree of its effects was and still is controversial. In this connection, the first question is: What criteria should be applied to determine whether the detriment sustained by the victim of breach has resulted in fundamental breach?

The legislative history of the provision shows that it was controversial. Examination of the legislative history of Art. 25 shows that it was first suggested that to ascertain whether breach was fundamental, it should have been proved that the detriment caused by the breach was substantial and the Committee welcomed that proposal and inserted it into the definition of fundamental breach.[291] In the Diplomatic Conference, however, the debate on the words "substantial detriment to the other party" was extensive.[292] Some delegations labelled it something between "vague," "subjective" and "objective and flexible."[293] The main objection to the "substantial" criterion was that "substantial" as an adjective caused as much uncertainty as "fundamental" itself, and, therefore, required an objective yardstick. Various proposals were offered for this purpose. Eventually, in order to reconcile the different proposals, it was decided that for a breach to be fundamental, it must result in such detriment as substantially to deprive the victim of breach of what he is entitled to expect under the contract.[294]

However, in relying on the phrase "the buyer was entitled to expect," one should be careful. It does not mean that the only criterion for this purpose is the buyer's expectations from the contract, as the language of Art. 25 seems to suggest. His expectations are qualified by the last phrase "what he is entitled to expect under the contract." It seems that this limitation introduces an important qualification and ensures that it is not solely the buyer's expectations which are relevant. The buyer is clearly entitled to expect to receive the performance promised by the seller, but since this depends on the seller's contractual undertaking, it is defined as much by the seller's expectations as by the buyer's. Thus, suppose that the buyer is deprived of the opportunity to obtain a particular benefit he expected to receive from the seller's performance but of which he has not informed the seller. Can it be said that the buyer is "entitled" to expect that benefit under the contract? Moreover, as will be seen in detail, the test of the buyer's expectations is further limited by the qualification, which takes account of what the seller could reasonably foresee. This makes clear that if the buyer is deprived of a benefit which the seller could not foresee and could not reasonably be expected to foresee, the breach is not fundamental. Accordingly, the degree of the requisite substantiality of deprivation caused by detriment must be ascertained within the framework of the amount of detriment incurred by the buyer in respect of those expectations required under the contract. The "legitimate expectation interest" test of Art. 25, as described above is, therefore, the only criterion in determining whether or not deprivation is substantial.

The question which arises here is whether the only source for the buyer's expectation interests is the terms of the contract, as the language of Art. 25 shows where it says "he is entitled to expect under the contract" -- which in principle refers to all the terms of the contract whether express or implied. Does it mean that any other circumstances of the case are not to be taken into account? The question came into view at the Vienna Conference when the German delegation proposed to amend the draft Art. 23 on fundamental breach so that the determination of whether or not a detriment was substantial would have been determined by the express or implied contract terms themselves.[295] This amendment was criticised by a number of representatives as too narrow. A substantial number of delegations suggested that the court has to examine the terms of the contract as well as the surrounding facts.[296] It was on this general understanding that the text accepted by the Conference referred to the phrase "what he is entitled to expect under the contract."

On this interpretation, the extent to which a party suffers an injury to its expectations will, therefore, be found not only in the language of the contract but in the circumstances surrounding the contractual relationship of the parties.[297] However, it does not mean that the assessment of the existence of substantial detriment will depend on the circumstances of any individual case, even those circumstances take place after the time of making the contract. If some particular circumstances are significant for a contracting party, he should bring them into the other party's attention at the time of contract. Accordingly, it is fair to say that the Convention has not left the determination of the degree of a given detriment, and drawing the line between substantial and insubstantial deprivation, to the judge's sole and sovereign appreciation, but requires him to decide in the framework of the contract and the circumstances that existed at the time it was made.

After all above, the main question still remains; At what point does deprivation resulting from detriment reach the threshold of substantial deprivation? The Convention has failed to introduce any concrete factors to guide the judge to decide whether the detriment sustained has attained the sufficient degree of substantial deprivation.[298] The Convention seems to have left the question of determining the sufficient substantial deprivation of the buyer from his contractual expectations to the arbitrators to decide in the light of the circumstances surrounding any particular case.[299] In any case, the court should decide the case by taking into account the value of the goods, the purpose for which the buyer has purchased the goods, and the degree of actual and prospective detriment caused by the breach, and other interference caused by the breach into his activities.[300]

     (III) Foreseeability. The foreseeability test in the final conditional clause of Art. 25 constitutes a further qualification. Although the sustained detriment which resulted in substantial deprivation prima facie makes breach fundamental, a breach will not be fundamental if the seller can rely on the last sentence of Art. 25.The legislative history of Art. 25 reveals that the burden of proving foreseeability of loss was originally on the party in breach. The 1976 Draft Convention put the onus on the aggrieved party both to show that the breach of contract resulted in a substantial detriment to him and that the party in breach foresaw or had reason to foresee such a result.[301] The Philippines' delegate to UNCITRAL subsequently objected that this formulation was unfair to the injured party and that the burden should not rest on him to show that the breaching party ought to have foreseen the result of his conduct. In the light of this objection, the wording of the definition was amended at the 1977 session of UNCITRAL so as to require the defaulting party to show that he could not reasonably have foreseen the consequences of his breach.[302] At the Vienna Diplomatic Conference, the Egyptian delegation sought to amend the Draft Art. 23 on fundamental breach by including express language indicating a shift in the burden of proof.[303] The drafters refused to include the language which would raise questions of civil procedure. However, there was a consensus that this burden should be on the party in breach because of the logical difficulty of requiring the non-breaching party to prove what the party in breach actually foresaw or a reasonable man in its position could have foreseen.[304]

The concept of foreseeability developed out of Art. 10 of ULIS which completely based fundamental breach on the foreseeability of events. Art. 25 of the present Convention, however, adds an objective test into the determination of whether a breach is fundamental by asking two questions: (1) Did the party in breach foresee that the breach of contract would result in a substantial deprivation of the non-breaching party; and (2) Would a "reasonable person of the same kind in the same circumstances" have foreseen such a result. These two questions will require the court to view the contract from the subjective perspective of the party-in-breach, as well as from the objective perspective of a reasonable merchant of the same kind in the circumstances of the party in breach. These subjective and objective elements are cumulative, not alternative. The outcome is that a breach would be regarded as non-fundamental only where courts or tribunals are satisfied that both elements are proved.[305]

The first requirement for negativing the claim for breach under Art. 25 is whether or not the party in breach actually foresaw the harm caused by the given breach. Whether the detriment caused by the breach was actually foreseeable by the seller depends on his knowledge of the facts surrounding the contract. In this respect, as some commentators suggested,[306] factors such as the seller's experience, level of sophistication, and organisational abilities should be considered in showing whether or not the harm in question was foreseeable. In the light of such factors, the court may be satisfied that the seller was able to anticipate and recognise problems in the transaction. However, this requirement is a purely subjective one which focuses solely on the personal position of the breaching party. Certainly, any party who has committed a breach of contract resulting in serious consequences will hardly accept that he foresaw those consequences, but will most likely insist that, unfortunately, he did not foresee, as the Article describes it, "such result."[307] The mere allegation, however, does not suffice but, as explained above, the party in breach must prove his allegation.

In this connection, Art. 25 provides a further requirement. This is an objective test requiring the party in breach to show that a reasonable person of the same kind in his circumstances would not have foreseen that the given default would have caused the injuries in question to the innocent buyer. Since parties to international sales contracts are presumed to be merchants, a "reasonable person" can be construed as a reasonable merchant. A reasonable merchant would, therefore, include "all merchants that satisfy the standards of their trade and that are not intellectually or professionally substandard."[308] The features that may characterise reasonable merchants include:

The phrase "of the same kind" is the first element of precision intended to mitigate the effects of subjectivity of the first criterion of foreseeability. The meaning of the phrase has to be apparently inferred from the purpose of the clause. It is, as Professor Will [309] suggested, provided to tailor a reasonable person to the likeness of the party in breach. The hypothetical merchant ought to be engaged in the same line of trade, doing the same function or operations as the party in breach. Not only must business practices be taken into account, but the whole socio-economic background as well, including average professional standards.[310]

A further element is also provided by Art. 25 for the purpose of precision. Under this requirement, the court must take into account the reasonable merchant "in the same circumstances," in which the party in breach was. By this requirement, the court should take into account "conditions on world and regional markets, legislation, politics and climate ... in short: [the] whole range of facts and events at the relevant time."[311]

As was seen, a party alleged to be in breach thus has a difficult burden, but if he can show that he did not foresee the drastic effects of his default, and can prove that a reasonable merchant facing the same market conditions would not have foreseen such results, then the party claiming breach will not be able to rely on the seller's breach for termination.

It seems that, like the other issues, it would be helpful to analyse the present issue in the light of legislative history of the provision. In the UNCITRAL Working Group's sessions and at the 1980 Vienna Conference, some delegates proposed that this element be amended to restrict consideration to those circumstances that the party in breach could have foreseen when the contract was made. In UNCITRAL's final [1977] review of the "sales" provisions, one delegate proposed to limit the time for foreseeability to the time of "the conclusion of the contract." Under another view, it was thought that "it would be fairer to refer to the time at which the breach was committed." The decision was recorded as follows: "The Commission, after deliberation, did not consider it necessary to specify at what moment the party in breach should have foreseen or had reason to foresee the consequences of the breach."[313] Finally, the UNCITRAL Draft Convention after some discussion preferred not to specify that point, thus leading the Secretariat Commentary to note that "in case of dispute, that decision must be made by the tribunal."[314]

As has been seen, the general understanding of the issue prior to the Vienna Diplomatic Conference was that the relevant time for foreseeability was left open. At the 1980 Diplomatic Conference, the issue again came into focus and there were various attempts to specify the point in time at which the foreseeability standard is to be applied. One proposal would have limited Art. 25 to foreseeability "at the time when the contract was concluded." The right to damages under Art. 74 is so limited. Had the proposal to similarly limit Art. 25 been approved, it would clearly have eliminated the possible anomaly of a right to avoid a contract even where there is no right to damages. However, this proposal was not approved nor did the delegates approve a related proposal which would have required foreseeability to be related to "the reasons for the conclusion of the contract, or any information disclosed at any time before or at the conclusion of the contract." The Official Records indicate that the latter proposal was withdrawn following the statement that "information provided after the conclusion of a contract could modify the situation as regards both substantial detriment and foresight.[315] Although the other delegates were not unanimous, a substantial number favoured leaving the question at large to be decided by the adjudicating body, taking into account the circumstances surrounding the case in question.

As the preceding analysis shows, the travaux préparatoires offer no help to the court. Accordingly, one may argue that the question was deliberately left unanswered because the working groups could not agree on the answer. They therefore left the question to the courts.[316] There is, therefore, no reason to impose an interpretation on Art. 25's foreseeability requirement that ignores post-formation developments. However, on this approach, one has to be in conformity to Honnold's view that information received by the seller later than the breach should not have any value attached to it.[317]

Nevertheless, there is the possibility of arguing in support of the first approach. As explained when dealing with the concept of the injured party's expectations under the contract, whether or not the injured party was entitled to expect to have a particular benefit should be ascertained within the contract terms and other circumstances which came to the attention of the party in breach at the time of making the contract. The same analysis seems to be applicable to the measurement of foreseeability of the consequences of the breach. It can even go further and argue that the language of Art. 25 is in line with this approach, since it defines the consequences relevant to the determination of fundamental breach in terms of what a party "is entitled to expect under the contract" and the second sentence of the Article refers to the foreseeability of "such result" by the party in breach. Accordingly, as contractual expectations are formed at the time of contracting, foreseeability of substantial deprivation of those expectations by the reason of breach should also be measured at that time.[318]

2.2.2. Nachfrist

As already pointed out, termination of contract is primarily to be justified on the basis of the doctrine of "fundamental breach." This criterion is to be applied even where the seller fails to perform his obligations within the contract time. Under this requirement, termination can be a thorny problem, for in any case the buyer must be sure that the breach is fundamental. This will not always be a proper solution for him. Once the seller is, for instance, late in performing, the buyer may rightly be doubtful whether the seller's delay amounts to a fundamental breach. One way to circumvent this problem is by use of the German law solution of Nachfrist according to which, where one party is in default the other party may give him a reasonable time within which he should perform his obligations. If at the end of this additional period of time, the defaulting party has not performed, the innocent party can terminate the contract.[319] In the case of buyer's remedies, Art. 47(1) adopted a version of this concept. The provision authorises the buyer to fix an additional period of time of reasonable length for performance by the seller of his obligations. The wording of the provision appears to cover the whole range of obligations arising under the contract and the Convention, such as delivery of all or part of the goods, the remedy of any lack of conformity by repair of the goods or by delivery of substitute goods or performance of any other act which would constitute performance of the seller's obligations. However, Art. 49(1)(b) only refers to the case where the seller has failed to deliver the goods. Accordingly, the question is whether the buyer's right to terminate the contract on the basis of Nachfrist notice arises only where the seller has failed to deliver on the date set for delivery in the contract or if it also comes into operation in respect of failure to perform other obligations.

Although ULIS started with the idea that the buyer could avoid a contract only for a fundamental breach (Art. 43),[320] it also allowed the buyer to demand that the seller cure the defect within a reasonable time and, if the seller did not, the buyer could declare the contract avoided (Art. 44(2)).[321] The UNCITRAL Working Group's early drafts were also broad and covered any failure of the seller to perform any of his non-fulfilled obligations within the additional period of time.[322] However, in 1973 at the fourth session several representatives advanced proposals to restrict the notice-avoidance procedure to cases where the seller has not delivered the goods. UNCITRAL accepted those proposals on the ground that the procedure could be abused to convert a minor breach into a fundamental breach by using the Nachfrist system provided under Art. [47(1)] and avoid the contract where the seller did not perform his obligations within the additional time.[323] The restricting provision survived in Art. 45(1)(b) of UNCITRAL's 1978 Draft Convention.[324] At the Vienna Conference, the question of extension of the buyer's right to avoid the contract on the ground of Nachfrist notice was again proposed by some delegations.[325] The debate over the issue centred on whether a distinction should be drawn between non-delivery and non-conformity. Some delegations proposed that, since the aggrieved buyer by virtue of draft Art. 43(1) was empowered to fix an additional period of time for the seller to perform any of his obligations, it was appropriate to widen the sphere of application of draft Art. 45(1)(b) to give the buyer necessary remedies when the seller disregarded his fundamental obligations arising from the additional period of time.[326] But as a result of the opposition of the State delegations, the Diplomatic Conference rejected the proposals to broaden the scope of notice-avoidance to include non-conformity and in order to avoid any possible misunderstanding, it added the phrase "in case of non-delivery" at the beginning of the notice-avoidance provision in Art. 49(1)(b).[327] Based on this amendment, it can be concluded that the buyer's right to avoid the contract on the ground of Nachfrist notice is restricted to non-delivery cases. Accordingly, the buyer will not be entitled to resort to the Nachfrist-notice rule to terminate the contract if the seller has failed to perform his duty to deliver substitute goods or other obligations under the contract and the Convention within the additional time.[328]

The buyer will be entitled to terminate the contract on the Nachfrist-notice procedure where he satisfies the court that he has fixed an additional period of time of reasonable length [329] and demanded that the seller deliver the goods within that period (Art. 47(1)).[330] He also has to prove that the seller has not delivered the goods or had declared that he would not have delivered them within the period so fixed (Art. 49(1)(b).

No clear provision, however, can be found in the Convention to be relied in ascertainment of this vague term. Professor Will suggests that it must be ascertained on the particular circumstances of each case. He also suggests that among the various elements to be taken into consideration are "the nature, extent and consequences of the delay, the seller's possibilities of and time needed for delivery, and the buyer's special interest in speedy performance."[331]

2.2.2.1. Perfect Conforming Delivery or Substantially Conforming

Where the seller has delivered the goods subsequent to the buyer's request, the latter will not be allowed to refuse to accept them and terminate the contract. The question which arises here is whether only a perfect tender would deprive the buyer of the right to rely on Nachfrist avoidance or a delivery which is substantially in conformity with the contract. Suppose, for example, that the seller is late in delivering the goods and the buyer sends a Nachfrist notice requiring complete delivery and within a reasonable period fixed by the buyer's notice the seller delivers all but a small portion of the goods or delivers all, but all or part of them do not conform to the contract terms, can the buyer avoid the contract? Art. 49(1)(b) permits the buyer to avoid if the seller fails "to deliver the goods" within the period fixed by a Nachfrist notice -- a standard that could be construed to apply even though such failure does not amount to a fundamental breach.

It might be argued that the position is apparently covered by Art. 51(2).[332] Under this Article, a buyer who has received goods a part of which is not in conformity with the contract or is missing can avoid the contract in its entirety "only if the failure to make delivery completely or in conformity with the contract amounts to a fundamental breach of contract." Thus a buyer who has received delivery of less than the required amount or non-conforming goods cannot avoid the contract as a whole by using the Nachfrist procedure. Termination can be justified in such a case where the lack of conformity amounts to a fundamental breach. The question can also be answered by the proper construction of the general principles on which the Convention is based (Art. 7(2)).[333] One of those principles is that avoidance of the contract is effective only where the other side has committed a fundamental breach. Art. 7(1),[334] furthermore, requires that the Convention is to be interpreted "to promote ... observance of good faith in international trade." The Nachfrist provisions of the Convention can and should, therefore, be interpreted in a manner that does not undermine the fundamental breach standard for avoidance accepted as a general criterion by the Convention. In the light of these considerations, Art. 49(1)(b) should be construed to permit avoidance only where the seller fails to deliver within the additional time fixed by the buyer in accordance with Art. 47(1), a substantial part of the goods or where the delivered goods are substantially contrary to the contract.[335]

2.2.2.2. Nachfrist Notice and Non-Conforming Documents

The other question which arises is whether the Nachfrist-notice avoidance can be extended to the case of non-tender of documents. There is no express provision in the Convention for such an extension, but Art. 49(1)(b) expressly refers to the case of non-delivery of goods. However, some commentators have suggested that "[B]y analogy, the provision also applies to the failure to transfer documents of title."[336] This can be justified on the ground that in an international sale of goods, the parties normally bargain for documents. Without the documents of title, the buyer cannot access or resell the goods bargained for. Accordingly, the same logic which justifies the provision in the case of non-delivery of goods exists in the case of failure to transfer the documents of title.[337]

2.2.3. Breach of Severable Contract

In the preceding discussions, it became clear that the buyer may be entitled to terminate the contract either on the basis of the doctrine of "fundamental breach" or the Nachfrist rule. Application of these rules has been examined in respect of the case where the buyer wishes to terminate a non-severable contract as a whole for the reason of the seller's non-conforming delivery or late delivery. The Convention, in addition to that, provides some provisions under which the buyer may be able to terminate the contract in respect of some part of the subject-matter of the contract and keep the contract alive with respect to the other part (Arts. 51(1) and 73(1). In the following, the application of the doctrine of fundamental breach as well as Nachfrist rule is assessed in respect of such cases.

2.2.3.1. Fundamental Breach and Severable Contracts

Where the seller makes a delivery which includes some non-conforming goods or of less than the required quantity of goods, Art. 51(1) [338] entitles the buyer to exercise his remedies under Arts. 46-50, including Art. 49 which gives him the right to avoid the contract. Although the Convention does not expressly make a distinction between cases where the contract is or is not severable, it seems that, by recognising partial avoidance, Art. 51(1) presupposes that it should be the case where performance of the seller could be divided into conforming and non-conforming parts. Where the non-conforming part is severable, the reference means that both the conditions and the effects of Arts. 46-50 can be applied to that part.[339] It follows that the buyer can treat the missing or non-conforming part as the subject of a separate contract that is severable for remedy purposes, and consequently terminate the contract in respect of that part, provided that the seller's failure constitutes a fundamental breach with respect to that part. In such situations the buyer can avoid the contract "in its entirety" only if the seller's default "amounts to a fundamental breach of contract (italics added)" as a whole (Art. 52(2)).

A similar rule is provided where the seller has committed a breach of contract in respect of one or more instalments under an instalment contract. Art. 73(1)[340] permits the buyer to avoid the contract "with respect to [an] instalment" if the seller's failure to perform any of his obligations "constitutes a fundamental breach of contract (italics added) with respect to that instalment."[341] He is also empowered to avoid the contract in respect of future instalments if the seller's default in relation to any instalment gives the buyer "good grounds to conclude that a fundamental breach of contract (italics added) will occur with respect to future instalments" (Art. 73(2)).[342] Likewise, Art. 73(3) grants the buyer who declares the contract avoided in respect of defective instalments an opportunity, at the same time, to declare the contract terminated "in respect of deliveries already made or of future deliveries if, by reason of their interdependence, those deliveries could not be used for the purpose contemplated by the parties at the time of the conclusion of the contract."

2.2.3.2. Nachfrist Notice and Severable Contracts

As the language of Art. 49(1)(b) shows, the rule comes into operation where the seller fails to deliver goods. This phrase raises the question whether the Nachfrist procedure can be applied to the case of partial delivery and instalment contracts or is confined to situations where the seller has not delivered any part of the goods within the contract period. Art. 51(1) entitles the buyer to exercise his remedies in Arts. 46-50, including the Nachfrist procedure, if the seller makes a delivery that contains less than the required quantity. In such a case, it therefore allows the buyer to fix an additional period of time for performance. Where the seller does not deliver the missing part, or informs the buyer that he will not deliver the missing part within the time fixed in a Nachfrist notice, the buyer has a right to avoid the contract with respect to that part.

However, Art. 73(1) does not, by its terms, permit the buyer to use the Nachfrist procedure to create grounds for avoidance with respect to an instalment if the seller is late in delivering the instalment. According to Professor Honnold, "an analogy to Art. 51(1) suggests that a Nachfrist notice should be effective with respect to overdue performance."[343] It seems that there is no clear reason to treat the analogous non-delivery situations covered by Arts. 51(1) and 73(1) differently; a buyer who is awaiting a late instalment delivery should be able to use the Nachfrist procedure to establish grounds for avoiding with respect to the instalment.

Similarly, Art. 73(2) does not mention avoidance of the contract for future delivery on the ground of the Nachfrist notice. Professor Honnold, however, argues that Nachfrist avoidance is "intrinsically inapplicable" to the situation addressed in Art. 73(2), i.e., avoidance as to future performance.[344] It seems that the basis of his argument is that the Nachfrist avoidance rule is designed to justify the buyer's avoidance where the seller fails to perform within a reasonable time beyond the contractual time for performance (Arts. 47, 49(1)(b). It is not designed to deal with avoidance as to performance not yet due.

2.3. Buyer's Right to Terminate and the Seller's Right to Cure

The Convention, for the purpose of minimising the hardship and economic waste involved in termination of the contract for international sales, provides appropriate rules permitting the defaulting seller to "cure" a defect in his performance by way of replacing or repairing defective documents and goods. For this purpose, Art. 34 enables the seller who handed over documents before the contract date to cure any lack of conformity in the documents before the time for performance is expired.[345] The same power is given to him by Art. 37 when he has delivered goods which do not conform to the contract.[346] The right to cure is also extended by Art. 48 to the case where the contract time for performance has expired.[347] The general language of Arts. 34 and 37 raises a significant question: Is the seller entitled to cure any lack of conformity even in case where it constitutes a fundamental breach of contract? The particular language of Art. 48 raises also the question: Does the buyer's right to avoid have priority over the seller's right to cure under Art. 48?

The Convention provides no clear provision to ascertain the relationship of the buyer's right to avoid the contract on account of fundamental breach with the seller's right to cure under Arts. 34 and 37; it does not determine when the seller 's right to cure would stop the buyer's right to terminate under Art. 49(1)(a). It simply says that the seller may, up to the contract date, cure any lack of conformity (by repair or replacement) or deficiency in the goods delivered under certain circumstances provided by Arts. 34 and 37. To solve this conflict, one way is to say that, where the seller is ready and able to offer reasonable cure, the breach is not effectively fundamental. Professor Honnold is one of the commentators who support this construction.[348] In contrast, Professor Will suggests that the same object can be achieved by determining the fundamentality of breach on the basis of the mere lack of conformity (without having regard to cure), but the existing right to avoid is merely suspended when a rightful offer to cure arrives.[349]

However, it seems that the legislative history of Art. 48 tends to support Honnold's view.[350] But it is suggested that it does not mean that the mere possibility of remedying the defect by the seller should change the character of an actual fundamental breach, otherwise the right of avoidance conferred on the buyer by Art. 49(1)(a) would be limited to very exceptional cases. In addition, it would certainly increase the uncertainty. A commercial seller is expected to act in a reasonable manner. It would not be fair to keep the buyer waiting for the seller to be able and willing to cure.

Art. 48 by its language raises a further question: Does the buyer's right to avoid the contract have priority over the seller's right to cure after the contract date? This Article by expressly reserving Art. 49, appears to underline the priority of the buyer's remedy of termination over the seller's right to cure. Is this appearance true? Things are not as simple as that. The interplay between termination and cure was a highly controversial issue throughout the UNCITRAL Working Group's sessions and the Vienna Conference and is still among the commentators on the Convention.[351]

It seems that a precise answer to the question requires one to examine the issue in light of the legislative history of the provision. Initially, the UNCITRAL Working Group, in examining the provision which is now Art. 48, took into consideration the relationship of the seller's right to cure with the buyer's right to terminate the contract and the remedy of reduction of price. Several proposals were considered. The central issue in discussion of those proposals was whether the buyer may preclude the seller from curing any failure to perform his obligations where the cure can be effected without such delay as would amount to a fundamental breach and without causing the buyer unreasonable inconvenience or unreasonable expense. This issue was discussed in the context of a defect in the goods which, in the absence of repair, was so serious as to constitute a fundamental breach but where the delay in remedying that defect would not constitute a fundamental breach and would not even cause the buyer unreasonable inconvenience or unreasonable expense. Different views were rendered by the members of the Committee. However, there was considerable opposition in the Committee to the idea that the buyer's right to declare the contract avoided could be affected by an offer to cure the defect after the time for performance. The seller was in breach and a possibility to cure was a privilege which depended upon the consent of the buyer who had the right to declare the contract avoided. There was, on the other hand, substantial support for the proposition that the buyer's right to declare a reduction in the price was subject to the seller's right to cure, provided that the seller bore all expenses of such cure. As a result, the Committee accepted the majority's view and reworded para. 1 of the draft Art. 30, which was renumbered as Art. 44(1) of the Draft Convention 1978, as follows: "[U]nless the buyer has declared the contract avoided in accordance with Art. 31, the seller may ... remedy ...."[352] The Secretariat Commentary on Art. 44 of the 1978 Draft in line with this general understanding notes that "the seller would have the right to remedy the non-conformity in the goods by repairing or replacing them, unless the buyer terminated the seller's right by declaring the contract avoided."[353]

The issue again became the subject of considerable debate at the Vienna Conference. This provision, which explicitly gave the priority to buyer's right to avoid the contract over the seller's right to cure, was opposed by some delegates at the Conference who sought to delete these limiting words.[354] Three alternative proposals were considered by State delegations.[355] Because of the strong opposition by some delegations, the proposals which sought to delete the limiting phrase were rejected [356] and the Conference finally adopted the second alternative as Art. 48(1) which opens with the words ''Subject to Art. 49, the seller may ... remedy ...."

As seen, the legislative history of the provision clearly shows that the majority of delegations at the Conference were opposed to the approach which sought to give absolute priority to the seller's right to cure over the buyer's right to avoid the contract under Art. 49(1)(a). The opening words of Art. 48 were adopted upon this general understanding.[357] Accordingly, where the fundamental breach test is satisfied, the buyer would be entitled to terminate the contract. The buyer is not required to accept the seller's offer to cure and give him an opportunity to cure the defect under Art. 48. This is because the language of para. (1) of Art. 48 subjects the exercise of the right of cure to the buyer's right to avoid the contract under Art. 49. In addition, there is no provision under the Convention to require the buyer to give the seller in breach an opportunity to cure before exercising his right of avoidance. Moreover, para. (2) of Art. 48 implicitly permits the buyer to reject the seller's request to remedy the defect within a reasonable time.[358] Under this provision, the buyer is deprived of the right to resort to remedies which are inconsistent with the seller's performance only when he accepts the seller's request. There is no express provision in the Convention to deprive the buyer of his right of avoidance in accordance with Art. 49(1)(a) for the seller's mere offer to cure his default after the contract date. The only thing provided by the Convention is the last phrase of Art. 50 under which the buyer who rejects the seller's offer to cure under Art. 48 is deprived of his right to claim price reduction.

However, the above construction would raise the question what purpose Art. 48(1) serves for the seller. Is it true, as Honnold observes, that giving priority to the buyer's right to avoid the contract would frustrate the seller's right to cure under Art. 48?[359] The answer to the question needs to take into account the relationship between the two provisions under Arts. 48 and 49. Under Art. 48(1) the seller is empowered to cure at his own expense "any failure to perform his obligations." Therefore, this is a general provision, contrary to Honnold, who believes that it is a specific one,[360] which covers fundamental and non-fundamental breaches. On the other hand, by virtue of Art. 49(1) the buyer is given an option to avoid the contract where the seller's failure amounts to a fundamental breach, whether the seller offers to cure or not. On this interpretation, giving priority to the buyer's right to avoid does not make the seller's right to cure futile, since the seller can exercise his right under Art. 48(1) where his breach does not amount to fundamental breach for the purpose of precluding the buyer from exercising his right to reduce the price under Art. 50.[361] The buyer would be able to exercise his right under Art. 49(1) where the seller does not show his ability and willingness to cure the breach, since the buyer should not be deprived of his right for the mere possibility of curing the breach by the seller. This is because the buyer, as indicated before, is not under any duty under the Convention to discover the possibility of cure by the seller and to give him an opportunity to cure.

The controversial case is where the buyer has not declared the contract terminated and the seller, after becoming aware of the defect, informs the buyer of his readiness to cure.[362] Which of these two rights has priority? The language of Arts. 48(1), 49(2)(b)(iii)[363] and 50 as well as the legislative history of the provision demonstrate that, in such a situation, the buyer is entitled to disregard the seller's offer to cure and terminate the contract on account of seller's fundamental breach. However, Art. 48 gives the seller the right to clarify the position by asking the buyer to make known whether he will accept late performance within a period specified by the seller in accordance with Art. 48(2), (3), (4). Where the buyer does not expressly declare his contrary view, the seller would be entitled to cure (Art. 48(2)). In the meantime, the buyer may not resort to any remedy inconsistent with the seller's performance.

Likewise, one may say that the seller's right to cure under Art. 48 would also arise where he has made a partial non-conforming delivery. In that case, where the lack of conformity does not constitute a fundamental breach of the whole contract, the seller may be entitled to cure even though breach in respect of the non-conforming part is fundamental. In that case, it can be argued that the seller's right to cure has priority over the buyer's right to avoid the contract in respect of the non-conforming part (Arts. 51(1) and 73(1)), since Art. 48 only refers to Art. 49 which is only concerned with the avoidance of the whole contract.

2.4. Mechanism of Termination

2.4.1. No Automatic Termination

Under ULIS, two types of avoidance of the contract were provided for. The first was ipso facto avoidance, that is, the right to continue performance under the contract would come to an end without needing a declaration by the victim of breach,[364] and the second was avoidance by declaration or notice from the innocent party to the breaching party. Ipso facto avoidance was eliminated from the remedial system of the present Convention on the ground that it led to uncertainty as regards the rights and obligations of the parties, e.g., in the case of late delivery, the seller needs to know when he must reship or resell the goods or take other actions to prevent their wastage or spoilage.[365] Under the present Convention, where the seller's breach amounts to a fundamental breach or the seller disregards the additional period of time fixed by the buyer in accordance with Art. 47(1), the buyer has an immediate right to declare the contract avoided, but he is not bound to make use of this remedy. He can, if he wishes, resort to other remedies.[366] However, it is to be noted that this does not necessarily apply where the failure in performance is due to a supervening event for which neither party is contractually responsible. Such an event may lead to automatic discharge, but this differs from termination for contractual default, most obviously in that it excludes all claims for damages.

Under the Convention, termination of the contract is always at the option of the aggrieved buyer. He is under no duty to give the defaulting seller prior notice of the proposed avoidance or to give him an opportunity to provide an assurance of performance.[367] He is also not required for this purpose to resort to a court's judgement,[368] and the court is not allowed to give a period of grace to the defaulting seller (Arts. 45(3) and 49). It is in his hand to exercise, if he wishes, unless he has lost his right under the Convention.

2.4.2. Electing to Terminate the Contract

Termination under the Convention in all cases can be effected by a simple declaration of the buyer to the seller.[369] If the injured buyer does not declare the contract avoided, the contract continues in force. Under the Convention, the avoiding buyer must affirmatively declare that he avoids the contract and must transmit advice of his decision to the seller by an appropriate means of communication (Arts. 26, 27). There must be a positive act on the part of the buyer to declare his intention to terminate. This principle is of a general nature applicable to all cases of avoidance under the Convention, whether it affects the whole contract or only part of it, and irrespective of whether it is based on an actual or anticipatory breach.

Unlike in the case of acceptance of an offer, where the Convention puts the risk of loss, etc. on the person sending the acceptance (i.e., offeree), Art. 27 lays down the opposite principle (i.e., the dispatch principle) as governing any notice, request or other communication, unless otherwise expressly provided in the Convention.[372] The risk therefore is prima facie on the person to whom the communication is addressed. Accordingly, what the buyer is required to do is to declare his intention to avoid the contract by an appropriate means. It is assumed, however, that failure to comply with the method of transmission does not mean the nullity of the notice; it simply means that a party who gives it in an inappropriate means would run the risk of its transmission if, for instance, it fails to arrive in time.[373] The notice has to make clear to the seller that the contract is avoided. Although the degree of clarity required in the notice is not clearly ascertained,[374] in a Convention case,[375] a German court provided guidance with respect to the type of declaration that must be made in order for the contract to be avoided in accordance with the Convention's provisions. First, the court by implication recognised the use of telex or fax as a proper means to declare avoidance. Second, and more significantly, the Court concluded that a party declaring a contract avoided need not use exact language, such as, "I hereby declare our contract avoided." Rather, the Court acknowledged a more pragmatic form for declaration of avoidance, that is, that the communication must contain language which clearly operates to put the party in breach on notice that the party not in breach will no longer fulfil. In that case, the buyer had informed the seller that the shoes remaining to be made would be made by another Italian company and that their joint venture under the contract for sale of shoes had ended. This notice was regarded by the court as sufficient for an effective declaration of avoidance.[376] Likewise, in another case, a German court stated that the buyer's refusal to take delivery would suffice.[377] This would be the case where termination is based on the late delivery, since refusal to accept has a clear meaning. However, the meaning would not be clear where the buyer simply rejects defective goods, for rejection could be understood as a demand for replacement goods under Art. 46(2).

2.4.3. Election of Affirmation

The Convention provides a number of circumstances in which the buyer may be treated as having affirmed the contract and as a result has lost his right of termination. These circumstances can be divided into three general categories: (a) failure to notify the seller of the lack of conformity in accordance with Art. 39; (b) lapse of a reasonable time without giving notice to the seller of his avoidance (Art. 49(2)),[378] and (c) restitution of the goods becoming impossible (Art. 82)).

Under the first rule, the buyer may lose his right to reject the non-conforming delivery and terminate the contract if he does not give notice to the seller specifying the nature of the lack of conformity within a reasonable time after he has discovered or ought to have discovered it (Art. 39(1)).[379] Similarly, in the case of latent defects, he may lose his right under this rule if he does not give the seller notice thereof at the latest within a period of two years from the date on which the goods were actually handed over to him, unless this time-limit is inconsistent with a contractual period of guarantee (Art. 39(2)).

Under the second rule, the buyer may lose his right where the time limit expires. In the case of late delivery, the time runs from the buyer's becoming aware that delivery has been made (Art. 49(2)(a)). In the case of any other breach, it runs either from the moment when the buyer knew or ought to have known of the breach (Art. 49(2)(b)(i)); or, where he has given a notice under Art. 47(1) requiring the seller to perform within a reasonable period of time from the expiration of that period, or from the seller's declaration that he will not perform his obligations within that period (Art. 49(2)(b)(ii)).

A further general rule is that the buyer may lose his right of termination if he cannot restore the goods in substantially the condition in which he received them (Art. 82(1)). Thus, he may lose his right if he has consumed, altered or resold the goods to a third party, provided that he has done so after he discovered or ought to have discovered the lack of conformity (Art. 82(2)). One may argue that acts such as sale, pledge or any other disposition of documents by the buyer may be placed in this category, since dealings with the documents controlling the goods will usually place them out of the buyer's control. This may be the case where he transferred the documents representing the goods or pledged them to the bank for credit. In both cases, he will hardly be able to reject the goods unless the sub-buyer himself rejects, or in the case of pledge, the pledgee approves rejection of the goods. Accordingly, unless the sub-buyer rejects or the buyer pays off the bank to obtain release of the documents, he will not be able to enforce his right to reject because of the impossibility of returning the goods to the seller.

However, he will retain his right where the impossibility of restoration was not caused by his acts or omission (Art. 82(2)(a)). Similarly, he will not lose his right by this method where it was due to examination of the goods in accordance with Art. 38 (Art. 82(2)(b)); or was because of reselling the goods in the normal course of business, consuming or transferring them in the course of normal use before he discovered or ought to have discovered the lack of conformity (Art. 82(2)(c)).[380]

2.5. Effects of Termination

As in English law, under the Convention, termination affects the legal life of the contract and the contractual relationship of the parties. In the following, the effects of termination on both the contract, rights and duties of the parties will be referred to in brief.

2.5.1. Effects on the Contract

As regards the question whether termination has retrospective or prospective effects on the contract, it is hard to say that the Convention adopted any single approach.[381] This is because it provides, on the one hand, that avoidance releases both parties from the obligations they have undertaken under the contract without affecting any rights to claim damages caused by breach. It also emphasises that avoidance does not affect any provision of the contract concerning dispute-settlement mechanism (arbitration and forum or re-negotiation clauses)[382] or any other provision of the contract governing the rights and obligations of the parties consequent upon the avoidance of the contract, such as liquidated damages and penalty clauses or clauses restricting or excluding liability (Art. 81).[383] On the other hand, the Convention requires both parties to return all benefits of possession (profits and advantages of use). If the seller is required to return the price, he must also pay interest from the date on which the price was paid. Similarly, in contrast to the seller who is bound to pay interest on the refundable price, the buyer is only required to account to the seller for all benefits which he has actually derived from using the goods or part of them (Art. 84(1)).[384] In addition, it imposes on the parties reciprocal duties of restoration (Art. 82). An obvious example of adoption of the retrospective effect of termination by the Convention can be found when an instalment contract is entirely terminated after delivery of some defective instalments. Under this provision, all instalments are to be returned even though some of them are perfect. These instances reveal that, although the Convention does not pose the problem in abstract terms of retrospectivity, its wording implies retrospective effects of avoidance. Accordingly, it can be said that the Convention has adopted a quasi-rescission and not a real one, that a contract becomes void ex tunc, as in the context of defects of consent.

2.5.2. Effects on Rights and Obligations

Under the Convention, termination releases both parties from their primary contractual obligations: The seller is not required to perform his delivery obligation and the buyer is under no duty to pay the price (if he has not paid in advance) and accept the seller's performance.[385] However, the injured buyer retains his claim for damages caused by the seller's breach before the avoidance (Art. 82(1)). After the contract is validly terminated, both parties have a right to claim restitution from the other party of whatever he has supplied or paid under the contract. If both parties are bound to make restitution, they must do so concurrently (Art. 81(2)).[386]

1. Withholding Performance

1.1. Introduction

As indicated above, Iranian Civil Code and Shi'ah jurists have in some instances recognised that the buyer who is aggrieved by the seller's breach is entitled to withhold performance. However, the position of the right to withhold performance as a general right is not quite clear. For instance, in the case of the seller's failure to deliver mabi', the Code and the jurists speak of haqq-e-habs, whereas in the case of seller's non-conforming delivery they talk of haqq-e-radd. Apart from using different terminologies, they have not answered the question whether the latter is a particular form of a general right to withhold performance, or something else. And if it is not so, on what ground should it be based?

It seems that the availability of this remedy, as a general rule, should be analysed on the division of contracts into u'qoud mua'wwad (synallagmatic contracts) and u'qoud qayr-mua'wwad or tabarrou'i (nudum pactum), on the one hand, and classification of contractual obligations into eltezam-e-asli (literally, principal obligation) and eltezam-e-fare'i (literally, collateral or subordinate obligation), on the other hand. For, as will be seen later in detail, Iranian lawyers and Shi'ah jurists have justified the remedy of refusal to perform on the ground of the theory of mutuality of obligations, on the one hand, and have said that such mutuality only exists between principal obligations rather than between them and subordinate ones, on the other hand.

Accordingly, before entering into examination of the circumstances in which this remedy may be available, it seems necessary to consider two preliminary issues: classification of contracts and classification of contractual obligations. The topics have ramifications that go beyond the scope of this essay, but there will be an attempt, so far as intelligibility allows, to limit the discussion to that which exploration of this remedy requires.

1.1.1. Classification of Contracts

One of the significant classifications of contracts is the distinction between mua'wwad and tabarrue'i contracts. Under the first type, both parties to the contract undertake an obligation. The contract of sale is a typical mua'wwad contract in Iranian civil law and Shi'ah jurisprudence so that almost all rules applicable to such contracts are examined under this heading.[387] In contrast, under the second category only one of the parties undertakes an obligation to do or forbear to do something.[388] U'qoud mua'wwad themselves are divided into two divisions. Under the first division, the contract is only bilateral, in the sense that each party undertakes an obligation,[389] whereas under the second, the contract is not only bilateral but has the characteristic that each party undertakes an obligation vis-à-vis the other party because the latter has undertaken an obligation in his favour.[390] It follows that each party's duty is tied to the other's.[391]

As far as the remedy of withholding performance is concerned, the latter is the most significant category. The synallagmatic nature of such contracts is said to be "generic" and "functional." The first concept refers to the creation of the contract (in the sense that it will fail to come into existence if either of the two promised performances is impossible)[392] and the second to its performance, i.e., failure by one party to perform his part of the promised exchange will justify the other party's refusal to perform.

1.1.2. Classification of Contractual Obligations

The parties' obligations under a reciprocal contract are classified into two general categories: eltezam-e-asli (principal obligation) and eltezam-e-far'ei (collateral or subordinate obligation).[393]

1.1.2.1. Eltezam-Asli (Principal Obligation)

The term is used to describe those obligations which constitute the heart of the contract and play a central role for making the contract. As an example, in a sale contract the basic aim of the seller and buyer is to exchange the goods against the price. On this basis, the seller's duty to deliver goods and the buyer's duty to pay the price are regarded as "principal" obligations.

Referring to this concept, the Iranian Civil Code [394] and the jurists have concentrated only on the seller's duty to deliver the subject of sale and the buyer's duty to pay the price; they have failed to answer the question whether the buyer is under a further principal duty to accept (not reject) the goods the seller delivers in performance of the contract. It seems that this is a crucial question, a clear answer to which will clarify the position of the buyer's right to reject the non-conforming delivery (i.e., haqq-e-radd) under this legal system. As will be explained later, the buyer's duty to accept the seller's delivery should be regarded as a principal obligation which is undertaken in exchange for the seller's duty to deliver in accordance with the contract terms. Accordingly, these two obligations should also be regarded as principal obligations under a sale contract.

1.1.2.2. Eltezam-e-Far'i (Subordinate Obligation)

The theory of "subordinate obligation" and its relation to the principal ones, in particular, the effects of void subordinate obligations, is one of the most complicated and controversial areas of Iranian and Shi'ah contract law. A full consideration of the issue is beyond the scope of the present research and requires a separate work. However, as far as the remedy of withholding performance is concerned, some significant aspects of the theory will be examined.

"Subordinate" obligations refer to those obligations which are technically collateral to the principal obligations. In the language of the jurists, they are those contractual obligations which are not exchanged with the principal obligations, but whose main role is to restrict or determine the scope of the principal obligations. For instance, Shaykh Murtada Ansari, a leading Shi'ah jurist, observes:

"Shart (subordinate obligation) is only for the purpose of conditioning a principal obligation. It is not exchanged with a part of the consideration. The exchange is only made between two considerations (goods and price). Condition (in his words, qayd) is not regarded as property (mal) to be exchanged with other property, although the value of consideration may be changed for it."[395]

"Subordinate" obligations are often described by the term shart, pl. shurout (stipulation within the contract).[396] As the term "condition" in English law which is used in different meanings, the term shart in Shi'ah law is used in different senses.[397] As far as the present study is concerned, the most important meaning of the term is that which is used to describe an eltezam (covenant or agreement) within another eltezam (a main covenant).[398] Shart in this sense is divided into: (1) shart-e-sefat; (2) shart-e-fe'l; and (3) a third type, shart-e-natijah, which is not relevant to the present study.[399]

     (I) Shart-e-Sefat. The expression is used to refer to any term indicating characteristics which define the subject-matter of contract, such as terms indicating the quality,[400] quantity and other characteristics.[401] The expression "shart-e-sefat" is, however, only used in the case of sale of specific goods. In a sale of unascertained goods, it is said that use of the term is technically inaccurate.[402] The reason is that where the contract is for unascertained goods, a promise about quality, etc. defines the seller's duty to deliver rather than the goods, since the goods to be used in performance of the contract are not yet identified by the contract terms. The seller's statement of quality, etc. must be a promise relating to his future conduct -- "I will deliver goods of a certain quality" -- not a promise of existing fact.[403] Accordingly, such a duty is in fact to be placed into the category of shart-e-fe'l rather than shart-e-sefat.[404]

     (II) Shart-e-Fe'l. This expression is used to describe terms indicating a promise to do or refrain to do something.[405] Unlike shart-e-sefat which is commonly used to refer to all descriptions made in defining the subject-matter of the contract, shart-e- fe'l is used to refer to an obligation undertaken by one of the contracting parties within a contract to perform or refrain from doing a particular act. Any shart requiring the promisor to do a positive act in favour of a contracting party or even a third party is placed into this category. Accordingly, a seller's obligation to ship the goods within the contract time, or to notify the buyer of the consignment where the goods are not clearly identified to the contract, or a c.i.f. seller's obligation to arrange a contract with a carrier for transportation of goods to the buyer's destination, or his duty to make a contract with an insurance company to insure the goods in transit as well as his obligation to transfer the relevant shipping documents are to be placed into this category.

