Discharge of Contract by Breach in Civil Law

Abstract

IT IS SAID IN THE COMMON LAW that a contract is discharged by the material breach of one party. This statement really means that, if one party to a bilateral contract has repudiated or broken all or some essential obligations under it, this renders the contract voidable by the injured party who may, if he so elects, rescind the contract. It may be of great importance to the injured party to be able to say to the other party: Since you have repudiated, or have not performed all or some of your obligations under the contract, I shall not perform mine. In the common law, this problem is characterized by somewhat uncertain groping for fundamental principles in the matter by English and American courts.' It may be therefore of some interest to consider how this question has been solved in the civil law systems. The question has also great practical significance because in international transactions acts of breach occur that may present frequent problems in international counselling. In the civil law, there are two main answers to the question: Can a contract be rescinded for breach and how can this be done? One is rescission of the contract by judicial decree, which solution has been accepted by French law and the legal systems relying on the Code Civil.2 The other solution is the right of the injured party to rescind the contract by withdrawing from it, which is followed by the German law and the related legal systems.3 We shall attempt to describe briefly these two modes of rescission and their operation under French and Swiss law.