The place of performance of the obligation will be that expressly agreed by the parties in the contract. Even if such a circumstance is not expressly provided, rules on contract interpretation, including commercial usages, lead very often to conclude an implied term of performance in a determined place. Thus, in relation with a pecuniary obligation, “cash clear”, “cash against invoice“ and “cash before delivery” clauses usually imply that payment must be made at the seller's place of business. Likewise, when payment must be made against delivery of goods or documents in international sales, the place of payment shall be the place of delivery [Section 28 of the Sales of Goods Act of 1979; Section 29 of the Sale of Goods Act of Antigua and Barbuda; Section 29 of the Sale of Goods Act of Montserrat; Section 29 of the Sale of Goods Act of Bahamas; Section 29 of the Sale of Goods Act of Trinidad and Tobago; Section 30 of the Sale of Goods Act of Belize; Section 28 of the Sale of Goods Act of Jamaica; Article 1.929 of the Colombian Civil Code; Article 1.087 of the Costa Rican Civil Code; Article 352 (a) of the Cuban Civil Code; Article 1.651 of the French and Dominican Civil Code; Article 1.825.2 of the Guatemalan Civil Code; Article 1.426 of the Haitian Civil Code; Article 7:26 of the Dutch and Suriname Civil Code; Article 1.436 of the Honduran Civil Code; Articles 2.084 and 2.294 of the Mexican Civil Code; Article 2.661 of the Nicaraguan Civil Code; Article 360 of the Nicaraguan Commercial Code; Article 1.271 of the Panamanian Civil Code; Article 773 of the Panamanian Commercial Code; Article 1.389 of the Puerto Rican Civil Code; Article 1.443 of the Saint Lucian Civil Code; Article 299 of the Saint Lucian Commercial Code; Article 1.528 of the Venezuelan Civil Code; Article 57.1 (b) CISG].

If the contract does not specify or give any indication as to the place of performance, a subsidiary rule, acting as an interpretative or integration rule to fill in the gap seems appropriate. The first paragraph of Article 6.1.1 of the OHADAC Principles makes the distinction, on this subject, between pecuniary and non-pecuniary obligations.

There is a wide diversity of solutions in Caribbean legal systems for pecuniary obligations. On the one hand, most of them provide that pecuniary obligations must be performed in the creditor's place of business [e.g. Article 1.083 of the Saint Lucian Civil Code; Article 57.1 (a) CISG; Article 6.1.6 (1) (a) UP; Article III-2:101 (1) (a) DCFR], determined in some cases at the time of conclusion of the contract [Article 7:101 (1) (b) PECL; Article 125.1 CESL. This rule is also usual in common law countries] and in other cases at the time of payment (e.g. Article 236.1 of the Cuban Civil Code). On the other hand, most civil law systems prefer the opposite rule, inspired by the favor debitoris principle, which leads to the debtor's place of business (Article 778 of the Costa Rican Civil Code; Article 451 of the Costa Rican Commercial Code; Article 1.646 of the Colombian Civil Code; Article 1.247 of the French and Dominican Civil Code, maintained in Article 191 of the Proposals for the Reform of French Law on Obligations of 2013; Article 1.398 of the Guatemalan Civil Code; Article 1.033 of the Haitian Civil Code; Article 1.436 of the Honduran Civil Code; Article 2.082 of the Mexican Civil Code; 2.031 of the Nicaraguan Civil Code; Article 1.058 of the Panamanian Civil Code; Article 1.125 of the Puerto Rican Civil Code; Article 1.295 of the Venezuelan Civil Code).

The OHADAC Principles have opted, in letter (a) of paragraph 1, for the rule that considers that the place of performance of pecuniary obligations is that of the creditor's place of business at the time the contract is concluded. This choice is more in line with international trade practices and the more common means of payment. Moreover, the determination of this place at the time of conclusion of the contract meets the need for predictability as well as the contractual equilibrium that recommends that the obligor be able to anticipate expenses inherent to the payment. Although this rule does not converge with contrary presumptions in most civil law systems, its application is not controversial, given the non-mandatory character of this question. The choice of the OHADAC Principles by the parties shall imply the inclusion of this rule in the contract, being a purely factual circumstance that does not entail interpretative difficulties.