1.2. Buyer's Right to Withhold Performance

As pointed out above, although in the case of the seller's failure to deliver goods, the Iranian Civil Code and the jurists have expressly recognised that the aggrieved buyer has a right to refuse to perform his payment obligation, they have failed to answer the question whether he has a general right to withhold performance of his obligations where the seller has failed to perform his delivery obligations in accordance with the contract terms. Whether the buyer has or has not a general right to withhold performance without being required (and in some cases without being entitled) to terminate the contract seems to be analysed on the legal bases upon which the jurists have justified the buyer's right to refuse to pay. Examination of them will help one understand whether or not the logic behind the right is of general application.

1.2.1. Theoretical Bases of the Right

Although the Iranian Civil Code does not refer to, and the jurists have not examined, the legal base of haqq-e-habs in detail, the jurists have occasionally referred to the legal ground upon which this right is to be based. In this respect, some jurists have observed that the right is to be justified on the ground of the theory of shart-e-demni (implied stipulation). That is to say, at the time of making the contract, as each party expressly undertakes an obligation to do something in exchange for the other's undertaking, each of them also impliedly promises to perform his obligation simultaneously in exchange for the other party's performance. For instance, the late Shaykh Ansari says:

"Some jurists have expressly said that there is no dissenting view between Shi'ah jurists as to 'haqq-e-habs' for a party where the other has refused to perform. This is perhaps because the contract of sale is based on the 'concurrent performance'. That is, two performances must be made in exchange of each other. Accordingly, either party has undertaken to perform his obligation at the same time as the other performs and he is allowed to refuse when the other refuses."[406]

In contrast, some statements can be found which show that some jurists are inclined to justify the right on the theory of mutuality of obligations; the right of refusal is justified by the very nature of a a'qd-e- mua'wwad. For instance, Shaykh Muhammad Hassan Najafi (Saheb Jawaher), in justifying the view that the performance of counter-obligations must be made at the same time, observes that it is because of the reciprocal nature of transaction.[407] Similarly, the prominent Shi'ah jurist, the late Mirza Habibullah Rashti, explains this doctrine in clearer words:

"One of the well-accepted principles between Shi'ah jurists, as they stated in the contract of sale as a typical synallagmatic contract, is that the nature of reciprocal contract requires that two performances must be made concurrently."[408]

As was seen, the first approach is based on a presumed mutual agreement on the part of the contract makers. It seems, however, that it is hard to prove that in any case it is impliedly agreed that the parties will perform at the same time. Although the parties at the time of concluding the contract are thinking of an entire performance of the obligations which they have undertaken, it adds nothing to the common concept of the reciprocal contract. To gain and benefit from the other party's performance is, indeed, the motive of each party in making the contract. But, that does not mean that the parties have in fact mutually agreed to perform their obligations concurrently in exchange for each other.[409] Thus, it seems that the best way to justify the right is to analyse it on the basis of the nature and definition of a synallagmatic contract. As explained earlier, a'qd-e- mua'wwad consists not merely of two separate obligations, but contains the exchange of two reciprocal promises at the stage both of formation and of performance of the contract. In both stages, the parties' counter-obligations are correlated together.

     (I) Consequences of Correlation of Obligations. The correlation of the parties obligations under a synallagmatic contract has a number of consequences, the most significant being that these obligations are exchanged with each other, both at the stage of formation of contract and at the stage of performance. Failure of one of them at the stage of formation may result in the nullity of the contract and, at the stage of performance, any failure on the part of one contracting parties will entitle the other to withhold performance of his part.[410]

     (II) Correlation of Obligations and Subordinate Obligations. However, as already stated, the common view is that the correlation only exists between the principal obligations. The subordinate obligations are only for the purpose of defining the principal obligations. They only influence the parties in making the contract and from the point of view of their mutual intention they are less important, even though they may in fact be more significant. They are not exchanged with the principal obligations, or part of the principal obligations. For this reason, it is said that where the parties to a contract of donation make a stipulation within the contract that the donee is to do some thing in favour of the donor, it will not change the nature of the contract of donation into a reciprocal contract. This is because the mutual intention of the parties is that the subject-matter of the "condition" is not exchanged with that of the donation contract, even though it costs much more than the subject-matter of the contract of donation.[411]

1.2.2. When Can the Buyer Withhold?

Having examined the concept of the remedy and its legal bases in general, it is now time to answer the question: When is the buyer entitled to withhold performance of his obligation on account of the seller's breach? As seen above, where the seller wholly fails to deliver, the buyer may refuse to pay the price as long as the seller's refusal continues. However, the position is not quite clear when the seller performs his delivery obligations in a way which does not conform with the contract conditions. The following discussion will try to ascertain in what circumstances the buyer may be entitled to withhold performance of his obligations on account of the seller's non-conforming delivery.

1.2.2.1. Non-Conforming Delivery

As already indicated, Iranian Civil Code and Shi'ah jurists simply say that if the seller delivers non-conforming goods the buyer is entitled to reject them, but they do not explain why, or what degree of non-conformity will entitle him to do so. The question may become more serious taking into account the fact that the Iranian Civil Code and the jurists have only recognised the right of refusal (haqq-e-habs) where a reciprocal obligation is broken, whereas, non-conformity is always caused by breach of a contract term (shart) which is commonly regarded as a subordinate obligation. In the absence of a clear legal and jurisprudential statement, it is therefore necessary to examine the case on the basis of general principles prescribed above.

A close examination of the relevant provisions of the Iranian Civil Code and the jurists' judgements in respect of the buyer's right to reject the non-conforming delivery, on the one hand, and the principle of correlation of reciprocal obligations, on the other hand, demonstrates that the buyer has a general right to withhold performance of his obligation under certain circumstances where the goods delivered do not conform with the contract requirements. However, the crucial task is to determine whether or not the seller's duty to deliver the goods in accordance with the contract terms is a reciprocal duty and if it is so, with what duty of the buyer it is exchanged.

1.2.2.2. Non-Conforming Delivery and the Theory of Eltezamat-e-Mua'wwad

As explained above, a common understanding among Shi'ah jurists is that all obligations arising from shurout within a sale contract (as a typical synallagmatic contract in Shia'h jurisprudence) are subordinate obligations rather than reciprocal duties, although undertaking such obligations may result in a considerable increase of the amount of the other party's obligations. Therefore, there would be no bilateral correlation between those obligations and the principal obligations the contract itself requires. As a result, failure to perform them will not in principle give the aggrieved promisee haqq-e-habs.[412] For example, the seller's obligation under a shart indicating the required quality, quantity, time performance and other specifications of the goods sold is not regarded as a principal obligation or part of such an obligation which is exchanged with the buyer's duty to pay the price or some part of it but simply defines the seller's duty to deliver.[413] On this construction, it is said that the seller's failure to deliver goods in accordance with the contract terms does not entitle the buyer to haqq-e-habs.[414] Nevertheless, almost all of them accept the view that where the seller delivers goods contrary to the contract description or quality, the buyer is entitled to haqq-e-radd (reject the goods). But they do not explain the nature of the right to reject the seller's non-conforming delivery and the reason why the buyer is entitled to such a right.

The crucial point is, therefore, to determine the legal ground upon which the buyer's right to reject is based. Analysing this right shows that it is not a separate remedy but is in fact a form of the general right to withhold performance, justified on the basis of the theory of correlation between two reciprocal obligations, that is, the seller's duty to deliver goods in accordance with the contract terms and the buyer's duty to accept such a delivery. The common view, concentrating on the buyer's duty to pay the price in exchange for the seller's duty to deliver goods, fails to take into account the buyer's duty to accept what the seller renders in performance of his delivery obligation. It is true that the seller's obligations under shurout are not exchanged with a part of the buyer's reciprocal duty to pay the price. However, the position is not so clear in respect of the buyer's duty to accept what the seller tenders in performance of his delivery obligation. A close analysis of the nature and definition of the sale contract as a synallagmatic contract demonstrates that both the seller and buyer are under two reciprocal obligations against each other.

To explain, although Iranian Civil Code and Shia'h jurists have not expressly addressed the buyer's duty to accept the seller's delivery, it seems that a validly concluded sale contract imposes such an obligation on the buyer.[415] The buyer's obligation to accept can be proved by the following reasons. First, in the context of a contract for sale of unascertained goods, where the seller's tender does not conform to the contract terms, the buyer is given a right to reject it and request a further tender, whereas if the seller's tender conforms to the contract terms, the buyer is not entitled to reject.[416] Acceptance of the fact that in some cases the buyer is not entitled to reject the seller's tender shows that he has a duty to accept it. Second, where the buyer rejects the seller's conforming tender, the seller is entitled to apply to the court to require him to accept them.[417] It can also be proved by the principle of ufou bel u'qoud.[418] The buyer's refusal to accept the seller's delivery would be a contravention of the contract and against the above principle.

However, the question is for what duty of the seller is this duty exchanged? It seems that such an obligation is undertaken in exchange for the seller's obligation to perform his delivery obligation in accordance with the contract terms. Put in other words, a sale contract imposes on each party two reciprocal obligations vis-à-vis the other. The seller is required to deliver the goods and to ensure that the delivery is in accordance with the contract terms and the buyer is also obliged to accept them and pay in exchange for such a performance. These two obligations on the both sides are to be performed at the same time. Thus, as long as the seller has not delivered goods corresponding with the contract requirements, the buyer cannot be required to perform his acceptance obligation.

1.2.2.3. What Degree of Non-Conformity Gives Rise to the Right?

Assuming that the buyer has a general right to refuse to accept the seller's non-conforming delivery, a further question is: Under what circumstances is the buyer entitled to refuse to accept it? Can he reject for any non-conformity or only where the non-conformity attains a certain degree of seriousness? No clear statement can be found in Iranian civil law and Shi'ah jurisprudence in this connection. The only thing which may afford some help for this purpose is the jurists' discussions about the concept of a'yb (defect) which gives rise to the "option of defect" (kheyar-e-a'yb) including the right to reject and terminate the contract. In that case, after great efforts to produce a precise definition for the term "a'yb" giving rise to the "option of defect," they eventually adopted the view that the case must be referred to the court to decide according to the relevant custom (u'rf).[419] However, as their discussion shows in that case, the given criterion has only been applied to ascertain whether the goods delivered are defective or not. It has not been extended to the case of other lack of conformity. In addition, they have examined it under the heading of "the option of defect" under which the buyer is given the right to reject the defective goods and terminate the contract. They have not distinguished between the right to reject and that of termination. Apparently, the same defect which gives rise to the right of rejection entitles the buyer to terminate the contract. Third, since the option of defect, as will be seen later, is only applied to the case of specific goods, the position of unascertained goods is not clear. As will be seen in detail in the second part, in the case of unascertained goods the buyer is only given a right to refuse to accept the non-conforming tender. But, it has not been made clear for what non-conformity the buyer should be given a right to reject.[420]

One may argue that the general theories explained as to the case of non-delivery should be applied to the case of non-conforming delivery, since, as described above, rejection is a form of the remedy of withholding performance. Adoption of each of the two above-mentioned theories would result in different consequences. If it is accepted that withholding performance is to be justified on the basis of the theory of shart-e- Àemni (implied stipulation), any lack of conformity will entitle the buyer to reject. In contrast, if the second approach is adopted it cannot be said that the nature of the reciprocal contract requires that any party should have the right to refuse to accept the other's performance for any lack of conformity. However, assuming that custom, as the jurists suggest in the case of defective delivery, is a general criterion applicable to all cases, custom may afford some criterion. On this approach, it is suggested that the buyer should not be given a right to reject for minor non-conformity but only where the lack of conformity attains such a degree of seriousness that it is not customarily ignored. This suggestion not only favours safeguarding the contractual relationships against minor non-conformity but also can be justified on the basis of the general principle of ufou bel u'qoud under which the buyer is obliged to accept the seller's delivery. This principle should be disregarded only when the lack of conformity between the contract goods and that actually delivered attains some degree of seriousness, since it is in such circumstances that the principle of la darar [421] comes into operation and allows the buyer to treat himself as discharged from his duty to accept. Whereas, when the non-conformity is minor it is doubted whether the buyer is required to continue his performance. In such a situation, the principle of isteshab comes into operation in favour of the principle of ufou bel u'qoud. Accordingly, it is suggested that in any case, the court should look at the effects of the non-conformity to ascertain whether they are such that rejection would be customarily unreasonable for the buyer. If so, the buyer will not be able to justify his rejection.

If this suggestion is accepted, the buyer's right to reject the seller's non-conforming delivery should be distinguished from his right to treat himself as discharged from the contract and to terminate it. Termination, as will be seen later, is an exception to the principle of ufou bel u'qoud and will be justified by taking into account various factors, such as the actual and foreseeable darars, the seller's ability and willingness to cure and the practicality of requiring the seller to perform his obligations.

1.3. Special Cases

The preceding discussions were concerned with the buyer's right of refusal where the seller delivers the right quantity of goods none of which conforms to the contract. The present discussion deals with the cases where the seller (a) delivers the whole contract quantity but only part conforms to the contract or (b) delivers the wrong quantity. In this case the following questions arise:

The Iranian Civil Code and the jurists have not addressed directly the question whether the buyer has the right to withhold performance of his obligations where the seller has delivered a partially non-conforming delivery. What the jurists have discussed is whether the seller's partially defective delivery would result in the right to terminate a contract for sale of specific goods. However, in that case no jurist has disputed the buyer's right to reject and terminate the contract as a whole. Any dispute is concerned with the buyer's right to terminate the contract as to the part affected.[422] A number of the jurists suggest that the buyer can only accept or reject all, and may not accept the conforming part and reject the non-conforming part.[423] In contrast, others suggest that the buyer is entitled to reject non-conforming goods and retain the rest.[424] However, as their discussions show, the subject of discussion is only the case where the seller of specific goods has delivered goods some of which do not conform to the contract quality. They have not addressed the case where the seller of unascertained goods has tendered goods only part of which conform to the contract conditions, or where the seller of specific goods has delivered goods part of which does not conform with the contract terms other than the quality requirement.

A general look at their discussions as to the issue shows that the subject of discussion has not been clarified. There is some confusion between several entirely different issues. Accordingly, in order to answer the questions it is necessary to determine the reason why they have taken different opinions. What is certain is that where the contract is for sale of a non-severable item, any breach of contract conditions in respect of any part of it will be treated as a breach of the whole contract giving rise to a right to reject it. In such a case, almost all the jurists have no doubt that the buyer should not be given the right to accept the conforming part and reject the non-conforming part.[425] Conversely, where the contract is for sale of several identified things each of which is exchanged for a certain portion of the contract price, it has not been questioned that the buyer is entitled to do so.[426] In fact, in such cases there are a series of certain separate contracts each of which has a separate subject-matter. The main debate of the jurists is in fact concerned with the case where the seller is required to deliver a severable consignment such as 1,000 cars against a fixed total price without specifying that a certain part of the consideration is exchanged with some part of the subject of sale. In such a case, where the seller has delivered a consignment, part of which does not conform with the contract conditions, the question arises whether the buyer is entitled to keep the conforming part and reject the non-conforming part or must either reject or accept all. This is the case where some of the jurists favoured the partial rejection and others disagreed.[427]

It seems that the different views are in fact due to whether or not the mere severability of the subject-matter of contract makes the contract itself severable. The question of what contracts are severable has not been clearly examined by Shi'ah jurists. As it appears from their discussions as to the buyer's right to terminate the contract in respect of the defective part, the mere severability of the subject of sale does not suffice for a contract to be severable.[428] Shaykh Ansari gives a general criterion for this purpose. He says:

"Where more than one consideration is mentioned within the contract, the contract would be regarded severable.[429]

However, others have questioned this criterion. According to them, a contract would be regarded as severable where both parties' performances are severable.[430]

It seems that what is required to make a contract severable is that it can be severed in terms of performance so that there is severability of performance on one side and consideration for each partial performance on the other, thus creating a contract within a contract and making delivery of each severable part a separate, self-contained part of the delivery obligation.[431]

On the basis of the above criterion, where a contract is construed as severable, any breach as to a severable part will in fact amount to a breach of the subsidiary contract relating to that particular part, and consequently, the buyer will only be entitled to reject the subject of this subsidiary contract. Whereas, if the contract is construed as non-severable the buyer has no partial-rejection right, he is only entitled to reject all or accept all. Accordingly, it is the court's duty to decide according to the circumstances of any case and the terms of the contract itself whether there are several subsidiary contracts within a main contract or only a single contract.

The point which deserves to be noted here is that the jurists have not addressed the question under what circumstances the seller's breach of contractual obligations as regards a severable part may entitle the buyer to refuse to accept it. It seems that the general principles applicable to non-severable contracts should apply to each severable part. That is to say, for remedial purposes each severable part is to be regarded as the subject of a distinct contract, although within a main contract and the principles applied to a contract containing a single delivery obligation apply to such a subsidiary contract.

1.3.2. Wrong Quantity Delivery

The question whether or not the seller's wrong quantity delivery can give the buyer the right to refuse to accept has not been separately addressed by the Iranian Civil Code and the jurists. What they have addressed is whether breach of a quantity term would result in the right to terminate a contract for sale of specific items.[432] However, in that case no jurist has disputed the buyer's right to reject and terminate the contract as a whole. Any dispute is concerned with the buyer's right to terminate the contract as to the missing part.

Nevertheless, it is not clear whether the buyer can reject for any shortfall or excess. There is no rule such as the English de minimis rule or the test of "unreasonableness" provided by s. 30(2A) of the English Sale of Goods Act 1979 for commercial contracts. Accordingly, it might be thought that in Shi'ah law the buyer may reject for a minor non-conformity with the quantity stipulation.

1.3.3. Seller's Failure as Regards the Shipping Documents

In the context of international sale transactions, the seller's duty to arrange the proper shipping documents and transfer them to the buyer is of great importance. As in the case of goods, the seller may fail to render the relevant documents to the buyer in due time or the handing over may be contrary to the contract conditions. As indicated above, neither the Iranian Civil Code nor any Shi'ah jurist has addressed the question. It is therefore important to answer the question: How can such an issue be analysed within the principles prescribed above? The issue raises a number of questions:

Some of these questions will be considered later. In this part, the right of refusal will be discussed.

1.3.3.1. Non-Delivery

In Iranian civil law and Shi'ah jurisprudence, the seller's duty to prepare and hand over proper shipping documents seems to be analysed on the basis of the doctrine of shart-e- fe'l, i.e., a stipulation requiring the promisor to perform a particular act in favour of the promisee. In this way, the first question which arises is whether the seller's duty concerning the shipping documents is a subordinate obligation or a principal one.

A close analysis of the parties' common intention in respect of the arrangement and delivery of shipping documents demonstrates that this duty is a reciprocal obligation which is fully correlated to the buyer's payment obligation. Furthermore, common sense and custom governing documentary sales confirms that the seller's duty to prepare and hand over the required documents is of such a character. The parties to a documentary sale contract, in fact, deal with documents. The seller receives the price by placing at the disposal of the buyer the shipping documents with which the buyer can sell or pledge the goods while they are in transit. Therefore, in the parties' view, tender of the documents under such contracts is no less important than the delivery of the goods themselves in an ordinary sale contract.

The other question posed here is whether if the seller fails to hand over some of the relevant documents, the buyer can refuse to take delivery and suspend payment of the price. It is suggested that the buyer should be given such a right, since the customary understanding of a documentary sale is that the buyer only pays for the full set of documents. The rule seems more clear where payment must be made by documentary credit under which the bank will refuse to pay the seller if the whole documents are not tendered as required by the contract.[433]

1.3.3.2. Non-Conforming Delivery

The crucial question is concerned with the situation in which the seller hands over documents which do not conform to the contract, as for instance, where the seller under a c.i.f. contract hands over a bill of lading which does not provide existence of a valid contract of carriage from the port of loading to the port of destination, or is not clean, or does not show that the goods are loaded at the time and place required by the contract of sale, and so on. Is the buyer, in such a situation, entitled to reject the non-conforming documents and refuse to pay the price?

It seems that in such a situation the buyer should be given a right to refuse to accept the non-conforming documents. The legal justification for this view is that in a documentary sale transaction the seller is under a general obligation to prepare particular documents and hand them over to the buyer in accordance with the contract terms. The buyer is obliged to accept and pay in exchange for such a performance. As long as the seller does not tender such a performance, the buyer is not under any duty to accept and pay for them.

1.3.3.3. Two Rights of Rejections

From the above, it appears that the buyer under a documentary sale contract should be given the right to reject documents for defects on their face, whether they relate to the goods or to the documents themselves. The question then arises whether the buyer can reject the goods on arrival for defects in the goods having accepted documents representing them. It seems that where the defect is one which was not apparent on the face of documents, he should be entitled to reject because his acceptance of the documents was on the basis of the belief that the goods would be in accordance with the contract. However, where the defect was apparent on the face of the documents, he would be taken to have accepted the non-conforming goods on the doctrine of isqat (waiver) which is discussed when dealing with the circumstances under which the buyer may lose his rights to reject and terminate the contract.

2. Termination of Contract

2.1. Introduction

Iranian Civil Code and Shi'ah jurisprudence have based termination on a complex system of kheyarat (options).[434] Under this heading, the jurists have extensively examined various cases in which an aggrieved party may be entitled to terminate the contract. These cases differ from one book to another.[435] Some have gathered the options under five categories,[436] others under seven,[437] and a third group has gone further and talked of fourteen separate options.[438] However, it seems that the difference is in codifying the headings of options rather than in granting the aggrieved party the right to terminate the contract in those circumstances.[439] In order to have a general picture of the various circumstances identified in the leading text books, all of the options will be mentioned below:

Dealing with termination in this way caused a number of important questions to be left unanswered. First, it is not clear what is the relationship between the buyer's right to withhold performance and that of termination. More importantly, it has not been made clear what lack of conformity will entitle the buyer to terminate the contract. Third, notwithstanding that almost all jurists have accepted the view that where the seller of unascertained goods makes a non-conforming delivery, the buyer has only a right to reject, they have not addressed the question whether the seller has a right to cure, and if so, under what circumstances he can exercise his right.

It seems that the best way to deal with the issue is first to identify the grounds upon which the above-mentioned options are justified, and then to examine the options relevant to the issue in question on the basis of their proper rationale, and finally to evaluate the relevant options in accordance with their proper grounds.

2.2. Grounds for Termination

2.2.1. General Principle

It is commonly said that the right of termination in Iranian civil law and Shi'ah jurisprudence is an exception to the dictum "asl-e-luzoum-e- a'qd" (pacta sunt servanda) rather than a rule.[450] An obvious consequence of this principle is that so long as the performance of a binding contract is possible, the contracting parties are required to perform their contractual obligations. According to this principle, termination should be the last option given to a party aggrieved by the other party's breach. The victim of breach should be given a right to terminate only when he is not able to require the defaulting party to perform his obligations in accordance with the contract. The important question is that, if the primary principle is that as far as performance of the contract is practicable it should be made, on what rationale is one party entitled to terminate the contract unilaterally?

2.2.2. Grounds for Kheyarat

Although the jurists have not examined the issue in separate, a thorough consideration of the jurists' arguments in justifying the grant of the option to terminate reveals three general principles: rewayat, shart-e-demni and la darar. However, few of the above-mentioned options are solely based on particular rewayat.[451] Most of them are commonly justified on two general theories: that which bases the right of termination on shart-e-demni (which can be described in general as "respect to the mutual will of the contracting parties") and that which bases the right on the principle of la darar.[452] If in some cases it is seen that the jurists rely on some rewayat, it is to support the general principles rather than an exclusive rationale.

A number of jurists have suggested that apart from those options which are based on particular rewayat, an option to terminate the contract should in principle be justified on the basis of the contents of the contract itself.[453] The view is based on the idea that the law should not interfere in this respect but must simply confirm what the contracting parties have agreed on. If the contract is to be performed because the parties have so wished, the exception to the principle must be justified on the same ground. Basing the option to terminate the contract on such a subjective criterion, the supporters of this view have attempted in any case to ascribe the right of termination to the will of the contracting parties themselves.

In contrast, a considerable number of distinguished jurists have suggested that the option to terminate can also be justified on the principle of la darar. Historically, the principle has occasionally been relied on by some jurists,[454] and presently it is supported by a number of eminent jurists in respect of several options mentioned above.[455] According to this approach, one does not always have to seek a mutual agreement in order to justify the grant of the right of termination, but instead, to determine the scope of the contracting parties' mutual agreement and its performance.

On this approach, where an undue detriment is caused by the buyer's duty to carry on his own part under the broken contract, the principle of la darar comes into operation. Put in other way, the contract of sale is a binding (lazim as opposed to jaeiz) contract.[456] The principle of ufou bel u'qoud (fulfil your contracts) in principle obliges both contracting parties to accomplish their contractual obligations. However, where for the reason of the seller's default, luzoum-e- a'qd (literally, the decree of necessity to perform the contract) results in imposing an undue detriment on the innocent buyer, he will be released from such a detrimental decree on account of the principle of la darar.

     (I) Different Consequences of Three Principles. Notwithstanding that the jurists have occasionally referred to the grounds justifying grant of an option to terminate, they have not addressed the issue that different consequences may follow from applying one principle rather than the other. For instance, when a party is given the right to terminate the contract because a particular rewayat so authorizes, the scope of the right should be ascertained in accordance with the express language of that authority. It cannot be extended to analogous cases. In contrast, if the option to terminate is to be based on the second principle, any breach of a shart-e-sefat or fe'l, whether express or implied, will give rise to an immediate right to terminate the contract even though the consequences of the breach are slight or even cause no loss. For example, a delay of one day in delivery or a slight non-conformity of the seller's delivery with the contract description will entitle the buyer to terminate the contract on the option of the "unfulfilled condition" and that of "incorrect description," respectively. Such a drastic effect is justified simply on the basis that the contracting parties themselves have wanted it. Whereas, if it is accepted that an option to terminate the contract should be justified on the third principle, the buyer should only be entitled to terminate the contract when performance of the breached contract becomes detrimental. It is only in such a case that the principle of la darar comes into operation and restricts the decree of luzoum-e- a'qd to the cases where the contract is not harmful at the time of election of the remedies.[457]

     (II) Preferred View. As pointed out above, rewayat have no significant role in justifying the option to terminate the contract. Few options can be found which are solely based on rewayat. Even in cases where certain rewayat are available,[458] the jurists are inclined to see them as ancillary reason rather than the main reason. For this reason, in those cases they try to justify the relevant option on one of the two other principles.

Similarly, although it is possible to infer under certain circumstances a mutual intention on the part of the contracting parties that in the case of any breach by one of the parties the other has a right to terminate the contract, it is hard to say that in all cases such an agreement can be inferred. Although receiving the required characteristics in the subject-matter of the contract or the actual performance of promises by the seller has a significant role in inducing the buyer to make the contract, it is not such that it can be inferred that in any case they have impliedly agreed that, if the buyer is deprived of the seller's actual performance, he will have an option to terminate the contract, because the contracting parties normally contemplate performance of the contract rather than seeking ways to evade performance.[459]

Furthermore, ascription of the option to terminate the contract by mutual agreement means that any contract containing a shart-e-sefat or fe'l consists of an implied undertaking that any breach of the shart gives the innocent buyer a right to terminate the contract, while a thorough interpretation of the contract [460] and the common understanding does not accept such a fictitious analysis. Moreover, adoption of the view would produce the unacceptable result that all the options must be regarded as applications of the "option of condition," whereas the supporters of the view themselves make a distinction between the option of condition and the other options.[461]

The option to terminate is therefore to be justified primarily on the theory of interference of the law in order to protect the party who suffers from the other party's violation. According to the principle of la darar, the law should not disregard the losses an innocent buyer may incur due to the seller's breach. Accordingly, the law, respecting the lawful expectations of the innocent buyer from the contractual obligation broken, should give him a proper means to protect himself against the seller's breach.

From what has been stated above, it can be said that no one ground can justify all the options provided under the Iranian Civil Code and Shi'ah juriprudence, but the most important of the three grounds is the principle of la darar.[462]

     (III) Criterion for Application of the Principles. Application of the first principle does not cause much difficulty. In any case, it has to be proved that a particular rewayat allows the aggrieved party to terminate the contract. When it is established, he will be entitled to terminate, whether the breach be minor or substantial. However, as pointed out above, few options are purely justified on the rewayat. Similarly, when termination is based on the second principle, the aggrieved party has an absolute right to terminate the contract. In that event, the main issue is to show that perfect performance was the condition of the non-breaching party's duty to perform and that it was impliedly agreed that any lack of conformity would entitle him to terminate the contract. It has to be done by construing the contract in the light of the terms of the contract and the surrounding circumstances.

However, application of the third principle may cause some difficulty. The jurists, when referring to the principle, simply say that, if performance of the broken contract becomes detrimental for the innocent buyer, the principle comes into operation and discharges him from performing the contract. But they do not explain what degree of detriment will be sufficient for the principle of la darar to come into operation. It is hard to find a general statement in Shi'ah jurisprudence to determine a general criterion. Accordingly, the main question here is whether the case is to be decided on the basis of personal factors so as to determine that a particular breach renders the contract harmful for the buyer, or on objective criteria. The only thing which can be found is the criterion provided in the context of the option of lesion (kheyar-e-ghabn) which applies where a buyer has paid an excessively high price for goods, and it has been suggested that the principle of la darar comes into operation where the price paid by the buyer was so excessive that a reasonable man would not have overlooked it if he knew of it. That is, where the difference between the contract price and the market value of the goods is so slight that a reasonable man would have ignored it when he learned of it, it will not be regarded as a ground for giving a right to terminate the contract.[463] It may therefore be argued that la darar comes into operation when the detriment caused by the seller's non-conforming delivery is so serious that a reasonable man would not have disregarded it when he learned of the detriment caused by the breach.[464]

As is seen, the given criterion refers the case to the court to decide whether or not a particular failure on the part of the seller results in such a detriment (darar) that a reasonable man would not overlook it. There is, nevertheless, little guidance to help the court to exercise the discretion and attempts must be made to formulate more specific guidance as to the degree of detriment which is required to give an injured party a right to terminate the contract. However, it has to be noted that in such a context it should avoid providing a single rule for all cases. It would suffice to determine some general factors giving general guideline and to give the trial judge a power to decide in any case according to the relevant circumstances. It is suggested, therefore, that the court should take into account factors such as, the nature of the breach, the amount of the loss resulting from the breach, any unreasonable inconvenience or unreasonable expense caused by the breach, the seller's readiness and ability to tender a conforming delivery or repair the lack of conformity.

A further point which is to be mentioned here is that the jurists have not made clear whether in deciding that the darars resulting from the seller's breach would make the contract harmful, the court should only take into account the actual loss resulting from the breach, or whether it should also take into account those darars anticipated probably to result from the breach. It seems that the court must take into account both those darars actually resulting from the breach and those which are anticipated most probably to result from the breach, since the principle of la darar is general and comes into operation for the purpose of negating both actual and foreseeable darar.

However, it is not clear how foreseeable the actual, and probable, consequences of the breach must be. Can one rely on any detriment caused by the breach, or only on those which were foreseeable by the seller? And if so, at what time and to what extent do they have to be foreseeable? No jurisprdential statement can be found to answer the question.

2.2.3. Relevant Kheyarat

So far as commercial contracts are concerned, the two first options mentioned in 2.1. supra are of no significance. The third option is a particular option based on particular rewayat and in the context of commercial contracts is of less value. Among the rest of the options mentioned above, only a few are relevant to the present research. The "option of condition" comes into operation by the contracting parties' express mutual agreement within the contract rather than by operation of law in the case of breach of contract. The "option of tadlis" only arises where one of the contracting parties is guilty of fraud which induces the victim to enter into the contract.[465] Similarly, although the "option of lesion" is significant in the context of a commercial contracts, it has no relevance to the present study. It applies when a buyer has paid an excessively high price for goods. Options such as the "option of insolvency" and the "option of impossibility" of the performance of contract arise in particular circumstances where the buyer becomes insolvent, or, after the conclusion of the contract one of the contracting parties becomes unable to perform his contractual obligations. The "option of unfulfilled sale in part" relates primarily to cases where the contract is dissolved or treated as void in respect of part of the subject-matter. Similarly, the "option of partnership," as some jurists pointed out,[466] is not a separate option but it is in fact a particular form of the option of defect or the option of unfulfilled sale in part. As regards the last option, it is to be noted that no jurist has addressed emtena' as a ground for termination. The only jurist who addressed the "option of emtena," as far as the present writer could identify, is, Ayatullah Khumayni.[467] However, he has not explained what he means by his short statement and how it can be justified; the only thing he mentions is that this option is "u'qalaeiyon" (that is, it is a common practice between the businessmen). Second, he restricted the option to the case where requiring the refusing party to perform is impractical. Third, he has raised it in the context of the seller's refusal to deliver goods and the buyer's refusal to pay; he did not state whether or not it can be applied to the case of non-conforming delivery. Accordingly, it is difficult to find a jurisprudential statement which has regarded the doctrine of emtena' (similar to the doctrine of repudiation in English common law) as a ground justifying the right to terminate the contract.

What follows will examine the rules relating to the "options" which may be resorted to by a buyer who is aggrieved by the seller's non-conforming delivery. For this purpose, the options of "inspection," "incorrect description," "unfulfilled conditions" and "defect" are the most relevant options.

2.2.3.1. Kheyar-e-Rou'yat

kheyar-e-rou'yat (the option of inspection) is occasionally associated with two other options: kheyar-e-takhalluf an al- wasf (the option of incorrect description) and kheyar-e-takhalluf an al- shart (the option of unfulfilled condition). The first question which arises here is whether this is a separate option, or a particular form of the others. The same question has also arisen as to the option of incorrect description and that of defect.

A general look at the jurists' classification of the options shows that there are three views:

     (I) Option of Inspection as a Separate Option. A number of Shi'ah jurists believe that the option of inspection is a particular option based on Rewayat and Ijma', rather than on general principles on which the other options are generally justified, i.e., the principle of la darar or shart-e-demni.[468] According to them, it must be distinguished from the option of incorrect description and the option of unfulfilled condition. The option of inspection, they argue, arises only where the buyer has previously examined a particular thing having certain specifications. At the time of making the contract, the seller has not undertaken any obligation as to the existence or accuracy of those specifications by way of incorporating them into the contract as the terms of the contract, but the buyer has agreed to buy those particular goods simply on the basis of his personal belief that they are of those specifications he found by his pre-contract examination. Accordingly, there is no contractual obligation as to the accuracy of the buyer's belief in respect of the object sold which would give the buyer the option of incorrect description. His entitlement to terminate the contract in such a case is, according to them, for the existence of special authorities.[469]

The same interpretation has been suggested in respect of the "option of defect." A number of jurists maintain that this option is to be distinguished from the "option of unfulfilled condition." The option of defect is a particular option based on particular rewayat [470] and it arises only where it is proved that the purchased goods are not in conformity with the presumed quality on which the buyer has relied when the contract was made.[471]

     (II) Option of Inspection Is the Same as the Option of Incorrect Description. In contrast, some other jurists believe that the option of inspection is not a separate option but a particular form of the option of incorrect description (as it seems that some jurists tend to view it)[472]) or of the option of unfulfilled condition.[473] According to the latter view, these three options are the same except that the first two arise where an implied term is broken, while the third arises where an express term is broken.[474] According to such a broad interpretation, it has also been suggested that the "option of defect" should not be regarded as a separate option, but as a particular form of the "option of unfulfilled condition."[475]

     (III) Preferred Construction. It seems that it would be better to treat, as the Iranian Civil Code does in Arts. 396 and 410-415, the option of inspection and that of incorrect description as a single option; both arise where an implied term of the contract indicating the characteristics of the article sold is broken. Nevertheless, although technically it can be said that these two options arise where a contractual promise (shart) is broken, it would be better to examine them separate from the "option of unfulfilled condition." This is because: First, the latter option, as will be seen, is subject to some restrictions to which the other options are not; Second, a general examination of the jurisprudential discussions in this respect shows clearly that Shi'ah jurists commonly use the expression kheyar-e-takhalluf an al- wasf in the case of breach of shart-e-sefat and the expression kheyar-e-takhallof an al- shart when discussing the consequences of breach of shart-e- fe'l.[476]

Similarly, it seems that "the option of defect" is technically the same as the options of incorrect description and unfulfilled condition; it arises where a contract term indicating the quality of the object sold is broken. It is hard to accept that the relevant rewayat give the buyer a right to terminate the contract for the defect in the goods on the mere fact that the buyer at the time of making the contract has relied on his personal belief that the article which is to be sold has a particular quality.The seller will be responsible for the presumed quality of the subject of sale where he was aware of the buyer's presumption. Assuming that the seller was aware of the buyer's reliance on the presumed quality of the sold article, there would be in fact an implied undertaking, breach of which gives rise to the option of defect.[477] Evidence in support of this construction is that if the contract contains an exemption clause as to the quality of the article, there will not be the option of defect even though the buyer has relied on the presumed belief.[478] In addition, some of these rewayat [479] expressly refer to the fact that the option of defect is for breach of a contract term rather than the mere belief of the buyer. Moreover, in a fully authentic (sahih) rewayat, the option of defect has been applied to a case in which the seller had expressly undertaken an obligation that the article sold was sound.[480] Accordingly, the option of defect arises only where the seller has undertaken, whether impliedly or expressly that the article to be sold has a particular quality.

However, there are three reasons which justify why the Iranian Civil Code and some jurists treat the option of defect as a separate option.[481] First, the option of defect arises only where a contract term indicating the quality of the goods (shart-e-sehhat) is broken. Second, where the option arises the buyer also has an option to accept the defective goods and claim for price reduction (arsh),[482] while in the case of breach of shart-e-sefat, most jurists believe that he is not given such a two-fold option.[483] Third, the option of defect, as will be seen later, is lost, as most jurists suggest, merely by using or altering the goods delivered, while in the case of breach of shart-e-sefat, such a restriction is not applied. The two latter features are, as they argue, based on particular authorities.[484]

According to this construction, the following discussion will examine these options under the three separate headings: the option of incorrect description, the option of defect, and, the option of unfulfilled condition.

2.2.3.2. Kheyar-e-Takhalluf an al- Wasf

When discussing termination of the contract on the basis of the option of incorrect description, Iranian Civil Code and Shi'ah jurists make a sharp distinction between cases where the contract is for sale of specific goods (mabi' mua'yyan) and where it is for unascertained goods (mabi' Kulli).[485]

     (I) Mabi' Mua'yyan. In the case of a contract for sale of specific goods, it is commonly said that if the seller's non-conforming delivery amounts to breach of shart-e-sefat, the buyer has an immediate right to reject the non-conforming goods and terminate the contract on the basis of the option of "incorrect description."[486]

This is the view which is supported by almost all Shi'ah jurists. But they do not explain what lack of conformity will enable the buyer to reject and terminate the contract. They also do not distinguish between the right to reject and that of termination. Apparently, the same lack of conformity which gives rise to the first right would justify the second right. However, as already suggested, the right to reject non-conforming delivery should be distinguished from the right to terminate the contract. Termination is an exception to the principle of ufou bel u'qoud and should be justified where the actual and foreseeable losses resulting from the breach makes the contract harmful for the buyer. Termination is not the only means to protect the injured buyer. He can be protected by the seller's offer to cure. If the seller is ready and able to cure the non-conformity by way of repair within the contract time without causing the buyer unreasonable expense or unreasonable inconvenience, he will be adequately compensated. Under such circumstances, there is no reason to justify application of the principle of la darar allowing the buyer to terminate the contract.

     (II) Mabi' Kulli. Where the contract is for the sale of unascertained goods, it is a well-accepted view that a mere non-conforming delivery by the seller does not entitle the buyer to terminate the contract on the basis of the option of incorrect description.[487] However, it is not clear when the buyer will be entitled to terminate the contract. The only thing the Iranian Civil Code and the jurists suggest is that he is entitled to reject the non-conforming goods and to request the seller to deliver goods conforming with the contract and if the seller refuses to make a fresh tender, the buyer will be entitled to apply to the court for an order requiring the refusing seller to perform his obligations.[488] Apparently, the buyer will not be entitled to terminate the contract under this view even in a case where the lack of conformity is substantial.

This view may result in uncertainty. Moreover, the buyer may not be able to obtain what he bargained for by way of requiring performance. Accordingly, it is suggested that he should be given a right to terminate the contract under certain circumstances. Certainly, he should not be entitled to terminate for minor lack of conformity. Where the seller is ready and able to deliver replacement goods which conform to the contract within the contract time without causing the buyer unreasonable expense or unreasonable inconvenience, there will be no reason to justify the buyer's termination. However, this is not always the case. Sometimes the lack of conformity is substantial and the seller is not ready to deliver replacement goods. Is the buyer still to be required to perform the contract and sue the refusing seller? It is submitted that such a rule may sometimes be contrary to the principle of la darar. Accordingly, there must be some time when the buyer is entitled to terminate the contract. It is suggested that he should be given the right to terminate the contract when the seller's breach results in such detriment that makes the performance of contract harmful for the buyer. However, whether the lack of conformity is or is not sufficiently serious should be determined in light of relevant factors including the seller's ability and willingness to cure. Where the suggested criterion is met, the principle of la darar comes into operation and the decree of luzoum-e-a'qd, which orders the buyer to perform the contract, ceases to operate.

2.2.3.3. Kheyar-e-A'yb

As in the case of the option of "incorrect description," the Iranian Civil Code and the jurists, when discussing termination of the contract on the basis of the "option of defect," make a distinction between cases where the contract is for sale of specific goods (mabi' mua'yyan) and where it is for unascertained goods (mabi' Kulli).[489]

     (I) Specific Goods. Where the contract is for sale of specific goods, almost all jurists hold that the seller's failure to deliver goods conforming with the contract quality will entitle the buyer to terminate the contract immediately. The only difference is that in the case of defective delivery (breach of shart-e-salamat) the buyer has a two-fold option: to reject the defective goods and to terminate the contract or to accept them and claim for arsh, whereas according to most jurists, such a two-fold option is not available for the buyer where shart-e-sefat is broken.[490]

The same objections made to the previous option are applicable here. Accordingly, as was suggested in respect of the option of incorrect description, termination on the basis of this option should be subject to the same limitation applied to the former option. A further objection to this common view is that the Iranian Civil Code and almost all the jurists seem to treat arsh [491] as a part of the option of defect. For this reason, they extend the same requirements applicable to the right to terminate the contract to the right to claim arsh. However, it is suggested that the right to claim arsh should be distinguished from the right to terminate the contract. It is a monetary relief which has its own requirements. Confusing this right with the remedy of termination may, as will be shown later, result in an unreasonable effect.

     (II) Unascertained Goods. In contrast, where the contract is for sale of unascertained goods, the buyer is only entitled to reject the non-conforming goods and request the seller to tender a conforming consignment.[492] Some jurists, however, take a different view here. According to them, where the seller of unascertained goods has tendered goods which do not conform with the contract quality the buyer, as in the case of specific goods, has an option to accept them and claim for arsh or to reject them and terminate the contract immediately. This view has been justified on the basis that where the seller appropriates a particular consignment to the contract, it becomes as the case of sale of specific goods where breach amounts to the option of defect.[493] However, as in the case of the previous option, no jurist explains when the buyer will be entitled to terminate the contract for a defective tender. It is suggested that the same criterion applied to termination on the basis of the option of "incorrect description" is applicable here.

2.2.3.4. Kheyar-e-Takhalluf an al- Shart

As already pointed out, this option arises where the seller fails to perform a term classified as shart-e- fe'l. Where such a term is broken, Shi'ah jurists are of two opposing views. A number of great jurists are of the opinion that mere failure to perform such a term does not entitle the buyer to terminate the contract on the basis of the option of unfulfilled condition. He will be entitled to terminate the contract on the basis of this option where requiring the defaulting seller to perform is impractical.[494] In contrast, others believe that mere failure to perform in accordance with the contract term enables the buyer to terminate the contract even in the case when he can require the seller to perform his obligations.[495]

The origin of these different views is the ground upon which the option of unfulfilled condition is to be justified.[496] On the first view, the option is justified on the principle of la darar so that this option comes into operation where the buyer cannot be adequately compensated by another remedy. Accordingly, as long as he can require the defaulting party to perform, he will be compensated by the remedy of requiring performance. There is therefore no reason to justify an immediate termination of the contract. In contrast, according to a number of jurists, the option of unfulfilled condition is to be based on the theory of shart-e-demni. That is, at the time of making the contract the contracting parties have impliedly agreed that where the shart is not performed, the promisee is entitled to terminate the contract.

Applying these two approaches to the seller's failure to tender documents conforming to the contract requirements, one may suggest that on the first approach the buyer is only entitled to reject the non-conforming documents and request the seller to tender the conforming documents. He will be entitled to terminate the contract only when he cannot require the seller to perform his obligations in respect of tender of the required documents. But according to the second approach, the buyer has a right to refuse to accept them and terminate the contract immediately.

The question whether the option to terminate is to be based on the first or the second ground has already been examined, and it was suggested that the option is primarily to be justified on the principle of la darar. On this suggestion, the buyer should be given the right to terminate the contract for breach of shart-e- fe'l when he cannot be adequately protected in other ways. Accordingly, where the seller is ready and able to tender conforming documents, the buyer should not be entitled to terminate the contract provided that the seller's re-tender does not cause the buyer undue detriment.

2.2.4. Seller's Right to Cure

The Iranian Civil Code does not address this issue. Nor has any jurist examined the question whether the seller has a general right to cure a defective performance. What they have said is that where the contract is for sale of specific goods, any breach of shart-e-sefat or shart-e-salamat will give the buyer an immediate right to reject the non-conforming goods and terminate the contract; whereas where the contract is for sale of unascertained goods, the buyer has only a right to reject the non-conforming goods and demand delivery of conforming goods. In the absence of clear jurisprudential authorities on this issue, it is proposed to deal with the issue on the basis of the general principles described above. A distinction should again be made between the cases of specific and unascertained goods.

2.2.4.1. Sale of Specific Goods

One may ask if the option to terminate is to be justified on the principle of la darar, why should the seller not be given a right to cure, at least in cases where he is ready and able to do so? If the seller is ready and able to cure the non-conformity by replacing or repairing the goods, is the contract still detrimental for the buyer? It may be said that it is logical that in such cases the buyer should not be given an immediate right to terminate unless the seller's cure cannot adequately redress the buyer, or causes him unreasonable inconvenience.

