UNIDROIT Principles of International Commercial Contracts - Research Paper Example

 TABLE OF CONTENTS Introduction 2 Background to the UNIDROIT Principles 3 Hardship Principle 5 Force Majeure 6 Foreseeability 7 Case Law on Foresee Ability 9 Significant Changes in the Value of Performance 10 Rights and Obligations of the Parties 12 Consequences of Hardship 13 Case – law Relating to Hardship 14 Issues Related to Performance 17 Obligations under UNIDROIT Principles 20 The Hardship Approach in the UNIDROIT Principles of International Commercial Contracts Introduction The UNIDROIT Principles make a valiant attempt to ensure fairness in international contracts. To this end, it states categorically that the parties to a contract should act in good faith and with fair dealing. In fact, it considers this to be a general duty of the contracting parties. In addition, these Principles impose certain standards of reasonable behaviour, in several specific instances. The UNIDROIT Principles are not binding instruments, and their acceptance depends on their persuasive authority. These Principles are not backed by any government. The Preamble to these Principles explains the chief instances, in which they could be applied (International Institute for the Unification of Private Law, 1994). The UNIDROIT permits the contracting parties to include its principles, in their contracts. However, such inclusion requires certain important conditions to be met by the parties. First, the contracting parties should agree to be bound by the UNIDROIT principles. Second, the parties have to agree to be bound by general principles of law; and the practices of international trade. Third, parties can invoke these principles, if the agreed upon national law, proves to be uncertain (Sharif 2001: 193). Contracts do not have an absolute binding character; and the UNIDROIT Principles introduce the concept of hardship, which occurs due to a fundamental alteration of the equilibrium of a contract. Such hardships or exceptional events have been addressed in these Principles. In international trade circles, the term hardship has come into vogue, and is generally accepted by the various legal systems of the world. Contractual notions, such as frustration of purpose, Wegfall der Geschäftsgrundlage, imprévision,and eccessiva onerosità sopravvenuta had been accepted in international contracts, from quite some time. All these concepts promote the notion of hardship, and it is the common practice to include a hardship clause in international contracts. Not surprisingly, this term was adopted by the drafters of the UNIDROIT Principles (International Institute for the Unification of Private Law, 1994). Background to the UNIDROIT Principles In the year 1971, the UNIDROIT decided to prepare a draft regarding the codification of international trade law. Its Governing Council established a Working Group, in the year 1980; which consisted of European academics, judges and members of the civil service. The members of this Working Group served in their personal capacity and as the agents of their government. Thus, diplomatic formality was far removed from the UNIDROIT; and this enabled it to establish laws that were most suitable. Prior to enacting the draft code, the Working Group conducted bi – annual meetings, and circulated its drafts amongst the acknowledged experts of the academic and business circles (Slater, 1998: 240). In 1994, the Governing Council approved the publication of the UNIDROIT Principles of International Commercial Contracts. It initially, published these Principles in English and French. Subsequently, they were published in other languages. The UNIDROIT Principles do not have the legal standing of an international treaty; consequently, they are not legally binding, on the contracting parties, as is the case with the CISG (Slater, 1998: 240). Therefore, the application of the provisions of the UNIDROIT is not compulsory, for any nation. Nevertheless, the Preamble to the UNIDROIT describes the occasions, wherein its Principles can be invoked. There has been a contention that its Principles could be employed to supplement or interpret the extant international law instruments, especially the lacunae in the CISG. The objective behind these Principles was to provide comprehensive legislation, for international commercial contracts. The UNIDROIT Principles utilise general terminology, which has no reference to the language or legal system of any particular nation (Slater, 1998: 240). Moreover, these Principles incorporate rules that are common to every legal system; and some of these rules have been seen to be quite innovative. The principles of the CISG, which constitute the de facto international treaty, had a major influence on the Working Group, while it was drafting the UNIDROIT Principles. As such, some provisions of the CISG were incorporated into these Principles. However, the members of the Working Group realised that the international treaties and conventions are limited in some areas. This feature helped the Working Group to draft new and innovative principles that extend beyond those limitations of the CISG and other international treaties. As such, it had been the desire of