Price Reduction in the System of Contractual Remedies

Abstract

Abstract: This article focuses on two aspects regarding the contractual remedy of price reduction. First, it analyses whether price reduction as a remedy can be used in case of breach of any type of contract or should be limited to the more traditional areas of application, such as a breach of sales contract, contract for work, or lease contract. At the moment, both approaches are represented in legal traditions of various countries and these differences are also present in international instruments. The authors suggest that allowing price to be reduced in case of breach of any type of contract has some significant advantages. Second, the article examines which remedies can be used cumulatively with price reduction and which remedies preclude it. This issue is discussed in the light of breach of both types of contracts - contracts for non-successive performance and contracts for successive performance. The authors are of the opinion that distinct differences exist in respect of rules governing cumulation of price reduction and other remedies contingent on the nature of the contract (non-successive/successive). The analysis of the aforementioned questions is based primarily on the regulation of the Draft Common Frame of Reference (DCFR), Common European Sales Law (CESL), German Civil Code (BGB), and the Estonian Law of Obligations Act.