FUNDAMENTAL BREACH OF CONTRACT AND DEBTOR’S CONDUCT: WHAT’S FAULT GOT TO DO WITH IT?

Abstract

Although an autonomous legal institute of international contract law, the seeds of the doctrine of fundamental breach of contract may be followed to the ‘seriousness’ requirement present in comparative contract law. Notwithstanding its autonomous notion, the article examines the role of debtor’s conduct in finding a case of fundamental breach. Comparative, international and European legal rules and practice are hence analyzed by putting emphasis on the role of debtor’s conduct. In terms of current legal rules, one may certainly draw a conclusion that debtor’s conduct, especially where it amounts to a fault of a greater degree, makes the finding of a case of fundamental breach of contract more probable. Available case law demonstrates the continuous relevancy of debtor’s fault for finding that fundamental breach has occurred. Such a relevancy, in the view of the authors, is inherent to the morality of promising and cannot be bypassed by introducing a neutral concept of fundamental breach of contract. Analyzed case law shows that courts and arbitrators do consider debtor’s fault; although by omitting its express mentioning. The authors contend that debtor’s fault does and should play a role for the purposes of establishing a uniform notion of fundamental breach of contract. At the end of the day, this is an inevitable consequence of the inherent morality of contractual obligations.