There is a greater unanimity in determining the place of performance of non-pecuniary obligations where this place cannot be inferred from the contract. It is presumed to be the place where the party obliged to perform has its place of business (Article 1.646 of the Colombian Civil Code; Article 778 of the Costa Rican Civil Code; Article 451 of the Costa Rican Commercial Code; Article 1.247 of the French and Dominican Civil Code, maintained in Article 191 of the Proposals for the Reform of the French Law on Obligations of 2013; Article 1.398 of the Guatemalan Civil Code; Article 1.033 of the Haitian Civil Code; Article 6:41 of the Dutch and Suriname Civil Code; Article 1.436 of the Honduran Civil Code; Article 2.082 of the Mexican Civil Code; Article 2.031 of the Nicaraguan Civil Code; Article 1.058 of the Panamanian Civil Code; Article 1.125 of the Puerto Rican Civil Code; Article 1.083 of the Saint Lucian Civil Code; Article 1.295 of the Venezuelan Civil Code; Article 31 (c) CISG; Article 6.1.6 (1) (b) UP; Article 7:101 (b) PECL; Article III-2:101 (1) (b) DCFR]. Letter (b) of paragraph 1 of this Article follows this rule generally accepted and fully consistent with the contract equilibrium. In civil law systems, however, there are some special rules about obligations on specific goods, which point to the place of situation, production or delivery of the goods to the bearer [Article 1.646 of the Colombian Civil Code, Article 778 of the Costa Rican Civil Code; Article 1.247 of the French and Dominican Civil Code Article 236 of the Cuban Civil Code; Article 1.398 of the Guatemalan Civil Code; Article 1.033 of the Haitian Civil Code; Article 6:41 of the Dutch and Suriname Civil Code; Article 1.436 of the Honduran Civil Code; Article 2.083 of the Mexican Civil Code; Article 2.031 of the Nicaraguan Civil Code; Article 1.050 of the Panamanian Civil Code; Article 758 of the Panamanian Commercial Code; Article 1.125 of the Puerto Rican Civil Code; Article 1.083 of the Saint Lucian Civil Code; Article 1.295 of the Venezuelan Civil Code; Articles 31 CISG]. In any case, these special rules do not question the general rule, because to a large extent, as stated in Article 6.1.1, the subsidiary rules are only applicable where the place of performance cannot be inferred from the rules on contract construction or from trade practices.

Paragraph 2 states an interpretative rule in cases where the current place of business or residence cannot be determined because the party has several places of business or residences. The place of business or the residence most closely connected at the time of conclusion of the contract will be applied [Articles 7:101 (2) PECL; III-2:101 (2) (a) DCFR; and 125.2 CESL].

If a party changes its place of business, for economic reasons, performance should be at the new place of business, providing that that party gives sufficient notice to the other party and assumes the expenses deriving from that change, which may be justified by many reasons, including banking negotiation costs. Hence the rule stated in paragraph 3 [also included in Article 2.032 and 2.033 of the Nicaraguan Civil Code; Article 1.400 of the Guatemalan Civil Code; Article 6.1.6 (2) UP; Article III-2:101 (1) (a) DCFR].

1. Determination of the time of performance

Parties are free to establish the date or time when the contract must be performed. The performance date must be set in relation to a concrete day, week on month, and in this case, it is considered as determined. Nevertheless, the date can also refer to a concrete fact (e.g. the day after acceptance of goods), in which case it is undetermined. In both cases the time of performance will be that provided in the contract according to letter (a) of second paragraph of this Article. A similar rule can be found in Articles 6.1.1 (a) UP; 7:102 (1) PECL; and III-2:102 (1) DCFR.

It is also usual that parties provide a period of performance instead of a determined or undetermined date. Rules included in Article 1.4 of these Principles will be observed for the computation of such a period. The rule established in letter (b) of first paragraph allows the party to perform at any time within the agreed period [e.g. Article 776 of the Costa Rican Civil Code; Article 1.187 of the French and Dominican Civil Code; Article 1.282 of the Guatemalan Civil Code; Article 976 of the Haitian Civil Code; Article 1.389 of the Honduran Civil Code; Article 6.1.1 (b) UP; Article 7:102.2 PECL; Article III.-2:102 (2) DCFR; Article 165 Draft Project of reform of the French law on obligations of 2013]. This is the most common interpretation on periods or fixed terms, which are usually considered in favour of the obligor, but it is also possible, in accordance with the rules on contract interpretation under Section 1 of Chapter 4 and the terms and aim of the contract itself, to conclude that is the obligee who will set, within the agreed period, the precise date when the obligor must perform. This is the case, for example, if parties have agreed on an FOB sale.