Whether the seller should be given a right to replace non-conforming goods seems difficult to reconcile with general principles. The point has been addressed by the late Shaykh Murtada Ansari in respect of the option of inspection. Ansari, in justifying why the seller should not be able to deprive the buyer of his right to terminate the contract by tendering replacement goods, observes:

"The option of inspection is not lost ... by delivery of replacement goods. For, the contract is made on a particular specific goods and delivery of replacement requires a fresh transaction.."[497]

The rule seems generally applicable to both the option of inspection and that of defect. In both cases, the seller should not be given a right to tender replacement. Replacement goods will not be regarded as a performance of the contract unless the buyer consents to it.

However, the position of the seller's right to cure by repair is not clear. There is no clear reason to justify why the seller should not be given such a right. It may be argued that the subject-matter of the contract was a particular article possessing specific characteristics. Any change to the article delivered will render it other than that for which the buyer has bargained. As a result, it needs the buyer's consent. Moreover, deprivation of the buyer of his right to terminate by giving the seller a right to cure by repair would be contrary to the principle of isteshab. Where it is proved that the goods delivered do not conform with the contract requirements, the right to terminate comes into existence. In such a situation, the seller's offer to cure the non-conformity raises the question whether the buyer's right to terminate derived from the lack of conformity should be continued or be stopped by the seller's ability to cure. In the event of doubt as to the continuity of a pre-existent decree (right to terminate), it is presumed that it is still on foot on the principle of "isteshab."[498] In addition, the principle of la darar is provided in favour of an innocent party who suffers a detriment (darar) from the other party's violation, and cannot be relied on by a defaulting seller against the injured buyer. On this view, the seller may be entitled to repair only where the buyer has accepted the seller's offer and gives him an opportunity to cure the non-conformity.

It seems that none of the forgoing arguments is sufficient to reject the possibility of giving the seller a right to cure a lack of conformity by repair. The first argument applies to the case where it turns out that the statement of fact as to the object sold was false. In such a case, cure is in fact impossible. It does not apply to the case where the buyer has ordered the seller to manufacture and deliver a particular instrument according to his instructions.

Second, the principle of isteshab cannot be relied on here, for in such a case not only the continuance of the option to terminate on account of kheyar-e-takhalluf an al- wasf or kheyar-e-a'yb becomes doubtful, but the very existence of the option becomes basically doubtful where the seller is able and willing to repair. To explain, as indicated when discussing the grounds of the options, the option to terminate is justifiable when the contract becomes detrimental according to the actual and/or probable results of the default at the time of exercising the option, whereas, where the seller has actually repaired the lack of conformity, or is willing and able to do so, the contract will not be harmful for the buyer when he wishes to exercise the option. Accordingly, in such cases the option lacks the logic justifying the option, since where the seller has cured the lack of conformity, or has offered to do so, the prospective harm justifying the right to terminate will become doubtful, while it is a well-settled rule that in such a case (in the terminology of the jurists, it is described as al- shakk fi iqteda' al- hukm; doubt as to the legal ground of the degree as opposed to its continuance), the principle of isteshab cannot operate.

Moreover, if it is accepted that the option of termination is granted to an injured buyer in order to protect him against the losses sustained by reason of the seller's breach, such a protection would effectively be achieved by curing the breach by way of repair. Accordingly, there is no reason to justify disregarding the principle of ufou bel u'qoud which obliges the buyer to be bound by the contract.

In addition, in a rewayat cited from Imam Sadeq, the Imam was asked about a person who purchased a particular plot of land of a certain area. After measurement, he realised that it did not conform with the contract in area. In that case, the Imam held that:

"The buyer was entitled either to reject it and take back his money or accept the land and take back that part of the price exchanged with the missing part. However, if the seller was able to cure the missing part by giving from another land (if he had any beside the sold land) the buyer was not entitled to terminate the contract."[499]

Although the case was concerned with the sale of land, the logic behind the rule is generally applicable to any similar situations. Moreover, the loss of the option to terminate was accepted by some distinguished jurists where the defect is removed automatically before the buyer learns of the fact, or after he learns of it but before he has exercised his right. In justifying this view, they argued that when the defect is actually removed there is no reason to justify termination.[500] It seems that the same logic which justifies the loss of the option will justify the view where the seller is ready and able to cure the defect by repair, since when the seller is able and willing to cure the defect by repair as prescribed above, the breach would not be sufficiently serious to bring the principle of la darar into operation. Accordingly, the buyer should not be allowed to terminate the contract unless the seller is not willing and able to cure or his cure causes the buyer unreasonable inconvenience or unreasonable detriment.[501]

It is also worth noting that the buyer's termination will be effective where he has exercised his option to terminate before the seller has informed him of his ability and readiness to cure, for the buyer is not under a duty to ask the seller whether he is able and ready to cure the lack of conformity. However, the question which arises is whether the buyer should be entitled to terminate the contract before the seller learns of the lack of conformity.The question becomes more difficult taking into account the fact that the jurists have not made clear whether the buyer is obliged to inform the seller of the lack of conformity and what will happen if the buyer fails to inform the seller. In the absence of an express jurisprudential authority, it is suggested that if the buyer has known that the seller would be able and willing to repair the lack of conformity as described above he should not be given the right to terminate. The suggestion can be justified on the basis that the logic of the foregoing case exists here.

2.2.4.2. Sale of Unascertained Goods

Where the contract is for the sale of unascertained goods, giving a general right to cure seems consistent with general principles, since as already explained, in such cases where the seller's tender does not conform to the contract terms, the buyer has only a right to reject the non-conforming delivery. He is not entitled to terminate the contract. On this approach, it is quite reasonable to suggest that the seller should be given a general right to cure his non-conforming delivery within the contract time. However, his right to cure beyond the time limit depends on the nature of time provisions to be discussed below.

Similarly, it is suggested that the seller should not be given the right to cure in all circumstances. The right must be given according to the general criterion that it could be done without causing the buyer unreasonable expense or unreasonable inconvenience. The same suggestion seems to be applicable where the seller has tendered non-conforming documents. As long as the seller is able and willing to cure lack of conformity in the documents without causing the buyer unreasonable inconvenience or unreasonable expense, he should be allowed to do so if the contract time allows him.

2.2.5. Special Cases

The preceding discussions were concerned with the buyer's right to terminate the contract where the seller has delivered the right quantity of goods, all not conforming to the contract. The present discussion examines the cases where the seller (a) delivers the whole contract quantity only part of which conforms to the contract terms, (b) delivers the wrong quantity, or (c) fails to deliver when the time for delivery has expired. Three questions will be examined:

2.2.5.1. Partial Non-Conforming Delivery

As already stated, the seller's partially non-conforming delivery raises a number of questions.

The first two questions have been discussed previously. The two other questions are now examined.

As explained before, the jurists have raised the issue in questions where the seller of specific goods has delivered goods some of which are in conformity with the contract quality. In that case, no jurist has disputed the buyer's right to reject all of the goods and terminate the contract as a whole.[502] Different views appeared in respect of the buyer's right to reject the non-conforming part and terminate the contract with respect to that part but keep the contract alive as to the conforming part.[503] A number of the jurists held that the buyer is simply entitled to either accept all or reject all and terminate the contract,[504] while the others support the view that in such a case the buyer should be given an option to reject the defective part and terminate the contract to that extent and keep the contract alive in respect of the conforming part.[505] However, a number of questions are unclear:

As was shown above, the different views are due to the lack of a clear distinction between the case of severable and non-severable contracts. Accordingly, it is suggested that where the contract is construed as severable, as already described, there is no reason to prevent the buyer from accepting the conforming part and rejecting the non-conforming part, whether the contract is for sale of specific or unascertained goods. Any severable part will in fact constitute the subject of a subsidiary contract within the main contract. As a result, the rules governing breach of a shart-e-sefat and shart-e-salamat under a non-severable contract apply to the severable part. That is, where the broken term is classified as a shart-e-sefat or salamat with respect to the severable part, the buyer is entitled to reject that part (subject to the limitation suggested in respect of a non-severable contract) and to request the seller to tender a conforming delivery. After the buyer has lawfully rejected the non-conforming part, if it is accepted that the seller should be given a general right to cure, he is entitled to cure the default by delivering a replacement in conformity with the contract, provided that he does so within the time limited for delivery, otherwise the buyer is entitled to terminate the contract in respect of the non-conforming part.

It is also suggested that a distinction should be made between partial termination and termination of the contract as a whole. Partial termination should be allowed where the requisite requirements, as described in respect of termination of a non-severable contract, are satisfied. But the buyer should not be given the right to terminate the contract as a whole merely because the seller has broken the contract in respect of one or more severable parts, even if the lack of conformity is serious. Termination of such contracts as a whole is to be permitted only where the seller's defective delivery in respect of one or more instalments is such that the buyer can reasonably conclude that the contract would be harmful for him, since in such a situation the principle of la darar comes into operation.

2.2.5.2. Breach of Quantity Stipulations

As indicated before, Iranian Civil Code and Shi'ah jurisprudence have not disputed the buyer's right to terminate the contract for breach of quantity term. Almost all jurists have agreed to give the buyer the right to terminate the contract where the seller delivers less than what he contracted to sell.[506] The same right is given to the buyer where the seller delivers to the buyer a quantity of goods larger than he contracted to sell.[507] The difference is in giving the buyer the right to keep the contract alive in respect of the goods delivered and to terminate the contract as to the non-delivered part.[508]

As the language of the late Shaykh Ansari's statement [509] shows, the jurists' difference is concerned with the case of sale specific goods. The different views are, it seems, due to the nature of the contract term indicating the quantity of the object of sale. Some jurists believe that such a term does not differ from shart-e-sefat. It is incorporated into the contract simply so as to qualify the seller's delivery obligation.[510] In both situations, no part of the consideration is exchanged for the shart, i.e., the contract price as a whole is exchanged with the purchased goods. Accordingly, the buyer is only entitled to accept the wrong items against the agreed price or reject them and terminate the contract. In contrast, others argue that these two situations must be distinguished. A stipulation indicating the contract quantity is not a mere descriptive shart but also constitutes a part of the subject of the seller's obligation so that it is exchanged with part of the price. On this construction, where the purchased items delivered differ in quantity from that provided for in the contract, the buyer can accept them and terminate the contract in respect of the non-existent part. However, the jurists have not addressed the case where the seller of unascertained goods has delivered the wrong quantity. They have not also made clear what degree of non-conformity will entitle the buyer to terminate the contract.

It is suggested that the buyer should be given the right to terminate the contract for partial delivery in both cases. Nevertheless, it is suggested to distinguish between termination of the contract in its entirety and termination of the contract as to the missing part. In the first case, the buyer should be given the right to terminate where the missing part is such that its absence makes the contract harmful for the buyer. But in the second case, he should only be entitled to terminate the contract as to the missing part where it is not so slight that it would be customarily unreasonable for him to do so. This should be assessed in light of the seller's ability and readiness to make a fresh tender or to deliver the contract quantity within the contract time. This suggestion is in line with the rewayat cited from Imam Sadeq. In that case, it was held that if the seller was able to cure the missing part the buyer has no right to terminate the contract.[511]

2.2.5.3. Breach of Time Stipulations

Although the consequences of breach of shart-e-zaman (time stipulation) have not been addressed by the Iranian Civil Code and Shi'ah jurists, some useful discussions can be found in Shi'ah jurisprudence when dealing with the question: "Where no specific time limit is provided under the contract, both parties are required to perform their contractual obligations "fouran" (promptly)."[512]

A number of questions must be addressed.

These are questions which have not been precisely examined by Shi'ah jurists.

     (I) Nature of Time Stipulation. As already explained, contractual terms are either of the nature of shart-e-sefat, or shart-e- fe'l, or shart-e-natijah. Terms indicating a time limit for performance of contract obligations cannot be outside this threefold classification. There is no doubt that a time stipulation does not fall into the category of shart-e-natijah. The main question is therefore whether shart-e-zaman is to be placed into the category of shart-e-sefat or that of shart-e- fe'l.

It seems that a stipulation containing a definite time or a period of time for performance cannot be described as shart-e-sefat because the term shart-e-sefat, as explained earlier, refers to those terms which define the subject-matter of the contract,[513] whereas a time stipulation is incorporated into the contract so as to define the contracting parties' duty to perform. A sale contract simply obliges the seller to deliver the object sold and the buyer to pay the price. Although, as will be seen below, where no particular contractual time limit is provided by the parties under the contract, the nature (itlaq) of a reciprocal contract requires them to perform their obligations promptly,[514] by incorporation of a time stipulation they are obliged to perform their duties within the specified time.[515]

     (II) Termination for Breach of Time Stipulation. Having placed time stipulations into the category of shart-e- fe'l, the question arises whether breach of such a contract term will give rise to an immediate right to terminate the contract, or whether the injured party is entitled to the common remedy provided for breach of shart-e- fe'l, i.e., requiring the defaulting party to perform his obligation. As already pointed out, according to most Shi'ah jurists, breach of shart-e-fe'l gives an innocent party only a right to require the breaching party to perform rather than an immediate right to terminate the contract. Accordingly, breach of a time stipulation must, according to this principle, produce the same result. That is, the buyer will be entitled to terminate the contract only when it is not practical to require the defaulting seller to perform his obligation.[516] This view has been strongly criticized by other jurists.[517] The main objection to this approach is that breach of such a term occurs only after the expiry of time limit. Before the time limit expires, the seller has not committed any breach entitling the buyer to require the seller to perform. After the expiration of that time, the defaulting seller can no longer perform his obligation under the time stipulation.[518]

However, the latter groups do not explain when the buyer will be entitled to terminate the contract for breach of time stipulation; is he entitled to terminate for any late delivery? It seems that the buyer's right to terminate the contract for the seller's late delivery should in principle be based on the serious consequences of delay. As explained before, the main ground for giving a right to terminate the contract is the principle of la darar. Accordingly, it is difficult to say that any delay in performance of the contract will give rise to an immediate right of termination. He will have such a right only where late performance will cause him undue detriment. Nevertheless, in the context of commercial contracts it is fairly possible to infer from the circumstances of the case that the contracting parties have impliedly agreed that any delay by the seller will give rise to a right of termination even though it does not cause the buyer any loss.

     (III) No Time Specified in the Contract. Where no time provision is specified by the parties within the sale contract, it is a well-accepted view in Shi'ah law that the contracting parties are required to perform their obligation "fouran" (promptly).[519] The term "promptly" is not defined in Shi'ah jurisprudence. It is generally said that it must be understood according to the custom of any particular case. Thus, the period of time for performance may differ from case to case.[520]

The question arises here whether or not the seller's failure to deliver promptly entitles the buyer to terminate the contract. There is no clear answer from the jurists in this connection. It seems that the question must be answered on the basis of the general principles explained above. One may argue that since the parties have left the question of time for performance open, it may be inferred that the time for performance of the contract cannot not be regarded as of the essence, since otherwise they would have expressly referred to it. Accordingly, termination should always be justified on the basis of the principle of la darar. However, the case may be different in the context of commercial contracts. In such contracts, performance within a reasonable time is of significance for the contracting parties. The parties may have relied on such a common understanding and have left the matter to the relevant custom.[521] Accordingly, it may be said that delivery beyond a reasonable time will be in breach of an implied undertaking that the seller will perform his delivery obligation within that time and if he fails to do so the buyer may be entitled to terminate the contract immediately.

The point which deserves to be noted is whether one could adopt a Nachfrist type procedure (as provided in the Convention) or make the time of the essence of the contract (as recognized in English law) in this system. No jurist has addressed the question whether the buyer is able to give the seller a reasonable period of time requiring him to perform his obligations within that time so that if the seller refuses to perform, the buyer is entitled to terminate the contract. It seems that Shi'ah law could follow neither. In Shi'ah law, as explained when dealing with the grounds for kheyarat, there are three well-accepted circumstances in which the buyer may be entitled to terminate the contract: a particular rewayat which allows him to do so, shart-e-demni (implied agreement), and the principle of la darar. No particular authority can be found to allow the buyer to give the seller additional time and terminate the contract if he fails to perform within that time. Accordingly, the only way to justify termination for late delivery is either the doctrine of shart-e-demni or the principle of la darar as described when dealing with the grounds of the options.

2.3. Mechanism of Termination

2.3.1. No Automatic Termination

As in the two other systems, in Iranian civil law and Shi'ah jurisprudence termination is a matter of election. Thus breach of contract does not automatically result in termination of the contract. This fact can easily be inferred from the definitions suggested by the jurists in respect of the concept of kheyar Although in terms of terminology, Shi'ah jurists have defined the term in different ways,[522] all of them agreed that kheyar simply gives a party a right to terminate the contract if he wishes. Accordingly, termination of the contract is always at the option of the party who is given such a right. As long as he has not lost his right, he cannot be required to elect to terminate or affirm the contract.

2.3.2. Election of Termination

A number of questions need to be considered here:

2.3.2.1. Declaration

The right to terminate is exercised by a simple declaration of intention to terminate the contract. A mere inner intention to terminate does not suffice. It must be clearly announced in a proper way.[523] Accordingly, there must be a positive act on the part of the buyer to declare his intention to terminate, but the declaration is not required to take any special form. Any statement or conduct by the buyer will suffice to effect termination provided that it clearly indicates that he has intended to terminate.[524] Accordingly, the contract will not be terminated merely because of the buyer's failure to declare it terminated.[525] Thus the buyer's rejection of defective goods or his request of the seller to return the money he has paid for the goods may be evidence of the intention to exercise the option to terminate the contract, provided that it was sufficiently unequivocal to show his intention.

2.3.2.2. Communication

It is commonly said that in Shi'ah law, termination will be effective even though the party in breach has no awareness of it.[526] This rule is based on the legal nature of termination. In Shi'ah law, termination is placed into the category of iqa' (unilateral juristic act), as opposed to a'qd (bilateral juristic act). The expression refers to any legal institution which is created by a unilateral legal intention of a party. Under the theory of iqa', a unilateral juristic act such as termination does not require the consent of any person to be effective but would be legally effective as soon as an intention to create such a legal concept has unequivocally been announced. Accordingly, under this construction, what a buyer is required to do in exercising his right to terminate is simply to declare his intention to terminate by a proper means such as a notice. It may, therefore, be written or oral, and may be transmitted by any means whatsoever.

This view may result in an unreasonable effect. It may be the case when taking into account the fact that the jurists do not require the aggrieved buyer to notify the seller of the lack of conformity. In such a case, it is quite possible that the contract is terminated even before the seller learns of the buyer's alleged entitlement to terminate. Such a result may be harsh for him when he is faced with the return of defective goods without any readiness to take them back, since the costs and risks of re-disposal of the goods fall on the seller together with losses resulting from a decline in the market price, which under the contract would normally fall on the buyer. This is perhaps the reason why the late Imam Khumayni was forced to depart from this common view and tacitly accept that as long as termination is not properly communicated to the party in breach it will not be effective.[527]

However, according to the suggestion made in this study, the buyer in practice will notify the seller of the lack of conformity. This is because his entitlement to terminate the contract should be assessed by taking into account the seller's ability and willingness to cure. Accordingly, the buyer will not be able to terminate the contract quickly to block the seller's right to cure.

2.3.2.3. Application for the Court's Judgement

Under Iranian civil law and Shi'ah jurisprudence, a buyer who wishes to exercise his right to terminate the contract for the seller's non-conforming delivery is not under any duty to apply for a court's decree.[528] However, he may be forced to resort to the court in order to enforce the effects of termination. The party in breach may not accept the terminating party's entitlement to terminate and, in contrast, may regard him as guilty of unlawful termination. In such a case, the buyer is required to satisfy the court that he was entitled to do so and that he has properly exercised his right. In deciding the case, the court in fact declares the buyer's lawful termination. Consequently, his termination would be effective from the time of the buyer's declaration. Where he fails to satisfy the court, he will himself be guilty of breach of contract and obliged to perform his obligations under the contract.

2.3.3. Election of Affirmation

As already pointed out, when a breach giving rise to the right to terminate is committed by the seller, the buyer does not have to terminate the contract but can waive his right to terminate and instead affirm the contract. He may expressly affirm the contract. Affirmation of contract by this way is called isqat-e-sarih (express waiver).[529] There are also circumstances in which he may be deemed to have affirmed the contract. Affirmation in this way is called isqat-e-demni (implied waiver).[530]

Where the buyer expressly affirms or is regarded as having affirmed the contract, he will lose his right to terminate the contract. The reason is clear. The option to terminate is given to the buyer to protect himself against the seller's breach. Where it becomes clear that he has declared, whether by express words or conduct or by operation of the law, that he has accepted the continuance of the contract he must be bound to the consequence of his action. In the terminology of Shi'ah jurisprudence, loss of the right to terminate is justified on the principle of iqdam (action against himself). Under this principle, any person who is given a right will lose his right where he himself, knowing of the right, acts to his detriment. The loss of the option can also be explained on the basis that the major ground of the options, as already explained, is the principle of la darar. This principle comes into operation in favour of the buyer where he has not consented to the detrimental contract. But if he himself declares his consent to the non-conforming delivery or the law presumes so, the principle will not come into operation.[531]

2.3.3.1. Isqa t-e-Sarih

Express waiver of the right to terminate the contract does not cause too much difficulty. The buyer may be regarded as having expressly abandoned his right where he expressly intimates to the seller that he will not reject the non-conforming goods. However, it should be emphasized that this does not mean that an "express waiver" can only be made by words: it would be sufficient if he does some positive act by which he indicates that he intends to waive his right to terminate the contract.[532] For example, where in the case of a documentary sale, the buyer, knowing the non-conformity of the seller's delivery with the contract, accepts and pays for the documents, it can be said that he shows his intention to abandon his rights to reject the non-conforming documents and non-conforming goods as far as defects apparent on the face of the documents are concerned. It may also be said that the buyer has expressly waived his right to terminate the contract for non-conformity of the goods delivered where he, actually knowing of the lack of conformity, takes the seller's delivery note and signs it.

It is worth noting that express isqat is not confined to cases where the buyer learns of the non-conformity and his right to terminate the contract. He may also do so before he learns of the fact. This is the position where, after the seller's delivery, he intimates to the seller that he will not reject the goods even though they do not conform with the contract.[533] However, it is suggested that the buyer's intimation must be such that it clearly shows his intention to waive his prospective right to terminate.

On the basis of this construction, where the buyer learns that the seller's delivery does not conform with the contract terms, the buyer may expressly ignore his right to terminate and accept the non-conforming delivery. In this regard, he may totally waive all rights resulting from the non-conformity or he may simply ignore his right of termination. It is therefore the court's duty to decide in any case whether the buyer has waived the breach or merely his right to reject the non-conforming delivery and terminate the contract.

2.3.3.2. Isqat-e-Demni

In some cases, notwithstanding that the buyer has not expressly waived his right to terminate, he may be deemed to have ignored his right and affirmed the contract. The fact that in some cases the buyer may be deemed to have affirmed the contract is not controversial. The major problem arises in determining which circumstances in effect constitute an implied affirmation, in the sense that the buyer is regarded to have affirmed the contract.

In Shi'ah jurisprudence, the circumstances in which the buyer may have been treated as having impliedly affirmed the contract are discussed under the headings of tasarruf (literally, any act as to the goods delivered) and ta'khir (delay) in exercising the right to terminate. As far as the buyer's right to reject the non-conforming goods and terminate the contract is concerned, the jurists have examined under the two headings various cases where a buyer may be deemed to have affirmed the contract. In some cases there is no doubt that the buyer will be regarded as having impliedly affirmed the contract, but others are controversial. However, no jurist has addressed the circumstances in which an international buyer may be taken to have lost his right to reject non-conforming documents and goods. In the following, examining some significant cases in which a buyer may be deemed to have accepted the contract, an attempt will be made to show how loss of the right to reject non-conforming documents could be analyzed in this system.

     (I) Tasarruf

The crucial question which arises here is whether any use of the goods delivered will be regarded as an implied affirmation of the contract or if the rule must be restricted to a particular use of them.

However, in applying the rule some jurists have distinguished between the option of incorrect description and the option of defect. In respect of the first option, it has been suggested that the buyer will lose his right to terminate only where his acts customarily indicate his intention to affirm the contract, while with respect to the option of defect any use will result in loss of the right.[541]

It is suggested that in both cases the buyer should be deemed to have lost his right provided that his act clearly indicates his intention to affirm the contract, for, as will be seen below, not every act has this result.[542] For instance, repairing or attempting to repair, or asking the seller to repair them may be regarded as a deemed affirmation, whereas, the same acts will not cause such a result if the buyer is not aware of the lack of conformity giving rise to the right to terminate the contract. It is therefore suggested that the buyer should not be taken as having affirmed the contract if a reasonable man in his position could not have discovered the lack of conformity.

It is commonly said that where the buyer is aware of the non-conformity, his act in reselling the goods delivered and other dispositions clearly indicate his intention to affirm the contract.[543] The buyer, by his conduct, shows his interest in keeping the contract alive, otherwise he would not have resold or disposed of them to a third party.

Nevertheless, the case becomes somewhat difficult where the buyer has sold or otherwise dealt with them before learning of the non-conformity. Although acts such as dealing with the goods normally indicate an intention to affirm the contract, it seems that a mere dealing with the goods cannot be regarded as a clear indication of the intention to affirm the contract. The buyer should be regarded as having affirmed the contract by such acts where he knew, or could have known, of the breach giving rise to the right. Otherwise, it is hard to say that the buyer has intended to affirm the contract by dealing with the goods, in particular where he resold them when they were in transit with no knowledge of the lack of conformity entitling him to terminate the contract, unless the circumstances of the case and the buyer's behavior show that he would have done so even if he had known of the fact.[544]

Assuming that the buyer's right to terminate the contract will be lost merely by selling them to a sub-buyer the question arises if, where the sub-buyer learns of the fact and rejects the non-conforming goods, the first buyer will be able to enforce his right to reject. Different answers have been suggested by the jurists.[545] Some of them believe that after the sub-buyer's rejection, the original buyer will be entitled to reject the non-conforming goods.[546] But others are of the view that after the buyer is deemed to have lost his right of termination by selling the goods to a sub-buyer, he will not be able to revive the right lost by his unilateral intention.[547]

It seems that one must distinguish between the case in which the loss of the right is justified on the implied affirmation of the contract and that in which the buyer is deprived of his right because of the impossibility of physical return of the goods. If it is accepted that by the resale the buyer has declared his intention to affirm the contract, he himself has acted to his detriment (the principle of iqdam) and there is no room to return to the previous position. However, if the loss of the right is based on the impossibility of restoration it is quite possible for him to enforce his right to terminate. In fact, his right has not been lost but its exercise was prevented by an external factor. As soon as the prevention is removed, he will be entitled to exercise his right.[548]

"If the cloth or cattle were in the same condition as they were in at the time of delivery he would have been entitled to reject them but if the cloth was cut or swung or painted he could have only claim price reduction for the defect."[550]

Where the right to terminate is based on other options, the general principle already established would apply. Thus the buyer will lose his right to terminate in such a circumstance if it becomes clear that he has declared his intention to affirm the contract. As long as such an intention cannot be inferred from the buyer's conduct and other circumstances, the buyer will preserve his right to terminate the contract. On this principle, even where the goods have perished or been destroyed by factors beyond the control of the buyer, the right to terminate still remains.[551] However, after termination the buyer will be entitled to request the seller to refund the difference between the price of non-conforming and conforming goods.[552]

     (II) Ta'khir (Delay) in Exercise of the Right The other circumstance in which a buyer may lose his right to terminate the contract is delay in exercising his right after he has learned of the non-conformity giving rise to the right to terminate the contract. This is based on the view that the option to terminate should be exercised fouran (promptly). However, the question is controversial among the jurists and different views have been offered with respect to any option.

As far as the options of incorrect description and defect are concerned, the jurists distinguish between these two opposite options. In the first case, most jurists suggest that the option must be exercised promptly. Any unjustified delay would result in loss of the right.[553] It is worth mentioning that on this view, "prompt" is a customary concept. Accordingly, it will differ from case to case, depending on the circumstances of the case and the state of the buyer. In general, the buyer will lose his right to terminate if he fails to exercise his right within such period of time as he is able to do so according to the relevant custom.[554] In contrast, in the second case, most of the jurists believe that mere delay in exercising the right will not result in the loss of the right, unless the delay is such as to indicate his intention to affirm the contract.[555]

The different views are, it seems, based on the grounds on which the option to terminate is justified. According to the view which justifies the option to terminate on particular authorities, the option should not be lost by mere delay, for the authorities reflecting the option give an absolute right to the aggrieved party without restricting his right to a particular time or period of time. Accordingly, as long as the buyer's delay in exercising his right does not show his consent to the contract, he will be entitled to enforce his right of termination. The same is true if based on the doctrine of shart-e-demni. But if it is accepted that the options of inspection and defect are based on the principle of la darar, the consequence will be different. Under this view, the principle comes into operation in favour of an aggrieved buyer to protect himself against losses imposed on him as a result of the seller's non-conforming delivery. According to this view, the principle gives the buyer a reasonable opportunity to decide and declare his intention. Any failure to do this while he is able to discharge himself from the detrimental contract will be at his risk.[556]

It seems that the buyer's right to terminate the contract for seller's non-conforming delivery should be exercised promptly, since, as already explained, the main reason for giving the buyer a right to terminate is the principle of la darar. For this purpose, he should be given only an adequate opportunity which enables him to benefit from this legal protection within that period. In addition, where the buyer, knowing of his right and being able to exercise, does not exercise it he will be regarded as having acted to his detriment (the principle of iqdam). Moreover, giving an indefinite right to the buyer would be harsh for the seller if one takes into account the fact that under Shi'ah law the buyer is not under any duty to inform the seller of the lack of conformity of the goods delivered.

     (III) Position of the Non-Conforming Documents One of the most important purposes of a commercial buyer is to have access to the goods for resale. An international buyer may wish to resell the purchased goods before they arrive at his destination. This is easily possible when the contract is made in the form of a documentary sale. Under such a contract, the buyer possesses documents representing the nature, quality, quantity and other specifications of the purchased goods. The documents enable the buyer who wishes to resell or obtain credit required for his future commercial activities to deal with them without having to wait for actual delivery. The crucial question which arises here is whether merely dealing with the documents will result in the loss of the right to reject for undisclosed defects, whether they are related to the documents themselves or to the goods. The question has not been addressed by Shi'ah jurists at all. Accordingly, it should be answered on the basis of general principles.

As already explained, according to general principles of Shi'ah contract law, it would not seem any problem if one suggests that under a documentary sale contract, the buyer may have two separate rights to reject: a right to reject non-conforming documents, and a right to reject non-conforming goods. Where the seller tenders documents which do not conform with the contract, the buyer is entitled to reject them and request conforming documents. However, if the buyer, knowing of the non-conformity accepts them he should be regarded as having accepted them and will lose his right to reject them on the principle of iqdam.

The question which arises here is whether waiver of the right to reject non-conforming documents would result in the loss of the right to reject the goods where they prove non-conforming on arrival. It is suggested that if the non-conformity of the goods with the contract was apparent on the face of the documents, he should be deemed to have lost his right to reject the goods. For, to accept documents representing non-conforming goods is a clear instance of conduct which indicates an intention to waive the right to reject. In contrast, if the defect was not apparent on the documents, mere acceptance of them should not result in loss of the right to reject the goods.

On the above interpretation, loss of the right to reject non-conforming documents does not necessarily result in loss of the right to reject the non-conforming goods. There may be cases in which the buyer loses, or is taken to have lost, his first right without losing his second right. The question is whether the buyer will lose his right to reject where he has dealt with the documents by, for instance, disposing of the documents representing the goods to a third party.

As stated before, it is a well-accepted rule of Iranian civil law and Shi'ah jurisprudence that the buyer will lose his right only when he has expressly declared his intention to waive his right or when his conduct and other circumstances of the case clearly show that he has such an intention. On this general principle, it is suggested that a buyer who deals with the shipping documents should not be taken to have intended to waive his right to reject unless he was actually, or should have been, aware of the fact and his entitlement to reject. Accordingly, where the buyer learns later of the fact that the documents possessed a wrong date of shipment he should be allowed to reject them. The same is true a fortiori as to the buyer's right to reject the goods where it proves that they do not conform with the contract conditions.

2.4. Effects of Termination

As in English law and the Convention, under Iranian civil law and Shi'ah jurisprudence, when election of termination for breach of contract validly takes place, it affects both the contract and relations of the parties from that time.

2.4.1. Effects on the Contract

The question of from when termination affects the contract has not caused major discussion between the Shi'ah jurists and Iranian lawyers. With a few exceptions,[557] it is commonly said that it is a general rule of Shi'ah and Iranian contract law that termination of the contract by an innocent party for the other party's breach operates from the time of termination rather than the time of contract.[558] However, it seems that it is not an entire picture of the law to say that termination has only prospective effects. Although some support can be found for the view that termination has prospective effect,[559] there can be found certain indications of retrospective effects of termination when, for instance, it is said that the purpose of termination is, like the mutual termination (i.e., iqalah), to place each party in the position in which he was at the time of making the contract, provided that it does not affect the rights of third parties;[560] or the point that by termination, both the subject-matter of the transaction and the consideration for it are automatically restored to the party who was the owner before the contract was made.[561] Such an effect seems to treat termination as retrospective rather than prospective. It can therefore be said that as far as such an effect is concerned, the contract is terminated ab initio.

2.4.2. Effects on Rights and Obligations

Generally, a valid termination of the contract releases not only the victim of breach but also the party in breach from their contractual obligations to perform in the future.[562] However, no jurist has examined the question what effects will termination have on the injured party's right to claim damages. This is a question which has to be examined in a seperate work. For now it suffices to say that the defaulting seller is not totally discharged from any liability, but may be liable to pay damages according to general principles. This liability may relate both to breaches committed before termination and to losses suffered by the buyer as a result of the seller's refusal to perform his future obligations. The contract will survive termination and in awarding the buyer damages for the seller's breach, the court should assess the buyer's legitimate expectations by reference to the terms of the contract.

PART FOUR: Comparative Assesment

The primary purpose of this study was to present a general picture of the buyer's right to withold performance and termination of contract for seller's non-conforming delivery under Iranian civil law and Shi'ah jurisprudence. It was suggested that this could be achieved by examining the issue under developed legal systems. This would help the writer to identify gaps in the undeveloped system and also have the rules provided in developed systems as guidelines for dealing with the issue under the undeveloped system. For this purpose, the issue has been dealt with first under English law and the United Nations Sales Convention and then under Iranian civil law and Shi'ah jurisprudence. In the part on Iranian civil law and Shi'ah jurisprudence, it was first attempted to identify the existing law. When no clear answer was found, great attempts were made to answer the relevant questions by interpretation of the jurists' judgements (fatawa) made in similar cases and the original authorities on which they relied. In the absence of jurisprudential statements, an attempt was made to show how far the rules suggested in English law and/or the Convention could be adapted to the well-accepted principles of this system.

In the following, an attempt will be made to review the English and the Convention approaches first to highlight gaps in the current Iranian civil law and Shi'ah jurisprudence and then to compare both with Iranian civil law and Shi'ah jurisprudence approach to assess this system as described in the third part. This would help to show how far the rules relating to buyer's remedies under the two systems examined here could be utilised to fill the gaps in the current Iranian civil law and Shi'ah jurisprudence as well as points of similarity and difference between English law and the Convention, on the one hand, and Iranian civil law and Shi'ah jurisprudence, on the other hand.

     - Withholding Performance as a Separate Remedy. Withholding performance can play a significant role in providing transactional justice. Under this remedy, a party who has not received what he bargained for can lawfully suspend performance of his own part of the contract without being sued by the other party who has failed to perform his reciprocal obligations in accordance with the contract. This is an effective remedy for an aggrieved party where he has not already performed his obligations. He can withhold performance without the court's assistance and thereby induce the defaulting party to perform his obligations as the contract provided. As shown in the first and second parts, both English law and the Convention have addressed the right to withhold performance and provided their own answers. Iranian civil law and Shi'ah jurisprudence seem to be similar to their two counterparts on some occasions and to depart from them on others. In some areas their position seems clear but in others unclear, due to the failure of the Iranian Civil Code and the jurists to examine the question.

     - Delivery of Non-Conforming Goods. As far as the seller's failure to deliver goods is concerned, as English law (s. 28 of the Sale of Goods Act) and the Convention (Art. 58), the Iranian Civil Code and Shi'ah jurisprudence, by accepting the doctrine of haq-e-habs, have recognised that the buyer has an option to withhold performance of his payment obligation as long as the seller fails to deliver the subject-matter of the contract. As shown, no substantial theoretical divergence exists between Iranian law - Shi'ah jurisprudence and the two other systems. Both English law and the Convention base the remedy of the right to withhold performance of the buyer's payment obligation on the theory of interdependence of the delivery and payment obligations (s. 28 of the Sale of Goods Act 1979 and Arts. 58 and 71 of the Convention) and Iranian civil law and Shi'ah jurisprudence base the remedy on the theory of shart-e-demni, as some jurists suggest, or u'qoud mua'wwad, as the others suggest, which is similar to the English and the Convention analysis. Accordingly, it can be said that under all four systems, the remedy is justified on the basis of the theory of dependency, whether it is by operation of law or will of the contracting parties, as the first approach in Shi'ah law suggests.

The difference appears where the seller has performed his delivery obligation in a way which does not conform with the contract terms. In English law, although the Sale of Goods Act 1979 has referred to the buyer's right to reject the goods where the seller's non-conforming delivery has resulted in breach of a term classified as a "condition" (s. 11(4)), as explained earlier in detail, it is not entirely clear whether this is a separate right or a component of a single right, i.e., the right to treat the contract as repudiated. Nevertheless, a substantial number of English authors suggest that rejection is distinct from the right to treat the contract as repudiated and that it is a particular form of the right to withhold performance. In contrast, it was shown that although the Convention does not mention the buyer's right to withhold performance within the remedial provisions provided for the buyer (Arts. 45-52), close analysis of the Convention provisions demonstrates that the buyer has a separate right simply to withhold performance of his obligations. The two systems, however, differ in that in the Convention, unlike English sale of goods law, which precisely provides that any breach of condition entitles the buyer to reject, it is not precisely determined what non-conformity will give rise to the right to refuse to accept and take delivery of the goods. However, it was shown that the buyer is certainly not required to show that the lack of conformity has amounted to a "fundamental breach" defined in Art. 25. Fundamentality of breach is only required for the purpose of termination and requiring delivery of substitute goods (Arts. 49(1)(a), 51, 72, 73 and 46(2)). Similarly, it was argued that the Convention does not certainly allow the buyer to refuse to accept the goods for any lack of conformity. Close consideration of Arts. 46(2), (3) and 71(1) suggest that the buyer is not entitled to reject the goods for minor lack of conformity. This result, deduced from the relevant provisions of the Convention, accords with the system of remedies provided by the Convention, the principles of good faith (Art. 7(1)) and mitigation (Art. 77). It appears that the Convention has left the case to the arbitrators to decide in accordance with the particular circumstances of each case.

Despite this apparent sharp difference, it seems that as far as the buyer's right to reject is concerned, the difference between the two systems will not be substantial in some cases. This would be the case where the buyer has alleged that the seller's non-conforming delivery has resulted in breach of a term implied by ss. 13-15 of the English Sale of Goods Act. In that event, s. 15A(1) of the Act, by recognising the rule that the buyer who does not deal as a consumer will not be entitled to reject where breach of a term implied by ss. 13-15 is so slight that it would be unreasonable for the buyer to reject the goods, gives in fact the court a discretionary power to decide whether rejection was or not was reasonable. Moreover, as already shown, English courts will usually be disinclined to treat a term placed outside the area of legally classified terms as a condition if the result of such a construction would be unreasonable.

In Iranian civil law and Shi'ah jurisprudence, as already shown, the Iranian Civil Code and the jurists, by recognising haq-e-radd (right to reject) have in principle accepted that the buyer has an option to withhold performance where the seller has delivered non-conforming goods. However, no proper guidelines are provided in these two systems to answer the question: under what circumstances should a buyer be given the right to reject a non-conforming delivery? Is he entitled to reject the goods for any lack of conformity (as English sale of goods law suggests where a "condition" is broken) or must there be some restriction on the right (as the Convention and s. 15A(1) of the English Sale of Goods Act suggest)? Each of the given approaches may be supported in this system. This is because, Shi'ah jurists have based the right to withhold performance for non-delivery on two different criteria. By applying them to the case of non-conforming delivery, one may argue that if it is accepted that the right to reject should be based on shart-e-demni (implied agreement), it was the mutual intention of the contracting parties that any lack of conformity should give rise to the right to reject. In contrast, if it is accepted that the right must be justified on the basis of nature of a a'qd -e-mua'wwad (the theory of mutuality), it is difficult to say that the nature of the reciprocal contract requires that any party should have the right to refuse to accept the other's performance for any lack of conformity. On this basis, it was suggested that the right to reject must be restricted to cases where the lack of conformity is not trivial.

If one describes Iranian civil law and Shi'ah jurisprudence according to the first doctrine, it would be more similar to English law than the Convention. In any case, rejection should be justified on the mutual intention of the contracting parties. The court should look at the terms of the contract and the other circumstances surrounding the case to decide whether a perfect tender was, or is assumed to have been, the pre-condition of the buyer's acceptance. Nevertheless, they will depart from English law in two aspects. The first is cases covered by s. 15A of the English Sale of Goods Act. The second is that, unlike English law, the Iranian Civil Code and the Shi'ah jurists are reluctant to pre-classify a contract term as a condition. In contrast, if explained on the basis of the second doctrine, Iranian civil law and Shi'ah jurisprudence would seem very similar to the Convention approach; in all the three systems, the court should look at the effects of the breach on the buyer's position to decide whether or not the buyer was entitled to refuse to accept the seller's delivery. However, they will be close to the English approach in cases covered by s. 15A of the Sale of Goods Act 1979, since in Iranian civil law and Shi'ah jurisprudence, as in English law in respect of cases covered by s. 15A, the court should look at the effects of the breach and see whether or not in the circumstances of the case at hand rejection is or is not customarily unreasonable for the buyer.

     - Tender of Non-Conforming Documents. Particular problems may arise where the seller fails to perform his duty to procure and tender documents representing the goods in accordance with the requirements provided by the documentary sale contracts.

The Convention while referring to the seller's duty to deliver goods and documents in accordance with the contract terms (Arts. 30 and 34), has not properly answered these questions. Although, relying on Arts. 30, 34 and 58(1) which provide that the seller must tender documents which are in conformity with the contract, one may argue that the buyer has an option to refuse to accept non-conforming documents, the other questions are left unanswered. This is perhaps because the subject is already adequately covered in such well known and widely accepted terms as the International Chamber of Commerce's Incoterms and its Uniform Customs and Practice for Documentary Credits. In contrast, English common law has addressed the issue in detail. Under a typical documentary sale contract, i.e., c.i.f. terms, English courts have regarded the seller's duty to tender conforming documents as distinct from the duty to deliver conforming goods and thereby they have held that breach of any of these duties would allow some remedy.[563] By classifying the seller's duty to tender conforming documents under documentary sale contracts in accordance with the contract terms as a "condition," English courts have granted the buyer a right to reject them for any lack of conformity. By recognising a right to reject non-conforming documents distinct from the right to reject non-conforming goods, English law gives the buyer the right to reject the former even though the goods themselves are perfectly in accordance with the contract.[564] English law has also taken a further step and provided that the right to reject non-conforming goods is not necessarily impaired by acceptance of the documents.[565] Thus the buyer could still reject the goods after accepting the documents if the goods suffered from a defect which did not appear on the face of the documents. However, if the defect giving rise to both rights of rejection is a single breach, for example, the goods are shipped late and this fact appears from the documents, the buyer's acceptance of the documents has been treated as having waived his right to reject the documents as well as the goods constituting their subject and thus he is bound to accept the goods on arrival,[566] although he has been given an opportunity to reject the goods on arrival if a different defect, or non-conformity, not appeared by the documents, becomes apparent.

Iranian civil law and Shi'ah jurisprudence, in contrast, seem very poor in this connection. They have not developed proper rules to regulate the seller's duties to tender conforming documents and the buyer's remedies where the seller fails to perform his duty to tender documents conforming to the contract requirements. The buyer's right to reject non-conforming documents is entirely unknown in Iranian civil law and Shi'ah jurisprudence. It is, however, suggested that the English law rules might work in these systems. As indicated before, the seller's duty to prepare and tender documents representing the purchased goods should be analysed on the basis of the theory of shart-e-fe'l. Where the seller fails to tender documents in accordance with the contract terms, the buyer should be given a right to refuse to accept them. The suggestion can be justified on the basis that, in a documentary sale transaction, the seller is under a general obligation to prepare particular documents and hand them over to the buyer in accordance with the contract terms. The buyer is obliged to accept and pay in exchange for such a performance. As long as the seller does not tender such a performance, the buyer is not under any duty to accept and pay for them. It is also submitted that under such contracts, the theory which justifies withholding performance on the basis of shart-e-demni (implied stipulation) is applicable to the issue in question. It is a well-settled customary law that the seller should tender documents precisely conforming to the contract requirements. Any non-conformity gives the buyer (or his bank when the payment made by letter of credit) the right to reject and pay for them.[567] Thus, unless a contrary intention appears, it is quite possible to infer that the parties to such contracts impliedly agreed that the seller should tender conforming documents and any lack of conformity will entitle the buyer to reject them. It is also suggested that the buyer under a documentary sale contract should be given the right to reject documents for defects on their face, whether the defects relate to the goods or to the documents themselves or both. It should be regarded as a separate right based on breach of the duty to perform shart-e-fe'l, while the right to reject the goods is founded on the basis of breach of the duty to deliver conforming goods. However, it is not clear whether the buyer should be given the right to reject the goods on arrival for defects in the goods if he has already accepted documents representing them. It may be suggested that where the defect is one which was not apparent on the face of documents, he should be entitled to reject, since as will be seen in respect of the right to terminate the contract, the buyer will lose his right when he was, or ought to have been, aware of the lack of conformity giving rise to the right. But if the defect was apparent on the face of documents or could be disclosed by a simple examination, he should be taken to have also accepted the non-conforming goods on the doctrines of isqat (waiver) and iqdam (action against himself).

