Remedies for Breach of Contract Under the CISG

Abstract

In this essay, I survey the three main remedial categories of the Convention on the International Sale of Goods (CISG) [specific performance, money damages, and goods-oriented remedies such as rejection and cure] from the vantage point of the economic literature on contract remedies, and discuss whether the rules set by the CISG are economically suitable for the particular transactions it governs—that is, long-distance and cross-border transactions, which are characterized by a different configuration of relative transaction costs than purely domestic exchanges. The central theoretical premise of the essay that is that while the economically optimal arrangement with respect to contract remedies is a second-best matter about which it is difficult to generalize, it is possible to draw some distinctions between long-distance and short-distance transactions and between in-border and cross-border transactions, and to develop generalizations about which remedies are relatively best suited to which contracts. A subsidiary premise is that CISG remedial rules are only default rules; and that private parties engaging in these transactions can and should contract into the remedial arrangements that are best suited to their particular arrangements. At the end of the paper, I draw some comparisons to issues raised by the burgeoning practice of electronic contracting.