However, sometimes parties do not decide on anything as to the time or period of performance of their obligations. In this case, default rules in Caribbean legal systems adopt different solutions leading to different results. In common law countries performance of obligations must be implemented within a reasonable time from the contract's conclusion [Article 330 (2) of the Saint Lucian Commercial Code; Section 29.3 of the Sale of Goods Act of 1979; Section 30.2 of the Sale of Goods Act Antigua and Barbuda; Section 30.2 of the Sale of Goods Act of Montserrat; Section 30.2 of the Sale of Goods Act of Bahamas; Section 30.2 of the Sale of Goods Act of Trinidad and Tobago; Section 31.3 of the Sale of Goods Act of Belize; Section 29.2 of the Sale of Goods Act of Jamaica).

The solution in civil law systems is different. In some cases, there are presumptive periods depending of the character of the obligation (to give or to do), which cover from 24 hours until one year. Thus, in commercial sales the period of delivery is fixed in some legal systems in 24 hours (e.g. Article 924 of the Colombian Commercial Code; Article 465 of the Costa Rican Commercial Code; Article 337 of the Cuban Commercial Code; Article 379 of the Mexican Commercial Code; Article 352 of the Nicaraguan Commercial Code; Article 758 of the Panamanian Commercial Code; Article 255 of the Puerto Rican Commercial Code); the most usual rule, however, points to immediate or “at present day” performance (statim debetur: Article 774 of the Costa Rican Civil Code; Article 6:38 of the Dutch and Suriname Civil Code; Article 1.013 of the Panamanian Civil Code; Article 1.212 of the Venezuelan Civil Code), generally from the time when the obligee calls for performance or, in sales contracts, at the time of delivery of the goods (e.g. Article 947 of the Colombian Commercial Code; Article 380 of the Mexican Commercial Code; Article 753 of the Panamanian Commercial Code Article 1.443 of the Saint Lucian Civil Code; Article 299 of the Saint Lucian Commercial Code). Indeed, the obligor is usually in delay after the call of the obligee for performance (Article 1.608.3 of the Colombian Civil Code; Article 295.1 of the Cuban Civil Code). Such a requirement is not consistent with efficiency in international trade, creates unnecessary procedural expenses, gives excessive discretionary power to the obligee and does not contribute to increasing legal certainty. Its rigidity is often toned down either by granting the obligor a reasonable time for performance in accordance with criteria of good faith or reasonableness (Article 2.080 of the Mexican Civil Code) or by empowering judges to determine the time of performance (Article 1.551 of the Colombian Civil Code; Article 1.901 of the French and Dominican Civil Code; Article 1.401 of the Guatemalan Civil Code; Article 1.390 of the Honduran Civil Code; Article 1.900 of the Nicaraguan Civil Code; Article 1.081 of the Puerto Rican Civil Code; Article 1.212 of the Venezuelan Civil Code).

The rule in letter (c) of the first paragraph deals with these criteria through a flexible solution that consists in considering a “reasonable time”, the openness of which is essential in the flexible and variable field of international trade. This is also the rule, with slight changes, in international texts on contract law [Article 33 c) CISG; Article 6.1.1 (c) UP; Article 7:102 (3) PECL; Article III.-2:102 (1) DCFR; Article 95.1 CESL], and it is compatible with current trends in Caribbean law.

For determining the time of performance of obligations, the relation between the obligations and the order of performance according to Article 6.1.4 must be considered.

2. Performance on one occasion or in instalments

The second paragraph is based on Article 6.1.2 of the UP and deals with performance of several obligations where parties have not agreed on a specific and precise time of performance. Consequently, if this is not the case, there is no doubt that the obligation must be performed at the time agreed upon by the parties. Where the time of performance of a severable obligation is not determined or if a period or time of performance has been determined, the question arises as to whether or not the obligor needs to fulfil its obligations completely in one step or the has the right to perform in instalments or in different steps within the agreed or reasonable period.