     - Partial Non-Conforming Delivery and Delivery of Wrong Quantity. Both English law and the Convention have set forth particular provisions for the cases where the seller has either delivered the wrong quantity, or has delivered the right quantity but not all of the goods delivered conform to the contract.

In English law, where the seller has made a partial non-conforming delivery, the buyer will be entitled to reject all if the requisite requirements are satisfied (s. 35A of the Sale of Goods Act 1979). Similarly, the same Act gives the buyer the right to reject some or all of the defective goods and keep those which conform to the contract, provided that the goods unaffected by the breach were included in those goods he has accepted (s. 35A(1)). In contrast, although the Convention has allocated a particular provision to the case of partial non-conforming delivery (Art. 51), it does not expressly address the question whether the buyer would be entitled to reject all the goods for partial non-conformity, or keep the conforming part and reject the non-conforming part. Nevertheless, relying on Art. 51(1) which expressly enables the buyer to exercise his remedies under Arts. 46-50 in respect of the non-conforming part, one may suggest that the same principles applicable to the case where the whole goods are affected by the seller's default can be applied to the case where a particular part is affected. However, it seems that the rules under s. 35A of the English Sale of Goods Act and the rule set forth by Art. 51(1) of the Convention differ in two aspects. First, as the language of s. 11(4) shows, s. 35A(1) is concerned with non-severable contracts, while the position of Art. 51(1) of the Convention is not so clear. Some commentators suggest that it is designed to regulate severable contracts but others say that it is general. Second, is that the first applies to the case where the buyer could reject all of the goods but wishes to keep some and reject the other part, while under the latter the buyer may reject the non-conforming part even though he is not entitled to reject all. It might be argued that these two differences are not substantial. This is because: First, the provision under s. 35A(1) is subject to the qualification that goods accepted by the buyer should not constitute a part of single commercial unit (s. 35A(7)). Accordingly, in English law the mere fact that something is physically separate does not follow that it would be necessarily appropriate to reject it separately.[568] Second, as some commentators suggest, Art. 51(1) of the Convention is only concerned with severable contracts to which s. 31(2) of the English Sale of Goods Act refers.

Partial rejection is also addressed by both systems where the contract is for delivery of goods by instalments. In both systems, the buyer is impliedly empowered to reject a defective instalment even though he has accepted previous instalments. However, it is not clear what lack of conformity gives the buyer the right to refuse to accept the non-conforming instalment(s). One difference appears between the English Sale of Goods Act and the Convention in this respect; the former extends the right of partial rejection right to the instalments (s. 35A(2)), while the Convention contains no such provision.

In Iranian civil law and Shi'ah jurisprudence, as shown before, no jurist has disputed the buyer's right to reject goods delivered by the seller where some of the goods do not conform with the contract. However, neither the Iranian Civil Code nor the jurists have directly addressed partial rejection as a remedy. What they have discussed is the right to terminate the contract partially on the ground of the option of defect where the seller of specific goods has delivered goods some of which are not in conformity with the contract quality. However, as seen before, although some jurists have refused to accept the right of partial termination, a number of jurists have accepted the grant to the buyer of a right to terminate the contract (including the right to refuse to perform his obligations if he has not already done so) in respect of the non-conforming part. It was shown that the different views are due to the lack of a clear distinction between severable and non-severable contracts. If the contract is treated as non-severable, no jurist disputes that breach of shart-e-sefat or sharte-e-sehhat in respect of some portion of the purchased item should be treated as a breach of the whole contract giving rise to a right to reject it. As already shown, those jurists who disagree with giving a right of partial rejection refer to such a case. In contrast, where the seller under a severable contract has delivered goods some of which do not correspond to the contract, the buyer will be entitled to keep the conforming part and reject the non-conforming part. It seems that those jurists who support the view that the buyer has a right of partial rejection [569] refer to such a case. Accordingly, it is quite possible to say that in Iranian civil law and Shi'ah jurisprudence, as in English law and the Convention, the question whether the buyer should be given a partial-rejection right depends on whether the contract is severable or non-severable. Where the contract is construed as severable, each severable part will constitute the subject of a separate subsidiary contract within the main contract and the buyer will have the same right with respect to the severable part as he has in respect of the whole goods under a non-severable contract. It is suggested that this rule is applicable whether the contract is for the sale of specific or unascertained goods. However, the jurists have not made clear what lack of conformity will give rise to the right of rejection. It seems that, as some academic authors suggested in English law, any severable part should be regarded as the subject of a subsidiary contract within the main contract and the general principles applicable to non-severable contract ought to be applied to the severable part under such contracts.

     - Delivery of Wrong Quantity. Both English law and the Convention have provided particular provisions for the case where the seller has delivered the wrong quantity of goods. Under English law, where the seller delivers to the buyer a quantity of goods less than he contracted to sell, the buyer may reject them (s. 30(1) of the Sale of Goods Act 1979). The same right is given to the buyer where the seller delivers to the buyer a quantity of goods larger than he contracted to sell. In the latter case, the buyer may accept the goods included in the contract and reject the rest, or he may reject the whole. However, the right to reject the whole of the goods delivered is subject to s. 30 (2A) under which the buyer who does not deal as a consumer will not be entitled to reject the goods where the shortfall or, as the case may be, excess is so slight that it would be unreasonable for him to reject. In contrast, although the Convention has expressly empowered the buyer to refuse to take delivery of the excess quantity where the seller delivers a quantity of goods greater than that provided for in the contract (Art. 52(2)), it does not make clear whether the buyer is entitled to refuse to take delivery of the goods delivered by the seller where they are less or greater than the contract quantity. And if so, what shortfall or excess can give rise to the right to reject. However, one may argue that since the buyer is, under certain circumstances, entitled to terminate the contract in its entirety (Art. 51(2)), which includes the right to refuse to perform his obligations insofar as this has not taken place, the same logic justifies the buyer's right to refuse to perform until complete delivery in conformity with the contract is offered. But this provision does not make clear when the buyer can benefit from this right. A further defect of the Convention rule is that it does not make clear whether the buyer can refuse to perform his obligations in respect of the missing part. This is also the position of s. 30 of the English Sale of Goods Act. As far as the Convention is concerned, one may argue that since the buyer is given the right to terminate the contract with respect to the missing part if the requirements of fundamental breach or the Nachfrist notice procedure are satisfied (Art. 51(1)) by express reference to Arts. 46-50, including Art. 49), it can be said, by analogy, that the buyer is entitled to withhold a corresponding portion of his own performance. The view can also be supported by Art. 58(1) which provides that the buyer is bound to pay only when the seller places the goods at the buyer's disposal.

In Iranian and Shi'ah law, in contrast, the question has only been addressed by the jurists where the seller of specific goods has failed to deliver the contract quantity. In that case, almost all of the jurists have suggested that the buyer is entitled to refuse to accept the wrong delivery.[570] However, the position of the case where the seller of a particular quantity of unascertained goods delivers to the buyer a quantity of goods larger or less than he contracted to sell is unclear:

It seems that s. 30 of the English Sale of Goods Act 1979 would work properly in this system. This is because, as the jurists' discussions show, the seller's duty to deliver the contract quantity is placed in the category of shart-e-sefat.[571] Accordingly, the buyer's duty to accept is qualified by the seller's complete performance. As long as he has not delivered the right quantity, the buyer's duty does not arise. It is also suggested that the same rule, by analogy, is applicable to the case where the buyer wishes to keep the goods delivered and demand that the seller deliver the missing part. However, the position of the latter question is not clear: Is the buyer entitled to reject for any shortfall or excess? There seems to be no rule such as the English de minimis rule or the test of "unreasonableness" provided by s. 30 (2A) of the English Sale of Goods Act. Accordingly, it might be thought that in Iranian and Shi'ah law, the buyer may reject for a minor non-conformity with the quantity stipulation. However, it seems that the rule under s. 30 (2A) would be compatible with this system, since, as suggested with respect to other forms of non-conformity, by virtue of the principle of ufou bel u'qoud, the buyer is required to accept the seller's performance. He will be discharged of this duty only where the lack of conformity results in such a degree of seriousness that rejection is not customarily regarded as unreasonable for the buyer. In such circumstance, the principle of la darar comes into operation and allows the buyer to treat himself as discharged from the duty to accept.

     - Relationship between Withholding Performance and Termination. A further question is whether a buyer who is given a right to reject the non-conforming goods should also be given an immediate right to terminate the contract. English law and the Convention have responded, but in different ways.

English law has based termination on two different theories -- the theory of breach of "condition" and that of HongKong Fir. Where the seller's non-conforming delivery results in breach of a term properly classified as a condition, the relationship between the buyer's right to reject the non-conforming goods and his right to terminate the contract is not quite clear. For this reason, two different interpretations are suggested by the English commentators. A considerable number of academic writers have interpreted the language of the Act (s. 11) as providing that any non-compliance with a condition by the seller will immediately place him in breach of condition and give the buyer an immediate right to reject the non-conforming goods and treat the contract as repudiated, while some others suggest that the mere delivery of goods which do not comply with a condition will not place the seller in breach of condition. On their view, the buyer's immediate remedy for the seller's non-conforming delivery is simply to refuse to accept it. Termination will be justified only where the seller's defective delivery amounts to a repudiation of the contract or the time for performance of contract has expired. The Convention, in contrast, makes a clear distinction between the right to withhold performance and that of termination. While refusal to perform will be justified where the seller's non-conforming delivery attains a certain degree of seriousness, termination is based primarily on the doctrine of "fundamental breach" (Arts. 49(1)(a), 51(1), 72(1) and 73).

If the first construction is preferred, the English approach would substantially differ from the Convention approach. The difference would appear more significant taking into account the fact that the English Sale of Goods Act 1979 has adopted an a priori system of classification of certain contract terms into "conditions" (ss. 13-15). Accordingly, under this construction, the buyer will be entitled to reject the goods and terminate the contract (subject to s. 15A(1) of the Sale of Goods Act), even though the actual breach is minor in character, while under the Convention, the buyer will only be entitled to terminate the contract on account of the seller's non-conforming delivery where the breach has resulted in a "fundamental breach."

However, the traditional method of justifying termination under English law has been somewhat modified by the HongKong Fir doctrine.[572] Under this doctrine, all contract terms under a contract for sale are not necessarily divided into "conditions" or "warranties." There are some contractual undertakings which cannot be categorised as "conditions" or "warranties." Where such a contractual term is broken by the seller, the buyer will not be entitled to reject the goods and terminate the contract immediately. Termination under this doctrine should be justified by reference to the severity of the breach and not turn on the a priori classification of the terms breached. In this way, English law becomes close to the Convention approach. Despite this similarity between the two systems, some difference still remains. In English law, no authority can be found to make a clear distinction between the buyer's right to reject and that of termination and there is no decided case in which a buyer has been given a right to reject on the basis of this doctrine without being entitled to terminate the contract.

Under both systems, termination on the doctrine of severity of breach will be justified where it has resulted in serious consequences. English courts have used various expressions to describe this doctrine and the Convention uses the term "fundamental breach" to refer to the test. In English law, three factors have been considered by the courts for the purpose of determining whether or not the breach is sufficiently serious [573]: the nature of the breach, and its actual and foreseeable consequences. Similarly, according to Art. 25 of the Convention, a breach of contract will be regarded as "fundamental" "if it results in such detriment to the other party as substantially to deprive him of what he is entitled to expect under the contract." However, Art. 25 of the Convention does not make clear whether the fundamentality of breach is to be assessed by reference to the actual consequences of the default, or as in English law, by reference to its actual and/or foreseeable results, although one may argue that the phrase .".. to expect under the contract" seems to suggest the latter. But neither system has made clear what degree of foreseeability is enough to justify the buyer's claim.

Although the doctrine of serious breach has been explained by different wordings in English cases, as explained before, these are in fact different ways of saying the same thing. In comparison, the "fundamental breach" test, as defined in Art. 25 of the Convention can be likened to the words Diplock LJ used to describe the doctrine of serious breach in HongKong Fir Shipping Co. Ltd. v. Kawasaki Kisen Kaisha Ltd [574] and subsequently applied to the sale of goods cases.[575] Accordingly, despite the difference in wording, it seems that both the English and the Convention approaches say the same thing: the seller's breach must result in such event (detriment) that it substantially deprives the buyer of what he was entitled to expect under the contract.[576] Under both systems, determination of the degree of a given detriment (or event, as expressed in the statement of Diplock L.J.) and drawing the line between substantial and insubstantial deprivation is not left to the judge's sole and sovereign appreciation, but requires him to decide in the context of the contract and the circumstances which existed at the time the contract was made. By qualifying the injured party's expectation (benefits) by the phrase "he is entitled to expect under the contract," both system seem to introduce an important qualification and ensure that it is not solely the buyer's expectations which are relevant. It depends as much on the seller's expectations as on the buyer's. Thus, as long as the seller has not been informed of the buyer's opportunity to obtain a particular benefit, it cannot be said that the buyer was "entitled" to expect that benefit under the contract. However, the two tests might differ in that, according to the English test, as the wording of Diplock LJ in describing the doctrine suggests, the court should only assess the degree of deprivation by reference to loss of those benefits he should have obtained from the contract.[577] Whereas, such a restriction may not be inferred from Art. 25 of the Convention, the language of which provides .".. he is entitled to expect under the contract ..."

Neither approach, however, introduces any concrete factors to guide the judges in deciding whether the consequences of the breach have reached the threshold of substantial deprivation. It seems that, under both systems the question is left to the court to decide on the basis of the circumstances of each particular case. The courts will classify a failure in performance with an eye to the nature of the breach and its consequences, considering all the circumstances surrounding the contract, the subject-matter, and the position of the party in breach and other relevant factors.

Nevertheless, one may argue that the Convention approach departs from the English approach in a number of aspects. First, as will be seen, the Convention has granted the seller a general right to cure (Arts. 34, 37 and 48). On this basis, the question whether or not the breach committed by the seller before the contract date has expired was fundamental must be assessed in the light of the seller's offer to cure. Where the seller has offered to cure his default in accordance with Art. 37, it would convert an otherwise fundamental breach into a non-fundamental one. Whereas, English law, as most English commentators suggest, does not recognise such a right. Thus, under the English approach, a breach satisfying the requirement of seriousness may be regarded as fundamental even though the seller has offered to cure it. Second, where the seller proves that the alleged consequences of his breach was not actually foreseen by him or could not have been foreseen by a reasonable person of the same kind in the same circumstances, the breach will not be regarded as a fundamental breach under the Convention, while the test of serious breach, as described in the HongKong Fir case, does not refer to such a limitation. Thus, it might be said that, under English law, where the buyer could show the court that the seller's breach has resulted in such consequences which deprived (or will deprive) him of substantially the whole benefit he was entitled to obtain under the contract, the breach would be regarded as sufficiently serious as to justify his termination. And the seller will not be able to excuse himself on the grounds that he did not foresee, or a reasonable person in his circumstances could not have foreseen, such consequences. However, one may argue that since the buyer is not entitled to recover damages for non-foreseeable losses, he should not be entitled to rely on such consequences for the purpose of terminating the contract.

Assuming that under both systems the buyer can only rely on foreseeable results, a number of questions are left unanswered. First, although the Convention places the burden on the party in breach to show that serious consequences were not reasonably foreseeable, the position of English law is not clear. Second, in both systems it is not clear to what degree the loss resulting from the breach must be foreseeable by the seller, although one may suggest that the criterion prescribed in the context of damages can be applicable to the present case. Likewise, it is not clear at what time is the foresight of the party in breach to be judged? Is the relevant time when the contract was concluded or when the breach was committed, or does it depend on the circumstances of each case? Nevertheless, it is possible to argue in support of the first approach in both systems. As indicated in respect of the concept of the injured buyer's contractual expectations, whether or not the buyer was entitled to expect to have a particular benefit should be ascertained within the contract terms and other circumstances which came to the attention of the seller in breach at the time of making the contract. The same analysis seems to be applied to the measurement of foreseeability of the consequences of the breach. As far as the Convention test is concerned, one can even go further and argue that the language of Art. 25 is in line with this approach, since it defines the consequences relevant to the determination of fundamental breach in terms of what a party "is entitled to expect under the contract" and the second sentence of the Article refers to the foreseeability of "such result" by the party in breach. Accordingly, as contractual expectations are formed at the time of contracting, foreseeability of substantial deprivation of those expectations by reason of a breach should also be measured at that time.

Iranian Civil Code and Shi'ah jurists, in contrast, have justified termination on the basis of a complex system of kheyarat (options to terminate). The jurists, instead of closely analysing the ground(s) upon which kheyarat should be justified, have placed much emphasis on examination of kheyarat themselves. Looking at their detailed discussions under these headings shows that they seem to accept a mixed approach. Where the seller of unascertained goods has tendered non-conforming goods, rejection is sharply distinguished from termination: the buyer is only given a right to reject the goods. Termination will be available for the buyer where he cannot coerce the seller to deliver conforming goods through the judicial authorities. In contrast, where the seller of specific goods has made a non-conforming delivery, almost all the jurists suggest that in any case in which the buyer is entitled to reject the goods he would be able to terminate the contract immediately.

Dealing with termination in this way causes some significant questions to be left unanswered. (a) Why should the buyer have an absolute right to terminate a contract for sale of specific goods? (b) When can the buyer terminate the contract for sale of unascertained goods? To deal properly with the right to terminate the contract and its relationship with the right to reject non-conforming goods under this system, a suggestion was made to analyze the grounds upon which the jurists have occasionally justified the grant of kheyar (the right to terminate). Likewise, it was shown that basing the option to terminate on one ground rather than other would have significant effects in granting a buyer the right to terminate the contract and would help to justify why the buyer should have the right to terminate the contract, and to decide what lack of conformity should entitle him to terminate the contract.

As discussed in detail, a thorough consideration of the jurists' arguments in justifying the grant of the option of termination reveals three general principles: rewayat, shart-e-demni and la darar. When a party is given the right to terminate the contract because a particular rewayat says so, the scope of the right should be ascertained in accordance with the express language of that authority. It cannot be extended to analogous cases. However, as already shown, very few options are solely based on the rewayat. The primary principles justifying the right to terminate are, therefore, the doctrine of shart-e-demni and the principle of la darar.

     - Doctrine of Shart-e-Demni. Where a particular kheyar (option to terminate) is to be based on the parties' mutual intention, two requirements must be satisfied. First, it has to be proved that it was the implied mutual intention of the parties that the seller should have delivered goods perfectly corresponding with the contract descriptions (shart-e-sefat) and quality (shart-e-sehhat). Second, it is to be proved that the contracting parties have agreed that any breach of those terms would give the buyer an immediate right to terminate the contract. On the basis of this doctrine, as long as the buyer could show that the seller has broken his obligations under one of these terms, the buyer will be entitled to terminate the contract, no matter what actual detriment will result from the lack of conformity. If this construction is accepted, termination under Iranian and Shi'ah law would be similar to English law when it is justified on the basis of the doctrine of "condition." However, the two systems differ in that in English law some particular contract terms have been a priori classified as conditions by law, while in Iranian and Shi'ah law the jurists are inclined to remit the case to the court to decide in light of the particular circumstances of each case whether a particular contractual obligation is so important that any breach of it would give rise to an immediate right to terminate the contract.

The jurists seems to have applied this approach to the case of specific goods and where a shart-e-fe'l is broken. By analogy, it is suggested that the buyer should be given such a right in the case of unascertained goods. For this reason, in the case of late delivery, as will be seen, it is commonly said that the buyer has an immediate right to terminate the contract, whether it is for sale of specific goods or unascertained ones.

     - Doctrine of La Darar. If the right to terminate is to be based on the principle of la darar, termination should be justified on the basis of the consequences of breach. On this principle, the buyer will only be entitled to terminate the contract when the seller's breach results in a detriment such that it makes performance of the contract harmful for the buyer, since it is only in such a case that the principle of la darar comes into operation and the decree of luzoum-e-a'qd, which orders the buyer to perform the contract, ceases to operate. If this approach is accepted, Iranian and Shi'ah law would be more similar to the Convention than English law.

However, the jurists are not unanimous on a single view. Some are in favour of the former and others the latter. Nevertheless, as explained in detail, the primary ground justifying giving a right to terminate the contract is the principle of la darar. Although it is quite possible for the court to identify certain cases in which the contracting parties have agreed on an implied undertaking that any breach of shart-e-sefat, shart-e-sehhat or shart-e-fe'l gives a contracting party an absolute right to terminate the contract, it does not mean that all the options provided under the Iranian Civil Code and Shi'ah jurisprudence are to be justified on a single ground. It is perhaps for this reason that some jurists have justified termination on the first doctrine in some circumstances and on the second principle on some other occasions.[578]

If the suggested interpretation is accepted, Iranian and Shi'ah law would resemble English law more than the Convention. This is because, under the Convention, to decide whether the buyer is entitled to terminate, the court should only look at the effects of the breach, while under English, Iranian and Shi'ah law, the court's basic duty is to look at the terms of the contract and the surrounding circumstances to ascertain whether it was a condition of the contract that the seller had undertaken to make a perfect delivery and that the buyer should have an immediate right to reject and terminate the contract if the seller failed to make perfect delivery. If such a condition is not proved, the court should then look at the breach itself and examine whether it is sufficiently serious to justify termination of the contract on the principle of serious detriment.

When termination is to be justified on the basis of the first principle, the aggrieved buyer has no great difficulty; he should only satisfy the court that the broken term was of the above-described character. But if termination is to be based on the second principle, this crucial question arises: What degree of detriment will be sufficient for the principle to come into operation? Notwithstanding that a considerable number of Shi'ah jurists have occasionally justified the option to terminate on the basis of this principle, they have not examined this question. Can one suggest that the English and the Convention test of "substantial deprivation" would work here? If so, how can it be justified in this system?

In the third part, by relying on what the jurists have stated in the context of the option of lesion (kheyar-e-ghabn), it was suggested that the principle of la darar should come into operation to justify termination when the detriment (darar) caused by the seller's non-conforming delivery is of such a degree a reasonable man would not overlook it. However, whether or not the contract becomes harmful for a reasonable person in the buyer's position must be assessed by reference to the degree of his deprivation from those legitimate benefits he should obtain from the contract. Although no jurist has addressed such a restriction, it seems that it is clearly inferable from the context. It is obvious that whether or not a particular contract becomes harmful for the buyer by reason of the seller's breach should be measured in accordance with the degree of the buyer's deprivation of those benefits he was entitled to obtain through proper performance of the contract by the seller.

But, is this the same as the test provided under English law and the Convention? It is most likely that a reasonable person would not ignore the results caused by the breach, even though they are not such as to deprive the buyer substantially of his contractual benefits. Accordingly, one may argue that, under the Iranian and Shi'ah law test, the buyer will be entitled to terminate the contract for breach where he could not do so under the other two systems. However, it should be borne in mind that under Iranian and Shi'ah law, as will be seen later, the seller has a general right to cure. Accordingly, it is suggested that the question whether the seller's breach is sufficiently serious to make the contract harmful is to be assessed in light of the seller's right to cure; where the seller has offered to cure, as will be described later, the contract will not reasonably be harmful to justify the operation of the principle of la darar. In this way, the difference between the two tests is considerably reduced.

However, two further questions remain unanswered. First, can the buyer rely not only on consequences of the breach which have actually occurred, but also on those, which are foreseeable as likely future consequences of it? Second, how foreseeable must the actual, and probable, consequences of the breach be? Can he rely on any detriment caused by the breach, or only on those, which were foreseeable by the seller? As to the first question, it was suggested that the principle of la darar is broad. It covers both actual and foreseeable consequences. However, they are to be those that are most likely to happen. Likewise, as to the second question, as already pointed out, no jurisprudential statement exists in this connection. Nevertheless, it seems that the limitation provided under the Convention would be compatible with the general principles under Iranian and Shi'ah law. Accordingly, the court should only consider those results which were or ought to have been foreseeable by the seller according to the information available to him at the time of making the contract. If there is a particular circumstance that is significant for the buyer, he should bring it to the attention of the seller when the contract is made. The suggestion can be supported on the grounds that the principle of la darar would only negate those detriments caused by the party in breach. Any detriment caused by the party who failed to bring the special circumstances to the attention of the other party would be at his risk (the principle of iqdam). However, it is suggested that it is the seller's duty, as in the Convention, to show that the detriments caused were not reasonably foreseeable. This is because, where the seller's non-conforming delivery has resulted in sufficiently serious breach, it will bring the principle of la darar into operation. The seller will only be able to escape from the drastic effects of termination where he can show that it was in fact the buyer's action or omission.

Relying on what has been said above, it can be concluded that where the seller of unascertained goods fails to deliver goods corresponding with the contract requirements, the buyer should be given the right to terminate the contract only where the seller is not able and willing to make a fresh tender within the contract time. The suggestion can be justified on the basis that the mere non-conforming delivery by the seller does not render the contract harmful for the buyer, since the buyer has an opportunity to reject the non-conforming delivery and require the seller to deliver conforming goods. Where the seller is ready and able to deliver replacement goods which conform to the contract within the contract time without causing the buyer unreasonable expense or inconvenience, there will be no reason to justify the buyer's termination. The same is true where the seller has failed to perform his obligations under shart-e-fe'l such as the duty to prepare the relevant shipping documents in accordance with the contract requirements. Thus where the seller is ready and able to tender conforming documents, the buyer should not be entitled to terminate the contract provided that the seller's re-tender does not cause the buyer undue detriment. In contrast, where the seller of specific goods has failed to deliver conforming goods, no matter whether it is for breach of contract description (shart-e-sefat) or contract quality (shart-e-sehhat), the buyer should be given an immediate right to terminate the contract (as almost all jurists suggest). But it must be borne in mind that, in such cases, termination is not always the only means to protect the injured buyer. He can be protected by requiring the seller to cure by way of repair. If the seller is ready and able to cure the non-conformity by way of repair within the contract time without causing the buyer unreasonable expense or inconvenience, he will be adequately compensated. Under such circumstances, there is no reason to justify application of the principle of la darar allowing the buyer to terminate the contract. The buyer's termination in such cases would be justifiable only when the actual and/or foreseeable losses resulting from the breach make the contract harmful for the buyer, unless it is proved that the parties' mutual intention was that any non-conformity would give rise to the right to terminate (as may be the case in consumer transactions).

     - Termination of Severable Contracts. Both English law and the Convention have provided particular restrictions for termination of severable contract. Under both systems, the mere fact that the seller has made a defective delivery in respect of one or more severable parts will not entitle the buyer to terminate the contract as a whole, even though the requisite requirements in respect of the defective parts are satisfied (s. 31(2) and Arts. 51, 73). In such situations, the buyer can only reject the defective parts as described above. Termination of the contract as a whole will be allowed only when the seller's defective delivery in respect of one or more instalments has resulted in a serious breach. However, the language used to describe the ground justifying termination is different. On the one hand, s. 31(2) of the English Sale of Goods Act provides that it is a question in each case depending on the terms of the contract and the circumstances of the case whether a breach of contract in respect of one instalment is a repudiation of the whole contract, or whether it is a severable breach giving rise to a claim of compensation but not to a right to treat the whole contract as repudiated. On the other hand, Art. 73(2) of the Convention requires the buyer to prove that the seller's failure to perform one of his obligations in respect of any instalment gave the buyer good grounds to conclude that a fundamental breach of contract would occur with respect to further instalments. Despite the difference in the language of the two pieces of legislation, English case law seems to suggest that the practical results will be much the same as they are likely to be under Art. 73(2) of the Convention. As shown in detail, under English case law the seller will be treated as repudiating the contract as a whole by delivery of defective instalments if his default goes to the root of the contract by considering "first, the ratio quantitatively which the breach bears to the contract as a whole, and secondly, the degree of probability and improbability that such a breach will be repeated."[579]

However, the two systems appear to depart from each other in a number of aspects. First, while in English law it is not clear whether the buyer is entitled to reject prior instalments, by virtue of Art. 73(3) of the Convention, the buyer is given an opportunity, at the same time, to declare the contract terminated "in respect of deliveries already made or of future deliveries if, by reason of their interdependence, those deliveries could not be used for the purpose contemplated by the parties at the time of the conclusion of the contract." However, this difference may be more apparent than real since the rights conferred under Art. 73(3) only arise where the deliveries are interdependent,[580] in which case, some English authors have suggested the same right. Second, although the English Sale of Goods Act 1979 gives the buyer a right of partial rejection (s. 35A), it does not clearly answer the question: Is there any case where the buyer is able to terminate the contract as to the rejected part and keep it on foot with respect to the remainder where the seller has made a partially non-conforming delivery? Whereas, the Convention has expressly empowered the buyer to terminate the contract partially (Arts. 51(1) and 73(1) and (2)), although one may argue that the English Sale of Goods Act has also impliedly accepted partial termination since it does not allow the buyer to reject those instalments already accepted, as some English commentators suggest.

In Iranian and Shi'ah law, the position of the issue in question is somewhat complicated. The jurists have not separately examined termination of severable contracts. However, as already shown, some indications of the issue can be found when dealing with the question whether the buyer of specific goods has an option to terminate the contract in respect of the defective part and keep it on foot with respect to the sound part where the seller has delivered goods part of which are in conformity with the contract quality. In that case, no jurist has disputed the buyer's right to reject all of the goods and terminate the contract as a whole, but they have differed in regard to the buyer's right to terminate the contract partially. However, a number of important questions are here left unanswered:

As was shown, the jurists' different views in respect of specific goods are due to the lack of a clear distinction between the cases of severable and non-severable contracts. For this reason, it was suggested to distinguish between severable and non-severable contracts. Where the contract is construed as non-severable, the rules described above should be applied. But if the contract is construed as severable, as described before, it was suggested to distinguish between partial termination and termination of the contract as a whole. Termination of such contracts as a whole is to be permitted only where the seller's defective delivery in respect of one or more instalments is such that the buyer can reasonably conclude that the contract would be harmful for him. If this construction is accepted, Iranian and Shi'ah law would be close to English law and the Convention, although, as indicated in respect of non-severable contracts, the two tests differ in the degree of seriousness they require.

On this suggestion, no difference should be made between specific and unascertained goods. Where the required conditions of termination, as described above, are met in respect of a severable part the buyer should be given the right to terminate the contract with respect to that part, although the contract is for the sale of unascertained goods.

     - Termination for Delivery of Wrong Quantity. Unlike the Convention, which entitles the buyer to terminate the contract as a whole or in respect of the missing part where the seller has delivered only a part of the contract goods (Art. 50), the position of English law is not quite clear. Although s. 30 of the English Sale of Goods Act enables the buyer to reject the goods where the seller delivers to him a quantity of goods less or larger than he contracted to sell, it does not make clear whether the buyer is entitled to terminate the contract in its entirety or in respect of the missing part. Even sub-section (2A) which restricts the non-consumer buyer's right to reject to the case where it is unreasonable for him, does not say whether he has a separate right to terminate the contract. Accordingly, it is not clear whether the buyer's right to terminate should be based on the doctrine of condition or serious breach.

In Iranian and Shi'ah law, the jurists have only addressed the question in respect of the contract for sale of specific goods. In that case, it is commonly said that where a quantity term is broken the general rule explained as to breach of shart-e-sefat applies here, i.e., breach of which will entitle the buyer to reject the wrong quantity and terminate the contract on the basis of the option of incorrect description (kheyar-e-takhalluf an al- wasf). But the question whether the buyer should be given the right to keep the contract alive as to the part delivered and terminate in respect of the missing part is controversial. Similarly, they have not made clear whether the buyer should be given such a right where the seller of unascertained goods has only delivered part of the contract goods. Moreover, it is not clear what shortfall or excess will give rise to the right to terminate the contract in its entirety or in respect of the missing part.

It was, however, suggested that the buyer should be given the right to terminate the contract on account of delivery of the wrong quantity, whether the contract is for sale of specific or unascertained goods. But this right should be subject to some restriction. If the buyer wishes to terminate the contract in its entirety, the missing part should be such that its absence makes the contract harmful for him. However, he should be given the right to terminate the contract as to the missing part where it is not so slight that it would be customarily unreasonable for him to do so. If this construction is adopted, Iranian and Shi'ah law would differ from English law in that, while under the suggested interpretation the buyer's right to terminate is to be subject to the seriousness of the lack of conformity, which is to be assessed in light of the seller's offer to cure, under English law, assuming the academic suggestion, the seller's duty to deliver the right quantity is a condition, breach of which gives the buyer, subject to s. 30 (2A), an immediate right to treat the contract as repudiated. It also differs from the Convention in the degree of seriousness required, since under the Convention the missing part must be such as to result in a fundamental breach of the contract, whereas, the requirement of seriousness under Iranian and Shi'ah law need not necessarily amount to a fundamental breach as defined under the Convention. The same is true where the buyer wishes to terminate the contract in respect of the missing part; it should be such as to render the contract harmful in respect of that part.

     - Termination for Breach of Time Stipulation. With respect to stipulations as to time, English law and the Convention have adopted different approaches. While the Convention provides that termination of the contract for delay in performance should in principle be based on the doctrine of "fundamental breach" -- whether delivery is made beyond a specific date or period of time fixed by the contract or if delivery is made outside a reasonable time where no specific time provided by the contract (Art. 33), English law seems to base it on the theory of "the nature of contract terms." Although s. 10(2) of the Sale of Goods Act 1979 provides that whether any stipulation as to time of performance other than time of payment is or is not of the essence of the contract depends on the terms of the contract, it was for a long time assumed by case law that the seller's duty to deliver on time under commercial contracts would have to be classified a priori as a condition regardless of the severity of the breach. Accordingly, under English law, the buyer is prima facie entitled to terminate the contract for any delay in delivery, no matter how trivial, or whether or not it causes any loss. However, as explained before, this is a rule based on considerations of commercial convenience and certainty applicable in a particular context, rather than on any general principle or presumption as to time being, or not being, of the essence.[581] Accordingly, where it is proved that the time for performance is not of the essence, termination should be justified on the basis of the doctrine of serious breach, or on the ground of the seller's failure to deliver within the reasonable time fixed by the buyer according to the common law rule, i.e., notice-giving procedure. The same rule is applied where the contract is silent as to the time for performance unless special circumstances of the case indicate that a failure to perform within a reasonable time is to be regarded as a breach of condition entitling the buyer to terminate.

In this way, the English law approach comes close to the Convention approach. This is because: First, the Convention has accepted the rule that where the contract (Art. 6) or a usage and the parties' established practices provide otherwise (Art. 9), the fundamental breach test is not necessary for termination on account of delay. Second, it does not leave the buyer in a sea of uncertainty. The Convention, by recognising the Nachfrist-notice procedure, allows the buyer to treat a delay in performance as a ground to terminate the contract if it is not cured within a reasonable time fixed in the notice in accordance with Art. 47 (Art. 49(1)(b)). This rule comes close to the English rule of making performance of basic contractual obligations within the period fixed in the notice "of the essence" of the contract. It makes non-performance within the time so fixed the equivalent of a fundamental breach of contract and thus allows a party awaiting performance to terminate the contract regardless of whether the breach is fundamental or not.

In Iranian and Shi'ah law, in contrast, the position of the buyer's right to terminate where the seller has delivered the contract goods beyond the contract time for performance is not quite clear. The jurists have only addressed the case where the seller has broken an express stipulation as to the time of performance. They have not examined the case where the contract has not expressly provided a time provision. In the first case, two opposing views have been suggested. Some jurists suggest that any delay would entitle the buyer to terminate the contract on the basis of the option of unfulfilled condition (kheyar al- takhlluf an al- shart),[582] while others disagreed with giving the buyer an immediate right to terminate for delay.[583]

As already explained, the difference is due to the different grounds upon which the option to terminate should be justified. However, as in other cases, it is suggested that the buyer's right to terminate the contract for the seller's late delivery should in principle be based on the serious consequences of delay (the principle of la darar). The same is true where the contract has not fixed a particular date or period of time for performance. Accordingly, termination for delivery beyond a reasonable time should be justified on the basis of the principle of la darar, unless it is inferred from the circumstances of the case that the buyer's right to terminate for performance beyond a reasonable time was impliedly agreed upon at the time of the contract. On this interpretation, a close similarity appears between English and Iranian-Shi'ah law. In both systems, where it is proved that performance within a given time was an implied condition, the buyer has an immediate right to terminate, no matter what actual loss results from delay. In contrast, where such an implied condition is not inferable, termination should be justified on the basis of the consequences of delay. However, the difference appears in a number of aspects. First is the case where timely performance is not treated as of the essence of the contract. Under English law, termination will be justified where the delay in performance was so grave as to frustrate the commercial purpose of the contract, while in Iranian and Shi'ah law it will be justified where the delay is such that performance of the contract becomes customarily harmful for the buyer. Second, is with respect to the making the time of performance of the essence of the contract. Although no jurist has addressed the question, it seems that it would be hard to reconcile this rule with the general principles already described. As indicated above, in Shi'ah law there are three general principles upon which termination may be justified: a particular rewayat, shart-e-demni and the principle of la darar. No particular authority, whether specifically or in general, can be found to allow the buyer to give the seller additional time and to terminate the contract where he fails to, or announces that he will not, perform within that time. The third difference between the two systems appears in that, in English law, a stipulation as to the time for delivery of goods under a commercial contract is prima facie treated as of the essence of the contract, while under Iranian and Shi'ah law in any case the buyer should satisfy the court that the term has such a character.

     - Seller's Right to Cure. A further question which is to be answered by any legal system is whether the buyer's right to terminate is to be subject to the seller's right to make amends by resubmitting a conforming delivery and/or repairing the defects in the goods delivered to the buyer, or he can terminate the contract immediately.

Both English law and the Convention have responded to this question, but in a different way. As already shown in detail, English law has not expressly recognised a general right to cure for a seller who has made non-conforming delivery. Although a number of English academic writers have tried to prove that such a right is in principle compatible with the existing English law of sale and is supported by a number of judicial dicta, some others, rejecting their arguments, argue that the present English law does not support such a general right for the seller. He may be entitled, they suggest, to cure his defective delivery only where the buyer consents to it. In contrast, the Convention gives the seller a general right to cure the lack of conformity. The right is broadly applicable to the case where the seller has delivered non-conforming documents (Art. 34) and goods (Art. 37). The right can be exercised by the seller before and after the time for performance has expired (Art. 48).

In comparison, English law would be similar to the Convention if the former system is seen in view of the first group of English authors; under both systems, the seller would have a general right to cure his non-conforming performance before the time for delivery has expired, and the buyer has no right to reject the seller's offer, otherwise he himself will be guilty of breach of contract. Similarly, under both systems, the right will be available for the seller even if the lack of conformity is serious. As far as the seller is ready and able to cure, non-compliance with the contract terms will not be treated as giving rise to the right to terminate the contract. Despite these similarities, the two systems will differ in some aspects. First, under English law, as described by the first approach, the seller will not be entitled to cure where his conduct is such that it constitutes a repudiation of the contract. One may say that it may be the case where the lack of conformity is so serious that the buyer has lost his confidence in the seller's ability and willingness to make a conforming tender. Whereas, under the Convention, as explained before, the seller's rightful offer to cure under Art. 37, would convert the character of an actual fundamental breach into a non-fundamental breach. Thus, as far as the seller is able and willing to cure under Art. 37, the buyer has no right to reject it and terminate the contract. Second, under English law, cure by the seller beyond the contract time depends on the fact whether or not time was of the essence of the contract, while the seller's right to cure beyond the contract date for performance, as prescribed by Art. 48 of the Convention, is not subject to such a restriction.

Similarly, despite a clear difference between the Convention and English law, as interpreted by the second approach, one may argue that the two systems have some similarities. The first appears in respect of non-conforming documents. Under the Convention, the seller is expressly given the right to cure any lack of conformity in documents before the contract time for handing them over has expired (Art. 34). There is the argument that the seller will also be entitled to cure under English law to that extent.[584] As explained before, in English law there are certain judicial authorities which clearly state that following the buyer's lawful rejection, the seller, under certain circumstances, has a right to make a sound tender provided that he can do so within the contract time. However, one may argue that this is only the case where the seller has not already made an unconditional appropriation. The second similarity is the case where the seller has intended by his tender to appropriate a particular cargo to the contract rather than to perform his delivery obligation. In that case, as long as his offer has not been unconditionally accepted by the buyer, English law gives the seller an opportunity to withdraw his non-conforming tender and make a fresh tender.[585]

The position of Iranian and Shi'ah law, as already shown, is unclear. Neither the Iranian Civil Code nor any jurist has addressed the question whether the seller should be given a general right to cure his defective performance and if so, in what circumstances it should be granted. In the absence of clear law provision and jurisprudential authorities on this issue, it is suggested that the Convention provisions regulating the issue could be compatible with this system. To adapt this rule with this system, it is suggested to analyse the issue on the basis of two general criteria upon which termination of contract is justified in this system, that is, shart-e-demni and la darar. Where it is accepted that termination is to be based on the first approach, the buyer will have an immediate right to terminate the contract if the seller's non-conforming delivery results in breach of shart-e-sefat or shart-e-sehhat. On this view, there is no opportunity for the seller to cure the lack of conformity. The seller's right to cure may arise where the option to terminate is to be based on the principle of la darar. On this approach, one may argue that giving the seller a general right to cure his non-conforming delivery is a sensible rule. This is because as long as the seller is able and ready to cure the defects in the goods delivered, as described below, it is quite possible to say that breach is not sufficiently serious to make the contract harmful for operation of the principle of la darar.

It is suggested, however, to distinguish between sales of specific and of unascertained goods. In the first case, giving the seller a right to replace non-conforming goods seems difficult to reconcile with general principles. But, the position of the seller's right to cure by repair is not clear. There is an argument against recognising such a right for the seller in this system. Nevertheless, it was suggested that no clear reason exists to justify not giving the seller such a right. In contrast, where the contract is for sale of unascertained goods, giving the seller a general right to cure seems more consistent with general principles. As already pointed out, almost all jurists have said that in such cases where the seller's tender does not conform to the contract terms, the buyer has only a right to reject the non-conforming delivery. On this approach, it is quite reasonable to suggest that the seller should be given a general right to cure his non-conforming delivery under certain circumstances. The same suggestion seems to be applicable where the seller has tendered non-conforming documents. The right to cure, however, should be subject to the requirements that it could be done without causing the buyer unreasonable expense or unreasonable inconvenience.

On this construction, Iranian and Shi'ah law come close to the Convention. Under all three systems, the seller has a general right to cure his defective performance. As long as the seller is ready and able to cure as described above, the buyer has no right to terminate the contract. If the buyer rejects the seller's offer to cure, he will be guilty of breach of contract. However, Iranian and Shi'ah law seem to depart from the Convention in that, while the latter allows the seller to cure after the time for performance has expired, under the former, as indicated before, the time for performance may be treated as of the essence of the contract. In that event, the buyer may be entitled to terminate the contract and as a result no opportunity is left for the seller to cure. However, this difference will not be substantial, since: First, as already explained in detail, under Art. 48 of the Convention the buyer's right to avoid the contract has priority over the seller's right to cure.[586] Second, under Iranian and Shi'ah law, unlike English law, timely performance is not pre-classified as a "condition." Whether it is or is not of the essence of the contract depends on the true construction of the contract and the circumstances of each case. Accordingly, where it is not proved that the time stipulation is of that character, the seller would be able to cure. The only difference between the two systems would be the case where the lack of conformity is not sufficiently serious to justify termination. In that case, the seller will be entitled to cure the lack of conformity in accordance with Art. 48, while under Iranian and Shi'ah law he will be able to do so where the time provision is not construed as of the essence of the contract. However, this difference seems insubstantial, since the buyer will in practice prefer cure by repair to a claim for damages or/and price reduction (arsh).

     - Mechanism of Exercising the Right to Terminate. As already shown, generally, all systems here under examination have accepted that where a breach giving rise to the right to reject the non-conforming delivery and terminate the contract is committed by the seller, the buyer has an option either to terminate the contract or to continue performance if he wishes; he is not required to elect to terminate the contract or to affirm it when he wants the contrary. Likewise, in terminating the contract, he is not required to apply for a court's judgement even though he may sometimes need the court's decision to the effect that he was entitled to terminate the contract. When he prefers to reject the seller's non-conforming delivery and terminate the contract, he must declare his intention by unequivocal words or conduct. The question whether the notice of termination must be communicated to the seller in breach is controversial in English law. But the position of the Convention, Iranian and Shi'ah law seems clear, the buyer exercising his right to terminate the contract should declare his intention to terminate by any means appropriate in circumstances. Delay or error in the transmission of the communication or its failure to arrive will not deprive him of the right to rely on the communication (Art. 27).

The buyer may wish to continue the performance of the contract and resort to other remedies. Affirmation of the contract must also be announced by unequivocal words or conduct. Since, where the contract is affirmed by the buyer, he will be precluded from subsequent rejection and termination, a crucial issue is: At what point will the buyer be deemed to have affirmed the contract and as a result have lost his right to reject the non-conforming delivery and to terminate the contract? Both English law and the Convention have set out certain circumstances in which the buyer may be deemed to have affirmed the contract. In English law, the buyer may lose his right under the following circumstances: (a) intimating to the seller that he has accepted the goods, (b) after the seller's delivery, doing an act inconsistent with the seller's ownership, and (c) retaining the goods beyond a reasonable time without giving the seller a notice of rejection (s. 35 of the Sale of Goods Act 1979). Similarly, the Convention provides that the buyer may lose his right by failure to notify the seller of the lack of conformity in accordance with Art. 39; by lapse of a reasonable time without giving notice to the seller of his avoidance (Art. 49(2), or where by the reason of the buyer's acts or omission, restitution of the goods in substantially the condition in which he received them becomes impossible (Art. 82).

Despite the difference in the language of the provisions, the two systems seem similar in a number of aspects. Under the Convention, as in English law, it is a general rule that it would be sufficient to result in loss of the right if the buyer was placed into a position in which he could discover the lack of conformity giving rise to the right to terminate the contract. Loss of the right does not require that the buyer has actual knowledge of the breach giving rise to the right. Similarly, under both systems, the buyer may lose his right to reject when he fails to exercise his right within a reasonable time. Again, loss of the right to reject under s. 35(1)(b) of the English Sale of Goods Act (subject to sub-section (6)) will substantially be in the same circumstances in which it may be lost under Art. 82(1) of the Convention.