the UNIDROIT to offer the best solution for disputes arising in international contracts (Slater, 1998: 241). Hardship Principle Article 6.2.2 provides the definition of hardship in contracts. It specifies the nature of the burden; and the other factors that have to be in existence, in order to render it legally relevant. Thus, hardship is a complicated notion in claims. Under this definition, a legal hardship is determined, by means of an analysis of the events that serve to alter the basic essence and balance of the contract. It also takes into consideration the loss caused to a party, on account of increased costs, due to an alteration, in the very purpose of the contract. Other events include a drastic reduction in profits to one of the parties. A fundamental alteration of a contract is established, when the costs or value of performance experience a change that is in excess of 50% of the predicted values. Such change is termed as a fundamental alteration of the equilibrium of the contract (Perillo1997: 23). The CISG fails to address the doctrine of hardship in international contracts; however, the Principles provide three exclusive articles, in this area. Article 6.2.1deals with the principle of pacta sunt servanda, by considering the performance of the contract by a party. Article 6.2.2 provides the definition of hardship. It states that if the equilibrium of the contract is fundamentally altered, then there is hardship (Slater, 1998: 241). Circumstances Leading to Hardship Force Majeure The hardship provisions of the UNIDROIT can be invoked, if the equilibrium of the contract is fundamentally altered, on account of unforeseen events of a political, economic, legal or technical nature. These events should significantly affect the economy of the contractual relations and make the execution of the contract, much more difficult or far more burdensome. The options available to the parties, in such instances are either renegotiation or termination of the contract. However, the factors that contribute to such hardship must be external and beyond the control of the parties (Block, 2009). If the parties do not arrive at a conclusion during renegotiations, they can terminate the contract. Events that render the contract, impossible to perform, are known as force majeure events. Under such circumstances, the execution of the contract has to be suspended; and the parties to the contract are exempted from any breach of contract (Block, 2009). Foreseeability Foreseeability assumes great importance in issues relating to hardship. The cardinal principle that holds sway in such situations is that all foreseeable events have to be dealt with in the contract. In the absence of such provisions in the contract, the party that had been put to loss would be required to bear the burden of that event. The chief determining factor is whether the event was so improbable that reasonable parties would not make provisions for it (Perillo1997: 24). This situation can be illustrated by the following examples. If there is a contract for the supply of crude oil, from a nation, which is located in a politically unstable region; then a sudden and exorbitant increase in the price of crude oil, would not constitute an unforeseeable event. Furthermore, consider a contract of sale with a country, whose currency had been experiencing a gradual depreciation. If there is 78% depreciation in that country’s currency, within a month of the formation of the contract of sale, then such depreciation would constitute an unforeseeable event. This would constitute legally relevant hardship (Perillo1997: 24). Hardship can be invoked only in the event of the occurrence of unforeseen circumstances. The provisions of the hardship doctrine are complex. Foreseeability is the determining factor in hardship claims. As a general rule, parties are required to make provision for all the foreseeable events that can influence their contract. If they fail to follow this all important tenet, then the disadvantaged party would have to bear the burden of such failure. It is very important to determine, what is foreseeable in contracts, and this issue was addressed in several arbitral awards. These awards had been in relation to claims of hardship in international contracts. Some of these awards were in the CMS Gas v. Argentina, and in particular Himpurna California Energy Ltd. (Bermuda) v PT (Persero) Perusahaan Listruik Negara (Indonesia). In claims of hardship in international commercial contracts, certain circumstances have been deemed to be foreseeable (Fucci, 2006). Some of these are: first, a significant change in the market price of products. Second, general economic circumstances in a country, which prove to be unfavourable. Third, changes in the value of the currency of a nation, irrespective of the severity of such variation. Fourth, failure on the part of a central bank to permit payment in foreign currency, when foreign exchange control regulations were in force at the time of entering the contract. Fifth, covert or overt armed engagements, between countries that have been on inimical terms from quite some time (Fucci, 2006). Case Law on Foresee Ability In the Indonesian Himpurna case, a