The proposed rule is based on premise that the obligation must be completely fulfilled once at one time. This assumption obeys the reasonable principle of contract economy. It is expressly stated for sale contracts in Article 302 (1) of the Saint Lucian Commercial Code; Section 31 of the Sale of Goods Act of 1976; Section 32 of the Sale of Goods Act of Antigua and Barbuda; Section 32 of the Sale of Goods Act of Montserrat; Section 32 of the Sale of Goods Act of Bahamas; Section 32 of the Sale of Goods Act of Trinidad and Tobago; Section 33 of the Sale of Goods Act of Belize; Section 31 of the Sale of Goods Act of Jamaica; section 2-307 UCC). In civil law systems, this rule is rarely expressed (Article 462 of the Costa Rican Commercial Code), but there is a general principle of equal treatment of obligations between a sole obligor and a sole obligee, regardless of the severable nature of the obligations, which is why the rule also fits within this legal family.

This rule is obviously not rigid. Firstly, it requires that performance in one step be materially feasible. In some severable obligations, there is a certain natural order of performance that requires deferred or staggered fulfilment. So, in complex engineering contracts for which there is a general delivery deadline, it is obvious that turnkey delivery or the supply of technological equipment precedes, for example, technical assistance for the training of the workers responsible for operating the equipment. However, aside from these cases, even in more homogeneous and perfectly severable obligations, such as the delivery of generic goods, commodities or batches of products, delivery in one step and at one time, may not be feasible for logistic reasons concerning both parties. Consequently, the rule must be understood as a rebuttable presumption, which leads to a specific interpretative canon and serves as a guide within the general framework of rules relating to the interpretation of the contract.

It must be noted that despite written rules on sale contracts, English case law rather tends to severability both of obligations and performance when parties have not expressly stated an obligation of performance at one time [The Juliana (1822), 2 Dods. 504; Davidson v Jones-Fenleigh (1980), 124 SJ 204]. Nevertheless, if both parties are subject to the OHADAC Principles, this will imply the incorporation by reference of the commented rule, the effects of which can be clearly recognised by judges and arbitrators of common law tradition.

Obviously, despite the interpretative scope of the rule, it is always recommendable that parties agree on a specific and unequivocal regime as to the time of performance of their respective obligations.

An early performance implies that a party performs its obligation before the term fixed or the beginning of the period established according to the preceding Article.

It is presumed that generally an early performance is not detrimental to the other party. Such a presumption becomes a rule in most civil law systems which consider that the term or period of performance is fixed to favour of the party obliged, such that the obliged party has the right to waive this advantage by performing before the term. unless this is clearly stated otherwise in the contract (e.g. Article 776 of the Costa Rican Civil Code; Article 238 of the Cuban Civil Code; Article 1.187 of the French and Dominican Civil Code, maintained in Article 165 Draft Project reform of French la won obligations of 2013; Article 1.282 of the Guatemalan Civil Code; Article 976 of the Haitian Civil Code; Article 6:39 of the Dutch and Suriname Civil Code; Article 1.958 of the Mexican Civil Code; Article 1.214 of the Venezuelan Civil Code). However, most of these legal systems accept exceptions derived from the nature and purpose of the contract that make it possible to consider that the term or period fixed is in the interest of both parties or exclusively of the obligee. Moreover, in other civil law systems the favor debitoris principle is not followed and the term or period fixed is interpreted in the interest both of the obligor and the obligee (e.g. Article 1.389 of the Honduran Civil Code; Article 1.899 of the Nicaraguan Civil Code; Article 1.012 of the Panamanian Civil Code; Article 1.080 of the Puerto Rican Civil Code). Early performance will thus be limited by the legitimate interest of the obligee to obtain timely performance. In common law Caribbean legal systems, the obligee may usually reject an early performance, and the same principle applies in civil law countries that only recognise early performance agreed by the parties (Article 1.889 of the Nicaraguan Civil Code).