However, it is possible to say that the Convention seems more generous than the English Sale of Goods Act. Although the English Sale of Goods Act provides that the buyer will not lose his right to reject merely because he has delivered the goods to another under a sub-sale or other disposition (s. 35(6)(b)), acts such as consumption of the goods by the buyer or using them in a way which makes the physical return of the goods impossible could result in loss of the right to reject under the heading of "acts inconsistent with the seller's ownership" (s. 35(1)(b)). Whereas, under the Convention, as long as these acts are done in the normal course of use, they will not result in loss of the right (Art. 82(2)(c)). This is perhaps for the reason that, unlike English law (s. 35(2)), the buyer may lose his right under Art. 82 of the Convention even where he has not had a reasonable time to examine the goods. Similarly, in comparing Art. 39 of the Convention with the English Sale of Goods Act 1979, one may argue that, on the one hand, Art. 39(2) is more generous to the buyer in regard to the time allowed to him -- this may be the case where the defect was a latent one and could not reasonably have been discovered by the buyer within a reasonable time -- but, on the other hand, while the Convention deprives him of all remedies (subject to Arts. 40 and 44) if he fails to notify in accordance with Art. 39, under English law his right to claim damages will survive even though he has lost his right to reject the goods and treat the contract as repudiated.[587]

As already shown in detail, Iranian and Shi'ah law, as their two counterparts, provide certain circumstances in which the buyer may lose his right to reject and terminate the contract. Iranian Civil Code and Shi'ah jurists have gathered certain circumstances in which the buyer may be treated as having impliedly affirmed the contract. These circumstances are comprised under the heading of isqa t-e-sarih (express intimation to the seller that he will accept the goods) and isqat-e-demni containing (a) tasarruf (any act as to the goods delivered),[588] and (b) ta'khir (delay) in exercising the right to terminate. Apart from the general similarities between these systems and their two counterparts, Iranian and Shi'ah law differ from English law and the Convention in some aspects.

First, unlike both English law and the Convention, which provide that the buyer's presumed knowledge of the lack of conformity giving rise to the right to terminate will be sufficient in loss of the right, according to most jurists there will be an effective deemed affirmation of the contract only where the buyer has actually discovered such a non-conformity.[589] However, it is suggested that the buyer should be taken as having affirmed the contract if a reasonable man in his position could have discovered the lack of conformity. He should not be entitled to reject the goods and terminate the contract for a defect which could have been discovered by a simple examination. The reason is clear: Where the buyer who knows or could have known that the goods may be defective, failed to examine them, he cannot be protected by the principle of la darar. In such a case, he has in fact acted against himself (qaedah-e-iqdam) and should bear the risk of his action.

Second, unlike English law and the Convention, under which the buyer will lose his right if he fails to exercise it within a reasonable time, the position of Iranian and Shi'ah law is not clear. According to some jurists, the buyer will lose his right to reject and to terminate the contract if he has not exercised his right fouran (promptly), while others suggest that he may keep his right even after that time. However, it is suggested that the buyer's right to reject the non-conforming goods and terminate the contract must be exercised within a reasonable time. Where the buyer who knows or ought to know of the lack of conformity giving rise to the right does not exercise his right, he should be deemed to have impliedly waived it. This is because the main reason for giving the buyer a right to terminate is, as already shown, the principle of la darar. For this purpose, he should be given only an adequate opportunity under which a reasonable person can benefit from this legal protection. In addition, where the buyer, knowing of his right and being able to exercise it, does not exercise it he will be regarded as having acted to his detriment (the principle of iqdam).

     - Position of Non-Conforming Documents. Iranian Civil Code and Shi'ah jurists have not addressed the question whether a mere dealing with documents will result in loss of the right to reject for undisclosed defects. In the absence of a clear jurisprudential authority, it is suggested that the general principle applied to the case of non-conforming goods has to be applied to the case in question. Thus, a buyer who deals with documents representing the purchased goods should not be taken to have intended to waive his right to reject unless he was actually, or should have been, aware of the non-conformity giving rise to the right to reject. Accordingly, where the buyer learns later of the fact that the documents possessed a wrong date of shipment, for instance, he should be allowed to reject them. The same is true a fortiori as to the buyer's right to reject the goods where it proves that they do not conform with the contract conditions.

     - Effects of Termination. As explained before, in all three systems, when termination for breach of contract validly takes place, it affects both the contract and relations of the parties from that time. It brings the contract to an end in respect of the unfulfilled obligations and releases both parties from their unperformed primary obligations either wholly or in part, as the case may be. However, while under English law and the Convention it is expressly provided that the contract survives termination for the purpose of settling any dispute between the parties including the question of damages, Iranian Civil Code and Shi'ah jurists have not addressed the question. This is perhaps due to the jurists' failure to examine the principle of compensation on the basis of breach of contract. It is, however, suggested that, in this system, the contract is not totally ended. Although the jurists seem to base the buyer's damages for the seller's breach on the principles applicable to tort cases, it is suggested, as will be explained in a separate text, that these two cases are to be distinguished. For the purpose of awarding the buyer damages on account of the seller's breach of contract, the buyer's legitimate expectations are to be assessed by reference to the contract.

CONCLUSION

BIBLIOGRAPHY

Commission on European Contract Law Home Page: http://www.ufsia.ac.be/~estorme/PECL2en.html

International Institute for the Unification of Private Law (UNIDROIT) Home Page: http://www.agora.stm.it/unidroit/welcome.htms

Pace University School of Law Home Page: http://www.cisg.law.pace.edu/

UN Commission on International Trade Law (UNCITRAL) Home Page, Case Laws on UNCITRAL Texts (CLOUT): http://www.un.or.at/uncitral/noframe.htm

4. Iranian and Shi'ah Law

N.B. H. Q. is used to refer Hejri Qamari (Lunar Calendar) and H. S. is used to refer to Hejri Shamsi (Solar Calendar).

(A) Iranian Law

(I) Books and Articles

Amiri Qaemmaqami, A.:	The law of Obligations, (Tehran, 1347 H.S.) vol. 1.
Broujerdi Abduh, M.:	Civil Law, (Tehran, 1329 H.S.) vol. 3. Imami, S. H.: Civil Law, (Kitab Furoushi Islami, Tehran, 1363 H.S. 4th ed.) vol. 1.
Jafari Langroudi, M.J.:	The Law of Obligations, (Entesharat-e-Madreseh-e-Ali-e-Umour-e-Ghadaei-e-Gum, 1354 H.S.).
Katouzian, N.:	Iranian Civil Law (Specific Contracts), (Sharkat Inteshar, Tehran, 1992, 4th. ed.) vol. 1.
Katouzian, N.:	The Law of Contracts, (Behnashr Publications, Tehran, 1989) vol. 3.
Katouzian, N.:	The Law of Contracts, (Behnashr Publications, Tehran, 1990) vol. 4.
Katouzian, N.:	The Law of Contracts, (Behnashr Publications, Tehran, 1990) vol. 5.
Khumayni, S. R. M.:	Toudih al- Masael, (Kanoun Intesharat Payam Mehrab, Tehran, 1369 H.S. 8th ed.).
Owsia, P.:	"Tadlis, A Comparative Study under English, French, Islamic and Iranian Laws," in: Katouzian, N.: Developments of Private Law, (Tehran University Publications, Tehran, 1992).

(II) Judicial Decisions

Decision No. 569 - 1329/3/25 cited in: Iranian Civil Code, Art. 410, (Nikfar, M., (ed. 1372 H.S.).

(III) Statutes

Iranian Civil Code (I.C.C.) (1307, 1313 and 1314 H.S./ 1928, 1934 and 1935, as amended in 1361 (1982) and 1370 (1991), translated by Taleghani, M.A.R., Littleton, Colorado, 1995).

Iranian Civil Code (I.C.C.) (1307, 1313 and 1314 H.S./ 1928, 1934 and 1935, as amended in 1361 (1982) and 1370 (1991), edited by: Nikfar, M., (Kayhan Publication, Tehran, 1372 H.S.).

Iranian Civil Procedure Act 1379 H.S./ 2000.

Iranian Criminal Procedure Act 1377 H.S./ 1999.

Iranian Constitution (1358 H.S./1378, as amended in 1367/1988).

(B) Shi'ah Law

(I) Arabic Materials

Ale Bahr al- U'loum, S. M.:	Bulqah al- Faqih (with Explanations by Ale Bahr al- U'loum, S. M. T.), (Najaf, Iraq, 1396 H.G.) vol. 1.
Ale Kashef al- Qeta, M. H.:	Tahrir al- Majallah, (Tehran, Nejah Publication, 1359 H. Q.) vol. 1.
Ameli, H.:	Wassael al- Shi'ah, (Intesharat-e-Islamiyah, Qum) vol. 15.
Ameli, H.:	Wassael al- Shi'ah, (Intesharat-e-Islamiyah, Qum) vol. 12.
Ameli, Zain al- Din Ibn Ali (Shahid Thani):	Masalek al- Afham fi Sharh Sharaye' al- Islam, (Maktabah Basirati, Qum) vol. 1.
Amuli, M. T., and, Naeini, M. H.:	Al- Makaseb wal Bay', (Mua'ssasah -e- Nashr -e- Islami, Qum, 1413 H.Q.) vol. 2.
Ansari, M.:	Makaseb, (edited by Taher Khoushnewis, Matbah al- Ittelaat, Tabriz, 1375 H.Q. 2nd ed.).
Bahrani, Y.:	Hadaeq Al- Nazerah, (Intesharat Jama 'ah al- Mudarresin, Qum) vol. 19.
Bujnourdi, M. H.:	Al- Qawaed al- Feqhiyah, (Mua'ssasah Matbouati Ismaeilian, Qum, 1389 H.Q) vol. 2
Bujnourdi, M. H.:	Al- Qawaed al- Feqhiyah, (Mua'ssasah Matbouati Ismaeilian, Qum, 1389 H.Q) vol. 3
Fayz Kashani, M.:	Mafatih al- Sharaye', (edited by, Rajaei, Sayyed Mehdi, Qum, 1401 H.Q.) vol. 3.
Gharavi Isfahani, M. H. (Kumpani):	Hashiyahto Ketab al- Makaseb, (Dar al- Zakhaer, Qum, 1408 H.Q. 2nd ed) vol. 1.
Gharavi Isfahani, M. H. (Kumpani):	Hashiyahto Ketab al- Makaseb, (Dar al- Zakhaer, Qum, 1408 H.Q. 2nd ed) vol. 2.
Helli, A. N. Jafar Ibn al- Hassan (Muhaqqeq Helli):	Sharaye' al- Islam, (Al- Maktabah al-E'lmiyeh al- Islamiyeh, Tehran, 1377 H.Q.).
Helli, M. Ibn H. M. (Allamah Helli):	Tadhkerah al-Fuqaha, (Tehran: Offset), vol. 1.
Helli, M. Ibn H. M. (Allamah Helli); Ameli, S. M. J.:	Meftah al- Keramah fi Sharh al-Qawaed lel Allamah, (Mua'ssasah Alul Bait, Qum), vol. 4.
Helli, A. M. Ibn H. Ibn Y. Ibn M. (Fakhr al- Muhaqqeqin):	Idah al- Fawaed, fi Sharh al-Qawaed, (E'lmi Publication, Qum) vol. 1.
Irawani, M. A.:	Hashiyah al- Makaseb, (Matbah Rushdiyah, Tehran, 1379 H.Q., 2nd ed.) vol. 2.
Isfahani, S. A.; Gulpayagani, S. M. R.:	Wasilah al- Nejat, (Dar al- Taaruf Lel matbouat, Lebanon, 1977 3rd ed) vol. 2.
Irawani, M. A.:	Hashiyah al- Makaseb, (Matbah Rushdiyah, Tehran, 1379 H.Q., 2nd ed.) vol. 2.
Karaki, A. (Muhaqqeq Thani):	Jame' al- Maqased fi Sharh al- Qawaed, (stone edition, Thehran) vol. 1.
Karimi, S. J.: Amuli, M. H.:	Kashf al- Haqaeq, (Matba'ah al- Najaf, Najaf, 1380 H.Q.) vol. 4.
Khalkhali, S. M. K.; Rashti, M. H.:	Feqh al- Imamiyah, (Maktabah al- Dawari, 1407 H.Q., 1st ed.) vol 1.
Khalkhali, S. M. K.; Rashti, M. H.:	Feqh al- Imamiyah, (Maktabah al- Dawari, 1407 H.Q., 1st ed.) vol. 2.
Khumayni, S. R. M.:	Tahrir al- Wasileh, (Matbah al- Adab, Najaf), vol. 1.
Khumayni, S. R. M.:	Tahrir al- Wasileh, (Matbah al- Adab, Najaf) vol. 2.
Khumayni, S. R. M.:	Ketab al- Bay', (Mua'ssasah Matbouati Ismaeilian, Qum), vol. 4.
Khumayni, S. R. M.:	Ketab al- Bay', (Mua'ssasah Matbouati Ismaeilian, Qum), vol. 5.
Khunsari, S. A.:	Jame' al- Madaek, (Mua'ssasah Matbouati Ismaeilian, Qum, 1364 H.Q., 2nd ed.) vol. 3.
Khurasani, M. K.:	Hashiyato Ketab al-Makaseb (edited by Shams al-din, S. M, (Wazarat Irshad Islami, 1406 H.Q. 1st ed.).
Makki, M. Ibn J. al- Din (Shahid Awwal); Ameli, Zain al- Din Ibn Ali (Shahid Thani):	Al-RuÀah al- Baheiyah fi Sharh Lum'ah al- Demashqiyah (Sharh al- Lum'ah), (Maktabah al- Tabatabaei, Qum, 1309 H.Q.) vol. 1.
Makki, M. Ibn J. al- Din (Shahid Awwal):	Al- Qawaed wa al- Fawaed, (with explainations by Hakim, S. A., Maktabah al- Dawari, Qum) vol. 2.
Mamaqani, A.:	Nehayatu al- Maqal, (Manshourat al- Dhakhaer al- Islamiyah, Qum, 1345 H. Q.).
Maraghei, M. F.:	Anawin al- Usoul wa Qawanin al- Fusoul, (stone edition, Tabriz, 1274 H. Q.).
Muqniyah, M. J.:	Feqh al-Imam Jafar al-Sadeq, (Dar al- Jawad, Beirut, 1402 H. Q.) vol. 3.
Muhaqqeq Tehrani, M. R.:	Haqaeq al- Feqh fi Sharh -e- Sharay' al- Islam, (al- Matbah al-E'lmiyyh, Qum, 1414 H. Q.) vol. 24.
Najafi, M.; Naeini, M. H.:	Munyah al- Taleb (edited by Tabrizi, M. A., Al- Matbah al- Murtadawi, Najaf, 1358 H.Q.) vol. 1.
Najafi, M.; Naeini, M. H.:	Munyah al- Taleb (edited by Tabrizi, M. A., Al- Matbah al- Murtadawi, Najaf, 1358 H.Q.) vol. 2.
Najafi, M. H.:	Jawaher al-Kalam, (Dar al- Ehya al- Turath al- Arabi, Lebanon, 1981 7th ed. edited by Akhoundi, vol. 22.
Najafi, M. H.:	Jawaher al-Kalam, (Dar al- Ehya al- Turath al- Arabi, Lebanon, 1981 7th ed. edited by Akhoundi, vol. 23.
Najafi, M. H.:	Jawaher al-Kalam, (Dar al- Ehya al- Turath al- Arabi, Lebanon, 1981 7th ed. edited by Akhoundi, vol. 25.
Najafi, M. H.:	Jawaher al-Kalam, (Dar al- Ehya al- Turath al- Arabi, Lebanon, 1981 7th ed. edited by Akhoundi, 37.
Naraqi, A.:	Mustanad al- Shi'ah fi Ahkam al- Shari'ah, (Al- Maktabah al- Murtadaweiyah, Tehran), vol. 2.
Naraqi, A.:	Awaed al- Ayyam, (Maktabah-e-Basirati, Qum, 1408).
Qumi M. A. (Muhaqqeq Qumi):	Qawanin al- Muhakkamah, (Stone Edition, edited by Taher and Abdurrahim, Qum) vol. 2. (1205 H.Q. (1785 AD).
Rashti., M. H.:	Al- Ijarah, (ston edition, Tehran.).
Sayouri, J. al- Din M. ibn A. (Fadel Meqdad):	Kanz al- Erfan fi Feqh al- Quran, (Murtadawi Publication, 3rd ed., 1343 H.S.) vol. 1.
Shahidi, M. F.:	Hedayat al- Taleb ela Asrar al-Makaseb, (edited by Khoushnewis, T., Matbah al- Ittelaat, Tabriz, Iran, 1375 H.G.).
Shahroudi, S. A.; Khouei, S. A.:	Muhadarat fel Feqh al- Jafari, (Dar al- Ketab al- Islami, Qum, 1409 H.Q., 1st ed.) vol. 2.
Shirazi, N. M.:	Anwar al- Feqahah, (Madrasah al- Imam Amir al- Mu'menin, Qum, 1413 H.Q. 2nd ed.) vol. 1.
Tabatabaei, S. A. (Saheb Reyad):	Reyad al- Masael fi Bayan al- Ahkam be al- Dalael, (Mua'ssasah Alul Bait, Qum, 1404 H.Q.) vol. 1
Tabrizi, M. J.:	Ershad al- Taleb, (Mua'ssasah Matbouati Ismaeilian, Qum, 1412 H.Q., 1st ed vol. 4.
Touhidi, M. A.; Khouei, S. A.:	Mesbah al- Feqahah, (Intesharat Wajdani, Qum, 1368 H.S., 1st ed.) vol. 6.
Touhidi, M. A.; Khouei, S. A.:	Mesbah al- Feqahah, (Intesharat Wajdani, Qum, 1368 H.S., 1st ed.) vol. 7.
Tousi, M. Ibn H. (Shaykh al- Taefah):	Kitab al Khelaf, (Intesharat Islami, Qum, 1407 H. Q.), vol. 2.
Yazdi, S. M. K.:	Hasheiyeh al- Makaseb, (Mua'ssasah Matbouati Ismaeilian, Qum, 1378 H.Q.) vol. 2.

(II) Persian Materials

Gulpaygani, S. M. R.: Tawdih al- Masael, (Intesharat Dar al- quran al- Hakim, Qum, Iran, 1371 H.S., 68th ed.).

FOOTNOTES

* This essay origins in my PhD project performed during 1994-1998 at the Department of Law, Sheffield University, Sheffield-England. The author would like to thank Mr. Robert Bradgate, who helped me, as supervisor,.Professor John Adams and Professor Michael Bridge, as examiners, by their valuable comments, when fulfilling my PhD project. I would also like to thank Professor Albert Kritzer for his valuable comments on the early draft of this paper.

** LLB (University of Tehran), LLM (University of Shahid Beheshti, Tehran-Iran, and, Sheffield University, Sheffield-England) and PhD (Sheffield University, Sheffield-England). Senior lecturer at the Department of Law, Faculty of Law, University of Shahid Beheshti, Tehran-Iran.

1. In the present study, the main emphasis is on examination of the law governing the remedies available for the buyer where the seller has performed his delivery obligations in a way which do not conform to the contract terms. Non-conformity, in this work, means that the performance rendered by the seller differs from that he has undertaken in point of view of quality, quantity, description and time. Accordingly, non-conformity in the sense that the goods are not free from the third party rights or claims or in that the seller has delivered goods as to which he has not had good title is in principle excluded from the study. The reason for exclusion of the latter issue, notwithstanding the term 'lack of conformity' may include it, is that under Shi'ah law a contract on a subject which the seller has no good title is invalid unless the owner or the beneficiary person approves it.

2. English law in compare with its counterparts suffers more terminological problems in the context of termination. Under this legal system various expressions are used to describe the contractual terms breach of which may give rise to the right of termination, the types of breach is plausible to justify the right of termination, and the termination itself.

The first problem is discussed in the text. In respect of the second, a variety of expressions are used by the courts and lawyers to refer to it, such as "repudiation," "repudiatory breach," "fundamental breach," "total breach" (see e.g., Hirji Mulji v. Cheong Yue SS Co. Ltd. [1920] A.C. p. 497 at 510; Joseph Constantine SS. Line Ltd. v. Imperial Licensing Corp. Ltd. [1942] A.C. 154 at 171), and "breach going to the root of the whole of the consideration" (Lord Porter in: Heyman v. Darwin's Ltd. [1942] A.C. p. 356 at 399). In this research there will be no use of any of the above general expressions in order to describe the various types of breaches which give rise to the right of termination. In order to avoid the possible confusion, it is proposed to use the simple phrase "breach which gives rise to the right of termination." Accordingly, specific reference to the various kinds of breach should not cause any contradictory terminology.

As regards the third, the courts and lawyers have used a variety of words and phrases to describe what is called in this study "the right of terminating the performance of contract," such as: termination," (Lord Wilberforce in: Photo Production v. Securicor ltd. [1980] A.C. p. 827 at 844; 383, 390; Aiyah, P.S., [1989] 4th ed., p. 411; Treitel, [1988], pp. 1, 318.) "rescission," "repudiation," (Bettini v. Gye [1876] 1 Q.B.D. p. 183 at 187; Atiyah, P.S., [1990] 8th ed. p. 487.) "discharge," (Lord Wilberfortcein: Photo Production v. Securicor ltd. [1980] A.C. p. 827 at 844; McGarvie, R.E., [1963] p.254, and [1979] p. 687; Guest A.G., [1984] pp. 125, 483.) "withdrawal," (Roger Brownsword, (1992) p. 83) "rejection," "cancellation," (Millar's Karri and Jarrah Co. v. Weddel [1909] 100 L.T. 128 at 129; Lord Salmon in: Decro-Wall S.A. v. Marketing Ltd. [1971] 1 W.L.R. p. 361 at 369; and [1971[ 2 All E R p. 216 at 223.) "avoidance," (Lord Roskill in: Cehave N.V. v. Bremer m.b. h. (The Hansa Nord) [1976] 1 Q.B. p. 44 at 71.) "determination," (Gunton v. Richmond-upon-Thames L.B.C. [1981] ch. p. 448 at 468; Photo Production Ltd. v. Securicor Transport Ltd [1980] A.C. 827 at 850; Gator Shipping Corporation v. Trans-Asiatic Oil Ltd. (The "Odenfeld) [1978] 2 Lloyd's Rep. p. 357 at 370.) "treat the contract as at end" (Vitol SA v. Norelf Ltd. [1994] 4 All E R p. 109 at 114), "treat the contract as repudiated," and "to put an end to all primary obligation of both parties," (Lord Diplock in: Photo Production Ltd. v. Securicor Transport Ltd [1980] 1 All E R p. 556at 566.). In this essay there will be no use of any of the above general expressions to describe the concept in question. Since, as Lord Diplock Said, (Photo Production Ltd. v. Securicor [1980] 1 All E R p. 556 at 566-567) the victim of breach's action does put an end to all primary obligations of both parties remaining unperformed without affecting the rights and duties accrued under the (terminated) contract, for this purpose the phrase "termination of performance" of the contract is employed in this study. Thus any refer to the word of "termination" in the research is used in this sense.

3. Maskow in: Bianca, C. M.; Bonell, M. J., (1987) at 390 and seq.; Enderlein; F.; Maskow, D., (1992) at 229 and seq.

4. The term employed by the Convention to describe the concept of bringing the performance of the contract to an end is "avoidance." The term was initially employed by ULIS in 1964 ((During the Hague Conference in 1964 the US representative objected use of the term in ULIS draft, see Official Records, (1966), vol. 2 at 236 No. 3.)) and retained by the UNCITRAL Woking Group ((It is to be noted that the Working Group has initially expressed his doubts whether to use the word "avoidance." For it initially placed square brackets around the word ["avoidance"] and wished to give further consideration to whether the appropriate word in English might have been "termination" or "cancellation" (see, UNCITRAL, Yearbook, vol. IV [1973], at 41 Para. 36; Honnold, (1989) at 118, Para. 38). However, in the next meetings the Committee deliberately preferred "avoidance" the other terms. Nevertheless, UNCITRAL's official records do not explain why they preferred this particular word.)) and the 1980 Vienna Diplomatic Conference.

The Convention, of course, uses the term "termination" for describing the given concept when the parties to the contract bring the contract to an end by mutual consent (Art. 29 ). It is to be added that in the UNCITRAL's early draft the term "recission" was used instead of the word "termination." (Honnold, (1989), at 304 Para. 141, 379), whereas in UNCITRAL's 1978 Draft Convention the term "abrogation" was used, (Official Records, 1981) at 7, 27-28, 76, and finally at the Vienna Conference, as a result of the US delegation's proposal the term "termination" was placed on the word "abrogation," ibid., at 181, and 157.).

Avoidance, however, may be the subject of misinterpretation, since "avoidance" of the contract could imply that all rights and duties under the contract thereby come to an end, while the Convention expressly provides that a party who "avoids" the "contract" because of breach by the other party will retain the right to recover damages that resulted from the breach (Art. 81). In order to avoid possible confusion any reference to the Convention terminology is used in the sense of bringing the performance of the contract to an end, without affecting the aggrieved party's right to claim damages.

5. See Arts. 235-246, 377, 410-415, 422-437 .

6. Although Iranian Civil Code (hereinafter I.C.C.) does not espressly refer to the term haqq-e-habs, Art 377 refers to the same meaning that the jurists mean in the Jurisprudence (Feqh). See also, Art. 1085 of I.C.C. However, 1n Art. 371 of Commercial Code the phrase is expressly referred. See in this respect, Jafari Langroudy, M.J., (1354 H.S.), at 244-245.

7. See e.g., Ansari, M. (1375 H.Q.) at 312; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 592; Khumayni, S. R. M., vol. 5 at 371-372. The only jurist who disagreed with this well-settled view is Muhaggheq Ardebili, in Sharh al-Ershad, (as cited in: Najafi, M. H., (1981) vol. 23, at 146. For criticise on this view see, Shahidi, M. F., (1375 H.Q) at 617.

8. See Arts. 410-415, 422-437.

9. See e.g., Yazdi, S. M. K., (1378 H.Q) vol. 2 at 70; Iravani, A., (1379 H.Q) vol. 2 at 50; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 60; Tabrizi, J., (1412 H. Q.) vol. 4 at 419.

10. See e.g., Ansari, M. (1375 H.Q.) at 283; Khumayni, S. R. M., (1363 H.S.) vol. 5 at 209; Shirazi, N. M., (1413 H.Q.) vol. 1 at 38-39.

11. Tabrizi, J., (1412 H. Q.) vol. 4 at 419. See also Arts. 412, 429 (3) and 430 of I.C.C.

12. See Arts. 235, 239, 240, 242, 243, 379, 384, 385, 388, 395, 397, 398, 399, 402, 404, 405, 410, 411, 413, 416, 418, 422, 439 and 441 of I.C.C. As a matter of terminology, I.C.C. and Shi'ah jurists describe the 'process of bringing the contract to an end' on account of breach of contract by the term faskh and the 'right to do so' by the phrase of 'kheyar-e-faskh'. See also note 434.

13. This is a part of principle 167 of the current Iranian Constitution. Under this principle, "The judge is bound to endeavour to judge each case on the basis of the codified law. In the case of absence of any such law, he has to deliver his judgement on the basis of authoritative Islamic sources and authentic fatawa. ..." (Italic added) See also, Principles 4, 61, 72 and 170. See also Art. 3 of Iranian Civil Procedure Act 1379 H.S./ 2000 and Art. 214 of Iranian Criminal Procedure Act 1377 H.S./ 1999.

14. What the term Shi'ah law means and the sources on which this system is based, the method of exploiting the law is discussed in a separate essay from the present author under the title: "Buyer's Right to Specific Performance: A Comparative Study Under English Law, the Convention on Contracts for the International Sale of Goods 1980, Iranian and Shi'ah Law." In the same essay, the author has examined the role of Shi'ah Law in developing Iranian law.

15. For a more detail discussion of the role and contribution of Jurist (Faqih) in Shi'ah Law, see: "Buyer's Right to Specific Performance: A Comparative Study Under English Law, the Convention on Contracts for the International Sale of Goods 1980, Iranian and Shi'ah Law."

16. See s. 11 of the Sale of Goods Act 1979. In spite of the fact that the term 'condition' has a significant role within the remedial provisions of the English Sale of Goods Act, the Act has failed to define it. The term has different usages. See in this respect, Wickman Machine Tools Sales Ltd v. Schuler A.G. [1972] 1 W.L.R. 840 at 850, and, [1974] A.C. 235 at 250; Stoljar, S. J., (1953) at 488; Reynolds, F. M. B, (1963) at 534-535; Guest, A.G. et al (1997) Para. 10-024; Treitel, G. H., (1999) at 58, 705-706.

17. Unlike 'condition', the Act has expressly defined 'warranty, in s. 61(1). See also the statement of Lord Abinger in a case decided before the passing of the Act, Chanter v. Hopkins [1838] 4 M. & W. 399 at 404. Like "condition," the term 'warranty' has different usages. See in this respect, Carter, J. W., (1991) Para. 416.).

18. [1962] 2 Q.B. 26. As to the history of development of the doctrine of serious breach as a ground for rejection and termination see, Bridge, M., (1983) 868; Carter, J.W. and Hodgekiss, C., (1977) 31.

19. See e.g., at the first instance of Cehave N.V. v. Bremer Handelsgesellschaft mbH (The Hansa Nord) [1974] 2 Lloyd's Rep. 216, per Moccata J. See also, Reynolds, F. M. B, (1963) at 540; Montrose, J. L., (1964) at 75; Sutton, K.C.T., (1967) at 152-3.

20. [1976] 1 Q.B. 44. In Bunge Corp v. Tradax Export S. A. [1981] 1 W.L.R. 711 at 718 Lord Scarman said that the statutory classification of terms in the Sale of Goods Act as conditions or warranties "is not to be treated as an indication that the law knows no terms other than conditions and warranties."

21. S. 62(2) of the Sale of Goods Act.

22. In this regard, reference can be made to the statement of Browne L.J. in Bunge Corp. v. Tradax Export S.A. [1980] 1 Lloyd's Rep. 294 at 309). See also, Reynolds, F. M. B, (1976) 17; Weir, T., (1976) 33.

23. Carter, J.W., (1981) at 221. For the reason of failure of the courts to recognise a term as a warranty since the HongKong Fir case, the editors of Benjamin's Sale of Goods raise the question whether the notion of such a term is a necessary one (see Guest, A. G. et al (1997) Para. 10-33).

24. For instance, in Wickman Machine Tool Sales v. Schuler A.G. [1974] A.C. 235, all members of the House of Lords recognised that conditions in the technical sense still formed a valid part of legal reasoning.

25. [1981] 1 W.L.R. 711.

26. See e.g., Cehave N.V. v. Bremer Handelsgesellschaft mbH (The Hansa Nord) [1976] 1 Q.B. 44, (the statement of Roskill LJ at 70-71).

27. [1976] 1 W.L.R. 989 at 998.

28. [1962] 2 Q.B. 26 at 69-70.

29. [1980] 1 Lloyd's Rep. 294 at 305

30. [1981] 1 W.L.R. 711 at 716 and 719. Perhaps it was for this reason that in Photo Production v. Securicor Transport [1980] A.C. 827, Lord Diplock in order to base discharge on the parties' intention, somewhat modified his earlier description of conditions in HongKong Fir case by describing them as arising where "the contracting parties have agreed, whether by express words or by implication of law, that any failure by one party to perform a particular obligation ..., irrespective of the gravity of the event that has in fact resulted from the breach, shall entitle the other party to elect to put an end to all primary obligations of both parties remaining unperformed," (ibid., at 849).

31. As far as the sale of goods cases are concerned, see ss. 12-15 of the Sale of Goods Act 1979, as amended by the Sale and Supply of Goods Act 1994.

32. See e.g. Bowes v. Shand (1877) 2 App. Cas. 455. The important point is that Bowes establishes that in an f.o.b. contract the date of shipment term is a condition.

33. See the statement of Blackburn L.J. in Bettini v. Gye (1876) 1 Q.B.D. 183 at 188. See also Wickman Machine Tools Sales Ltd. v. Schuler A. G. [1974] A.C. 235; United Scientific Holdings Ltd. v. Burnley Borough Council [1978] A.C. 904 at 923, 937, 944.

34. See e.g., the statement of Lord Denning M.R in Wickman Machine Tool Sales Ltd. v Schuler A. G [1972] 1 W.L.R. 840 at 851. The view was also confirmed by Lord Reid at the House of Lord [1974] A.C. 235 at 251. See also Cehave N.V. v. Bremer Handelsgesellschaft mbH (The Hansa Nord) [1976] 1 Q.B. 44 at 71.

35. See e.g., Cehave N.V. v. Bremer Handelsgesellschaft mbH (The Hansa Nord) [1976] 1 Q.B. 44; Tradax Internacional S.A. v.Goldschmidt S.A. [1977] 2 Lloyd's Rep. 604) and by a number of later decisions cited in: Treitel, G. H., (1999) at 740 no. 10.

36. See e.g., Bunge Corp v. Tradax Export S. A. [1981] 1 W.L.R. 711; Gill & Duffus S.A. v. Societe Pour L' Exportation des Sucres S.A.[1986] 1 Lloyd's Rep. 322. See also the cases cited in Treitel, G. H., (1999) at 741 no. 16.

37. See the authorities cited in fns. 20 and 21.

38. But in other types of contract terms the court are somewhat reluctant to treat a contract term as a condition. For instance, in Bunge Corp v. Tradax Export S. A. [1981] 1 W.L.R. 711 at 715, Wilberforce L.J. maintained "It remains true, as Roskill LJ has pointed out in Cehave N.V. v. Bremer Handelsgesellschaft m. b. H. (The Hansa Nord) [1976] 1 Q.B. 44, that the courts should not be too ready to interpret contractual clauses as conditions."

39. See ss. 11(3) 61(1).

40. Law Commission, (1983); Law Commission, (1987).

41. Ss 11(3) and 61(1).

42. S. 11(3). It does not mention the aggrieved party's right of "termination" or any of the other alternatives similar to it, although it refers to a contract of sale as being "rescinded" by the seller on account of the buyer's breach (s. 48). It only refers to the right of an innocent party to treat the contract as repudiated (ss. 11 and 31), without saying what that signifies in practical terms.

43. S. 11(2).

44. S. 36. See in this respect, Bridge, M., (1988) at 278-279.

45. These two alleged rights can also be inferred from the provision which state the remedial consequences of breach of warranty (ss. 11(3) 61(1).

46. In other words, it uses the word "rejection" as a component of a single right because of the fact that in the case of non-conforming delivery this right is frequently exercised by actual rejection of the non-conforming goods.

47. See e.g., Bentsen v. Taylor, Sons & Co [1893] 2 Q.B. 274 at 281; Arcos, Ltd. v. E.A. Ronaasen & Son [1933] A.C. 470, per Lord Atkin at 480; Cehave N.V. v. Bremer Handelsgesellschaft mbH (The Hansa Nord) [1976] 1 Q. B. 44, per Ormerod LJ at 83 and 84 (in which he described the term "rejection of goods" equivalent to the phrases "treat the contract as repudiated," "terminate the contract" and "rescind"); Kwei Tek Chao v. British Traders and Shippers Ltd [1954] 2 Q.B. 459 at 480 (where Devlin J treats 'rejection' as tantamount to 'rescission' (in the sense of termination); Lord Roskill in Bunge Corp v. Tradax Export S. A. [1981] 1 W.L.R. 711 at 724, 725. Again, there are numerous judicial dicta, in non-sale of goods cases, which express the law that breach of condition automatically entitles the innocent party to terminate the contract, without exploring the concept of "rejection" and "termination." See for instance, Lord Denning M R in the case of Wickman Machine Tools Sales Ltd. v. Schuler A.G [1972] 1 W.L.R. 840 at 850 (see also Lord Reid's statement in the House of Lords, [1974] A.C. at 251); Lord Diplock in Photo Production v. Securicor Ltd. [1980] A.C. 827 at 849.

48. See for instance, the old case of Reuter, Hufeland, & Co. v. Sala & Co. [1879] 4 C.P.D. 239.

49. See e.g., Treitel, G. H., (1991) at 690; Carter, J. W., (1991) Paras. 102, 628, in particular, 940; Carter, J. W., (1991 A), at 102-103; Carter, J. W., (1993) at 95 and 110; Guest, A.G. et al (1994) vol. 2, Para. 41-040.

50. Beale, H., (1980) at 20-21 and 80, 91; Davies, I., (1992) at 161; Furmston, M., (1995) at 158, 159; Goode, R. M., (1995) at 362-363; Atiyah, P. S. & Adams, J., (1995) at 449 and 456 fn. 30; Bradgate and White (1995) at 53; Treitel, G. H., (1999) at 732 fn. 28 then p. 698; Bridge, M., (1997) at 162, 163; Guest, A. G. et al, (1997) Para. 12-031.

51. See in this regard, Bradgate and White (1995) at 61-62. The idea which underlies the use of the word "condition" in this context is that the term is, or assumed to be, so vital, to the operation of the contract that its fulfilment by one party is a condition precedent to the other party's liability to perform his own part (see Wallis, Son & Wells v. Pratt & Haynes [1910] 2 K.B. 1003, the statement of Per Fletcher Moulton L.J. at 1012; see also State Trading Corp. of India Ltd. v. M. Golodetz Ltd. [1989] 2 Lloyd's Rep. 277 at 282.

52. [1981] 1 W.L.R. 711 at 724, 725; see also Lord Scarman's judgement at 717.

53. [1989] 2 Lloyd's Rep. 462 at 478. See also non-sale of goods cases such as, Lord Denning M R in Wickman Machine Tools Sales v. Schuler A.G, [1972] 1 W.L.R. 840 at 850; Lord Reid in the same case before the House of Lords, [1974] A.C. 235, at 251; Lord Diplock in Photo Production v. Securicor Ltd. [1980] A.C. 827 at 849.

54. See in this respect, Bradgate and White (1995) at 69 (fn. 47). See e.g., the statements observed in respect of the promissory representations regarding the existence of certain facts in the subject-matter of the contract, such as Behn v. Burness [1863] 3 B.& S. 751 (statement that the ship "now in the port of Amsterdam"; Bensten v. Tatlor [1893] 2 Q.B. 274 (statement that ship "now sailed or about to sail"; Maredelanto Compania Naviera SA v. Bergbau-Handel G m b H (The Mihalis Angelos) [1971] 1 Q.B. 164 (statement that a ship is "expected ready to load" clause in a voyage charter.

55. See e.g., Atiyah, P. S. & Adams, J., (1995) at 449 and 456 fn. 30; Bradgate and White (1995) at 76; Bridge, M., (1997) at 162, 163. See also, Carter, J.W., (1991) Paras. 308, 407, 501 and 569, in particular Para. 572; Guest, A. G. et al, (1994) vol. 2 Para. 41-040. In justifying this approach see, Treitel, G. H., (1991) at 692-693, Treitel, G. H., (1988) Paras. 198, 267; Treitel, G. H., (1990) at 186; Cehave N.V. v. Bremer Handelsgesellschaft mbH (The Hansa Nord) [1976] 1 Q.B. 44, the statement of Ormerod LJ at 84.

56. See e.g., Guest, A. G., et al, (1997) Para. 10-28; Bradgate and White (1995) at 69).

57. See in this respect, Bradgate and White, (1995) at 75. On this view, where the buyer rejects the goods and requests cure but the seller fails to comply, the buyer will be entitled to terminate the contract and claimed damages assessed as at the date of termination (see, ibid.).

58. Goode, R., M., (1995) at 274-276, 293-294, 362-367; Beale, H., (1980) at 91. The difficulty which arises from this approach is that if it is assumed that before the time for performance is expired the seller's non-conforming delivery would not result in breach of a condition how it is that the buyer can reject for 'breach of condition'. Where does the right of rejection come from? The proponents of the view do not deal with this issue adequately. It might be argued that the right to reject is to be justified on the breach of an implied term. That is, the seller has undertaken to deliver goods in conformity with 'conditions' within the contract period, but is impliedly obliged to make just one delivery. Where he has made non-conforming delivery he will be guilty of breach of this implied term which entitles the buyer to reject them (the point to which Professor Goode refers in a footnote of his leading text book without any explanation, ibid., at 362). But if breach of this implied term justifies rejection, the implied term must be a condition. If so, why can the buyer not terminate for its breach.

59. See e.g., Guest, A. G., et al, (1997) Para. 12-031; Ahdar, R. J., (1990) 364; Guest, A. G., et al, (1994) vol. 2 Para. 41-045; Law Commission, (1983) Para. 2.38.

60. See e.g., Goode, R. M., (1995) at 363-367; Beale, H., (1980) at 91; Sealy, L.S. & Hooley, R. J. A., (1994) at 427. See also, Lord Devlin, (1966) 192; Beale; Bishop, and Furmston, (1995) at 482, 504 and 510; Davies, I., (1992) at 161; Apps, A., (1994) 525; Treitel, G. H., (1999) at 732 fn. 28 and then 698 fn. 14.

61. In this respect, Professor Goode and his advocates have relied on a number of cases such as, Tetley v. Shand (1871) 25 L.T. 658; Borrowman Phillips & Co. v. Free & Hollis (1878) 4 Q.B.D. 500); Ashmore & Sone v. C.S. Cox & Co [1899] 1 Q.B. 436; Longbotton v. Bass Walker [1922] W.N. 245; E. E. & Brian Smith (1928), LD. v. Wheatsheaf Mills. LD. [1939] 2 K.B. 302; McDougall v Aeromarine of Emsworth [1958] 3 All E.R. 431; Agricultores Federados Argentinos v. Ampro S.A [1965] 2 Lloyd's Rep. 157; Gertreide Import Gesellschaft mb H v Itoh & Co. (America) Inc. [1979] 1 Lloyd's Rep. 592; Bremer Handelsgesellschaft m. b.H. v. J. H. Rayner & Co. Ltd. [1979] 2 Lloyd's Rep. 216; S.I.A.T. Didal Ferro v. Tradax Overseas S.A [1980] 1 Lloyd's Rep. 53; Empresa Exportadora de Azucar v. Industria Azucareva Nacional S.A. (The Playa Larga) [1983] 2 Lloyd's Rep. 171; Motor Oil Hellas (Corinth) Refineries S.A. v. Shipping Corpn of India (The Kanchenjunga) [1990] 1 Lloyd's Rep. 391 at 399.

62. The same argument may arise where the seller of unascertained goods has unconditionally appropriated goods to the contract. In such a situation, it can be argued that the act of appropriating goods to the contract with the buyer's consent may result in a description on them so that the seller cannot unilaterally recall and substitute them. See also, Bridge, M., (1997) at 199.

63. Goode, R. M., (1995) at 274-277, 294,, 362-367. See also, Beale, H., (1980) at 90-93.

64. Goode, R. M., (1995) at 365 and then 279. See also Beale, H., (1980) at 91; Beale H.G.; Bishop, W.D. and Furmston, M.P., (1995) at 482, 503 and 510; Lord Devlin, (1966) at 203.

65. Bradgate, R., (1995) at 247; Bradgate and White (1995) at 75; Atiyah, P. S. & Adams, J., (1995) at 455-456; Bridge, M., (1997) at 163, 198-201.

66. See Bradgate and White (1995) at 76.

67. See in this regard, Bradgate and White (1995) at 71-75; Bridge, (1997) at 199-201.

68. (1878) 4 Q.B.D. 500.

69. The editors of Benjamin's Sale of Goods, has cited this case as authority for this proposition (Guest, A. G., et al, (1997) Para. 19-021).

70. See e.g., Bradgate,R., (1995) at 247; Bridge, (1997) at 199.

71. Such as Motor Oil Hellas (Corinth) Refineries S.A. v. Shipping Corpn of India (The Kanchenjunga) [1990] 1 Lloyd's Rep. 391 at 399; Empresa Exportadora de Azucar v. Industria Azucareva Nacional S.A. (The Playa Larga) [1983] 2 Lloyd's Rep. 171 at 186; E. E. & Brian Smith (1928), LD. v. Wheatsheaf Mills. LD [1939] 2 K.B. 302 at 315; Gertreide Import Gesellschaft mb H v Itoh & Co.[1979] 1 Lloyd's Rep. 592 at 594

72. [1899] 1 Q.B. 436.

73. [1939] 2 Q.B. 302. The relevant statement cited in this case has also been explained as obiter, because the reasoning to which is referred is only one of two reasons for the decision (see Bradgate and White, (1995) at 73). The same has been said as to the comment in Motor Oil Hellas (Corinth) Refineries S.A. v. Shipping Corpn of India (The Kanchejunga) [1990] 1 Lloyd's Rep. 391 at 399, since the statement relied on was made in a case concerned with nomination of vessel under a charterparty contract.

74. [1958] 3 All E.R. 431. The case of Gertreide Import Gesellschaft mb H v Itoh & Co.[1979] 1 Lloyd's Rep. 592 can also be explained in this way. McDougall has also been explained as a case concerned with a contract containing an express term giving the seller a right to make a further tender after the buyer's rejection. It was not based on the general provisions of the law (see Bradgate and White, (1995) at 74).

75. [1965] 2 Lloyd's Rep. 157. See Bradgate and White, (1995) at 74. It seems that Bremer Handelsgesellschaft m. b.H. v. J. H. Rayner & Co. Ltd. [1979] 2 Lloyd's Rep. 216 at 229 could be explained in this way.

76. However, it can be said that nomination of a vessel is broadly equivalent to appropriation of goods to a contract. That is, as appropriation identifies some particular goods to the contract, nomination of a vessel identifies the vessel to be used in performance. As a result, such cases can be authorities for a limited right of cure; where no binding appropriation/nomination has been made.

77. [1922] W.N. 245. As Atkin LJ indicated in respect of the Longbottom v. Bass Walker at 246. In this way Tetley v. Shand (1871) 25 L.T. 658 can also be explained, since in that case the plaintiffs (brokers who actually sold the cargo in their names) undertook to buy gradually the 500 bales of cotton in a certain prices.

78. See e.g., Bradgate, (1995) at 247. The other cases such as S.I.A.T.di dal Ferro v. Tradax Overseas S.A [1980] 1 Lloyd's Rep. 53 at 63 and Empresa Exportadora de Azucar v. Industria Azucareva Nacional S.A. (The Playa Larga) [1983] 2 Lloyd's Rep. 171 at 185 can be explained on the basis that no authority has been cited in favour of the view in the statements cited in these cases. Moreover, the comments are rendered in respect of seller's duty to present documents in a documentary sale. It is not thus clear whether it would be applied to the other type of contracts and in respect of the delivery of defective goods under documentary sale itself.