government owned power company, the PLN, staked a claim of hardship based on altered circumstances, in the year 1997. The PLN’s contention was that these circumstances were unforeseeable. The tribunal opined that Indonesia had frequently been distressed on account of economic crises. As an example, the tribunal cited the 1966 economic crisis in Indonesia, which had witnessed 1500% inflation in just a year (Himpurna California Energy Ltd. (Bermuda) v PT (Persero) Perusahaan Listruik Negara (Indonesia), 1999). Consequently, any long term commercial contract would necessarily have to take into cognisance, the prevalence of economic crises in Indonesia. As such, the tribunal held that the parties to a commercial contract were precluded from contending that they had been unaware of the risks arising from macroeconomic adversities. It further stated that although, the effects of such adversity may be extraordinary, nevertheless, such effects were well within the contemplation of the parties to a commercial contract (Himpurna California Energy Ltd. (Bermuda) v PT (Persero) Perusahaan Listruik Negara (Indonesia), 1999). In CMS Gas v Argentina, the defendant Argentina had contended that it had encountered unforeseeable difficulties, in the performance of the commercial contract. This stance of the Argentine government was set aside by the tribunal, which declared that the difficulties in question were foreseeable. Specifically, Argentina had vehemently opposed any adjustment of the tariff that would serve to neutralise the adverse effects, resulting from inflation and currency value (CMS Gas Transmission Company v. Argentine Republic, 2007). The basis for such contention, from the Argentine perspective, was that tariff included not only country but also currency risks. The tribunal objected to this argument, and held that Argentina had admitted, at the same time that the relevant risk had been foreseen and was foreseeable (CMS Gas Transmission Company v. Argentine Republic, 2007). Significant Changes in the Value of Performance The events that alter equilibrium include reduction in the value of performance to be received by a party. Moreover, these events must have transpired after the contract had been concluded; and the risk due to these events should not have been assumed by the disadvantaged party contracts (Slater, 1998: 242). An event that fundamentally alters the equilibrium of a contract can take place in two ways. First, on account of a significant increase in the cost of performance; and second, a substantial decrease in value of performance. These events can invoke the hardship provisions. The Comment succeeding Article 6.2.2 states that a fundamental alteration can be deemed to exist, if there is 50% or greater monetary alteration in the contract. Furthermore, Article 6.2.3 manages the effects of hardship. Under this Article, the disadvantaged party can request a renegotiation of the contractual terms and conditions (Slater, 1998: 242). This requires the intending party to inform the other party of the basis of hardship. However, such request does not relieve the disadvantaged party from its duty to discharge its contractual obligations. In the event of the contracting parties, being unable to arrive at an agreement, during the renegotiations; they can approach a court to resolve the matter. If the court feels that there is hardship, then it can terminate the contract, on terms that are to be determined; or it can adapt the contract, in order to restore its equilibrium. This has been provided in Article 6.2.3 (Slater, 1998: 242). The fundamental alteration of equilibrium is defined by the Commentary to Article 6.2.2 of the UNIDROIT Principles. It is obvious that these Principles adopt a lenient standard for determining the fundamental alteration of equilibrium in a contract. The standard adopted by the UNIDROIT Principles is less stringent than the other legal systems, of the second category. The standards adopted by these Principles are patently wider in perspective, in comparison to the provisions of the legal system of the first category that deal with the consequences of hardship, as well as the event that results in hardship. This constitutes one of the provisions of the UNIDROIT, which was deemed to be especially appropriate, by the drafters of the UNIDROIT, in the context of international contracts (Horn, 2004: 464). According to Article 6.2.1, the doctrine of hardship cannot be invoked, until and unless there is a fundamental alteration in the equilibrium of the contract. Thus, a mere change in the circumstances cannot influence the obligation to perform the contractual duties (International Institute for the Unification of Private Law, 1994). Rights and Obligations of the Parties Any of the parties to a contract, has the right to ask for a negotiation of the contractual terms, if that party finds it extremely difficult to continue with performance. Such negotiation will relate to modifying the contract to conform to the altered situation. Although, such requests have to be preferred in a timely manner, the occurrence of delay in making such requests does not automatically preclude it (Article 6.2.3. UNIDROIT Principles). Proper communication