The OHADAC Principles have chosen to follow international texts on contract law harmonisation, which initially recognise early performance, providing that it does not prejudice the legitimate interests of the obligee [Article 6.1.5. (1) UP; Article 7:103 (1) PECL; Article III-2:103 (1) DCFR; Article 130 CESL). That rule is more restrictive for the obligee than that stated in Article 52 CISG, which provides the obligee with a discretionary power to admit or reject goods delivered early. Indeed, early performance (particularly in case of pecuniary obligations) does not usually prejudice the obligee and this party must therefore accept it. In case of non-pecuniary obligations the obligee may reasonably reject early performance if it provokes damage or frustrates its expectations.

Example: A garment retail franchise undertakes to buys from a manufacturer a batch of garments for the spring season, which must be delivered to its wholesaler in the second half of January. The manufacturer offers to deliver the batch in the second half of December. The buyer can reject the early performance because, until the contractual period, its warehouse will still be holding winter garments and does not have storage capacity for new garments until the agreed period.

If the obligee cannot reasonably justify its rejection of early performance, it must accept this performance. According to the second paragraph of Article 6.5.3, expenses resulting from early performance will be borne by the obligor. In any case, the acceptance of the performance does not imply the waiving by the obligee of any remedy or action to which it may be entitled in accordance with the rules on contract non-performance. This rule is also found in Article 6.1.5 (3) UP.

Furthermore, in accordance to paragraph 3, this acceptance will also not modify the time of performance of the obligee's obligations. The OHADAC Principles opt thus for a rule similar to that of Articles 7: 103 (2) PECL and III-2:103 (2) DCFR. Some legal systems, in line with Article 6.1.5 (2) UP, only provide such an effect in cases where the time of performance of the obligee's obligation is fixed regardless of the obligor's early performance, but not otherwise. Thus, when in a sale contract, the payment is fixed at the time of delivery of the goods, and the obligor delivers the goods a month before the agreed date, the obligee is also obliged to an early payment, unless it can refuse the early performance because of the difficulties caused by the early payment. Such a consequence seems neither reasonable nor efficient, and increases the chances of rejection of an early performance. In the example, if the seller anticipates the delivery of the goods, the buyer will be able to pay on the agreed date of delivery, so that the obligor assumes the risk derived from early performance. For instance, if the agreed date is a within a given period, in the above example, the obligor will fulfil the contract if it pays on the last day of the period fixed for the delivery of goods.

This Article contains one of the most generally accepted rules in international trade. Its original formula is found in Section 234 of the Restatement (Second) of Contracts and very similar rules are in Articles 6.1.4 UP, 7:104 PECL and III-2:104 DCFR. This rule is not very common in Caribbean legal texts, but is usually admitted by case law. In any case, it is an open rule with subsidiary presumptions that can be contradicted by general rules on contract interpretation.

Firstly, agreements of the parties on the time and order of performance shall prevail. Secondly, even if there is no express agreement, the rules of this Article will not be applied either if a specific order of performance can be inferred from the contract provisions, such that it becomes unreasonable to apply the proposed presumptions. Thus, if one obligation is a condition precedent, it must be interpreted that this obligation must be performed first. In other cases, commercial terms used by the parties imply a different order of performance (e.g. a C.I.F. sale, where payment is due against documents representing the goods).

Where the contract does enable the determination of an express or implied order of performance, the presumptions included in this Article, which as has been said, are flexible should be considered. The first rule is that obligations must be performed simultaneously whenever possible. English law arrives at the same result with the rebuttable presumption, according to which, if simultaneous performance is possible, the mutual obligations create concurrent conditions and must be performed simultaneously. This rule is expressly stated in relation with payment at the time of delivery in sales contracts [e.g. Article 1.929 of the Colombian Civil Code; Article 1.087 of the Costa Rican Civil Code; Article 352 (a) of the Cuban Civil Code; Article 1.651 of the French and Dominican Civil Code; Article 1.825 of the Guatemalan Civil Code; Article 1.436 of the Haitian Civil Code; Article 7:26 of the Dutch and Suriname Civil Code; Article 1.659 of the Honduran Civil Code; Article 2.294 of the Mexican Civil Code; Article 2.661 of the Nicaraguan Civil Code; Article 1.271 of the Panamanian Civil Code; Article 1.389 of the Puerto Rican Civil Code; Article 300 (2) of the Saint Lucian Commercial Code; Article 1.528 of the Venezuelan Civil Code; Section 28 of the Sale of Goods Act of 1979; Section 29 of the Sale of Goods Act of Antigua and Barbuda; Section 29 of the Sale of Goods Act of Montserrat; Section 29 of the Sale of Goods Act of Bahamas; Section 29 of the Sale of Goods Act of Trinidad and Tobago; Section 30 of the Sale of Goods Act of Belize; Section 28 of the Sale of Goods Act of Jamaica; 58.1 CISG; Article 126 CESL].