79. See in this respect, Bradgate and White, (1995) at 75.

80. For instance, in Payzu Ltd. v. Saunders [1919] 2 K.B. 581, Scrutton LJ said that "in commercial contracts it is generally reasonable to accept an offer from the party in default" (ibid., at 589).

81. One may argue that the point can be supported by the language of s. 27 of the Sale of Goods Act. The section requires the seller to deliver "the goods." It is quite possible to say that such a language refers to "the specific goods" or, in a contract for unascertained goods, "the goods actually appropriated to the contract." As long as some particular goods are not effectively allocated to the contract the seller's duty is simply to identify some goods which conform to the contract terms. On this reading, the section would fit with a right of cure up to the stage of appropriation to identify the contract goods.

82. Such as S.I.A.T.di dal Ferro v. Tradax Overseas S.A [1980] 1 Lloyd's Rep. 53 at 63 and Empresa Exportadora de Azucar v. Industria Azucareva Nacional S.A. (The Playa Larga) [1983] 2 Lloyd's Rep. 171 at 185. See also, Guest, A. G., et al, (1997) Para. 19-062.

83. [1962] 2 Q.B. 26.

84. [1976] 1 Q.B. 44 at 60, 73 and 84.

85. See e.g., Cehave N.V. v. Bremer Handelsgesellschaft mbH (The Hansa Nord) [1976] 1 Q.B. 44, at 60, 73, 84; Bunge Corp v. Tradax Export S. A. [1981] 1 W.L.R. 711 at 717.

86. [1962] 2 Q.B. 26 at 64.

87. Ibid., at 66. See also, Cehave N.V. v. Bremer Handelsgesellschaft mbH (The Hansa Nord) [1976] 1 Q.B. 44, per Roskill L.J. at 73.

88. See generally, Guest, A. G., (1984) at 480; Treitel, G. H., (1988) Para. 260; Carter, J.W., (1991) Paras. 620, 647.

89. See e.g., Decro-Wall International S.A. v. Practitioners in Marketing Ltd. [1971] 1 W.L.R. 361 at 368; Cehave N.V. v. Bremer Handelsgesellschaft mbH (The Hansa Nord) [1976] 1 Q.B. 44 at 60, 73, 84.

90. See e.g., Lord Diplock in Photo Productions [1980] A.C. 827 at 849; Gill & Duffus S.A. v. Berger & Co. Inc. [1984] A.C. 382 at 391.

91. See e.g., Cehave N.V. v. Bremer Handelsgesellschaft mbH (The Hansa Nord)[1976] 1 Q.B. 44, per Roskill LJ at 73.

92. Upjohn LJ in HongKong Fir Shipping Co. Ltd. v. Kawasaki Kisen Kaisha Ltd [1962] 2 Q.B. 26 at 64.

93. Ibid., per Diplock LJ at 66, 72. See also Bunge Corp v. Tradax Export S. A. [1981] 1 W.L.R. 711, per Lord Scarman at 717. Diplock's criteria has been criticised by Lord Devlin (see, Lord Devlin, (1966) at 197). In contrast see, Carter, J. W., (1991) Para. 625.

94. See Carter, J. W., (1991) Para. 652.

95. Carter, J. W., (1991) Para. 653.

96. The same question arises in the case of recoverable loss. As to that issue, it is disputed whether to recover damages for loss resulting from the breach of contract, it is sufficient that the loss in question foreseeable or it must attain a degree more than the mere foreseeability. The issue is fully discussed by the Author in a separate paper under the title: Buyer's Right to Claim Monetary Relief: A Comparative Study Under English Law Vienna Convention on Contracts for the International Sale of Goods 1980, Iranian and Shi'ah Law.

97. Carter, J. W., (1991) Para. 653.

98. Ibid.

99. Lord Devlin, (1966) at 198. It is worth noting that the question of degree of foreseeability of recoverable loss is, as will be seen in detail in damages section, a controversial issue. At that place, in some English cases, it has been suggested that in order to ascertain the degree of requisite foreseeability of recoverable loss there must be a distinction between the personal injury and economic loss (see, H. Parsons (Livestock) Ltd. v. Uttley Ingham & Co. Ltd, [1978] Q.B. 791, the statement of Lord Denning MR. However, the view has not been welcomed by the other members of the Court of Appeal.).

100. Professor Carter favours this approach (see, Carter, J. W., (1991) Para. 653). In the absence of clear provision, Professor Carter suggests that one way of avoiding this problem is to allow the buyer to refuse to accept the goods in situations where a serious consequence is a foreseeable event and only to permit termination if serious consequences are likely to occur as a result of the breach (ibid.).

101. See e.g., Weir, T., (1976) 33; Beale, H., (1980) at 98; Carter, J. W., (1991) Paras. 625, 626.

102. See generally, Carter, J. W., (1991) Paras. 655 and seq.; Treitel, G. H., (1988) Para. 264; Treitel, G. H. (1995) at 686 and seq.; Brownsword, R., (1992) at 92 and seq.

103. HongKong Fir Shipping Co. Ltd. v. Kawasaki Kisen Kaisha Ltd [1962] 2 Q.B. 26 at 66. As an example, see Cehave N.V. v. Bremer Handelsgesellschaft mbH (The Hansa Nord) [1976] 1 Q.B. 44; Tradax Internacional S.A. v. Goldschmidt S.A. [1977] 2 Lloyd's Rep. 604 at 612.

104. See e.g., Buckley L.J. in Decro-Wall International S.A. v. Practitioners in Marketing Ltd. [1971] 1 W.L.R. 361 (a distributorship case) which is cited with approval by Lords Wilberforce and Frazer in Federal Commerce & Navigation v. Molena Alpha Inc. (The Nanfri) [1978] 3 W.L.R. 757 at 779 and 783. However, where damages are regarded as an inadequate remedy termination will likely be permitted (Bremer Handelsgesellschaft m. b.H. v.Vanden Avenne-Izegem P.V.B.A. [1978] 2 Lloyd's Rep. 109 at 113.

105. According to some authors, this factor should have been given an important relevance to the fact whether the consequences of the breach are sufficiently serious (see Treitel, G. H (1967) at 155).

106. It is worth noting that although English law does not overtly recognise an explicit general duty of "good faith" affecting the formation, performance or breach of contracts (see particularly Bingham LJ in Interfoto Picture Library Ltd. v Stiletto Visual Programmes Ltd. [1989] Q.B. 433 at 439), there is no doubt that English judges would take account of the behaviour of the parties when reaching decisions. Thus, if a court thinks that a buyer is acting in bad faith in trying to get out of a contract on the grounds of an alleged breach, for instance by trying to get out of the contract to avoid a fall in market prices the court will try to prevent the buyer escaping the contract. Thus, it may find that there is no breach, or that the breach is only of an intermediate term, not a condition, and is not sufficiently serious to allow the buyer to reject and terminate. This can be seen in Cehave N.V. v. Bremer Handelsgesellschaft mbH (The Hansa Nord). In that case the original buyers who had sought to reject defective goods later re-acquired them for almost the same purpose from another source for about a third of the original contract price it was quite obvious that the court had grave suspicions about the buyer, and consequently refused to regard the sellers' breach of the term requiring that "goods be shipped in good condition" as sufficiently serious to justify their rejection. In that case Roskill L.J. observed that "Contracts are made to be performed and not to be avoided according to the whims of market fluctuation" ([1976] 1 Q.B. 44 at 71).

107. See e.g., Decro-Wall International S.A. v. Practitioners in Marketing Ltd. [1971] 1 W.L.R. 361 at 380. See also Treitel, G. H., (1999) at 726.

108. Sale of Goods Act 1979 ss. 11(4) and 31(2). In view of terminology, the usual approach is to speak of severable and non-severable contracts rather than obligations. But it has been suggested (Goode, R. M., (1995) at 284 fn. 48.) that such a description is incorrect, since it is the obligation to deliver goods and to accept them and pay the price which is to be regarded severable or non-severable.

109. See e.g., Taylor v. Oakes, Roncoroni & Co. [1922], 127 L. T. 267 (C.A.).

110. Section 31(2):"Where there is a contract for the sale of goods to be delivered by stated instalments, which are to be separately paid for, and the seller makes defective deliveries in respect of one or more instalments, ..., it is a question in each case depending on the terms of the contract and the circumstances of the case whether the breach of contract is a repudiation of the whole contract or whether it is a severable breach giving rise to a claim for compensation but not to a right to treat the whole contract as repudiated."

111. Lord Heward in Maple Flock Co. Ltd. v. Universal Furniture Products (Wembley) Ltd [1934] 1 K.B. 148 at 157.

112. [1934] 1 K.B. 148 at 157. See also, Regent OHG Aisenstadt und Barig v. Francesco of Jermyn Street Ltd. [1981] 3 All ER 327.

113. [1930] 2 K.B. 312.

114. In that case, Wright J. observed: "Where the breach is substantial and so serious as the breach in this case and has continued so persistently, the buyer is entitled to say he has the right to treat the whole contract as repudiated" ([1930] 2 K.B. 312 at 331). The same principles have been clearly stated by Donaldson J with respect to an alleged repudiation by the buyer in a f.o.b. case of Warinco A.G. v. Samor S.P.A. [1977] 2 Lloyd's Rep. 582 at 588. Although the decision was reversed on appeal ([1979] 1 Lloyd's Rep. 450), the disagreement was purely with the application of the law to the facts, and no doubt was cast on Danoldson's statement of the relevant principles.

115. See e.g., Donaldson J. Warinco A. G. v. Samor S. P. A. [1977] 2 Lloyd's Rep. 582 at 588.

116. See e.g., Honck v. Muller [1881] 7 Q.B.D. 92; Lord Blackburn in Mersey Steel & Iron Co. v. Naylor, Benzon & Co. [1884] 9 App. Cas. 434 at 443-4.

117. See e.g., Atiyah, P. S. & Adams, J., (1995) at 455; Guest, A. G., et al, (1997) Para. 12-070. See also, Bradgate, R., (1995) at 257.

118. Guest, A. G., et al, (1997) Para. 8-078.

119. Ibid.

120. The reason for that has been clearly stated by Brett L. J. in Reuter, Hufeland & Co. v. Sala & Co. [1879] 4 C.P.D. 239 at 256, which was cited with approval by Lord Farwell in Jackson v. Rotax Motor & Cycle Co. [1910] 2 K.B. 937 at 947.

121. See Guest, A. G., et al, (1997) Para. 8-079 and the authorities cited in fns. 68, 69.

122. Atiyah, P. S. & Adams, J., (1995) at 454.

123. Bridge, M., (1997) 40 at 185 and fn. 250 in which he cites a number of authorities for this view. See also Atiyah, P. S. & Adams, J., (1995) at 454; Guest, A. G., et al, (1997) Para. 8-080

124. Bridge, M., (1997) 40 at 185.

125. Bridge, M., (1997) 40 at 185.

126. Goode, R. M., (1995) at 365; Guest, A. G., et al, (1997) Para. 8-080

127. See also Guest, A. G., et al, (1997) Para. 8-080; Bridge, M., (1988) at 263-265.

128. The view is cited in: Guest, A. G., et al, (1997) Para. 8-080. However, the editors of Benjamin's Sale of Goods themselves suggest that the seller should be entitled to cure the default by delivering a substitute instalment (Guest, A. G., et al, ibid.)

129. There are also other reasons which may justify the separate consideration of time provisions in contract law. First, time stipulations attract a notice procedure under which time stipulation can be made essential even where the term was not originally of such character. Secondly, in commercial contracts, a court is more likely ready to treat a time stipulation as a condition than other contractual terms. See also, Carter, J.W., (1991) Para. 543; Treitel, G. H., (1999) at 766.

130. The Act, in dealing with the nature of time stipulations, makes no explicit reference to the doctrine of conditions and warranties which is so dominant elsewhere of the Act. It uses a different terminology to describe a time stipulation strict compliance with which is a condition precedent to the promisee's obligation.

131. With respect to stipulations as to time of payment, sub-section (1) provides that unless a different intention appears from the terms of the contract, such stipulations are not of the essence of a contract of sale.

132. In Martindale v. Smith [1841] 1 Q.B. 389 at 395, a case decided before the passing of the Sale of Goods Act, Lord Denman observed "In a sale of chattels time is not of the essence of the contract, unless it is made so by express agreement." See also Lord Simon in United Scientific Holdings Ltd. v. Burnley Borough Council [1978] A.C. 904 at 941.

133. The Sale of Goods Act 1979 s. 10 (2).

134. See e.g., Steedman v. Drinkle [1916] A.C. 275 at 280. The time stipulation will have the effect of an express condition where the contract provides that, in the event of one party's any failure to perform within the stipulated time, the other is to be entitled to terminate (see e.g. Maredelanto Compania Naviera SA v. Bergbau-Handel G m b H (The Mihalis Angelos) [1971] 1 Q.B. 164), or, that the stipulation as to time is to be a condition.

135. Lord Diplock in United Scientific Holdings Ltd. v. Burnley Borough Council [1978] A.C. 904 at 927. See also, Lord Hailsham of St. Marylebone, (1983) vol. 9 Para. 481.

136. Lord Diplock in United Scientific Holdings Ltd. v. Burnley Borough Council [1978] A.C. 904 at 928.

137. Lord Simon in United Scientific Holdings Ltd. v. Burnley Borough Council [1978] A.C. 904 at 940.

138. Lord Wilberforce in Bunge Corp v. Tradax Export S. A. [1981] 1 W.L.R. 711 at 716. See also, Lord Hailsham of St. Marylebone, (1983) vol. 41, Para. 686; Carter, J.W., (1991) Para. 564.

139. Hartley v. Hymans [1920] 3 K.B. 475, at 484. See also by the same judge in J. Aron & Co. v. Comptoir Wegimont [1921] 3 K.B. 435 at 439-40; James Finlay and Co. Ltd. v. N. V. Kwik Hoo Tong Handel Maatschappij [1929] 1 K.B. 400, per Scrutton L.J. at 407.

140. See also, Stoljar, S.J., (1955) at 532, and the authorities cited at fns. 25 and 26.

141. For example in Bunge Corp v. Tradax Export Lord Roskill observed: "I would emphasise in this connection the need for certainty in this type of transaction ... Parties to commercial transactions should be entitled to know their rights at once and should not, when possible, be required to wait upon events before those rights can be determined" ([1981] 1 W.L.R. 711 at 725). See also, Guest, A. G., et al, (1994) vol. 1 Para. 21-012; Treitel, G. H., (1999) at 767. See also Bradgate (1995) at 38; Carter, J. W., (1991) Para. 564.

142. See e.g., Perell, Paul M., (1990) at 426; Clarke, M., (1991) at 30.

143. Bunge Corp v. Tradax Export S. A. [1981] 1 W. L. R. 711 at 719.

144. See also, ibid., at 729; United Scientific Holdings Ltd. v. Burnley Borough Council [1978] A.C. 904 at 924, 950.

145. Bentsen v. Taylor, Sons & Co. [1893] 2 Q.B. 274, per Lord Bowen at 281.

146. See e. g. Compagnie Commerciale Sucres Et Denrees v. C. Czarnikow Ltd. (The Naxos) [1991] 1 Lloyd's Rep. 29.

147. See in this respect, Clarke, M., (1991) at 31.

148. For instance, as Scrutton L.J. in James Finlay and Co. Ltd. v. N. V. Kwik Hoo Tong Handel Maatschappij [1929] 1 K.B. 400 at 407) observed "since the decision in Bowes v. Shand ((1877) 2 App. Cas. 455) it has been well settled that on a sale of goods a condition as to the time of shipment is vital and is of the essence of the contract."

149. Lord Roskill in Bunge Corp v. Tradax Export S. A. [1981] 1 W.L.R. 711 at 729.

150. See e.g., Bowes v. Shand (1877) 2 App. Cas. 455. In this case the court held that the buyers were justified in the termination where the seller shipped the goods prior to a stipulated period, notwithstanding the buyers suffered no damages as a result of the breach.

151. Bunge Corp. v. Tradax Export S.A. [1980] 1 Lloyd's Rep. 294 (A.C.); [1981] 1 W.L.R. 711 (H.L.).

152. See e.g., Raineri v. Miles [1981] A.C. 1050. In such a case, the buyer has also an option to resort to the notice-giving procedure. Under this provision, the buyer will be able to give a notice containing a reasonable period of time requesting the seller to perform the contract within that time. By this way, he will be able to make the time for performance of the essence. As a result, the seller's failure to perform within the additional period of time the buyer will be entitled to terminate the contract. It is to be recalled that the notice procedure was originally developed by equity in contracts for the sale of land and is frequently utilised in this context. However, common law has also applied the procedure to the contracts for sale of goods (McCardie J., in Hartley v. Haymans [1920] 3 K.B. 475 at 495; cf. by Lord Denning in Charles Rickards Ltd. v. Oppenhaim [1950] 1 K.B. 616 at 623, in which he described McCardie J's statement "as accurately stating the law in regard to the sale of goods.").

153. Goode, R. M., (1995) at 365 and then p. 279. However, Professor Goode, when dealing with buyer's remedies for seller's breach, observes that the seller's delay may give rise to a right of termination if the delay is so great as to frustrate the commercial purpose of the contract (ibid., at 391).

154. Devlin J. in Universal Cargo Carriers Corp. v. Citati [1957] 2 Q.B. 401 at 426. See also Apps, A., (1994) at 535.

155. Universal Cargo Carriers Corp. v. Citati [1957] 2 Q.B. 401 at 430, 432.

156. See also, Beale, Bishop & Furmston, (1995) at 505.

157. Apps, A., (1994) at 536, although he himself rejects such an inference, but on other grounds. See also Goode, R. M., (1995) at 279, fn. 26.

158. [1958] 3 All E.R. 431.

159. Although the contract was for a building a yacht, is was treated as a contract of sale.

160. [1958] 3 All E.R. 431 at 438-439.

161. [1957] 2 Q.B. 401.

162. [1957] 2 Q.B. 401 at 434-435.

163. Ibid., at 403.

164. See also, Guest, A. G., et al, (1997) Para. 8-025.

165. Sale of Goods Act 1979 ss. 29 (3) and 59. See e.g., McDougall v. Aeromarine of Emsworth Ltd. [1958] 3 All E.R. 431; Charles Rickards Ltd. v. Oppenhaim [1950] 1 K.B. 616 at 622. See also Carter, J.W., (1991) Para. 103.

166. Lord Devlin, (1966) at 208. See also, Guest, A. G., et al, (1997) Para. 8-034.

167. See e.g.,, McDougall v. Aeromarine of Emsworth Ltd. [1958] 3 All E.R. 431; Thomas Borthwick (Glasgow) Ltd. v. Bunge & Co, Ltd.[1969]1 Lloyd's Rep. 17.

168. Under this new provision, a buyer who does not deal as consumer will not be entitled to reject the goods where the shortfall or, as the case may be, excess is so slight that it would be unreasonable for him to reject.

169. Atiyah, P. S. & Adams, J., (1995) at 109. In contrast, see: Bradgate and White, (1995) at 75; Bridge, M., (1997) at 199 in which he says that the seller's duty to deliver right quantity is not expressed as contractual condition and as a result s. 11(3) does not come into play.

170. See e.g., Manbre Saccharine Co. Ltd. v. Corn Products Co. Ltd. [1919] 1 K.B. 198 at 202. He may be obliged to tender these documents together with any other documents required by the contract, e.g. a certificate of quality or origin. It should be noted that in a standard f.o.b. contract only the bill of lading is required.

171. See e.g., Gill & Duffus S.A. v. Berger & Co. Inc. [1984] A.C. 382. See also, Sassoon, David, M., (1995) at 4; Bradgate, R., (1995) at 657.

172. See in this respect, Guest, A. G., et al, (1997) Para. 19-126 and the authorities cited there.

173. [1929] 1 K.B. 400 (AC).

174. [1954] 2 Q.B. 459. Similarly, Lord Diplock in Gill & Duffus S.A. v. Berger & Co. Inc [1984] A.C. 382 at 395,has referred to the buyer's right to reject documents and to reject goods as "separate and successive rights." See generally, Sassoon, David M., (1995) at 281 and seq.

175. However, some academic authors have suggested that the existence of two separate rights of rejection prescribed by Devlin J. in British Traders & Shippers case is subject to some qualifications. In practice there can be found some cases in which such a separation is undermined. See in this respect, Atiyah, P. S. & Adams, J., (1995) at 467-8; Bridge, M., (1997) at 191.

176. See e.g., In re General Trading Co.& Van Stolk's Commissiehandel [1910] 16 Com. Cas. 95.

177. See e.g., Tamvaco v. Lucas (no. 1) [1859] 1 E. & E 581. See in this connection: Guest, A. G., et al, (1997) Para. 19-126.

178. As was the case in Cehave N.V. v. Bremer Handelsgesellschaft mbH (The Hansa Nord) [1976[ 1 Q.B. 44, at 70.

179. See e.g., Kwei Tek Chao v. British Traders & Shippers Ltd, [1954] 2 Q.B. 459 at 482.

180. If, however, the buyer takes up the documents in ignorance of facts giving him the right to reject the documents or goods or both, he will not be taken to have waived his right to reject the documents or the goods (see e.g., Suzuki & Co. v. Burgett & Newsman [1922] 10 Ll. L.R. 223). Although he may, as will be seen below, lose his right to reject the goods under the doctrine of "acceptance" (s. 35 of the Sale of Goods Act).

181. See e.g., Bradgate, R., (1995) at 664.

182. It is, of course, controversial whether such a case is strictly a mater of waiver, estoppel, or solely the effect of s. 35. The controversy is based on the fact where the buyer has not read the documents he cannot strictly speaking be said to have waived the right to reject, since waiver requires actual knowledge of the existence of the right to reject. See in this respect, Atiyah, P. S. & Adams, J., (1995) at 468, fn. 79; Bradgate, R., (1995) at 664.

183. See e.g., Panchaud Freres S.A. v. Etablissements General Grain Co. [1970] 1 Lloyd's Rep. 53. For further cases see, Atiyah, P. S. & Adams, J., (1995) at 468, fn. 79.

184. In contrast see, Thomson, J. M., (1978) 137 (in which he argues that the breach always bring the contract to an end automatically unless the victim affirms it).

185. An election to continue the performance of the contract is often termed an "affirmation" of the contract (see e.g., Motor Oil Hellas (Corinth) Refineries S.A. v. Shipping Corpn of India (The Kanchenjunga) [1990] 1 Lloyd's Rep. 391 at 398).

186. See Cheshire, Fifoot and Furmston, (1996) at 556; Treitel, G. H., (1999) at 783 and authorities Treitel cited in fn. 18; Carter, J. W., (1991) Paras. 745, 1001.

187. As far as the sale of goods cases are concerned, the given feature of the right to terminate might be inferred from the language of s. 11(3) of the Sale of Goods Act 1979 which provides that breach of condition "may "give rise to a right to treat the contract as repudiated."

188. Alghussein Establishment v. Eton College [1988] 1 W.L.R. 587. See also, Treitel, G. H., (1999) at 784.

189. See e.g., Decro-Wall International S.A. v. Practitioners in Marketing Ltd. [1971] 1 W.L.R. 361, where it was held that a repudiation or discharging breach by one of the parties to a contract does not of itself terminate the contract.

190. Ibid., at 375.

191. Treitel, G. H., (1988) Paras. 243, 248.

192. See e.g., Kwei Tek Chao v. British Traders and Shippers Ltd. [1954] 2 Q.B. 459 at 477; Lord Goff in Motor Oil Hellas (Corinth) Refineries S.A. v. Shipping Corpn of India (The Kanchenjunga) [1990] 1 Lloyd's Rep. 391 at 397-398..

193. See e.g. Graanhandel T. Vink B.V. v. European Grain & Shipping Ltd. [1989] 2 Lloyd's Rep. 531, at 533, in which Evans J. said: "if he does decide to reject the goods he must do so unequivocally and be prepared to take a stand."

194. See e.g., Vitol SA v Norelf Ltd., The Santa Clara.[1994] 4 All E R 109 (anticipatory repudiation).

195. See e.g., Heyman v. Darwins, Ltd. [1942] A.C. 356 at 361.

196. See e.g., Graanhandel T. Vink B.V. v. European Grain & Shipping Ltd. [1989] 2 Lloyd's Rep. 531 at 533. See also, Tradax Export S.A. European Grain & Shipping Ltd. [1983] 2 Lloyd's Rep. 100 esp. at 107.

197. See also, M.S.C. Mediterranean Shipping Co. S.A. v. B.R.E-Metro Ltd. [1985] 2 Lloyd's Rep. 239 at 240.

198. See e.g., Lakshmijit v. Faiz Sherani (P.C.) [1974] A.C. 605 at 616.

199. For instance, in the very recent case Barber v. NWS Bank plc. [1996] 1 All ER 906 at 909 (CA) the contract for sale of car has been treated as "terminated" when the solicitors sent a letter "rescinding" the contract. See also Carter who suggests various examples in: Carter, J. W., (1991) Para. 1016.

200. See e.g., State Trading Corp. of India v. M. Golodetz Ltd [1989]2 Lloyd's Rep. 277 at 286.

201. See e.g., Denmark Productions Ltd. v. Boscoble Productions Ltd. [1969] 1 Q.B. 699 at 731-732. See, further, Dawson , F., (1981) at 90; Lord Hailsham of St. Marylebone, (1983) vol. 9, Para. 559; Thomson, J. M., (1978) at 142.

202. See e.g., Mardorf Peach & Co. v. Attica Sea Carriers Corp. of Liberia (The Laconia) [1977] A. C. 850 at 871. See also, s. 35 (4) of the Sale of Goods Act.

203. Carter, J. W., (1991) Para. 1016.

204. See e.g., Taylor v. Oakes, Roncoroni & Co. [1922] 38 T.L.R. 349.

205. Car & Universal Finance Co. Ltd. v. Caldwell [1965] 1 Q.B. 525 at 550. For further authorities see, Carter, J. W., (1991) Para. 1016

206. See e.g., State Trading Corp. of India v. M. Golodetz Ltd. [1989] 2 Lloyd's Rep. 277 at 286 ("at least overtly evinced").For further cases see, Carter, J. W., (1991) Para. 1016.

207. See e.g., Heyman v. Darwins, Ltd. [1942] A.C. 356 at 361; Decro-Wall International S.A. v. Practitioners in Marketing Ltd. [1971] 1 W.L.R. 361 at 375-6.

208. See Generally, Lord Hailsham of St. Marylebone, (1983) vol. 9 Para. 254; Treitel, G. H. (1995) at 21; Cheshire, Fifoot & Furmston, (1996) at 48-49.

209. Lord Hailsham of St. Marylebone, (1983) vol. 9 Para. 556; Cheshire, Fifoot & Furmston, (1996) at 556.

210. State Trading Corp. of India v. M. Golodetz Ltd. [1989] 2 Lloyd's Rep. 277 at 286. See also, Carter, J. W., (1991) Para. 1016

211. Sale of Goods Act, s. 11(4).

212. The principle was clearly stated by Lord Atkin in United Australia Ltd. v. Barclays Bank Ltd [1941] A.C. 1 as follows: "If a man is entitled to one of two inconsistent rights it is fitting that when with full knowledge he has done an unequivocal act showing that he has chosen the one he cannot afterwards pursue the other, which after the first choice is by reason of the inconsistency no longer his to choose" (ibid., at 30). It can also be said that the reason why the non-defaulting party loses his right of termination is that he cannot at the same time claim the benefits of performance and claim to be discharged from the obligation to perform the contract.

213. Ss. 11(2), (4) and 35. It is worth noting that common law has also developed certain doctrines in order to identify whether or not a party who has an option to affirm the contract or to terminate it has affirmed or is deemed to have affirmed the contract. There is no uniform terminology to describe these doctrines. Terms such as "election," waiver, "affirmation" in the one hand, and "estoppel," "promissory estoppel," on the other, are used for this purpose. See e.g. Lord Goff in Motor Oil Hellas (Corinth) Refineries S.A. v. Shipping Corpn of India (The Kanchenjunga) [1990] 1 Lloyd's Rep. 391 at 397-398; Kwei Tek Chao v. British Traders and Shippers Ld. [1954] 2 Q.B. 459 at 477. See also, Guest, A. G., et al, (1997) Paras. 12-034-12-038 and 19-129-19-131). However, since these doctrines have little relation to the present research, they are not examined here in separate, although they will be referred to if some of them come into application. See also, Bridge, M., (1997) at 169-170.

214. It is worth noting that in the case of breach of condition, the Act (s. 11(2).) uses the terms "election" and "waiver," while s. 11(4) and 35 refers to the term "acceptance." It is also to be stressed that acceptance in this context is different from that is mentioned in s. 27 which provides correlative duties of the parties to a sale contract. See also Goode, R. M., (1995) at 367; Bridge, M., (1997) at 169.

215. S. 35 (2). Relying on this provision it can be said that acceptance of a delivery note can only operate as an express acceptance if suitably worded as an acceptance and not merely an acknowledgement of delivery and the buyer was offered a reasonable opportunity to examine the goods before signing. See in this respect, Law Commission, (1983) Para. 2.53; Law Commission, (1987) Para. 5. 24; Atiyah, P. S. & Adams, J., (1995) at 461; Bradgate, R., (1995) at 251; Bridge, M., (1997) at 171.

216. Law Commission, (1983) Para. 2.53.

217. [1900] 1 Q.B. 513. See also Law Commission, (1983) Para. 2-53; Law Commission, (1987) Para. 2-45.

218. As to the concept of the term "an act inconsistent with the seller's ownership" used by the Act, see, Kewi Tek Chao v. British traders and Shipping Ltd. [1954] 2 Q.B. 459 at 487). See also, Goode, R. M., (1995) at 371. See also, Law Commission, (1983) Para. 2.55; Atiyah, P. S. & Adams, J., (1995) at 466-7; Guest, A. G., et al, (1997) Para. 12-046; Bridge, M., (1997) at 175.

219. S. 35 (2).

220. See also, Bradgate, R., (1995) at 251.

221. S. 35 (6). It is worth noting that this sub-section applies to all the three methods of acceptance. Accordingly, when the buyer asking the seller, for example, to repair he will not be deemed to have accepted under the method of lapse of a reasonable time. This will suspend the period of reasonable time. It will also not put the buyer in a position that he has accepted under the head of express intimation. See also, Bridge, M., (1997) at 170 and 171.

222. See e.g., Kewi Tek Chao v. British Traders and Shipping Ltd. [1954] 2 Q.B. 459 at 486; approved in Gill & Duffus S.A. v. Berger & Co. Inc. [1984] A.C. 382 at 395.

223. See e.g., Kwei Tek Chao v British Traders & Shippers Ltd [1954] 2 Q.B. 459. See also, Atiyah, P. S. & Adams, J., (1995) at 467.

224. However, in practice the buyer's dealing with the documents will affect his power to reject the goods unless the sub-buyer himself rejects. See also, Atiyah, P. S. & Adams, J., (1995) at 468.

225. Bradgate, R., (1995) at 252.

226. S. 59 Sale of Goods Act 1979.

227. See also, Law Commission, (1983) Para. 2.57, Law Commission, (1987) Para. 5.19; Bradgate, R., (1995) at 253; Goode, R. M., (1995) at 376-377; Bridge, M. (1997) at 176-177. The Law Commission has commented that "Because every thing will turn on the question of reasonableness, there is no limit on the number of factors which the court is entitled to take into account when deciding what period of retention is reasonable (Law Commission, (1987) Para. 2. 48).

228. Sale of Goods Act, s. 35 (5).

229. S. 35 (5).

230. Taking into account the lack of a principle allowing an accepting buyer to revoke his acceptance, as it is provided in American Uniform Commercial Code (U.C.C. s. 2-608), the rule would be harsh for the buyer in respect of latent defects which may appear long time after delivery during the period in which he uses them. In addition, in a large scale-sale of commodities it is frequently impractical or at least expensive and wasteful for a buyer to inspect each item before he comes to use it. Thus, it is probable that a buyer is required to have a consignment which is substantially different from that bargained for on the basis of being have had a reasonable opportunity to examine the goods. The case has been examined by Law Commission and was decided ultimately in favour of finality of transaction (see Law Commission, (1983) Paras. 4.66-4.73, and, Law Commission, (1987) Paras. 5.6-5.5.14).

231. See e.g., Bernstein v. Pamson Motors (Golders Green) Ltd. [1987] 2 All E.R. 220; Reynolds, F.M.B., (1988) 16.

232. This is one of the points which distinguishes this doctrine from the common law doctrine of "waiver." Although there are some dicta which cast some doubt on the necessity of existence of the element that a non-defaulting party must have actual knowledge of the defect before he can be said to have waived his right to reject (see e.g., Bremer Handelsgesellschaft m. b.H. v. C. Mackprang Jnr. [1979] 1 Lloyd's Rep. 221 at 226, 230; Avimex S.A. v. Dewulf & Cie [1979] 2 Lloyd's Rep. 57 at 67; see also, Carter, J. W., (1991) Para. 1042), there are a number of authorities which demonstrate that the non-defaulting party's actual knowledge of the defect constitutes an essential element of the doctrine of waiver in the sense of election of remedies. This view has been affirmed by the Court of Appeal in Peyman v. Lanjani [1985] Ch. 457. See also United Australia Ltd. v. Barclays Bank Ltd. [1941] A.C. 1 at 30; Motor Oil Hellas (Corinth) Refineries S.A. v. Shipping Corpn of India (The Kanchenjanga) [1990] 1 Lloyd's Rep. 391 at 398; Bridge, M., (1997) at 266 and seq.; Treitel, G. H., (1999) at 755-756; Beale, H., (1980) at 118; Carter, J. W., (1991) Para. 1042; Carter, J. W., (1992) at 215.

233. This is one of the elements which distinguishes this doctrine from the common law doctrine of "estoppel." The doctrine has two branches: "promisory estoppel" and "estoppel by conduct." See in this respect, Cheshire, Fifoot & Furmston, (1996) at 106-107 and 578-579; Carter, J. W., (1991) Para. 1045-1046; Atiyah, P. S. & Adams, J., (1995) at 102. Although in modern decisions, it is difficult to find an authority to make a clear distinction between waiver and estoppel, differences can be found between the conceptual bases of the two doctrines. See in this respect, Adams, J., (1972) 245; Carter, J. W., (1991) Para. 1090; Atiyah, P. S. & Adams, J., (1995) at 99.

234. As the language of this provision shows, the buyer must first have the right to reject the whole goods for the partial defective performance. That is, the defective part must not be seen as isolated from the whole part, but it must be as such that allows the buyer to reject the whole goods. Accordingly, he will not be entitled to reject a portion of the goods and retain the remainder if his rejection would be unreasonable under s. 15A.

235. See s. 35 (7) of the Sale of Goods Act 1979 which provides "Where the contract is for the sale of goods making one or more commercial units, a buyer accepting any goods included in a unit is deemed to have accepted all the goods making the unit; ...."

236. See generally, Cheshire, Fifoot and Furmston, (1996) at 558-559; Carter, J. W., (1991) Paras. 314, 1038-1040, 1206-1207, 1211-1212, 1215; McGarvie, R. E., (1964) 305; Albery, M., (1975) 337. See further Heyman v. Darwins, Ltd. [1942] A.C. 356 at 399; Johnson v. Agnew [1980] A.C. 367, in particular at 392-393. Cf. Coote, B., (1970) at 227; Dawson, F., (1976) 214; Coote, B., (1981) at 802.

237. As it happened in State Trading Corp. of India v. M. Golodetz Ltd. [1989] 2 Lloyd's Rep. 277 at 288. See also Gill & Duffus S.A. v. Berger & Co. Inc. [1984] A.C. 382 at 390 (where Lord Diplock seems to assume that such a breach had indeed occurred on the part of the seller); Treitel, G. H., (1999) at 789-790.

238. As some academic writers have suggested (Atiyah, P. S. & Adams, J., (1995) at 455; Guest, A. G., et al, (1997) Para. 12-070). But, as already indicated, this point is not clearly stated by the Act (see in this respect, 2.3.1.). See also, Treitel, G. H., (1988) Para. 283.

239. See e.g., Lord Diplock in Moschi v. Lep Air Services Ltd. [1973] A.C. 331 at 350; Johnson v. Agnew [1980] A.C. 367 at 392; Photo Production Ltd. v. Securicor Transport Ltd. [1980] A.C. 827 at 849, 850; Gill & Duffus S.A. v. Berger & Co. Inc. [1984] A.C. 382 at 390; State Trading Corp. of India v. M. Golodetz Ltd. [1989] 2 Lloyd's Rep. 277 at 285.

240. See e.g., Lord Diplock in Photo Production v. Securicor Transport Ltd. [1980] A.C. 827 at 848-850 and in Gill & Duffus S.A. v. Berger & Co. Inc. [1984] A.C. 382 at 390. See also, Thornely, J. W. A, (1967) 168; Treitel, G. H., (1999) at 789-790; Carter, J. W., (1988), 113 and 246; Opeskin, B. R., (1990) 293.

241. See e.g., Lord Diplock in Photo Production v. Securicor Transport Ltd. [1980] A.C. 827 at 849 ("anticipatory secondary obligation"); and, in Gill and Duffus S.A. v. Berger & Co. Inc. [1984] A.C. 382 at 390.

242. See e.g., Photo Production v. Securicor Transport Ltd. [1980] A.C. 827 at 848; Afovos Shipping Co. v. Pagnan [1983] 1 W.L.R. 195 at 203; Corbin, A. L., (1917) at 745.

243. Lord Porter in Heyman v. Darwins Ltd. [1942] A.C. 356 at 399; Johnson v. Agnew 1980] A.C. 367, at 396; Photo Production v. Securicor Transport Ltd. [1980] A.C. 827 at 850 (survival of choice of forum clause); Gill & Duffus S.A. v. Berger & Co. Inc. [1984] A.C. 382 at 390. See also Beale, H., (1980) at 105-106; Cheshire, Fifoot & Furmston, (1996) at 559-560; See Carter, J. W., (1991) Para. 1208; Shea, A. M., (1979) 623, in particular, at 635, 642 ff.

244. As a matter of terminology, the Convention, in different places, speaks of the right of "suspension" - in the case of prospective non-performance (Art. 71(1)) -, the right to "refuse" - in the case of early or excess quantity delivery - (Art. 52) and the right to "reject" (Art. 86(1)) -, but in this study the right is described by "withholding performance." All of these expressions are in fact particular instances of the application of a general right to withhold performance.

245. Maskow in: Bianca, C. M.; Bonell, M. J., (1987) at 390 and seq.; Enderlein; F.; Maskow, D., (1992) at 229 and seq.

246. Art. 31: "If the seller is not bound to deliver the goods at any other particular place, his obligation to deliver consists: (a) if the contract of sale involves carriage of the goods - in handing the goods over to the first carrier for transmission to the buyer; (b) if, in cases not within the preceding subparagraph, the contract relates to specific goods, or unidentified goods to be drawn from a specific stock or to be manufactured or produced, and at the time of the conclusion of the contract the parties knew that the goods were at, or were to be manufactured or produced at, a particular place - in placing the goods at the buyer's disposal at that place; (c) in other cases - in placing the goods at the buyer's disposal at the place where the seller had his place of business at the time of the conclusion of the contract."

247. Art. 32(1): "If the seller, in accordance with the contract or this Convention, hands the goods over to a carrier and if the goods are not clearly identified to the contract by markings on the goods, by shipping documents or otherwise, the seller must give the buyer notice of the consignment specifying the goods."

248. See also, Maskow in: Bianca, C. M.; Bonell, M. J., (1987) at 390, 391.

249. Art. 71(1): "A party may suspend the performance of his obligations if, after the conclusion of the contract, it becomes apparent that the other party will not perform a substantial part of his obligations as a result of: (a) a serious deficiency in his ability to perform or in his creditworthiness; or (b) his conduct in preparing to perform or in performing the contract."

250. See e.g.,, the statement of Bulgaria in: Official Records, (1981) at 375 para. 57; Secretariat Commentary, (1979) at 52-53; Bennett in: Bianca-Bonell, (1987) at 518; Honnold, (1990) at 484. See generally, Strub, M. G., (1989) 475.

251. Art. 58(1) provides: .".. the buyer ... must pay it (the price) when the seller places either the goods or documents controlling their disposition at the buyer's disposal ...."

252. See Secretariat Commentary, (1979) at 47.

253. See also, Enderlein; F.; Maskow, D., (1992) at 229.

254. In the event of a tender of non-conforming goods or documents, the buyer may very well want to keep the contract alive, even be entitled to terminate the contract, but at the same time not be interested in accepting the actually tendered goods or documents.

255. Art. 52 provides: "(1) If the seller delivers the goods before the date fixed, the buyer may take delivery or refuse to take delivery. (2) If the seller delivers a quantity of goods greater than that provided for in the contract, the buyer may take delivery or refuse to take delivery of the excess quantity...."

256. Enderlein; F.; Maskow, D., (1992) at 229 and seq.; Maskow in: Bianca-Bonell, (1987) at 389 and seq.

257. Art. 86(1) provides "If the buyer has received the goods and intends to exercise any right under the contract or this Convention to reject them (italic supplied),..."

258. Art. 58(3) provides "The buyer is not bound to pay the price until he has had an opportunity to examine the goods ..."

259. Art. 46(1): "The buyer may require performance by the seller of his obligations unless the buyer has resorted to a remedy which is inconsistent with this requirement."

260. Art. 47(1): "The buyer may fix an additional period of time of reasonable length for performance by the seller of his obligations."

261. Enderlein; F.; Maskow, D., (1992) at 229; Maskow in: Bianca-Bonell, (1987) at 390, 391.

262. Ibid.

263. The view can be supported by Arts. 71(1) and 72(1). Under these Arts. the Convention has differentiated between the right to suspend and that of avoidance. A buyer will be entitled to resort to the remedy under Art. 71(1) if the seller's prospective non-performance relates to a 'substantial part of his obligation', whereas for avoidance it must be 'fundamental' (Art. 72(1). The legislative history of these provisions shows that it must be, at least in theory, assumed that such a differentiation is possible. This is because the Egyptian proposal to make the right to suspend conditional on a prospective 'fundamental breach', was rejected by the delegations (see, Official Records, (1981) at 129 para. 10, 419-422 and 431-433. See also, Schlechtriem, (1986) at 93 and 95-96; Bennett in: Bianca-Bonell, (1987) at 521; Strub, M. G., (1989) at 494; Kritzer, Albert H., (1989) at 457.

264. Tercier, cited in Enderlein; F.; Maskow, D., (1992) at 230.

265. See also, Enderlein; F.; Maskow, D., (1992) at 201 and 230; Maskow in: Bianca-Bonell, (1987) at 392.

266. Art. 7(1) provides: "In the interpretation of this Convention, regard is to be had to its international character and to the need to prompt uniformity in its application and the observance of good faith in international trade."

267. See also, Maskow in: Bianca-Bonell, (1992) at 392.

268. It is worth noting that the Convention fails to mention any statement that the buyer is bound to take over the documents tendered to him by the seller. Nevertheless, this failure can be justified by the fact that in the case of documentary sales, insofar as documents are concerned, any document which is necessary for taking delivery of the goods, e.g. documents of title, the obligation to take delivery of the goods regularly comprises an obligation to take those documents.

269. Art. 34; "If the seller is not bound to hand over documents relating to the goods, he must hand them over at the time and place and in the form required by the contract. ..."

270. See also, Enderlein; F.; Maskow, D., (1992) at 231.

271. Art. 9: " 1. The parties are bound by any usage to which they have agreed and by any practices which they have established between themselves. 2. The parties are considered, unless otherwise agreed, to have impliedly made applicable to their contract or its formation a usage of which the parties knew or ought to have known and which in international trade is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade concerned."

272. It is worth noting that where the parties make payment through the system of letters of credits banks, of course, have very strict requirements in regard to the adequacy of documents where letter of credit are issued. That is, they will refuse to pay against documents which do not strictly comply with the requirements of the contract. See in this connection: Uniform Customs and Practices for Documentary Credits (1993 Version), Art. 13.

273. See in this respect, Guest A.G. et al, (1997) para. 19-126, no. 91.

274. See also Art. 43(1).

275. The term employed by the Convention to describe the concept of bringing the performance of the contract to an end is "avoidance." As to the history of using the term in the context of international conventions on contracts for the sale of goods see, Official Records, (1966), vol. 2 at 236 No. 3); UNCITRAL, Yearbook, vol. IV (1973), at 41 para. 36; Honnold, (1989) at 118, para. 38). The Convention also uses the term "termination" for describing the given concept when the parties to the contract bring the contract to an end by mutual consent (Art. 29 ). As to the history of using this term see, Honnold, ibid., at 304 para. 141, 379); Official Records, (1981) at 7, 27-28, 76, 181, and 157).

276. Arts. 46(2), 49(1)(a), 51(2), 64(1)(a), 70, 72(1), and 73(1) and (2).

277. See e.g.,, Art. 49(1)(a), Art. 51(1) -avoidance for partial non-conforming delivery-, Art. 72(1) -avoidance for anticipatory breach- and Art. 73 for breach of a contract for delivery of goods by instalments.

278. Effort to define the fundamental breach test has undergone substantial changes over the years during the development of the international sale law. These changes can be found in the following documents: The 1939 and 1951 Rome Drafts, the 1956 and 1963 Working Committee Drafts, the Text Presented by the Drafting Committee to the 1964 Hague Conference, the 1964 Hague Uniform Law (ULIS) Text, the 1975 Text of the UNCITRAL Working Committee, the 1977 Vienna UNCITRAL Text, and finally the Text of the 1980 Convention. For more information as to the history of the test see, Official Records, (1966) vol. 2 at 50 (Art. 55(3) of the 1939 of the Rome Draft), 108, 124, 125, 138, 169, 183, 214, 378; Official Records, (1966) vol. 1 at 35-36, 337; Graveson-Cohn-Graveson, (1968) at 55; Eorsi G., (1983) at 338-339; Will in Bianca-Bonell,(1987) at 206; Honnold, (1989) at 64-65, 88-90, 219, 220, 244, 324; Official Records, (1981) at. 157, 206, 295-303, 425.

279. Will in Bianca-Bonell, (1987) at 205. It has been said that the concept of "fundamental breach," in the Convention sense, is an "unfamiliar concept in many parts of the world" (Will, in Bianca-Bonell, ibid.). For instance, Mr Guevara (delegation of Philippines) at the Vienna session of UNCITRAL in opposing the last phrase of Art. [25] said: the term "fundamental breach" was not very familiar to him but he took it that it meant a serious breach (as cited in: Michida, S., (1979) at 285).