is accorded paramount importance, in the UNIDROIT Principles. Consequently, any request for negotiation of contractual terms, should clearly specify the reasons underlying that request. The only exception permitted, in this context, is when the grounds for making that request are obvious (Article 6.2.3. UNIDROIT Principles). A very important aspect of such requests, relates to the mala fide intent of a party to a contract, in seeking negotiation. In such cases, the requesting party will be held liable for the damage causes to the other party (Article 2.15. UNIDROIT Principles). In the absence of an agreement between the parties to the contract, in the context of negotiation of contractual terms, recourse may be had to a court of law (Article 6.2.3. UNIDROIT Principles). Consequences of Hardship As such, fundamental alteration of the equilibrium of a contract gives rise to hardship. Such fundamental alteration of equilibrium, results due to an increase in the cost of performance of the contract; or a diminution in the value of the performance that a party to the contract receives. Hardship also arises in four instances. First, if the disadvantaged party comes to know about the events after the conclusion of the contract. Second, if the disadvantaged party could not have reasonably taken into account the events at the time of the conclusion of the contract. Third, if the events were beyond the control of the party; and lastly, if the risk involved in the events had not been assumed by the disadvantaged party (Falla, 2005: 519). Thus, hardship emerges when there is a fundamental alteration in the equilibrium of the contract. Hardship is unlike impossibility, because it does not automatically invoke the juridical doctrine of force majeure. Hardship can be invoked, only if the disadvantaged party can prove that the events were beyond its control; and that the risk had been unpredictable (Perillo1997: 24). An extremely pertinent doubt arises in such situations, namely, whether a party to a contract that claims hardship, can discontinue performance, till such time as the contract is altered. This query stands clarifies by the declaration that a disadvantaged party cannot discontinue performance, merely on the grounds that it had made a request for renegotiation. Any suspension of performance in a contract, per se, entails the existence of unusual conditions (Article 6.2.3. UNIDROIT Principles). The court is empowered to terminate or revise a contract, or restore its equilibrium, if it comes to the conclusion that there is legally redressable hardship. Substantial leeway has been provided to the judiciary, in this regard. The termination of a contract by a court will be as per the terms determined by the court, as being equitable. There is no compulsion upon the courts to revise a contract, by effecting a price adjustment (Article 6.2.3. UNIDROIT Principles). Case – law Relating to Hardship In Peckham v Industrial Securities Co, the court had appointed a receiver to confiscate the assets of the seller. It also directed the receiver to seize the goods, which were under the contract between the parties. It was held by the Delaware Supreme Court that the seller can be excluded from the specific performance of the contract. This exclusion was granted because of the appointment of the receiver was wrongful (Peckham v. Industrial Sec. Co , 1921). In Lowenschuss v Kane, a court issued temporary injunction orders, in order to stop the delivery of shares by the buyer. This injunction order was issued against the buyer for his alleged infringement of antitrust and securities law provisions. It was held by the Court of Appeals for the Second Circuit that buyers had to be excused if there did not violate any law. In addition, they were exempted from being made liable for the breaches ( Lowenschuss v. Kane , 1975). In Canadian Industries Alcohol Co v Dunbar Molasses Co, the defendant promised to supply 1.5 million gallons of blackstrap molasses to the buyer. The defendant failed to supply the molasses, due to fact that the refinery did not produce the required quantity of molasses. The court ruled that the defendant company could not be absolved of its responsibility to supply molasses, in quantities specified in the contract (Canadian Industrial Alcohol Co. v. Dunbar Molasses Co , 1932). In arriving at this decision, the court ruled that the defendant would have been relieved, if the refinery had been destroyed, or the output had been reduced on account war or failure of the sugar crop. Moreover, there had been no specific clause relating to special circumstances in the contract (Canadian Industrial Alcohol Co. v. Dunbar Molasses Co , 1932). The provisions of the UNIDROIT Principles do not cover financial impediments. The American law does not provide any excuse to financial impediments. The case law regards financial impediments as subjective and not objective impossibility. Under the law, subjective impossibility does not receive any excuse. The risk of financial ability to perform is the basic feature in all contracts. It can be excused only through a decree in bankruptcy proceedings. It is difficult to believe that this tradition does not hold good in