The second rule is more specific. Where one of the obligations can be performed instantaneously (such as payment), while the other party's obligation requires a time for performance (for example the execution of a work), the rule of simultaneity actually requires that the obligation that requires a period of performance must begin earlier. In practice, this rule implies that non-pecuniary obligations are performed before pecuniary obligations. In this way, simultaneity is actually achieved when the contract performance is completed, as the payment will be made, for example, at the time when the work or the service is completed. On the balance, the rule follows the same principle based on the general rule that in a sale contract the payment must be made at the same time as the delivery of goods. In actual fact, the seller's performance therefore begins before because it usually requires a time for shipping, transportation, etc. Moreover, this rule will not pose a problem in English law, because the submission of the parties to the OHADAC Principles will mean that the parties commit to abide by these reasonable rules, which are fully acceptable in English law. However, it must be noted that under English law, should the parties fail to agree, the general interpretation rule for non-simultaneous and independent obligations is that there is no concrete order of performance, so that each party may demand the performance by the other party even when it has not performed its obligation. The other party will not be able to invoke the non-performance to avoid that required performance. The required party must firstly perform and, once its obligations are performed, it may claim performance from the other party. Hence the rules of these Principles are a safer alternative for preventing a battle of claims and the difficulties that arise with the determination of the first shot.

Regardless of the severable or entire nature of the obligation, this Article deals with the possibility of a partial performance. Partial performance implies a breach of contract. However, it is important to establish if such a partial performance must be accepted and therefore the breach is also partial. The rule does not deal with breach of contract caused by the obligee's behaviour or induced by the obligee preventing the obligor's performance [e.g. decision of the Supreme Court of Jamaica (1977) in Charles Gibbs Martin Foster v Dewar (1977), Carilaw JM 1977, SC 18]. In these cases, rules on interpretation, modification and non-performance shall be applied.

The rule in paragraph 1 (shared by Articles 51 CISG, 6.1.3 UP and 130.2 CESL) adopts as a starting point that the obligee is not obliged to accept a partial performance offered by the obligor at the time of expiry of its obligation, even if it is accompanied by guarantees for total performance. Obviously, cases of performance in instalments expressly agreed are not considered. Otherwise, obligations must be entirely performed according to the contract terms and the general principle stated in Article 1.2 of these Principles. However, this rule is too inflexible where partial breach is not fundamental according to the contract's circumstances, the scope of the reference of the parties in the contract to a total performance, the degree of partial performance and the actual damage caused to the obligee by the partial performance. That is why the rule is relaxed where the obligee has no legitimate interest in rejecting the partial performance.

Example 1: Under a building contract, the contractor delivers 99% of the works at the expiry of the contract. One of the ornaments of the façade's plaster projected in the project design could finally not be incorporated due to technical difficulties. The obligee has no legitimate interest in rejecting the partial performance, insofar as the contract has been substantially performed and the consequences of the breach are not fundamentally damaging in relation with the aim of the contract.