280. For instance, Peter Schlechtriem suggests that it approximates to the German test of whether the injured party can be said to have no further interest in the performance of the contract (Schlechtriem, P., (1986) at 59, while Nicholas likens it to the HongKong fir test which is examined in the previous part of this text (see Nicholas, B., (1989) at 218).

281. Will in Bianca-Bonell, (1987) at 210. For instance, Van Der Velden says: "detriment is hardly of a term of art. It is rarely used in (international) legal terminology. Is detriment damage or loss, or damage and loss? Is consequential damage/loss included, or has detriment to be interpreted in a specific way..." (see Van Der Velden in: Voskuil C.C.A. and Wade J.A., (1983) at 64-65).

282. For instance, Van Der Velden suggests: "a paraphrase of detriment, acceptable for international use could be one given by the Corpus Iuris Secundum, namely, '... the detriment need not be real and need not involve actual loss, nor does it necessarily refer to material disadvantage to the party suffering it, but means a legal detriment as distinguished from a detriment in fact and has been defined as giving up something which one had the right to keep, or doing something which one had the right not to do'." (Van Der Velden in: Voskuil C.C.A. and Wade J.A., (1983) at 64-65. Interpretation of this term in this way is arguable. Such an interpretation seems to relate to an entirely different context, i.e., the doctrine of consideration, whereas detriment in the Convention sense is designed to describe the circumstances in which the remedy of termination or demanding substitute goods are available. It is perhaps for this reason, Professor Will describes the test in an entirely different way (see Will, in Bianca-Bonell, (1987) at 211-212). See also Schlechtriem, P., (1986) at 60.

283. See in this respect, UNCITRAL, Yearbook, VI (1975) at 53; Honnold, (1989) at 244. The legislative history of fundamental breach test as defined by Art. 10 of ULIS shows that it was subject to serious criticisms by the delegations to the Hague Conference itself (see e.g.,, observation of the Austrian Federal Government, the Government of the Netherlands, the UK Government (Official Records, (1966) vol. 2 at 108, 138 and 169) respectively; in the course of debate: delegations from Austria, Israel, UK; against: delegations of France, Ireland, who definitely believed the subjective notion appropriate (see Official Records, (1966) vol. 1, 35-36). See also (Official Records, (1966) vol. 2 at 124-125, academic writers (see e.g.,, Graveson-Cohn-Graveson, (1968) at 55) and the UNCITRAL Working Group (see Honnold, (1989) at 64-65, 88-90, 220, 244). The drafting party considered the revised text of ULIS Art. 10 unsatisfactory since it relied on an impractical test that requires the breaching party to anticipate whether the non-breaching party would have entered into the contract had he foreseen the breach and its effects.

284. See UNCITRAL, Yearbook, VI (1975) at 53, VIII (1977) at 31; The Official Records, (1981) at 7; Honnold, (1989) at 244, 324, 384.

285. But see Official Records, (1981) at 329-330.

286. Official Records, (1981) at 330 para. 33.

287. Secretariat Commentary, (1979) at 26 para. 3. Art. 23 of the 1978 Draft is the predecessor to Art. 25 CISG.

288. See also Will in Bianca-Bonell, (1987) 1 at 211; Babiak, A., (1992) at 119-120.

289. See Arts. 49(1)(a), 64(1)(a), 51(2), 72(1), 73(2), 46(2) and 70.

290. See also Will in Bianca-Bonell, (1987) at 211. The Brazilian delegate, in contrast, observed that Art. [25] was related to Art. [74], see Official Records, (1981) at 296.

291. In 1971 at the second session a proposal was presented by the Mexican delegation. It contained a single objective criterion: "whether the breach substantially alters the scope or contents of the rights of the other party." On the basis of this proposal, the proposed revision of Art. 10 was drafted as follows: "For the purpose of the present law, a breach of contract shall be regarded as fundamental wherever such breach substantially [to a significant extent] impairs the value of the performance required by the contract and the present Law." (see, Honnold, (1989) at 219-.220) This was further developed at the sixth session in 1975 when the definition was revised by introduction of the word "detriment" and the requirement that the party in breach should have had reason to foresee this consequence (see, Honnold, ibid., at 244.). This survived the seventh session of the Working Group in 1976 (see, Honnold, ibid., at 324). Consequently, the proposed Art. 10 of the Working Group was drafted as follows: "A breach committed by one of the parties to the contract is fundamental if it results in substantial detriment to the other party and the party in breach foresaw or had reason to foresee such a result" (Honnold, ibid., at 324) (italic supplied).

292. Official Records, (1981) at 98-99, 295-303, 329-330 and 425-426, then 206.

293. Official Records, (1981) at 296-297, 299-300 329-330.

294. Official Records, (1981) at 425, para. 13.

295. Official Records, (1981) at 99, para. 3.

296. See, Official Records, (1981) at 301, paras. 74, 75, and, at 300 para. 70. It was the reason why the German representative responded that "he had not intended to restrict [by his proposal] the definition of substantial detriment or to exclude the circumstances of the case" (Official Records, (1981) at 300 para. 68; at 301 para. 78, and, at 329 para. 23).

297. See also Babiak, A., (1992) at 120; Will in Bianca-Bonell, (1987) at 213; Schlechtriem, P., (1986) at 59-60. In contrast, see Van Der Velden in: Voskuil C.C.A. and Wade J.A., (1983) at 64.

298. To know what the Convention commentators suggest in this respect, see e.g.,, Schlechtriem, P., (1986) at 59-60, see also p. 77).

299. In a considerable number of the Convention cases the courts and arbitral tribunals have addressed the doctrine of 'fundamental breach'. For instance, in a case decided by an Italian court, it was held that the delay by the seller in delivering the goods, together with the fact that two months after the conclusion of the contract the seller had delivered only one third of the goods sold, amounted to a fundamental breach of the contract according to Art. 49(1)(a) (see, Italy 24 November 1989 Pretura circondariale di Parma (Foliopack Ag v. Daniplast S.p.A), (CLOUT, abstract no. 90). Likewise, in a case decided by the German Court of Appeal (see, Oberlandesgericht Frankfurt A. M.; 5 U 164/90 (17 September 1991), (CLOUT, Case No. 2:), an Italian seller had agreed to manufacture and deliver a number of shoes with a particular trademark, to be used as a basis for further orders. The manufacture was allowed to use the trademark only with special permission from the buyer. At a trade fair, the manufacturer displayed some shoes produced according to the buyer's specifications and did not remove them upon the buyer's demand. In that case, the German Civil Court of Appeal held that the manufacturer's breach of the ancillary duty of preserving exclusivity constituted a fundamental breach of the contract under Art. 25 of the Convention, since it endangered the purpose of the contract to such a degree that, as was foreseeable to the manufacturer, the buyer had no more interest in the contract (see in this regard, the Editorial remarks by Albert H. Kritzer attached to the abstract case; Behr, V., (1993) at 271-275). For further cases, see, Diederichsen, E., (1995) at 177-181 (a comment on a German court decision: 17 September 1991 Oberlandesgericht Frankfurt); Karollus, M., (1995) at 51-94. In the latter reference, the author has gathered a number of cases decided by the German courts, including those referred to Art. 25. But, no detailed analysis, as far as the English abstract shows, can be found in them.

300. It seems that the problems of defining 'substantial deprivation' are unavoidable and that it is neither practical nor useful to try to solve them in the abstract. The problem the commentators face here is very similar to that faced by judges and commentators in defining when under English law a breach will be sufficiently serious to justify termination under the HongKong Fir test, or in deciding how foreseeable loss has to be recoverable as damages. In all these cases any attempt at "definition" is likely to result in replacement of one analogy or metaphor with another. See the problems the House of Lords had in Koufos v. Czarnikow Ltd. (The Heron II) [1969] 1 AC 350.

301. Honnold, (1989) at 244.

302. Honnold, (1989) at 324; Michida, S., (1979) at 285.

303. Their amendment read as follows: "A breach committed by one of the parties is fundamental if it results in substantial detriment to the other party unless the party in breach proves that he did not foresee such a result and that a reasonable person of the same kind in the same circumstances would not have foreseen it," (Official records, (1981) at 99, 295).

304. See for instance, Official records, (1981) at 296, para. 13, 297, paras. 21 and 26.

305. It is to be noted that the 1976 UNCITRAL Working Group's Draft Convention contained the conjunction "or" instead of "and"(Honnold, (1989) at 244, No. 45). At the Vienna Working Group session in 1977, as a result of the American delegation's proposal the word "or" was replaced by "and" (Summary Record, as referred to by Michida, S., (1979) 285). The word "and" survived an attempt to switch back to "or" at the Vienna Conference (Official Records, (1981) at 296 para. 13 and 298 para. 41). The purpose of replacement was that just as the subjective test alone is not enough, the objective test alone would not suffice either, for it may well happen that an overly astute merchant in fact knew and foresaw more than his peers would have known and foreseen. In such a case the real person should not be allowed to hide behind the reasonable person of the same kind in the same circumstances. See also, Will in: Bianca-Bonell,(1987) at 220.

306. Babiak, A., (1992) at 122. See also Will in: Bianca-Bonell, (1987) at 217.

307. See also Will in: Bianca-Bonell, (1987) at 217.

308. See also, Will in: Bianca-Bonell, (1987) at 219; Babiak, A., (1992) at 122.

309. Will in: Bianca-Bonell, (1987) at 219.

310. See Official Records, (1981) at 261 para. 30; Will in: Bianca-Bonell, (1987) at 218-219.

311. Will in: Bianca-Bonell, (1987) at 219, as under Art. 8 para. (3) of the Convention which provides: "due consideration is to be given to all relevant circumstances of the case."

312. See e.g., Ziegel, in: Nina M., Galston; Hans Smit, (1984) at 9-20, (arguing that "it would surely be anomalous if a buyer were able to avoid the contract for breach by the seller if the grounds justifying avoidance were regarded as too remote for the recovery of damages under Art. 74"); Honnold, (1991) at 257-258 (in contrast, on the basis of the legislative history of the provision, he concludes that information received after formation but prior to performance can be relevant and could fall within the scope of Art. 25); Will in: Bianca-Bonell, (1987) at 220-221; Schelchtriem, P., (1986) at 60; Feltham, J. D., (1981) at 353; Speidel, R. E., (1983) at 444; Flechtner, H. M., (1988) at 76-79; DTI's Consultative Document, (1989) at 29-30.

313. Honnold, (1989) at 324.

314. Official Records, (1981) at 26.

315. See Official Records, (1981) at 99 and 302.

316. On this reading, there is, of course, no guarantee of consistency in interpretations.

317. Honnold, (1991) at 257-258

318. See also, Schlechtriem, P., (1986) at 60. Speidel articulates, but does not necessarily endorse, a similar argument. Speidel, R. E., (1983) at 441, 444.

319. See Art. 326(1) of The German Civil Code. It provides: "If, in the case of a mutual contract, one party is in default in performing, the other party may give him a reasonable period within which to perform his part with declaration that he will refuse to accept the performance after the expiration of the period. After the expiration of the period he is entitled to demand compensation for non-performance, or to withdraw from the contract, if the performance has not been made in due time; the claim for performance is barred. If the performance is only partly made before the expiration of the period, the provision of Art. 325(1) sent. 2 applies mutatis mutandis."

320. ULIS Art. 43: "The buyer may declare the contract avoided if the failure of the goods to conform to the contract and also the failure to deliver on the date fixed amount to fundamental breaches of the contract..." See also, Arts. 27(2), 31(2).

321. ULIS Art. 44 (2): "The buyer may however fix an additional period of time of reasonable length for the further delivery or the remedying of the defect. If at the expiration of the additional period the seller has not delivered the goods or remedied the defect, the buyer may choose between requiring the performance of the contract or reducing the price in accordance with Art. 46 or, provided that he does so promptly, declare the contract avoided."

322. Honnold, (1989) at 98-99, 109-111, 130-132, 136, 147.

323. Honnold, (1989) at 147-148.

324. Honnold, (1989) at 148, 155, 201, 247, 339 and 387.

325. Official Records, (1981) at 79, 116-117.

326. Official Records, (1981) at 354, paras. 67 and 68, 356, para. 87.

327. Official Records, (1981) at 354-56, then 211 para. 12.

328. In contrast, see, Karollus, M., (1995) 51-94 where the author (relying on a Convention case decided by a German court in 1994, see, Germany 10 February 1994 Oberlandesgericht Düsseldorf [6 U 119/93], CLOUT abstract no. 82) suggests that since the substitute delivery is regarded as a delivery under Arts. 31-33, Art. 49(1)(b) is to be applied where the buyer has demanded delivery of substitute goods under Art. 46(2). As the language and the history of Art. 47 makes clear, by virtue of this provision the Convention grants the buyer a general right to request the seller to perform his obligations during the period of time fixed by him. Yet, it is, as was pointed out at the Vienna Conference (Official Records, (1981) at 211, para. 13 and 354, para. 68), strange that the Convention protects the buyer only in the case of non-delivery but without giving him any remedy against the seller's failure to comply with the buyer's request under Art. 47(1). It is not in fact obvious what purpose Art. 47(1) serves in giving a broad right to the buyer to fix an additional period of time for the seller to perform his obligations other than delivery of goods. The only advantage seems that the Nachfrist procedure may provide for the buyer is to give him time to consider what course of action to adopt in relation to the seller's breach and to encourage him to perform. See also, DTI's Consultative Document, (1989) at 37; Nicholas, B., (1989) at. 225; Ziegle in: Nina, M.; Galston and Hans Smit, (1984) at 9.03 at 9.17.

329. Although whether or not a particular period of time is reasonable depends on the facts of the case, in a case decided by a German court it was held that the additional delivery period of two weeks was too short. According to the court, the period of seven weeks between announcement and actual declaration of avoidance was reasonable (see Germany 24 May 1995 Oberlandesgericht Celle (CLOUT, abstract no. 136).

330. The question whether the fixing of an additional time period must be done in such a way as to make it clear to the party in breach that the additional period sets a fixed and final limit on the date for performance or whether no such unequivocal warning is necessary is controversial. Will and Knapp (see Bianca-Bonell, (1987) at 345 and 461 respectively) and Honnold (see Honnold, J., (1991) at 370) support the former view and Enderlein & Maskow (see Enderlein F., & Maskow, D., (1992) at 238) support the latter view. However, in a Convention case decided by ICC the arbitral opinion appears to support the latter view (see ICC Arbitration Case No. 7585 of 1992, the case was concerned with the seller's right to avoid the contract on Nachfrist notice.). See also the Editorial remarks by Albert H. Kritzer attached to the abstract case.

331. Will in: Bianca-Bonell, (1987) at 345.

332. Art. 51(2): "The buyer may declare the contract avoided in its entirety only if the failure to make delivery completely or in conformity with the contract amounts to a fundamental breach of the contract."

333. Art. 7 (2): "Questions concerning matters governed by this Convention which are not expressly settled in it are to be settled in conformity with the general principles on which it is based or, in the absence of such principles, in conformity with the law applicable by virtue of the rules of private international law."

334. Art. 7(1): "In the interpretation of this Convention, regard is to be had to its international character and to the need to promote uniformity in its application and the observance of good faith in international trade."

335. See also Flechtner, H. M., (1988) at 71-73 in which he raises the question as to the buyer's failure to pay in full within the additional period of time. At the Vienna Diplomatic Conference, both the Netherlands and Canada delegations proposed amendments that would have allowed a buyer to avoid if the seller failed to perform any obligation within the extended period of time. However, the Canadian proposal would have permitted avoidance only where the seller's failure consisted of non-delivery or failure to fulfil another 'material obligation' (see, Official Records, (1981) 116, 354-356). Although the proposal was consisted of two separate questions: the question of the materiality of the seller's delayed performance and that of extension of the Nachfrist notice to breaches other than late performance, the first issue was confused with the second and consequently the whole proposal was defeated.

336. Schlechitriem, P., (1986) at 78.

337. See also, Guest A.G. et al, (1997) para. 19-123, no. 62.

338. Art. 51(1): "If the seller delivers only a part of the goods or if only a part of the goods delivered is in conformity with the contract, Arts. 46 to 50 apply in respect of the part which is missing or which does not conform."

339. See in this respect, Will in: Bianca-Bonell, (1987) at 378. In contrast, see DTI's Consultative Document, (1989) at 42; Ziegel, J., & Samson, C., (1981) Art. 51 where the authors argue that the Art. does not make such a distinction. However, they do not answer the question: how can the breach in respect of a particular part be determined fundamental if it is non-severable.

340. Art. 73(1): "In the case of a contract for delivery of goods by instalments, if the failure of one party to perform any of his obligations in respect of any instalment constitutes a fundamental breach of contract with respect to that instalment, the other party may declare the contract avoided with respect to that instalment."

341. If Art. 51(1) is provided to cover severable contracts one may argue that what is the role of Art. 73(1). The legislative history of the provision shows that the point was noted by the 1977 Commission. The Commission then argued that the provision was necessary to enable the seller to avoid the contract equivalent to the provision in what is now Art. 51, which permits the buyer to do so (see, UNCITRAL, Yearbook, vol. VIII, (1977) at 55, paras. 422-425. Under this construction, the language of Art. 51 is broad. It is not directed to contracts which provide for delivery of goods in separate lots. It applies to any contract its subject-matter is commercially severable.

342. Art. 73(2): "If one party's failure to perform any of his obligations in respect of any instalment gives the other party good grounds to conclude that a fundamental breach of contract will occur with respect to future instalments, he may declare the contract avoided for the future, provided that he does so within a reasonable time."

343. Honnold, (1991) at 501 No. 3.

344. Honnold, (1991) at 501, and, fn. 3, see also at 401.

345. Art. 34: "If the seller is bound to hand over documents relating to the goods, he must hand them over at the time and place and in the form required by the contract. If the seller has handed over documents before that time, he may, up to that time, cure any lack of conformity in the documents, if the exercise of this right does not cause the buyer unreasonable inconvenience or unreasonable expense. However, the buyer retains any right to claim damages as provided for in this Convention."

346. Art. 37: "If the seller has delivered goods before the date for delivery, he may, up to that date, deliver any missing part or make up any deficiency in the quantity of the goods delivered, or deliver goods in replacement of any non-conforming goods delivered or remedy any lack of conformity in the goods delivered, provided that the exercise of this right does not cause the buyer unreasonable inconvenience or unreasonable expense. However, the buyer retains any right to claim damages as provided for in this Convention."

347. Art. 48(1): "Subject to Art. 49, the seller may, even after the date for delivery, remedy at his own expense any failure to perform his obligations, if he can do so without unreasonable delay and without causing the buyer unreasonable inconvenience or uncertainty of reimbursement by the seller of expenses advanced by the buyer. However, the buyer retains any right to claim damages as provided for in this Convention."

348. Honnold, relying on the legislative history of Art. 25 concludes that "the question of whether a breach was 'fundamental' for the purpose of avoidance must be answered in light of the effect of a rightful offer to cure or price adjustment, for otherwise [the] seller's exercise of this right would be futile." (see Honnold, 1991) at 258-259. See also, Ziegel in: Nina, M.; Galston and Hans Smit, (1984) at 9-23. The Secretariat's Commentary on Art. 45(1)(a) also notes: "In some cases the fact that the seller is able and willing to remedy the non-conformity of the goods without inconvenience to the buyer may mean that there would be no fundamental breach unless the seller failed to remedy the non-conformity within an appropriate time" (Secretariat Commentary, (1979) at 41 para. 6).

349. Will in: Bianca-Bonell, (1987) at 357-358. The same difficulty arises in respect of the buyer's right to demand that the seller deliver substitute goods under Art. 46(2). Will the seller's offer to repair the lack of conformity exclude the buyer's right to require substitute goods if the lack of conformity is fundamental? Professor Will argues that to confine the buyer's right to require substitute goods under Art. 46(2) to the case where the seller was not able and willing to offer to repair may make little sense, since it would be restricted to the few situations where repair is impossible. Such a rigid construction of Art. 46(2), was certainly not in the mind of the drafters, who had originally dedicated all of Art. 46 to the right to require substitute goods (ibid., at 357). See also, Secretariat's Commentary, (1979) at 38-39; Official Records, (1981) at 332-333.

350. In this regard, the Drafting Committee, during its consideration of Art. [48] in Tenth Session (1977) considered a proposal under which Art. [25] was to be changed as follows: "A breach committed by one of the parties to the contract is fundamental if, under all the circumstances, including a reasonable offer to cure, it results in substantial detriment to the other party and the party in breach foresaw or had reason to foresee such a result (emphasis added)." In support of this proposal the US delegate explained that the proposed addition to the definition of fundamental breach was meant to protect the defaulting party against technical avoidance of the contract where there had been an offer to cure under Art. [48]. However, the majority did not support the US proposal, arguing that the change was unnecessary because the problem was fully covered by the specific provision dealing with the seller's right to cure and if there was no offer to cure, the situation was governed by Art. [25] (see UNCITRAL, Yearbook, VIII (1977), 31-32; Honnold, (1989) at 324, paras. 93-95. See also, Michida, S., (1979) at 287-289 in which he explained in more detail the history of that proposals). As is seen, the general understanding of the members of the Committee was that the problem was covered by a specific provision. However, they did not doubt the fact that in determining whether or not the breach was fundamental, the seller's rightful offer to cure should be regarded as a decisive factor

351. For instance, Professor Honnold, emphasising the replacement of UNCITRAL's Draft Art. 44 -i.e., "Unless the buyer has declared the contract avoided ..." by the present words of Art. 48 -i.e., "Subject to Art. 49...," argues that the change in words leaves little doubt that the seller's right to cure prevails over the buyer's right to avoid. To find otherwise, he observes, would make meaningless the seller's right to cure (see, Honnold, (1991) at 375-376, particularly, footnote no. 6 at 376, see also, p. 259). In contrast, Professor Ziegel argues that the offer to cure must be made before the injured party exercises the right to avoid the contract (Nina, M.; Galston and Hans Smit, (1984) at 9-23). See also, Enderlein in: Sarcevic P.-Volken P., (1986) at 193; Schlechtriem, P., (1986) at 77). Professor Will, on the other hand, believes that one cannot answer with certainty the question whether avoidance or cure will prevail, since the language of para. 1 of Art. 48 is no clearer than that of 1978 Draft (Bianca-Bonell, (1987) at 349-351).

352. UNCITRAL, Yearbook, VIII (1977) at 44-45; Honnold, (1991) at 337-338; Official Records, (1981) at 40.

353. Official Records, (1981) at 40 para. 3. Art. 44 of the 1978 Draft is the predecessor to Art. 48 CISG.

354. Official Records, (1981) at 78-79, 114-116, 341-344 and 351-353.

355. Official Records, (1981) at 115.

356. Official Records, (1981) at 341-344, paras. 44, 45, 48, 51, 55, 56, and 66-68.

357. In a case decided by ICC arbitration in 1994, the Tribunal confirmed the point. In that case a buyer from Austria sued a seller from China. The contract involved 80,000 scaffold fittings delivered to buyer's customer in England. The Tribunal found that there was a lack of conformity of an important part of the goods giving rise to the right to avoid the contract. In justifying the buyer's avoidance, the Tribunal stated: "The lack of conformity of an important part of the goods supplied amounts to a breach of the contract which, under Art. 25, is fundamental since the buyer is deprived of substantially what he was entitled to expect under the contract." The Tribunal also stated: "According to Arts. 49(1)(a) and 51(2) of the Convention [the buyer] may declare the contract avoided." The seller, in contrast, argued that subject to Art. 49, Art. 48(1) permits a seller to cure, if he can do so without unreasonable delay, unreasonable inconvenience to the buyer or uncertainty of reimbursement of expenses incurred by the buyer. However, on the facts of the case (declaration of avoidance pursuant to Art. 49(1)(a)), the Tribunal held that "[the seller] is not entitled to supply substitute items after the delivery date specified in the contract without the consent of [buyer]." See in this respect, ICC Arbitration Case No. 7531 of 1994. See also, the Editorial remarks by Albert H. Kritzer attached to the abstract of the case.

358. See also Art. 49(2)(b)(iii).

359. Honnold, (1991) at 376.

360. Honnold, (1991) at 376 and the accompanying fn. 6.

361. Art. 50 provides where the buyer refuses to accept the seller's offer to cure in accordance with Arts. 34, 37 and 48 he may not reduce the price.

362. However, this would be the case where the buyer is not deemed to have lost his right to avoid the contract because of lapse of a reasonable time (Art. 49(2)(b)(i).

363. This provision provides that the buyer will not lose his right to avoid the contract if he has declared that he will not accept performance made under Art. 48(2).

364. See e.g., Arts. 25, 26(1) and (2), 30(1) and (2) of ULIS.

365. See generally the study of the secretary-general, A/CN.9/W.G.2/W.P.9, reprinted in UNCITRAL, Yearbook, III (1972) at 41-54; A/CN. 9/35, reprinted in UNCITRAL, Yearbook, I (1971) at 176-188, paras. 94 ff., and annex 2, reprinted in UNCITRAL, Yearbook, I (1971) at 188-198, paras. 70 ff.; A/CN. 9/62, annex 2, reprinted in UNCITRAL, Yearbook, III (1972) at 83-90 paras. 28 ff.; Secretariat's Commentary, (1979) at 41; Berman H.J.; Kaufmann C., (1978) at 268; Goldenhielm, B., (1966) at 35; Honnold, (1965) at 384; Honnold, (1979) at 228; Treitel, G. H., (1988) paras. 250, 281; Treitel, G. H., (1976) paras. 154, 178.

366. Arts. 49(1), 72(1) and 73(1) -may declare the contract avoided. As the word "may" shows, under the Convention the remedy of avoidance is always at the option of the aggrieved party. For justification of this rule, see, A/CN. 9/35, reprinted in UNCITRAL, Yearbook, vol. 1 (1971) pp. 176-188, para. 96; A/CN. 9/62, annex 2, reprinted in UNCITRAL, Yearbook, vol. 3 (1972) at 83-90 para. 30.).

367. The rule is subject to an exception. In the case of avoidance for the "anticipatory fundamental breach" Art. 72 (2) requires the party intending to declare the contract avoided "to give reasonable notice to the other party in order to permit him to provide adequate assurance of his performance" provided the time for performance allows.

368. This point has been expressly referred to by ICC arbitration in the Convention case of ICC Arbitration Case No. 7585 of 1992. The full text of the decision is cited in: UNILEX, E. 1992-32.

369. See in this respect the opening word of Art. 49 which provides: "The buyer may declare the contract avoided: ..."

370. Art. 26: "A declaration of avoidance of the contract is effective only if made by notice to the other party."

371. This was the clear position of the draftsmen where all suggestions opposing this principle were expressly rejected (such as the suggestion that notice must be made in writing (A/CN. 9/125, add. 1, comment of USSR on Art. 10 reprinted in: UNCITRAL, Yearbook, VIII, (1977) at 130) or, alternatively, be immediately followed by written notice (A/32/17, annex 1, para. 102, reprinted in: UNCITRAL, Yearbook, VIII, (1977) at 32).

372. Such as the seller's request or notice to cure beyond the contract time under Art. 48(1) which is to be received by the buyer (see Art. 48(4).

373. See also, Graveson-Cohn-Graveson, (1968) at 60 where it is said that a communication made in an unusual manner would appear to be satisfactory if it reached the addressee in due course and was not promptly (Art. 11 of ULIS) rejected by him.

374. See, Karollus, M., (1995) 51-94.

375. See, Germany 17 September 1991 Oberlandesgericht Frankfurt (CLOUT abstract no. 2).

376. See in this respect, Babiak, A., (1992) at 126; the editorial remarks by Albert H. Kritzer attached to the abstract case.

377. see, Germany 24 April 1990 Amtsgericht Oldenburg (CLOUT, abstract no. 7). See also, Karollus, M., (1995) at 51-94.

378. Art. 49 (2): "However, in cases where the seller has delivered the goods, the buyer loses the right to declare the contract avoided unless he does so: (a) in respect of late delivery, within a reasonable time after he has become aware that delivery has been made; (b) in respect of any breach other than late delivery, within a reasonable time: (i) after he knew or ought to have known of the breach; (ii) after the expiration of any additional period of time fixed by the buyer in accordance with paragraph (1) of Art. 47, or after the seller has declared that he will not perform his obligations within such an additional period; or (iii) after the expiration of any additional period of time indicated by the seller in accordance with paragraph (2) of Art. 48, or after the buyer has declared that he will not accept performance."

379. It is to noted that in a number of Convention cases the courts have applied this rule in a severe sense. For instance, in a case decided by an Austrian court (Austria 29 March 1994 Landgericht (i.e., District Court) Feldkirch), it was held that two months after delivery of the goods was a reasonable period of time within which the buyer should have discovered the lack of conformity of the goods. The decision of the district court was affirmed in: Austria 1 July 1994 Oberlandesgericht Innsbruck: Dansk Blumsterexport A/s v. Frick Blumenhandel, CLOUT abstract no. 107). The same position has been taken by the German courts. For instance, in a case heard by a Stuttgart court, a German buyer of Italian shoes claimed that it had examined several samples, but that the defects could not have been discovered before the buyer's clients brought them to the buyer's attention. The shoes were delivered on May 25, 1988 and the buyer gave notice of lack of conformity of June 10, 1988. The court held that the buyer was in contravention of the "reasonable time" requirement of Art. 39(1), reasoning that the buyer had a duty to examine the goods minutely and scrupulously. The court noted in this context that the buyer previously had identified flaws in a prior shipment, and that it therefore had been on notice of problems. The court thus held that notice to be tardy when it was given sixteen days after delivery (see, Germany 31 August 1989 Landgericht Stuttgart (CLOUT abstract no. 4).). Likewise, in the case of OLG Düsseldorf 8 January 1993, the German court held that seven days constituted an unreasonably long time period. In another case before a German court, notice of lack of conformity was deemed unreasonable where it was given two months after the delivery of the purchased goods, and where the court found that the claimed defect in packaging could have been discovered immediately (Germany 20 April 1994 Oberlandesgericht Frankfurt (CLOUT, abstract no. 84). In other cases before German courts, notice of lack of conformity was held not to have been given within a reasonable time period when it was given more than two months after the delivery of shirts of the wrong size (see Germany 10 February 1994 Oberlandesgericht Düsseldorf [6 U 32/93] (CLOUT, abstract no. 81), and in other cases it is measured about one month (see e.g., Germany 8 March 1995 Bundesgerichtshof (CLOUT, abstract no. 123; Germany 21 August 1995 Oberlandesgericht Stuttgart). See in this respect, Curran, V. G., (1995) at 175-199. These instances show that the period of reasonable time would vary according to the nature of lack of conformity and goods.

380. Giving the buyer who resells, transforms or consumes the goods the right to avoid the contract raises the question whether it has any legal justification. See in this respect, Tallon in: Bianca-Bonell, (1987) at 609; Honnold, J., (1991) at 568.

381. For different views see Enderlein; F.; Maskow, D., (1992) at 341-342; .Schlechtriem, P., (1986) at 107; Tallon in: Bianca-Bonell, (1987) at 604.

382. The 1976 UNCITRAL Arbitration Rules (General Assembly Resolution 31/98) in Art. 21(2) protects this basic function by providing that an arbitration clause, although included in the contract, "shall be treated as an agreement independent of the other terms of the contract"; the arbitrators "have the power to determine the existence or the validity of the contract of which an arbitration clause forms a part." See also, the draft "Principles of International Commercial Contracts" proposed by International Institute for the Unification of Private Law (UNIDROIT) in 1994 (Art. 7.3.5.); The Principles of European Contract Law (Version 1996), Art. 9.305.

383. Art. 81(1): "Avoidance of the contract releases both parties from their obligations under it, subject to any damages which may be due. Avoidance does not affect any provision of the contract for the settlement of disputes or any other provision of the contract governing the rights and obligations of the parties consequent upon the avoidance of the contract. (2) A party who has performed the contract either wholly or in part may claim restitution from the other party of whatever the first party has supplied or paid under the contract. If both parties are bound to make restitution, they must do so concurrently."

384. Assuming that the buyer was able to benefit from the non-conforming goods, as the case may be in the latent defect which affects the capability of the item some time after taking over and putting it in use. Art. 84(1) provides so: "If the seller is bound to refund the price, he must also pay interest on it, from the date on which the price was paid."

385. If the contract is partially avoided, the parties are released from their obligations only as to that part of the contract which has been avoided.

386. It is interesting to note that a proposal for the purpose of applying such a right to the case of the buyer's right to require the seller to deliver substitute goods was made by the Norwegian delegation at the Vienna Diplomatic Conference but it was rejected (Official Records, (1981) at 387 para. 68. See also Schlechtriem, P., (1986) at 107). Accordingly, the buyer has no lien on the non-conforming goods and is not entitled to refuse to return them to the seller for the purpose of requiring the seller to tender substitute goods.

387. See e.g., Art. 456 of I.C.C.

388. As an example of the second category reference can be made to the contract of donation. See e.g., Isfahani, S. A., and Gulpaygani, S. M. R., (1977) vol. 2 at 127

389. Such as hebeh-e-mua'wwad (bilateral donation) (see e.g.,, I.C.C. Art. 801). In this type of the contract two obligations are not exchanged with each other, but they are two independent obligations. However, if the donee fails to perform his contractual obligation the donor is entitled to require him to fulfil his duty otherwise he can terminate the contract on the ground of the option of kheyar-e-takhalluf an al- shart (unfulfilled condition). See e.g., Ansari, M. (1375 H.Q.) at 80; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 3, at 14. Isfahani, S. A., and Gulpaygani, S. M. R., (1977), vol. 2 at 129 (question no. 11); Khumayni, S. R. M., vol. 2 at 52 (question no. 11).

390. For this reason the jurists define the contract of sale "Disposition of res (a'yn) in return for a known consideration," (see e.g., Ansari, M. (1375 H.Q.) at 79; I.C.C. Art. 338.).

391. All expressions such as:(Mu'awadeh), (mubadalah), (mu'a'maleh), and (e'wadayn), in the jurisprudential text books, indeed, are used to indicate such a nature of the reciprocal contracts.

392. See e.g., Najafi, M. H., (1981) vol. 22 at 390; Ansari, M. (1375 H.Q.) at 185; Najafi, M., and, Naeini, M. H., (1373 H.Q.) vol. 1 at 378; Gharavi Isfahani, M. H., (1408 H. Q.) vol. 1 at 201-2. See also, Imami, S. H., (1363 H.S.) at 219-220; Katouzian, N., (1992) vol. 1 at 30, 36 and 140-142; Katouzian, N. (1990) vol. 4 at 83-86. For this reason Art. 348 of I.C.C. states: "The sale of something which is not within the seller's power to deliver is null and void."

393. See e.g., Tabrizi, J., (1412 H. Q.) vol. 4 at 375.

394. See Art. 362(2) and (3) of I.C.C.

395. See Ansari, M. (1375 H.Q.) at 285, see also at 286 in which he says in clear words: " An undertaking, when is classified as shart is not exchanged with the consideration." See also, Najafi, M., and, Naeini, M. H., (1358 H.Q.) vol. 2 at 138; and 142 and seq.; Gharavi Isfahani, M. H., (1408 H.Q.) vol. 2 at 159; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7, at 376; Khumayni, S. R. M., vol. 5 at 226, 238; Tabrizi, J., (1412 H. Q.) vol. 4 at 444, 450. See in contrast, Yazdi, S. M. K., (1378 H.Q) vol. 2 at 130

396. It seems that the reason of calling such an obligation as 'shart' (literally, condition) is that it is, in fact, undertaken as a subsidiary obligation (as opposed to the principal one), and the enforceability of the principal obligation is qualified by performance of such an obligation.

397. See generally, Imami, S. H., (1363 H.S.) vol. 1 at 268; Katouzian, (1989) vol. 3 at. 122.

398. The term is sometimes used in the sense of an "event" when the jurists describe a conditional contract or an obligation. In this sense, the term "shart" is used to refer to an event on which the existence of a principal obligation or the occurrence of the whole contract depends (see in this respect, Ansari, M. (1375 H.Q.) at 99; Shahroudi, S. A. and, Khouei, S. A., (1409 H.Q.) vol. 2 at 134 and seq.; Shirazi, N. M., (1413 H.Q.) vol. 1 at 143 and seq. See also, Katouzian, (1989) vol. 3 at 124-5.

399. See generally, Ansari, M. (1375 H.Q.) at 283; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7, at 359-360; Katouzian, N., (1989) vol. 3, at 154. Since shart-e-natijeh has no relevance to the present study, it is not examined here. It is only used to refer to terms under which a particular juristic act occurs when the main contract is validly concluded (see e.g., I.C.C., Art. 234 (2)). The main emphasis of this part of the study is on the consequences of breach of the two other categories.

400. It should be noted that technically, the jurists use a particular term, that is, wasf-e-salamat (literally, health) or wasf-e-sehhat (literally, correctness) to describe the 'quality' of the subject of sale.

401. See generally, Ansari, M. (1375 H.Q.) at 283; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7, at 359-360; I.C.C., Art. 234(1). In comparison, the terms "shart-e-sefat" and "sehhat" in Shi'ah law may be likened to those terms referred to in ss. 13-15 of the English Sale of Goods Act 1979.

402. A general examination of what the jurists have stated when discussing shurout, kheyar-e-rou'ayat (the option of inspection) and kheyar-e-takhalluf an al- shart ( the option of unfulfilled condition) will make clear the point (see e.g., Ansari, M. (1375 H.Q.) at 283, 285 and 249). In Iranian law, see Imami, S. H., (1363 H.S.) vol. 1 at 282 who suggested that the term "shart-e-sefat" used by Art. 234 of Iranian Civil Code is to be restricted to the case of contract for sale of specific goods. In contrast see, Katouzian, N., (1989) vol. 3 at 149.

403. The view can also be supported by the statements of some jurists who, raising the theory of shart within the grounds of termination (options), describe shart-e-sefat as the terms indicating the characteristics of specific goods See e.g., Ansari, M. (1375 H.Q.) at 283; Bujnourdi, M. H., (1389 H.Q) vol. 3 at 259.

404. It seems that this is perhaps the reason why I.C.C. (Art. 414) and almost all the jurists hold that in the case of sale of unascertained goods the mere lack of conformity does not entitle the buyer to terminate the contract, but only to require the seller to deliver goods conforming with the contract terms, since the seller is able to select some other consignment which conform to the required conditions. Whereas, in the case of specific goods since the seller cannot be required to deliver conforming goods, the buyer is given an immediate right to terminate the contract.

405. See generally, Ansari, M. (1375 H.Q.) at 283; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7, at 359; I.C.C., Art. 234(3).

406. See Ansari, M. (1375 H.Q.) at 312). See also, Gharavi Isfahani, M. H., (1408 H. Q.) vol. 2, at 198-199 (in which the late Kumpani explains this theory in very detail); Najafi, M., and, Naeini, M. H., (1358 H.Q.) vol. 2 at 188; Khumayni, S. R. M., vol. 5 at 371.

407. Najafi, M. H., (1981) vol. 23, at 144 ("Apparently, since the contract is a synallagmatic contract it is necessary that the performance must be made concurrently. As the ownership of the considerations is transferred so."

408. See Rashti., M. H., al- Ijarah, at 111. See also, Ale Bahr al- U'loum, S. M., (1396 H.G.) vol. 1 at 157; Imami, S. H., (1363 H.S.) vol. 1 at 458.

409. See also, Khurasani, M. K., (1406 H.Q.) at 275 where this jurist, in a short comment on Ansari's statement quoted above, said that the contract does not contain such an implied undertaking.

410. Although Shi'ah jurists expressly justify the remedy of withholding performance on the theory of mutuality of obligations, they have not expressly referred to the principle of correlation of reciprocal obligations under a synallagmatic contract. Nonetheless they have adopted the logical consequences of the principle in different places. See generally, Ansari, M. (1375 H.Q.) at 185; Najafi, M., and, Naeini, M. H., (1373 H.Q.) vol. 1 at 378; Gharavi Isfahani, M. H., (1408 H. Q.) vol. 1 at 201-2; Imami, S. H., (1363 H.S.) vol. at 219-220; Katouzian, N., (1990) vol. 4 at 83-6 and 109-112; Katouzian, N., (1992) vol. 1 at 36). It is to be recalled that I.C.C. does not indicate any express statement as to this principle. However, a close consideration of the legal grounds of Arts. 377 and 1085 (concerning the right of refusal) and Arts. 238 and 239 (regarding the innocent party's right to require the refusing party to perform his contractual obligations) as well as Art. 387 (relating to the automatic termination of the contract in the case of the impossibility of performing one of the reciprocal obligations) reveals that this Code has impliedly adopted the principle of correlation of obligations under a synallagmatic contract. See in this regard: Imami, S. H., (1363 H.S.) vol. 1 at 225-226.

411. On this basis, it is said that where the shart is null it does not, except in some exceptional cases, make the main contract void (see Ansari, M. (1375 H.Q.) at 287 and seq; Khumayni, S. R. M. (1362 H.S.) vol. 5 at 243; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 389 and seq.; Tabrizi, J., (1412 H. Q.) vol. 4 at 455), while in the case of nullity or impossibility of the performance of one of the principal obligations the contract would be void (see Ansari, M. (1375 H.Q.) at 185; Najafi, M., and, Naeini, M. H., (1373 H.Q.) vol. 1 at 378-379).

412. See e.g., Ansari, M. (1375 H.Q.) at 285 and 286; Najafi, M., and, Naeini, M. H., (1358 H.Q.) vol. 2 at 137-138 and 142-144; Khumayni, S. R. M., vol. 5, at 225-6 and 238-43; Yazdi, S. M. K., (1378 H.Q) vol. 2, at 129-31; Katouzian, N. (1990) 9 vol. 4 at 84; Katouzian, N. (1989) vol. 3 at 141.

413. This rule is stated in Shi'ah jurisprudence: "laysa leshshart-e-qhestun men al thaman" (No part of the consideration is exchanged with shart.). See in this respect, Ansari, M., (1375 H.Q.) at 286.

414. See e.g., Katouzian, N., (1989) vol. 3 at 90-91.

415. The duty to accept has been expressly addressed in the case of payment of the price and other monetary debts. See e.g., Ansari, M. (1375 H.Q.) at 306. However, the late Sayyed Yazdi recognises the duty to accept in a general form (see Yazdi, S. M. K., (1378 H.Q) vol. 2, at 178-179. See also, Tabrizi, J., (1412 H. Q.) at 554. In Iranian Civil Code the buyer's duty to accept can be inferred from Art. 273.

416. See e.g., Makki, M. (Shahid Awwal), and Ameli, Z. (Shahid Thani), (1309 H.Q.) vol. 1 at 364; Gulpaygani, S. M. R. M., (1371 H.S.) at 359 questions 2122, 2123; Khumayni, S. R. M., (1369 H.S.) at 371, questions 2114, 2115.

417. See Katouzian, (1992) vol. 1 at 167.

418. The principle has also been relied on by the late Sayyed Yazdi for this purpose (see Yazdi, S. M. K., (1378 H.Q) vol. 2, at 179) where he says "the requirement of performance (waf bel a'qd) means delivery (dafa') and acceptance (qaboul)."

419. See for this purpose, Ansari, M. (1375 H.Q.) at 265 and seq., in particular, p. 267 in which the late Ansari refers eventually definition of the term to the custom of traders. The same criterion has been adopted by other jurists. See e.g., Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 237 and seq., particularly, p. 247; Khumayni, S. R. M., vol. 5 at 118 and seq.; Tabrizi, J., (1412 H. Q.) at 349. See also I.C.C., Art. 426.

420. However, under I.C.C. whether or not the buyer is entitled to refuse to accept the seller's non-conforming performance is left to the court to decide according to the relevant custom (see Art. 279). But there is no clear criterion on which the can rely for this purpose.

421. This principle is based on the statement of the Prophet of Islam who said "la darar wa la derar fi al- Islam (No detrimental decree is provided in Islam.)." The concept of the statement, as will be seen when dealing with the legal grounds for claim of damages (see a separate essay from the present author titled: "Buyer's Right to Claim Monetary Relief: A Comparative Study under English Law, the Convention on Contracts for the International Sale of Goods 1980, Iranian and Shi'ah Law"), is controversial between the jurists. However, according to most of the commentators on the principle, the principle comes into operation in order to negative a harmful religious rule.

422. See e.g., Ansari, M. (1375 H.Q.) at 258; Yazdi, S. M. K., (1378 H.Q) vol. 2 at 81; Khumayni, S. R. M., vol. 5, at 56; Tabrizi, J., (1412 H. Q.) at 298-299.

423. Helli, M. M. (Allamah Helli), and, Ameli, S. M. J. H., vol. 4 at 629-630, and 660; Bahrani, Y., vol. 19 at 90; Ansari, M. (1375 H.Q.) at 258-259; Yazdi, S. M. K., (1378 H.Q) vol. 2 at 81; Khalkhali, S. M. K., & Rashti, M. H., (1407 H. Q.) vol. 2 at 627 (in which he claims that he could not identify a jurist who disagreed with this view) and 629-630; Khumayni, S. R. M., vol. 5 at 56. The same view is accepted in Art. 431 of the I. C. C.

424. See e.g., Gharavi Isfahani, M. H., (1408 H. Q.) vol. 2 at 108; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 146 and seq.; Tabrizi, J., (1412 H. Q.) at 299-300.

425. See e.g., Najafi, M. H., (1981) vol. 23 at 248; Khalkhali, S. M. K., & Rashti, M. H., (1407 H. Q.) vol. 2 at 625; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 145; Tabrizi, J., (1412 H. Q.) at 299.

426. See e.g., Ansari, M. (1375 H.Q.) at 258; Khumayni, S. R. M., vol. 5 at 56.

427. See generally, Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 146-147.

428. Khalkhali, S. M. K., & Rashti, M. H., (1407 H. Q.) vol. 2 at 641; Khumayni, S. R. M., vol. 5 at 57.

429. Ansari, M. (1375 H.Q.) at 258.

430. See e.g., Yazdi, S. M. K., (1378 H.Q) vol. 2 at 81; Khalkhali, S. M. K., & Rashti, M. H., (1407 H. Q.) vol. 2 at. 640-641.

