Damages, Exemption Clauses, and Penalties

Abstract

The last draft of the Unidroit project comprises twelve articles on damages (there were more in the initial draft) and two articles on exemption clauses and agreed payment for nonperformance, in other words penalty clauses. These fourteen articles are the result of fierce discussions prompted by conflicting traditions governing the respective domestic laws of remedies. Of course, the U.N. Convention on Contracts for the International Sale of Goods (CISG) served as a starting point. But it is not comprehensive and lacks, for instance, specific rules on exemption and penalty clauses. In other cases the CISG rules are ill-adapted; their scope being limited to sales of goods, they cannot be easily extended to other kinds of contracts such as to contracts for services. In addition, certain rules are defective: CISG is not a perfect model. Some trompe-l'oeil formulas just mask deep and lasting oppositions. The Unidroit group has tried to improve it, both in substance and in form. The group sought inspiration, for the civil law tradition, in the major codifications of the Romano-Germanic system beginning with the ancestor, the French Civil Code of 1804, the middle-aged codifications of Germany, Switzerland and Italy, and the new-born (or about to be born) Quebec Civil Code and Dutch Civil Code (NBW).' Article Two of the Uniform Commercial Code and the Restatement (Second) of Contracts2 were main sources for the common law tradition. The influence of socialist countries has declined, even if the Republic of China still represents this family of laws in the group. The interests of developing countries are always a concern since they are often in the situation of consumers in international trade and are to be protected as such. And it must noted that there was, as elsewhere, a close cooperation with the Commission for European contract law.3