The rule chosen is also in line with the essential rules of a comparative approach of the Caribbean legal systems. Although the contract terms do not provide for the need of a complete performance, the related applicable presumptions and interpretative rules in the Caribbean sphere seem dissimilar in principle. Some civil law systems, in the absence of an agreement, do not recognise the obligor's right to implement or call for a partial performance, so that a partial performance implies a fundamental and entire breach of contract [Article 1.649 of the Colombian Civil Code; Article 927 of the Colombian Commercial Code; Article 772 of the Costa Rican Civil Code; Article 330 of the Cuban Commercial Code; Article 1.244 of the French and Dominican Civil Code, maintained in Article 189 of the Proposals for the reform of the French law on obligations of 2013; Article 1.387 of the Guatemalan Civil Code; Article 1.030 of the Haitian Civil Code; Article 6:29 of the Dutch and Suriname Civil Code; Article 1.434 of the Honduran Civil Code; Article 2.078 of the Mexican Civil Code; Article 2.021 of the Nicaraguan Civil Code; Article 1.056 of the Panamanian Civil Code; Article 1.123 of the Puerto Rican Civil Code; Article 248 of the Puerto Rican Commercial Code; Article 1.080 of the Saint Lucian Civil Code; Article 1.291 of the Venezuelan Civil Code). Sometimes partial performance is admitted in cases specially determined by law or according to the nature or circumstances of the contract. At any event, the principle of good faith and abuse of law doctrine enable judges to consider some exceptions when the refusal of the partial performance is disproportionate or unreasonable. Particularly, some legal systems allow partial performance when obligations have a liquid and a non-liquid portion, because the first must be performed before the second becomes liquid (Article 1.387 of the Guatemalan Civil Code; Article 1.434 of the Honduran Civil Code; Article 2.078 of the Mexican Civil Code; Article 2.021 of the Nicaraguan Civil Code; Article 1.056 of the Panamanian Civil Code; Article 1.123 of the Puerto Rican Civil Code; Article 1.292 of the Venezuelan Civil Code). Finally, in some cases, partial performance is permitted when the judge decides to divide the payment in instalments (Article 1.244.1 of the French and Dominican Civil Code; Article 1.030 of the Haitian Civil Code).

In common law, the solution depends on the severable or entire nature of the obligation. In cases of entire contracts, the obligor must perform entirely (full performance). Partial performance leads to breach of contract and the creditor is not obliged to accept it or to pay a part of the agreed price [Section 30.1 Sales of Goods Act of 1979; Section 31 of the Sale of Goods Act of Antigua and Barbuda; Section 31 of the Sale of Goods Act of Montserrat; Section 31 of the Sale of Goods Act of Bahamas; Section 31 of the Sale of Goods Act of Trinidad and Tobago; Section 32 of the Sale of Goods Act of Belize; Section 30 of the Sale of Goods Act of Jamaica; Section 235 Restatement (Second) of Contracts; Cutter v Powell (1775), 6 TR, 320; Sumpter v Hedges (1898), QB 673; Hoenig v Isaacs (1952), 2 All ER 176; Bolton v Mahadeva (1972), 1 WLR 1009; The Hansa Nord (1976), QB 44; Williams v Roffey Bros & Nicholls (Contractors) Ltd (1991), 1 QB 1]. This rule is relaxed if partial performance does not imply a fundamental breach or even when it benefits the creditor, discrepancies are minor or the rejection by the creditor is unreasonable [Re Thornett and Fehr and Yuills (1921), 1 KB, 219; Mitchell v Darthez (1836), 2 Bing. NC 555]. Conversely, partial performance is admitted in cases of severable obligations [Ritchie v Atkinson (1808), 10 East 295].

Acceptance by the obligee of partial performance does not imply a waiver of any remedy or action resulting from the obligor's non-performance, according to paragraph 2. Obviously, this acceptance means that the breach is only partial. This does not preclude that the obligee will accept the performance without objections, which could limit or exclude further action by breach of contract. Moreover, expenses derived from partial performance (duplication in the receipt of goods or in banking operations, replacement or substitution of the non-performed part, etc.) are borne by the obligor. If the obligee covers such expenses, they may be taken into account in calculating the damages due as a result of partial performance. If the obligee accepts the partial performance without objections, expenses must merely be reimbursed by the obligor.

Acceptance by the obligee of a partial performance requires determining the effects on the obligee's obligation. There is no general solution, because it depends on the severable or entire nature of this obligation, according to paragraph 3. Thus, in the case of a sale contract of a batch of units, the obligee who accepts a partial delivery performs by paying for the units delivered. This rule is quite reasonable and so is established, for example, in Section 31 of the Sale of Goods Act of Antigua and Barbuda; Section 31 of the Sale of Goods Act of Montserrat; Section 31 of the Sale of Goods Act of Bahamas; Section 31 of the Sale of Goods Act of Trinidad and Tobago; Section 32 of the Sale of Goods Act of Belize; Section 30 of the Sale of Goods Act of Jamaica. On the contrary, where obligations are entire the obligee must entirely perform, without detriment to the remedies by breach of contract.