431. See also, Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 147.

432. See I.C.C., Art. 384. See generally, Ansari, M. (1375 H.Q.) at 286-7; Najafi, M., and, Naeini, M. H., (1358 H.Q.) vol. 2 at 142-44; Gharavi Isfahani, M. H., (1408 H. Q.) vol. 2 at 162-3; Yazdi, S. M. K., (1378 H.Q) vol. 2 at 129-131, and 133-135; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 383-9. See also, Imami, S. H., (1363 H.S.) vol. 1 at 437-39; Katouzian, N., (1992) vol. 1 at 120- 126; Katouzian n, N., (1989) vol. 3, at 210-215.

433. See in this respect, Uniform Customs and Practices for Documentary Credits -UCP- (1993 Version), Article 13 which reflects customary law of this area.

434. As a matter of terminology, in Iranian civil law and Shi'ah jurisprudence the process of bringing the contract to an end on account of breach of contract is described by the term faskh and the right to do so is called kheyar-e-faskh. The term faskh is controversial. Generally, the term has been defined in two phrases. According to the first, faskh is to put an end to a valid contract (see in this respect, Karimi, S. J., and, Amuli, M. H. (1380 H.Q.) vol. 4 at 23). According to the other, the term means "rejection, and, restitution of subject-matter of the contract" (see e.g., Khurasani, M. K., (1406 H. Q.) at 266; Gharavi Isfahani, M. H., (1408 H. Q.) vol. 2 at 45; Khumayni, S. R. M., vol. 5 at 258, 259, 270, 271, 327, 328). The main effect of this difference appears where the subject-matter of the contract deteriorates, is consumed or is transferred to a third party. It seems hard to accept the view that the concept of termination involves rejection and restoration of the subject-matter of the contract. Rejection can be an evidence on the intention to terminate the contract; but rejection and restoration of the subject-matter is in fact one of the consequences of a valid termination, or, alternatively, one could argue, a pre-requisite of a valid termination, but not termination itself. Accordingly, it can be said with certainty that the term faskh is used to describe, the bringing a valid contract into an end. In this sense, the term refers to the same concept as the English term "termination."

435. See generally, Makki, M. (Shahid Awwal), and Ameli, Z. (Shahid Thani), (1309 H.Q.) vol. 1 at 372; Bahrani, Y., vol. 19, at 3; Ansari, M. (1375 H.Q.) at 216.

436. See e.g., Helli, A. N. J. (Muhaqqeq Helli), (1377 H.Q.) at 100.

437. See e.g., Ansari, M. (1375 H.Q.) at 216. Almost all jurists after him have also confined to the seven.

438. See for instance, Makki, M. (Shahid Awwal), and Ameli, Z. (Shahid Thani), (1309 H.Q.) vol. 1 at 372. However, Iranian Civil Code has listed those circumstances in ten numbers (see Art. 396).

439. See e.g., Najafi, M. H., (1981) vol. 23, at 3; Ansari, M., (1375 H.Q.) at 216; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 6 at 56.

440. This option is clearly defined by Art. 397 of I. C. C. For more information see, Ameli, Z. (Shahid Thani), vol. 1 at 177; Bahrani, Y., vol. 19 at 4 and seq.; Ansari, M. (1375 H.Q.) at 216.

441. Art. 398 of I. C. C. has defined this option. For a detailed discussion see, Mamaqani, A., (1345 H. Q.) at 45 (who applies, contrary to most jurists, the option to the case of certain unascertained animals), Imami, S. H., (1363 H.S.) vol. 1 at 479). See generally, Ameli, Z. (Shahid Thani), vol. 1 at 178; Ansari, M. (1375 H.Q.) at. 224; Najafi, M., and, Naeini, M. H., (1358 H.Q.) vol. 2 at 31;.

442. See for instance, Ameli, Z. (Shahid Thani), vol. 1 at 180; Ansari, M. (1375 H.Q.) at 244-247; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 4 and 8-19; Tabrizi, J., (1412 H. Q.) at 234-245; I.C.C., Arts. 402, 407). This is only the seller who is entitled to terminate the contract where the buyer delays in payment of the price. It is often said that the buyer cannot do so where the seller delays to deliver the goods (see e.g., Najafi, M., and, Naeini, M. H., (1358 H.Q.) vol. 2 at 94; Khalkhali, S. M. K., & Rashti, M. H., (1407 H. Q.) vol. 2, at 542; I. C. C., Art. 406. This particular option is based on the particular authorities (see in this respect, Bahrani, Y., vol. 19, at 44; Ansari, M. (1375 H.Q.) at 244-247; Khalkhali, S. M. K., & Rashti, M. H., (1407 H. Q.) vol. 2, at 543-544; Najafi, M., and, Naeini, M. H., (1358 H.Q.) vol. 2 at 94; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 4-8).

443. See e.g., Ameli, Z. (Shahid Thani), vol. 1 at 179; Ansari, M. (1375 H.Q.) at 228-229; I.C.C., Art. 399).

444. See e.g., Ansari, M. (1375 H.Q.) at 234; I.C.C. Art. 416; Katouzian, N., (1990) vol. 5 at 217).

445. See e.g., Helli, M. M. (Allamah Helli), and, Ameli, S. M. J. H., vol. 4 at 644 and 645; Ansari, M. (1375 H.Q.) at 398. See also, Katouzian, N., (1990) vol. 5, at 326, 354; Owsia, P. (1992) at 297; I.C.C., Art. 438.

446. See Bujnourdi, M. H., (1389 H.Q) vol. 2, at. 137; Maraghei, M. F., (1274 H. Q.) at 194; and seq).

447. See e.g., Makki, M. (Shahid Awwal), and Ameli, Z. (Shahid Thani), (1309 H.Q.) vol. 1 at 386).

448. See e.g., Makki, M. (Shahid Awwal), and Ameli, Z. (Shahid Thani), (1309 H.Q.) vol. 1 at 389, and, 402; Najafi, M. H., (1981) vol. 25 at 295; Tabrizi, J., (1412 H. Q.) at 580). I.C.C. has no mention of this option but see Art. 380. See also, Imami, S. H., (1363 H.S.) vol. 1 at 527; Katouzian, N., (1990) vol. 5 at 393; Katouzian,, N., (1992) vol. 1 at 217). It is to be noted that the option is purely for the seller, the buyer cannot enjoy from it. In the case of the seller's insolvency, the buyer can rely on the option of impossibility of performance.

449. See e.g., Shahid Makki, M. (Shahid Awwal), and Ameli, Z. (Shahid Thani), (1309 H.Q.) vol. 1 386; Gulpaygani, S. M. R., (1371 H. S.) at. 361 (question 2132); Khumayni, S. R. M., (1369 H. S.) at 373 (question 2124)). For the position of Iranian Civil Code see, Katouzian, N., (1989) vol. 3 at 263; Katouzian, N., (1990) vol. 5 at 395.

450. See e.g., Bahrani, Y., vol. 19 at 3; Ansari, M. (1375 H.Q.) at 214-215; Khalkhali, S. M. K., & Rashti, M. H., (1395 H. Q.) vol. 1 at 50 and seq.; Khalkhali, S. M. K., & Rashti, M. H., (1407 H. Q.) vol. 2 at 8 and seq.; Najafi, M., and, Naeini, M. H., (1358 H.Q.) vol. 2 at 4 and seq.; Khumayni, S. R. M., vol. 4 at 13 and seq; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 6, at 15 and seq; Amuli, M. T. and, Naeini, M. H., (1413 H.Q.) vol. 2. at 10 and seq. Katouzian, (1990) vol. 5 at 55. The principle is primarily based on a Quranic verse which orders all Muslim to respect their contracts, " ufou bel u'qoud" (Maedeh, Verse 5) and the saying of the Prophet, "al- mu'menoun enda shuroutehem" (all who believe Islam must respect their obligations (see, Ameli, H., vol. 15, Bab 20, Abvab al- Muhour, hadith 4). The principle is expressly recognised in Art. 219 of I. C. C.

451. Such as the option of majlis, the option of animal and that of delayed payment of the consideration as well as the options of inspection and defect, as some jurists suggest. The concept of rewayat and its role in devolping Shi'ah jurisprudence are estensively examined in a separate essay from the author titled: "Buyer's Right to Specific Performance: A Comparative Study under English Law, the Convention on Contracts for the International Sale of Goods 1980, Iranian and Shi'ah Law."

452. The principle is extensively examined in a essay from the author titled: "Buyer's Right to Claim Monetary Relief: A Comparative Study under English Law, The Convention on Contracts for the International Sale of Goods 1980, Iranian and Shi'ah Law."

453. The approach has been taken particularly in the case of the options of lesion and defect. See for instance, Ameli, Z. (Shahid Thani), vol. 1 at 193; Ansari, M. (1375 H.Q.) at 253, 262; Yazdi, S. M. K., (1378 H.Q) vol. 2 at 128 (in which the late Sayyed Yazdi has applied the criterion to some other options); Gharavi Isfahani, M. H., (1408 H. Q.) vol. 2, at 199; Najafi, M., and, Naeini, M. H., (1358 H.Q.) vol. 2, at 57, 58; Karimi, S. J., and, Amuli, M. H. (1380 H.Q.) vol. 4 at 9 and 10, 325-327; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 6 at 291, 292; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 299-300, 374; Khunsari, S. A., (1364 H.S.) vol. 3 at 156; Tabrizi, J., (1412 H. Q.) at 165-166, 257, 277, 436. Among Iranian lawyer see, Buroujerdi Abduh, M., (1329 H.S.) vol. 3 Para. 977 and seq.; Amiri Qaemmaqami, A., (1347 H.S.) vol. 1 at 78.

454. See e.g., Tousi, M. H. (Shaykh al- Taefah), (1407 H. Q.) vol. 2 at 19); Helli, M. M. (Allamah Helli), vol. 1 at 531.

455. See e.g., Makki, M. (Shahid Awwal), and Ameli, Z. (Shahid Thani), (1309 H.Q.) vol. 1, at 377, 378; Tabatabaei, S. A., (1404 H.Q.) vol. 1 at 525; Ale Kashef al- Qeta, M. H. (1359 H. Q.) vol. 1 at 63; Najafi, M. H., (1981) vol. 23 at 42, 95 and 97; Ansari, M. (1375 H.Q.) at 198, 235, 244, 249; Khurasani, M. K., (1406 H. Q.) at 189; Yazdi, S. M. K., (1378 H.Q) vol. 2 at 208; Bujnourdi, M. H., (1389 H.Q) vol. 3, at 269, 270; Khumayni, S. R. M., vol. 4 at 268-270. Among Iranian lawyers see, Imami, S. H., (1363 H.S.) vol. 1 at 499, 501, 502, 518, 526; Katouzian, N., (1995) vol. 1 at 99 and seq.

456. As to the definition of the terms "lazim and jaeiz contracts see, I.C.C., Arts. 185, 186, respectively.

457. Speaking in English law context, a parallel can be drawn here: the principle of la darar in this context seems to work rather like the HongKong Fir principle, while the theory of shart-e-sefat seems similar to the rule that allows termination for breach of condition.

458. Such as the options of defect and inspection.

459. The case becomes much more difficult in the case of the "option of defect." As will be seen later, it is commonly said that where the seller has delivered defective goods the buyer has an option either to reject the defective goods and terminate the contract or accept them and claim arsh on the option of defect. It is hard to prove that the parties have impliedly agreed on such a twofold right.

460. See also, Najafi, M., and, Naeini, M. H., (1358 H.Q.) vol. 2 at 133.

461. Almost all jurists have distinguished the "option of condition" from the other options, whereas if the options should be justified on the basis of an implied condition to terminate the contract there would be one option, "the option of condition." See e.g., Ansari, M., (1375 H. Q.) at 228 and seq. and other jurisprodential books discussing the "options."

462. For instance, in the case of the "Option of Ghabn (Lesion)" I.C.C. does not base the Option on the principle of la darar. This is the reason that Art. 421 provides: "In the case of lesion, if the seller pays the difference in price, the buyer's option of lesion is not lost unless he agrees to receive it.

463. See in this connection, Helli, M. M. (Allameh Helli), vol. 1 at 322, Helli, A. N. J. (Muhaqqiq Helli), (1377 H.Q.) at 101; Fayz Kashani, M., (1401 H.Q.) vol. 3 at 73; Najafi, M. H., (1981) vol. 23 at 43; Ansari, M. (1375 H.Q.) at 236; Najafi, M., and, Naeini, M. H., (1358 H.Q.) vol. 2 at 67; Khalkhali, S. M. K., & Rashti, M. H., (1407 H. Q.) vol. 2 at 415; Yazdi, S. M. K., (1378 H.Q) vol. 2 at 40; Katouzian, N., (1990) vol. 5, at 215-216. The same criterion is expressly confirmed by the revised Art. 417 of I.C.C.

464. See also, Khumayni, S. R. M., vol. 5 at 122 in which the late Khumayni says: "whatever custom and the learned (u'qala) will not disregard it would be a'yb which gives rise to the right to terminate the contract."

465. See e.g., I.C.C., Arts. 438-440.

466. Makki, M. (Shahid Awwal), and Ameli, Z. (Shahid Thani), (1309 H.Q.) vol. 1 at 386.

467. See, Khumayni, S. R. M., vol. 5 at 372.

468. These authorities are cited in: Ameli, H., vol. 12 at 361, rewayat 1 (Jamil Ibn Durraj cites from Imam Sadedq), and, at 362 rewayat 2 (Zayd al-Shahham cites from Imam Sadeq).

469. See e.g., Najafi, M. H., (1981) vol. 23 at 92 and 94; Gharavi Isfahani, M. H., (1408 H. Q.) vol. 2, at 86; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 55-59, particularly, at 59; Khumayni, S. R. M., vol. 4 at 422-427; Tabrizi, J., (1412 H. Q.) vol. 4 at 256-259.

470. These rewayat are cited in: Ameli, H., vol. 12 at 362 and seq., Bab 15, at 418, Bab 6, hadith 1.

471. See e.g., Helli, M. M. (Allamah Helli), and, Ameli, S. M. J. H., vol. 4 at 623; Ansari, M. (1375 H.Q.) at 253; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 96-99; Iravani, A., (1379 H.Q) vol. 2 at 52; Tabrizi, J., (1412 H. Q.) vol. 4 at 277.

472. See e.g., Makki, M. (Shahid Awwal), and Ameli, Z. (Shahid Thani), (1309 H.Q.) vol. 1 at 377; Helli, M. M. (Allamah Helli), and, Ameli, S. M. J. H., vol. 4 at 585; Naraqi, A., vol. 2 at 388 and 389; Khunsari, S. A., (1364 H.S.) vol. 3 at 168. See also Art. 396 of I.C.C.; Katouzian, N., (1990) vol. 5 at 182-184. See in contrast, Imami, S. H., (1363 H.S.) vol. 1 at 491.

473. See e.g. Ansari, M. (1375 H.Q.) at 248, see also p. 198; Khalkhali, S. M. K., & Rashti, M. H., (1407 H. Q.) vol. 2 at 591 and 595; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 54 (citing from some jurists such a broad construction).

474. Khalkhali, S. M. K., & Rashti, M. H., (1407 H. Q.) vol. 2 at 595 in which the late Mirza Rashti expressly refers to this point. See also, Ansari, M. (1375 H.Q.) at 198-199 and other sources cited there.

475. See e.g., Najafi, M. H., (1981) vol. 23 at 235-236; Yazdi, S. M. K., (1378 H.Q) vol. 2 at 66; Ale Kashef al- Qeta, M. H. (1359 H. Q.) vol. 1 at 63 and seq.; Khumayni, S. R. M., vol. 5 at 6-7.

476. It is perhaps the reason why some jurists described the option of unfulfilled condition as the "option of Ishterat " See e.g., Makki, M. (Shahid Awwal), and Ameli, Z. (Shahid Thani), (1309 H.Q.) vol. 1 at 385; Naraqi, A., vol. 2 at 389; Yazdi, S. M. K., (1378 H.Q) vol. 2 at 129).

477. Tabrizi, J., (1412 H. Q.) vol. 4 at 277.

478. See e.g., Tabrizi, J., (1412 H. Q.) vol. 4 at 277.

479. Ameli, H., vol. 12 at 418, Bab 6, hadith 1. There are also rewayat under which a buyer was given the option of defect notwithstanding that their language tends to apply to the case where the contract contained an express term (See e.g., Ameli, H., vol. 12 at 362, Bab 16, hadith 2).

480. See: Ameli, H., vol. 12 at 418, bab 6, hadith no. 1.

481. See Arts. 396 (7) and 422-437 of I.C.C.

482. See Art. 422 of I.C.C.

483. The case is, as shown in the author's another essay titled: "Buyer's Right to Claim Monetary Reliefs: A Comparative Study under English Law, The Convention on Contracts for the International Sale of Goods 1980 Iranian and Shi'ah Law," controversial in the jurisprudence. Some of the jurists are of the view that the right to claim price reduction is a general right for breach of any contract stipulation (See e.g., Yazdi, S. M. K., (1378 H.Q) vol. 2 at 130, 134).

484. Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 97; Tabrizi, J., (1412 H. Q.) vol. 4 at 281.

485. For a detail discussion of the terms, 'specific' and 'unascertained goods' see, Shahroudi, S. A. and, Khouei, S. A., (1409 H.Q.) vol. 2 at 11-12; Shirazi, N. M., (1413 H.Q.) vol. 1 at 23-24; Imami, S. H., (1363 H.S.) vol. 1 at 425. See also, I.C.C., Arts. 350, 351.

486. Ansari, M. (1375 H.Q.) at 249 and 283 in which he observes "Where it becomes clear that a term classified as shart-e-sefat is broken by the seller there is no way for the buyer unless to terminate the contract."; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 60. See also, Arts. 235 and 410 of I. C. C. Similarly, in a case decided by an Iranian Court, it was held that when Art. 410 applies, any lack of conformity will give rise to the right to terminate the contract, whether or not it results in any loss (the decision No. 569 - 1329/3/25 cited in: Iranian Civil Code, Art. 410, (Nikfar, M., (1372 H.S.).

487. Ansari, M. (1375 H.Q.) at 249; Khumayni, S. R. M., vol. 4 at 427; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 61.See also, I.C.C., Art. 414.

488. Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at. 60; Tabrizi, J., (1412 H. Q.) vol. 4 at 419.

489. The distinction is clearly inferable from Art. 437 of the I. C. C.

490. See e.g., Ansari, M. (1375 H.Q.) at 253; Khumayni, S. R. M., vol. 5 at 15; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 100; Tabrizi, J., (1412 H. Q.) vol. 4 at 278. See also Art. 422 of the I. C. C.

491. The term is used to refer to what is called under the Convention "price reduction."

492. Yazdi, S. M. K., (1378 H.Q) vol. 2 at 70; Iravani, A., (1379 H.Q) vol. 2 at 50; Tabrizi, J., (1412 H. Q.) vol. 4 at 419.

493. See the different sources cited in: Yazdi, S. M. K., (1378 H.Q) vol. 2 at 70. See also Khumayni, S. R. M., vol. 5 at 17; Imami, S. H., (1363 H.S.) vol. 1 at 504, in which they try to justify the view. This view has been rejected by most jurists. See in this respect, Yazdi, S. M. K., (1378 H.Q) vol. 2 at 70; Gharavi Isfahani, M. H., (1408 H. Q.) vol. 2 at 97; Khumayni, S. R. M., vol. 5 at 15-18. Moreover, there is no reason to justify a distinction between cases of breach of shart-e-sehhat and of shart-e-sefat; the same logic which justifies the above-mentioned view in respect of the former would justify it as to the latter. In addition, this view would enable the buyer to terminate the contract for minor defects, which certainly is contrary to the principle of la darar.

494. Makki, M. (Shahid Awwal), and Ameli, Z. (Shahid Thani), (1309 H.Q.) vol. 1 at 386; Ameli, Z. (Shahid Thani), vol. 1 at 191; Naraqi, A., (1408) at 44; Najafi, M. H., (1981) vol. 23 at 219; Ansari, M. (1375 H.Q.) at 285 (in which he expressly observes that we cannot find any authority for the option to terminate the contract for the mere refusal notwithstanding that the innocent party is able to require the refusing party to perform his contractual obligations.); Najafi, M., and, Naeini, M. H., (1358 H.Q.) vol. 2 at 134. Iranian Civil Code, following this view, restricts the right of termination for breach of shart-e-fe'l to the case of impossibility of requiring the refusing party to perform (Art. 239). However, it seems that I.C.C. has to some extent derogated from the jurists' judgements and follaw the French Civil Code's attitude (see Art. 238). The isuue is examined in a separate essay from the author under the title of "Buyer's Right to Specific Performance: A Comparative Study under English Law, the Convention on Contracts for the International Sale of Goods 1980, Iranian and Shi'ah Law."

495. Helli, A. N. J. (Muhaqqeq Helli), (1377 H.Q.) at 105; Makki, M. (Shahid Awwal), and Ameli, Z. (Shahid Thani), (1309 H.Q.) vol. 1 at 386; Qumi, M. A. (Muhaqqeq Qumi), (1371 H. S.) vol. 2 at 193 (question no. 119); Naraqi, A., vol. 2 at 389; Yazdi, S. M. K., (1378 H.Q) vol. 2 at 129; Bujnourdi, M. H., (1389 H.Q) vol. 3 at 268, 270; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 374; Khouei, S. A., vol. 2 at 43 (question 167); Khumayni, S. R. M., vol. 5 at 220; Tabrizi, J., (1412 H. Q.) at 436-437, 439.

496. See in this respect, Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 373.

497. Ansari, M., (1375 H.Q.) at 252. Before him the view was pointed out by the late Sahib Javaher in: Najafi, M. H., (1981) vol. 23 at 96 ("There is no doubt that the option of incorrect description is not lost by replacement as it is not lost by paying the difference between the non-conforming and conforming goods."). See also, Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 77; Tabrizi, J., (1412 H. Q.) vol. 4 at 271; Khumayni, S. R. M., vol. 4 at 441; Katouzian, N., (1990) vol. 5 at 202. The late Sahib Javaher goes further and suggests that where the parties have agreed that in the case of non-conformity the seller is allowed to deliver replacement or pay the difference the contract would be void because of qarar (see, Najafi, M. H., (1981) vol. 23 at 96). Nevertheless, in the case of the "option of lesion," it has been suggested that where the seller is ready to reduce the price the buyer will not be entitled to terminate the contract on account of the option of lesion. See e.g., Helli, M. M. (Allamah Helli) and Ameli S. M. J. H., vol. 4 at 571; Tabatabaei, S. A., (1404 H.Q.) vol. 1 at 525; Yazdi, S. M. K., (1378 H.Q) vol. 2 at 39).

498. See Qumi, M. A. (Muhaqqeq Qumi), (1371 H. S.) vol. 2 at 117 (question no. 84) in respect of the option of lesion.

499. See Ameli, H., vol. 12, bab 14, hadith 1 at 361.

500. Ameli, Z. (Shahid Thani), vol. 1 at 195; Ansari, M., (1375 H.Q.) at 261; Khalkhali, S. M. K., & Rashti, M. H., (1407 H. Q.) vol. 2 at 663-664. See also, Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 171-175; Tabrizi, J., (1412 H. Q.) vol. 4 at 311-312. In addition in the case of the option of lesion, it has also been said that if the seller is ready and willing to pay the difference between the contract price and the market price the buyer has no option to terminate the contract (See e.g., Qumi, M. A. (Muhaqqiq Qumi), (1371 H. S.) vol. 2 at 117 (question no. 84). See also Helli, M. M. (Allamah Helli), and, Ameli, S. M. J. H., vol. 4 at 571; see also at 57; Tabatabaei, S. A., (1404 H.Q.) vol. 1 at 525; Yazdi, S. M. K., (1378 H.Q) vol. 2 at 39).

501. This view is expressly recognised by I.C.C. in lease contract (Art. 478).

502. See e.g., Ansari, M. (1375 H.Q.) at 259; Khalkhali, S. M. K., & Rashti, M. H., (1407 H. Q.) vol. 2 at 627; Khumayni, S. R. M., vol. 5 at 56 and 61.

503. Ameli, Z. (Shahid Thani), vol. 1 at 189 in which the late Shahid Thani expressly refers to two opposing views.

504. Helli, M. M. (Allamah Helli), and, Ameli, S. M. J. H., vol. 4 at 629-630, and 660; Bahrani, Y., vol. 19 at 90; Ansari, M. (1375 H.Q.) at 258-259; Khalkhali, S. M. K., & Rashti, M. H., (1407 H. Q.) vol. 2 at 627 (in which he claims that he could not identify a jurist who disagreed with this view) and 629-630. See also, Ansari, M. (1375 H.Q.) at 258; Khumayni, S. R. M., vol. 5 at 56. The same view is accepted in Art. 431 of the I. C. C.

505. Gharavi Isfahani, M. H., (1408 H. Q.) vol. 2 at 108; Yazdi, S. M. K., (1378 H.Q) vol. 2 at 81-82; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 146 and seq.; Tabrizi, J., (1412 H. Q.) at 299-300.

506. See Art. 384 of I.C.C.

507. See e.g., Ansari, M. (1375 H.Q.) at 287; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 387. However, it seems that I.C.C. does not give the buyer the right to terminate the contract for the seller's excess delivery. The last part of Art. 384 provides: "… [I]f on delivery it is found that the goods delivered are more than the specified quantity, the excess belongs to the seller."

508. For instance, the late Shaykh Ansari says: "There is no dispute as to the buyer's right to terminate the contract for partial delivery. The different views arise as to the question whether or not the buyer should be given a right to keep the contract alive as to the part delivered and terminate in respect of the undelivered part" (Ansari, M. (1375 H.Q.) at 286). As to the first view see e.g., Helli, M. M. (Allamah Helli), and, Ameli, S. M. J. H., 4 at 734; Ansari, M. (1375 H.Q.) at 286-7 (in which the late Ansari cites a number of jurists who supported this view); Yazdi, S. M. K., (1378 H.Q) vol. 2 at 133-134; Najafi, M., and, Naeini, M. H., (1358 H.Q.) vol. 2 at 144; Tabrizi, J., (1412 H. Q.) at 450, and as to the second view see e.g., Khumayni, S. R. M., vol. 5 at 238; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 383-388, in particular, at 388.

509. See, Ansari, M. (1375 H.Q.) at 286.

510. Art. 234(1) of I.C.C. does also regard stipulation as to quantiy of subject-matter of the contract as shart-e-sefat.

511. See e.g., Ameli, H., vol. 12, bab 14, hadith 1 at 361.

512. See generally, Qumi, M. A. (Muhaqqeq Qumi), (1371 H. S.) vol. 2 at 144 and seq. (question no 101); Ansari, M. (1375 H.Q.) at 303; Yazdi, S. M. K., (1378 H.Q) vol. 2 at. 174 and seq.; Gharavi Isfahani, M. H., (1408 H. Q.) vol. 2 at 191; Shahidi, M. F., (1375 H.Q) at 600-601; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 546 and seq.; Khumayni, S. R. M., vol. 5 at 330 and seq.; Tabrizi, J., (1412 H. Q.) at 540;

513. See e.g., Ansari, M., (1375 H. Q.) at 283.

514. See e.g., Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 547-548.

515. Some jurists have recently referred to such a nature of time stipulation. See for instance, Tabrizi, J., (1412 H. Q.) at 419.

516. This approach has been supported by the great Shi'ah jurist the late Sahib Javaher in: Najafi, M. H., (1981) vol. 23 at 99.

517. See e.g., Ansari, M. (1375 H.Q.) at 303; Gharavi Isfahani, M. H., (1408 H. Q.) vol. 2 at 191; Khumayni, S. R. M., vol. 5 at 334; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 548; Tabrizi, J., (1412 H. Q.) at 542.

518. See e.g., Qumi, M. A. (Muhaqqeq Qumi), (1371 H. S.) vol. 2 at 144 (question no 101) and 192 (question no. 119).

519. See e.g., Ansari, M. (1375 H.Q.) at 303; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 547; Khumayni, S. R. M., vol. 5 at 333; Tabrizi, J., (1412 H.Q.) at 540. See also, Katouzian, N., (1992) vol. 1 at 173; Imami, S. H., (1363 H.S.) vol. 1 at 237.

520. Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 547-548. See also, Katouzian, N., (1992) vol. 1. at 173.

521. The fact to which Diplock J. (as he was then) referred in an English case of McDougall v. Aeromarine of Emsworth Ltd. [1958] 1 W. L. R. 1126 at 1132.

522. Definitions such as," kheyar is the option to terminate the contract," or, "kheyar is the option to affirm the contract or bring it to an end," or, "kheyar is the option to dissolve the contract or bring it to an end." See in this respect, Ansari, M., (1375 H. Q.) at 214; Najafi, M., and, Naeini, M. H., (1358 H.Q.) vol. 2 at 4; Khalkhali, S. M. K., & Rashti, M. H., (1407 H. Q.) vol. 2 at 5-6; Khumayni, S. R. M., vol. 4 at 5; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 6 at 5-6; Karimi, S. J., and, Amuli, M. H. (1380 H.Q.) vol. 4 at 3 and seq.

523. See e.g., Najafi, M., and, Naeini, M. H., (1358 H.Q.) vol. 2 at 58).Khumayni, S. R. M., vol. 5 at 279-280; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 451 and seq.; Tabrizi, J., (1412 H. Q.) at 488. Among Iranian lawyers see, Katouzian, N., (1990) vol. 5 at 54. In contrast, see Ansari, M. (1375 H.Q.) at 294 and various references the late Ansari cites there; Imami, S. H., (1363 H.S.) vol. 1 at 184-185.

524. See e.g., Najafi, M., and, Naeini, M. H., (1358 H.Q.) vol. 2 at 37, 163-164; Khurasani, M. K., (1406 H. Q.) at 258; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 445. See also, Arts. 449 and 451 of I.C.C.

525. However, as will be seen below, where the buyer learns of the breach and his right to terminate the contract he has to exercise his right promptly, otherwise he will lose his right.

526. See e.g., Helli, A. M. (Fakhr al- Muhaqqeqin), vol. 1 at 484; Helli, M. M. (Allamah Helli), vol. 1 at 522; Helli, M. M. (Allamah Helli), and, Ameli, S. M. J. H., vol. 4 at 567, 659 (in this reference Ameli, citing a considerable number of sources on this view, observed that this view is a well-accepted view among Shi'ah jurists); Bahrani, Y. vol. 19 at 117; Karaki, A. (Muhaqqeq Thani) vol. 2 at 269); Najafi, M. H., (1981) vol. 37 at 344.

527. See Khumayni, S. R. M., vol. 4 at 21.

528. It seems that this is a well-settled view in Shi'ah jurisprudence. In this respect, the distinguished Shi'ah jurist, Allamah Helli observes: "Termination to be effective does not depend on the court's decision." (see Helli, A. M. (Fakhr al- Muhaqqiqin vol. 1 at 484). See also, Helli, M. M. (Allamah Helli), vol. 1 at 522; Helli, M. M. (Allamah Helli), and, Ameli, S. M. J. H., vol. 4 at 567 and 659; Mamaqani, A., (1345 H. Q.) at 196. There is no clear provision in I.C.C. which requires a buyer who seeks to exercise his right to terminate to resort to the court. But in a case by the court in 1337 [1954] it is held that a buyer who wishes to exercise his right to terminate the contract is not required to apply for a court's judgement (as cited in Katouzian, N., (1990) vol. 5 at 71, fn. 1). It is, however, worth noting that a party who seeks to terminate the contract under Art. 239 of I.C.C is required to apply the court for termination. The same is true in the Shi'ah jurisprudenc according to the opinion of those jurists who restrict his right to terminate the contract for breach of shart-e-fe'l on the impracticality of compelling the defaulting party (see in this respect: 2.2.3.4.). This is called in the terminology of Iranian civil law, "judicial termination" or "faskh ghazaei."

529. See generally, Ansari, M. (1375 H.Q.) at 251, 253; Khumayni, S. R. M., vol. 5 at 19-23.

530. See generally, Ansari, M. (1375 H.Q.) at 251, 254-5; Khumayni, S. R. M., vol. 5 at 23 and seq.

531. See e.g., Ansari, M. (1375 H.Q.) at 239 (with respect to the loss of the option of lesion).

532. Yazdi, S. M. K., (1378 H.Q) vol. 2 at 71; Khumayni, S. R. M., vol. 5 at 19, 24-25. It is worth noting that where the relinquish is expressed by the words it is called "isqat quli," while if it is expressed by the conducts it is called "isqat fe'li."

533. Ansari, M. (1375 H. Q.) at 251 (the option of inspection) and 253 (the option of defect); Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 72, 105. The buyer may also lose his right to terminate the contract for the seller's non-conforming delivery where he relinquishes from his right to reject non-conforming goods at the time of conclusion of the contract. See in this respect, Ansari, M. (1375 H. Q.) at 251; Yazdi, S. M. K., (1378 H.Q) vol. 2 at 60; Khalkhali, S. M. K., & Rashti, M. H., (1407 H. Q.) vol. 2 at 595; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 74; Khumayni, S. R. M., vol. 4 at 435; Tabrizi, J., (1412 H. Q.) at 266; and Art. 448 of the I. C. C.

534. See e.g., Khalkhali, S. M. K., & Rashti, M. H., (1407 H. Q.) vol. 2 at 256; Tabrizi, J., (1412 H. Q.) at 197.

535. In contrast, a number of jurists are of the view that in the case of the option of defect any use of the goods even before knowledge of the fact will amount to loss of the right to reject. See e.g., Muhaqqeq Tehrani, M. R., (1414 H.Q.) vol. 23 at 268; Muqniyah, M. J., (1402 H. Q.) vol. 3 at 226.

536. Katouzian, N., (1990) vol. 5 at 131. The existence of the option after such acts can also be justified on the basis of the principle of Isteshab. That is, as long as it does not prove that the buyer has declared his intention to relinquish his right to terminate the pre-existent option is presumed as still standing (see Ansari, M. (1375 H.Q.) at 239).

537. See e.g., Ansari, M. (1375 H.Q.) at 226 ("It appears from the wordings of the most jurists that the right to terminate is not lost by the mere use because it is quiet possible that it was for examination or preservation for the seller."). Accordingly, it cannot be said that the buyer has acted in his detriment. The principle of iqdam comes into operation where the buyer notwithstanding that he knows that his action would result in his detriment makes such an action (Ansari, M., ibid., at 239).

538. See in this respect, Najafi, M., and, Naeini, M. H., (1358 H.Q.) vol. 2 at 164.

539. A buyer may be taken to have waived his right to reject the non-conforming delivery where he has discovered the non-conformity. The question arises here is whether it is necessary that defect to be latent on a reasonable person or the criterion is the buyer himself. It is commonly said that the criterion is the buyer not a reasonable person. Accordingly, he will be entitled to terminate for the defect which can be discovered by a simple examination. Art. 424 of I. C. C. apparently accepts this criterion. This would be harsh for the seller if one takes into account that the jurists have not obliged the buyer to examine the goods. It is therefore suggested that the right of the buyer must be confined to cases where he has examined the goods but failed to discover the defect, for where the buyer who knows that the goods may be defective, failed to examine them he cannot be protected by the principle of la darar, since he has acted against himself (qaedah-e-iqdam).

540. Ansari, M. (1375 H.Q.) at 254-255; Tabrizi, J., (1412 H. Q.) vol. 4 at 283-284.

541. Ansari, M., (1375 H.Q.) at 254, in which he cites from a great number of jurists that any use amounts to the loss of the right. See also, Khalkhali, S. M. K., & Rashti, M. H., (1407 H. Q.) vol. 2 at 664 (in which the late Rashti says: "There is no doubt and nobody has disputed that use of the goods delivered after that the user has known of the defect in the goods would result in loss of the right to terminate."); Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 110-111 in which the late Ayatullah Khouei quotes the view from a number of jurists such as Allamah Helli.

542. Ansari, M. (1375 H.Q.) at 254-255; Yazdi, S. M. K., (1378 H.Q) vol. 2 at 60, 71; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 108; Khumayni, S. R. M., vol. 5 at 29; Tabrizi, J., (1412 H. Q.) at 282-283.

543. See Art. 450 of I. C. C.

544. See, Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 73, 107. The same argument has been supported by Ayatullah Khouei in the case of option of lesion (see, Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 6 at 355). See also, Art. 450 of I.C.C.

545. Khumayni, S. R. M., vol. 5 at 29-30.

546. See e.g., Tousi, M. (Shaykh al- Taefah), vol. 2 at 131; Yazdi, S. M. K., (1378 H.Q) vol. 2 at 71-72.

547. See Ansari, M. (1375 H.Q.) at 255; Tabrizi, J., (1412 H. Q.) at 286.

548. See also, Katouzian, N., (1990) vol. 5 at 299. See in contrast, Imami, S. H., (1363 H.S.) vol. 1 at 506, 507.

549. See e.g., Ansari, M. (1375 H.Q.) at 255; Khalkhali, S. M. K., & Rashti, M. H., (1407 H. Q.) vol. 2 at 610; Khumayni, S. R. M., vol. 5 at 29; Tabrizi, J., (1412 H. Q.) at 284-285. See also Art. 429 of I. C. C.

550. See Ameli, H., vol. 12 Bab 16, p. 363, Hadith 3. The view is also supported by another full authentic (correct) hadith cited from Imam Sadeq (A. S.) (ibid., at 362 hadith 2).

551. In this respect, see Ansari, M. (1375 H.Q.) at 302. In contrast see, Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 73 (with respect to the option of inspection) 109 and 113 (in general).

552. See e.g., Ansari, M. (1375 H.Q.) at 255; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 108.

553. See e.g., Naraqi, A., vol. 2 at 388; Bahrani, Y., vol. 19 at 59; Fayz Kashani, M., (1401 H.Q.) vol. 3 at 72; Ansari, M. (1375 H.Q.) at 250; Khalkhali, S. M. K., & Rashti, M. H., (1407 H. Q.) vol. 2 at 593; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 72; Khumayni, S. R. M., vol. 4 at 433. See also Art. 415 of I. C. C. See in contrast, Tabrizi, J., (1412 H. Q.) at 263.

554. Najafi, M. H., (1981) vol. 23 at 95; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 72; Katouzian, N., (1990) vol. 5 at 73.

555. See e.g., Ameli, Z. (Shahid Thani), vol. 1 at 196; Helli, M. M. (Allamah Helli), and, Ameli, S. M. J. H., vol. 4 at 659 (and different sources cited there); Bahrani, Y., vol. 19 at 104, 117. Shaykh Yousef Bahrani and Abdullah Mamaqani maintain that most of Shi'ah jurists have accepted this view (Mamaqani, A., (1345 H. Q.) at 119). However, there are a considerable number of the jurists who are of the view that the option of defect is to be exercised promptly. See in this respect, Ansari, M. (1375 H.Q.) at 254 and different references he cites there and p. 262. I. C. C. in Art. 435 follows the latter view.

556. See e.g., Ansari, M. (1375 H.Q.) at 262; Yazdi, S. M. K., (1378 H.Q) vol. 2 at 60.

557. Makki, M. (Shahid Awwal), vol. 2 at 79, (rule no. 173); Yazdi, S. M. K., (1988) vol. 2 at. 590 (question no. 5).

558. For instance, Allamah Helli says: "Termination dissolves the contract from the time when the aggrieved party exercises his right to terminate not from the time of making the contract, since when the contract is validly concluded it affects the relationship of the parties and its actual effects cannot be restored. The same is true as to termination." (Helli, M. M. (Allamah Helli), vol. 1 at 531).

559. Reference can be made to that when the contract is validly terminated future contractual obligations of the contracting parties are discharged. Although no jurist has expressly referred to this effect, this can be clearly inferred where the jurists say termination does simply dissolve the contract rather than annul it. For instance, the late Allameh Helli says: "Termination dissolves the contract," (Helli, M. M. (Allamah Helli), vol. 1 at 531).

560. See also, Katouzian, N., (1990) vol. 5 at 81.

561. See e.g., Ansari, M. (1375 H.Q.) at 303; Khumayni, S. R. M., vol. 5 at 258, 329; Tabrizi, J., (1412 H. Q.) at 539. See also, I.C.C., Arts. 287, 288.

562. It is to be noted that the jurists have not expressly referred to such a consequence for termination. However, it is easily inferable from the statements made in definition of termination. See e.g., Khurasani, M. K., (1406 H. Q.) at 266; Gharavi Isfahani, M. H., (1408 H. Q.) vol. 2 at 45; Khumayni, S. R. M., vol. 5 at 258 and seq.; Karimi, S. J., and, Amuli, M. H. (1380 H.Q.) vol. 4 at 23..

563. See e.g.,, Kwei Tek Chao v. British Traders & Shippers Ltd ([1954] 2 Q.B. 459 and Gill & Duffus S.A. v. Berger & Co. Inc ([1984] 1 A.C. 382).

564. See e.g.,, Re General Trading Co. Ltd., and Van Stolk's Commissiehandel ([1910] 16 Com. Cas. 95); Tamvaco v. Lucas (no. 1) [1859] 1 E. & E 581.

565. See e.g.,, Kwei Tek Chao v. British Traders & Shippers Ltd [1954] 2 Q.B. 459.

566. See e.g.,, Panchaud Freres S.A. v. Etablissments General Grain Co ([1970] 1 Lloyd's Rep. 53). For further cases see, Atiyah, P. S., & Adams, J., (1995) at 468, fn. 79.

567. See e.g.,, Uniform Customs and Practices for Documentary Credits (1993 Version), Art. 13; Incoterms 1990 (International Commercial Terms) published by ICC.

568. See in this respect, Guest, A. G., et al, (1997), Para. 12-062.

569. See e.g.,, Gharavi Isfahani, M. H., (1408 H. Q.) vol. 2 at 108; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 146 and seq.; Tabrizi, J., (1412 H. Q.) at 299-300.

570. See, generally, Ansari, M. (1375 H.Q.) at 286-7; Najafi, M., and, Naeini, M. H., (1358 H.Q.) vol. 2 at 142-3; Gharavi Isfahani, M. H., (1408 H. Q.) vol. 2 at 162; Yazdi, S. M. K., (1378 H.Q) vol. 2 at 129, and 133-135; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 383-9. See also I.C.C., Art. 384.

571. See the references cited above.

572. [1962] 2 Q.B. 26 applied in the sale of goods cases by the Court of Appeal in Cehave N.V. v. Bremer Handelsgesellschaft mbH (The Hansa Nord) [1976] Q.B. 44.

573. See e.g.,, HongKong Fir Shipping Co. Ltd. v. Kawasaki Kisen Kaisha Ltd [1962] 2 Q.B. 26, per Upjohn LJ at 64, and per Diplock LJ at 66, 70 and 72; Bunge Corp v. Tradax Export S. A. [1981] 1 W.L.R. 711, per Lord Scarman at 717.

574. [1962] 2 Q.B. 26 at 70.

575. Cehave N.V. v. Bremer Handelsgesellschaft mbH (The Hansa Nord) [1976] 1 Q.B. 44.

576. In contrast, see, Ziegel, J., (1982) at 43 who argues that the Convention test is a demanding one and goes beyond the scope of Hong Kong Fir doctrine and may be likened to the test of fundamental breach applied by English and Canadian courts in determining the validity of exception clauses (the latter test has been examined in detail in the charterparty case: Suisse Atlantique Societe d'Armement Maritime S.A. v. N.V. Rotterdamsche Kolen Centrale [1967] A.C. 361). Cf. with Nicholas, B., (1989) at 218 who likened the Convention test to the HongKong fir test.

577. See HongKong Fir Shipping Co. Ltd. v. Kawasaki Kisen Kaisha Ltd [1962] 2 Q.B. 26 at 66, 70 and 72.

578. See, e. g., Ansari, M. (1375 H.Q.) at 253 has based the option of defect on the first doctrine, while at 235, 244 and 249 has justified the options of lesion, delay in payment and inspection, respectively, on the second principle. See also, Yazdi, S. M. K., (1378 H.Q) vol. 2 at 128, and 208.

579. Lord Hewart in Maple Flock Co. Ltd. v. Universal Furniture Products (Wembley) Ltd[1934] 1 K.B. 148 at 157.).

580. This suggests that "delivery of goods by instalments" in Art. 73 has a broader meaning that it has under the English Sale of Goods Act 1979 and may encompass some types of contract that are indivisible or at least indivisible in part. See in this respect, Ziegel, J. & Samson, C., (1981) Art. 73.

581. See e.g.,, Bunge Corp v. Tradax Export S. A.[1981] 1 W.L.R. 711 per Lord Roskill at 725; per Lord Lowry at 719.

582. See e.g.,, Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 549; Khumayni, S. R. M., vol. 5 at 334; Tabrizi, J., (1412 H. Q.) at 542.

583. See e.g.,, Najafi, M. H., (1981) vol. 23 at 99.

584. Moreover, it is the practice in relation to documentary credits that documents rejected as not conforming to the credit are generally allowed to be represented. See also Uniform Customs and Practice for Doumentary Credits (1993 Version), Art. 14 (d)).

585. As explained before, a number of English authors are inclined to explain the decided cases in this way.

586. However, if Professor Honnold's view (see, Honnold, (1991) at 375-376, particularly, footnote no. 6 at 376, see also, p. 259) is accepted, the Convention will differ from Shi'ah law in this respect, since on his view the buyer will be entitled to terminate the contract only when the seller is not willing and able to cure after the expiration of the time for delivery.

587. It is to be noted that in English law "an action founded on simple contract shall not be brought after the expiration of six years from the date on which the cause of action accrued" (s. 5 of the Limitation Act 1980,). Accordingly, an injured party will be entitled to take an action for damages before the court within a period of six years. The Convention, however, does not ascertain for how long the buyer could take an action for damages. The is perhaps because the issue is covered by another UN Convention, i.e., The 1974 Convention on the Limitation Period in the International Sale of Goods (New York), as amended in 1980. Under Art. 8 of the latter Convention the limitation period shall be for four years. But the position of Shi'ah law is not clear; no clear rule exists in this respect.

588. As explained before, Shi'ah jurists suggest that the buyer may be taken to have consented to the non-conforming goods by the method of tasarruf in three classes of case: use of the goods, dealing with them and altering them so that it is not possible to return them in the same condition they possessed at the time of delivery

589. See e.g.,, Ansari, M. (1375 H. Q.) at 254, 261; Touhidi, M. A., and Khouei, S. A. (1368 H.S.) vol. 7 at 108, 175.

Pace Law School Institute of International Commercial Law - Last updated December 13, 2001

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