international trade. Consequently, the parties to a contract control the financial health of the contract (Perillo, 1997: 17). Thus, they are to be held liable for financial impediments. The Principles state that the party to the contract cannot be reasonably expected to predict the impediment. The aspect of foreseeability is a complex issue. Unforseeability can be defined as an event, whose occurrence was so remote that reasonable parties had no necessity to specifically make allowances for its occurrence. Moreover, such an event, on transpiring, would have had a significant impact, and if its likelihood had been more likely, then the parties to the contract would have entered into negotiations over that event (Perillo, 1997: 18). In International Paper Co. v Rockefeller the court ruled that stoppage of supply of wood, on account of a steep increase in costs, did not constitute an adequate reason for non – performance. As such, breach of contractual terms, due to delay by one of the parties to the contract; and the occurrence of an impediment, subsequently, cannot constitute an excuse for non – performance (International Paper Co. v. Rockefeller , 1914). In ICC Award No 2216, 1974, a Norwegian Company refused to accept crude oil from the other party to the contract. The reasons for refusal were stated as the steep increase in the cost of crude oil and significant variation in the currency. It was decided that there was no force majeure event in this case (ICC Award No 2216, 1974). Furthermore, in ICC Award No 2478 of 1974, a Romanian company refused to supply gasoline. The reasons behind this refusal were the escalation in the price of oil and currency rate fluctuations. Once again it was held that there was no force majeure event, and the seller was condemned (ICC Award No 2478, 1974). Issues Related to Performance The application of the hardship provisions of the UNIDRIOT Principle should not be utilised as a defence against the specific performance of contracts that are regulated by the CISG. The exception to this norm arises, only when the parties to a contract expressly declare that the UNIDROIT Principles will be the applicable law, in respect of excuses for specific performance. In such events, the provisions of the CISG ought not to prevent the application of the excuses, specified in the UNIDROIT Principles (Carlsen, 1998 ). The combined application of Article 7.2.2 of the UNIDROIT, along with the other provisions of the CISG, would result in an anomalous situation, wherein the disadvantaged party would be permitted to forego its obligation to perform, while the remedy for damages, under the CISG would be in force (Carlsen, 1998 ). The UNIDROIT Principles contain the chapter with regard to non-performance of a contract. This chapter contains the provisions that deal with the doctrine of force majeure. Furthermore, the chapter on performance of a contract deals with the concept of hardship. If it becomes impossible to perform a contract, then that contract will not be performed. The exoneration or otherwise of non-performance constitutes the basis for a judgement that entails redressal, and this issue is addressed under the category of non – performance (Perillo, 1997: 16). The damages for non – performance will be remedied under the provisions available in the chapter on non – performance. If performance becomes burdensome, its consequences are treated under the provisions of performance. The provisions that deal with force majeure are rigid. An excuse is admissible, under provisions of force majeure, only it is absolutely impossible to perform the contract. In other words, force majeure in a contract is established, only if there is some impediment that is beyond the control of the party. Moreover, the party should not have reasonably expected that such an impediment would occur (Perillo, 1997: 16). Thus, force majeure is an impediment that is beyond the party’s control. Contracts that do not make provisions for hardship have to take recourse to the law of agreement. In the majority of the nations, there are legal interventions for effecting adjustments for hardship, in contracts. It is essential to consider the applicable legal provisions, in respect of such hardship, whilst drafting or reviewing contracts; whenever these contracts do not make provision for hardship. The cardinal principal in contracts is that contractual provisions can be at the behest of the parties to the contract. However, these conditions cannot infringe the provisions of public policy or the extant legislation (Fucci, 2006). Moreover, the UNIDROIT Principles can be resorted to, in order to determine the appropriate rate of interest to be applied in respect of the monetary obligations of a party to a contract. Such use of the UNIDROIT Principles is apposite in the context of commercial contracts that are governed by the CISG (Garro, 1995: 1157). A course of action, wherein the UNIDROIT Principles are resorted to, is preferable to applying the law that is derived from the private international law of the forum. Although, Article 78 of the CISG provides a right to interest to the obligee, in a contract; it fails to provide the rate of interest to be applied to monetary