This chapter reconsider the meaning of the seriousness of a breach of contract and its role in determining the victim’s entitlement to terminate the contract and claim loss of bargain damages. It challenges the conventional dichotomy of regarding a condition as resting upon ‘the importance of the term’ and a fundamental breach as resting upon ‘the consequence of the breach’. The chapter argues that the ‘deprivation of benefit’ test formulated by Diplock LJ in the Hong Kong Fir case should be understood as a uniform test determinative of all actual and anticipatory breaches that give rise to a right to termination of contract and loss of bargain damages. Accordingly, a term is characterised as a condition if, and only if, the parties predicate at the time of contracting that any breach of it will satisfies the test, whilst a fundamental breach of an intermediate term must be subject to the test being satisfied at the time of the purported termination of contract, following a multi-factorial assessment involving, inter alia, the actual and prospective effect of the breach. As a consequence, it is suggested that Lord Diplock’s dictum in The Afovos applies only to an express contractual right of termination but not a condition arising under common law.
Ewan McKendrick, Qiao Liu and Xiang Ren
This chapter, using two examples, focuses on the role played by international instruments such as the CISG and the PICC in the development of uniform laws and how that role is affected by national courts’ interpretation of such instruments. It is argued that these international instruments set out and promote a general consensus as to the most appropriate rules to be applied to international commercial contracts, such as the consensus as to the initial entitlement of a claimant to specific performance and also to the circumstances in which the remedy should not be available. However, such a consensus does not guarantee identity of outcome given the possibility that domestic courts or arbitrators drawn from national jurisdictions may interpret the text of an instrument through the lens of their own national law. Nevertheless, as shown in the application of the ‘fundamental breach’ provision in Article 25 of the CISG by the Supreme People’s Court of China in the case of ThyssenKrupp Metallurgical Products GmbH v Sinochem International (Overseas) Pte Ltd, a willingness on the part of a national court to engage with case law from other jurisdictions can to some extent alleviate this so-called ‘homeward trend’.