obligations (Garro, 1995: 1158). This shortcoming is addressed by Article 7.4.9(2) of the UNIDROIT Principles; which provides the applicable rate of interest, in such instances. According to these Principles, the interest rate to be applied should be the average bank short-term lending rate to prime borrowers. If such a rate of interest cannot be ascertained, then the rate specified by the domestic law of the state, where the payment has to be made, is to be applied (Garro, 1995: 1158). In this manner, the UNIDROIT Principles fill the lacunae in the provisions of the CISG, wherever the latter fails to provide a specific remedy. Consequently, the UNIDROIT Principles play an important role in international contracts. These Principles can be utilised to determine the occurrence of a fundamental breach of contract, and other issues, like the conditions under which a buyer is entitled to pay by check. Another instance, where these Principles can be invoked, is in order to determine, when the seller is entitled to receive payment in a foreign currency; and when payments effected by the transfer of funds, become effective (Garro, 1995: 1158). Obligations under UNIDROIT Principles The contention that the UNIDROIT Principles can be employed, in order to interpret queries that have been explicitly deemed to be beyond the purview of the CISG, is fallacious. In fact, the Principles supplement such questions. The task of the CISG is to encompass international contracts relating to the sale of goods. All the same, the CISG excludes several types of sales, despite the fact that those sales can be categorised as international sales. At this juncture, the UNIDROIT Principles come to the rescue, and fill these gaps in the CISG (Garro, 1995: 1159). Chapter 5 of the UNIDROIT Principles addresses the validity of contracts and its stipulations. However, it does not cover the passage of title in goods, in international commercial contracts. The rules pertaining to the substantive validity of contracts have been excluded from the CISG; and this has been the situation from the time that the UNICTRAL had commenced discussion. It is important to note that it had never been contested that validity should fall under the ambit of the UNIDROIT Principles (Garro, 1995: 1159). The CISG do not deal with sales of stock and negotiable instruments. It is also inapplicable to the sale of ships, vessels, aircraft, electricity, and sales by authority. It expressly excludes the sale of consumer goods and sales that mainly consist of services. Furthermore, the CISG fails to cover several issues that pertain to international contracts. Some instances of such exclusions are the issues pertaining to the validity of a contract and its specifications; ownership in the goods; and the liability of the seller for death or personal injury (Garro, 1995: 1159). The doctrine of good faith emerges when the fundamental purpose of the contract is frustrated. Thus, frustration of the principal purpose, for which the contract had been formed, leads to the emergence of the principle of good faith. The principle of good faith proscribes the creditor from inequitably affecting the interests of the debtor (Falla, 2005: 520). The most appropriate example of this principle is provided by the English Coronation cases. These cases involved the provision of suitable accommodation, for viewing the Coronation of King Edward VII. Due to illness, this ceremony was postponed, and the contracts for provision of accommodation were deemed to have been annulled, because it was not possible to view the ceremony. Some of these cases were Krell v Henry; Chandler v Webster and Herne Bay Steamboat Co v Hutton. Contractual obligations require strict compliance by the parties to the contract. Amendment in Respect of the Rights of the Buyer The buyer's right to repair is not automatically precluded, just because such repair would cause substantial difficulty to the seller. An amendment was made to this effect, in the Vienna Diplomatic Conference, in relation to the principles of UNIDROIT declaring the buyer’s rights. The UNCITRAL, as well as the Vienna Diplomatic Conference were reluctant to adopt proposals that took into consideration, the buyer’s right to demand substitute delivery. The delegates to the Vienna Diplomatic Conference were of the opinion that the rights of the seller were adequately safeguarded by the fundamental breach requirement. It was their intention to ensure that the buyer’s interests, in the context of the right to substitute delivery were to supersede the rights of the seller (Koch, 2001). The buyer is entitled to demand repair, and this does not necessitate a fundamental breach. However, this right could be curtailed to some extent, due to the outcome that it could have for the seller. Significantly, the delegates to the Vienna Diplomatic Conference adopted an amendment that ensured that the buyer’s right to repair was not precluded, for the reason that such right to repair would cause substantial difficulty to the seller (Koch, 2001). In the majority of the cases, substitute delivery entails significantly greater cost to the seller, in comparison to avoidance of the contract. Hence it is reasonable to assume that if the effects of substitute delivery are not taken in to consideration, while deciding fundamental breach; no importance should be accorded to the hardship experienced by the seller, due to avoidance of contract (Koch, 2001). Conclusion The fundamental objective of the UNIDROIT Principles is to establish a set of rules that can be employed anywhere in the world, in respect of commercial contracts. These set of rules have been designed to be independent of any particular country’s legal system. Moreover, these rules will be applicable to every contract, irrespective of the economic and political conditions of the nations, in which they are to be applied. These Principles were drafted in plain language, and it was meticulously ensured that the legal terminology of any particular legal system was not used, during the process (International Institute for the Unification of Private Law, 1994). This distinctive feature of the UNIDROIT Principles signifies its international character. As such, there is no reference to any legal system, regarding the rationale behind the provisions of these Principles. However, in instances, wherein the provisions of the UNIDROIT had been adopted, more or less in a verbatim manner from the CISG, an explicit reference had been provided (International Institute for the Unification of Private Law, 1994). Thus, it can be concluded that the chief objective of the UNIDROIT is to curtail legal uncertainty in international contracts, by the avoidance of partiality towards any particular legal system or contracting norm. Its Provisions are flexible in nature and can be amended to suit the changing situation, resulting from the technological and economic developments that engender change in cross – border trade practices. References Lowenschuss v. Kane , 520 F.2d 255 (Second Circuit 1975). Article 2.15. UNIDROIT Principles. (n.d.). Article 6.2.3. UNIDROIT Principles. (n.d.). Block, G. (2009, May 13). Role of Arbitration and the Change in the Price of Energy: Adjustment Clause, Indexation, Hardship Clause and Force Majeure in Energy Contracts. Retrieved December 23, 2009, from http://74.125.153.132/search?q=cache%3AZ4WW9fJcWOYJ%3Awww.arbitration-adr.org%2Fdocuments%2F%3Fi%3D52+mechanism+and+the+circumstances+required+to+implement+the+hardship+Unidroit+principles&hl=en Canadian Industrial Alcohol Co. v. Dunbar Molasses Co (NY 1932). Carlsen, A. (1998 , December 14). Can the Hardship Provisions in the UNIDROIT Principles Be Applied When the CISG is the Governing Law? Retrieved December 23, 2009, from http://www.cisg.law.pace.edu/cisg/biblio/carlsen.html Chandlerv. Webster, 1 KB 493 (King's Bench 1904). CMS Gas Transmission Company v. Argentine Republic, ICSID Case No. ARB/01/8 (2007). Falla, D. L. (2005). Good Faith in Commercial Law and the UNIDROIT Principles of International Commercial Contracts. Penn State International Law Review , 23 , 507 – 520. Fucci, F. R. (2006, April). Hardship and Changed Circumstances as Grounds for Adjustment or Non-Performance of Contracts. Retrieved December 24, 2009, from American Bar Association Section of International Law: http://www.aporter.com/resources/documents/Hardship_Excuse_Article.pdf Garro, A. M. (1995). The Gap-Filling Role of the UNIDROIT Principles in International Sales Law: Some Comments on the interplay between the Principles and the CISG. Tulane Law Review , 69, 1149 – 1159. Herne Bay Steamboat Co v. Hutton, 2 KB 683 (King's Bench 1903). Himpurna California Energy Ltd. (Bermuda) v PT (Persero) Perusahaan Listruik Negara (Indonesia) (1999). Horn, N. (2004). Arbitrating foreign investment disputes. Volume 19 of Studies in transnational economic law. Kluwer Law International. ICC Award No 2216 (1974). ICC Award No 2478 (1974). International Institute for the Unification of Private Law. (1994). Principles of International Commercial Contracts. Retrieved December 23, 2009, from http://www.unidroit.org/english/principles/contracts/principles1994/1994fulltext-english.pdf International Paper Co. v. Rockefeller , 146 N. Y. Supp. 371 (1914). Koch, R. (2001, March 22). The Concept of Fundamental Breach of Contract under the United Nations Convention on Contracts for the International Sale of Goods (CISG). Retrieved December 24, 2009, from Pace Law School Institute of International Commercial Law : http://cisgw3.law.pace.edu/cisg/biblio/koch-46.html Krell v. Henry, 2 KB 740 (Kings Bench 1903). Peckham v. Industrial Sec. Co , 31 Del. 200, 113 A. 799 (1921). Perillo, J. M. (1997). Force Majeure and Hardship under the Unidroit Principles of International Commercial Contracts. Tulane Journal of International and ComPtive Law , 5, 5 – 28. Sharif, A. (2001). Contemporary Affairs in International Contracts: A Brief Discourse on Unidroit. New England International and Comparative Law Annual , 7, 193 – 197. Slater, S. D. (1998). Overcome By Hardship: The Inapplicability Of The Unidroit Principles' Hardship Provisions To CISG. Florida Journal of International Law , 12(23), 238 – 242. UNCITRAL Arbitration Rules . (1976). UNIDROIT Principles of International Commercial Contracts. (2004). United Nations Convention on Contracts for the Internatinal Sale of Goods (CISG). (1980). Read More