Example 2: The case is the same as in example 1. The creditor must pay the agreed price for the delivery of the building, because the cost of the absent ornaments is not severable in relation with the building. It may claim for breach of contract and damages for this partial breach.

Example 3: A manufacturer of cars sited in country X concludes a contract with a manufacturer of spark plugs for car engines, sited in country Y. The contract establishes the obligation to deliver 50,000 units within a given period. The supplier delivers only 40,000 units. The car manufacturer can get the missing units in the market and use the 40,000 delivered units, so that it has no legitimate interest in rejecting the partial performance. It must pay with a reduction of 20% and may claim for damages derived from expenses, delays and inconveniences related to the replacement solution for the 10,000 non delivered units.

Each party to the contract is obliged to perform its contractual obligations. However, most legal systems accept the discharge of the obligor by a third person (vicarious performance). Performance by a third person in this sense, where there is no assignment or agreed substitution, does not exempt the obligor for being held liable in case of defective performance by the third person. The rule allows vicarious performance as a way of performance of the obligor, who continues to be obliged to the obligee and responsible for breach of contract. This rule is expressed in most Caribbean civil law systems (Article 1.630 of the Colombian Civil Code; 765 of the Costa Rican Civil Code; Article 1.236 of the French and Dominican Civil Code, maintained with some modifications in Article 186 Proposals for reform of the French law on obligations of 2013; Article 1.380 of the Guatemalan Civil Code; Article 1.022 of the Haitian Civil Code; Article 6:30 of the Dutch and Suriname Civil Code; Article 1.423 of the Honduran Civil Code; Articles 2.065-2068 of the Mexican Civil Code; Article 2.010 of the Nicaraguan Civil Code; Article 1.045 of the Panamanian Civil Code; Article 1.112 of the Puerto Rican Civil Code; Article 1.072 of the Saint Lucian Civil Code; Article 1.283 of the Venezuelan Civil Code). Common law systems also recognise the possibility of vicarious performance, but with some conditions relating to the obligor's consent.

Paragraph 1 of Article 6.1.6 therefore recognises the possibility of performance by a third party insofar as it acts with the consent of the obligor (Article 7:106 PECL; Article III-2:107 DCFR; Article 127 CESL). It is considered that the obligee has an interest in obtaining the performance of the contract regardless of whether it comes from the obligor of from a third person acting with its consent.

It has been considered significant to require as condition that the third person acts with the obligor's consent [Article 7.106 (1) (a) PECL; Article III-2:107 (1) (a) DCFR; and Article 127 (2) (a) CESL]. It is a characteristic condition in common law systems, although some exceptions are found in case law. In any case is openly considered, for example, if the obligor subsequently ratifies the third party's performance. Under Section 278 of the Restatement (Second) of Contracts, consent need not be express, but can simply be tacit or implied, following, for instance from the mere passivity of the obligor, who knows of that performance and does not oppose it. In most civil law systems, however, the obligee must accept the performance if the third person is not authorised by the obligor or even if it acts against the common will of both the obligee and the obligor, although there are different consequences with respect to the subrogation effect. Article 186 of the Proposals for reform of the French law on obligations of 2013 proposes a more flexible and more qualified criterion by limiting this principle in cases of justified opposition of the obligor or legitimate interest of the obligee. The OHADAC Principles have opted, following this line, to make the performance conditional upon the express or implied consent of the obligor. The contrary rules in force in Caribbean civil law systems cannot be considered as international public policy. Moreover, this rule is more consistent with the freedom of contract principle. The obligee is bound by the contract and when the obligor has not authorised the performance by a third person the obligee is not obliged to accept it. Payment by a third person could prejudice the obligor who has a legitimate interest to personally perform the obligation. If the obligee accepts the performance, it becomes exposed to the obligor's claim for damage as a result of the third person's performance. The obligee must therefore accept the performance only if the obligor's consent is acknowledged. In this respect, the obligee must check, reasonably and without excessive expense, that there is consent. Otherwise it is free to accept the performance, but it is not released from the liability arising from damage to the obligor as a result of this consent.

The rule does not consider the possibility that the obligee, in the absence of the consent of the obligor, was obliged to accept the performance by a third person who has a legitimate interest when the obligor does not perform or it is evident that it will not perform. This possibility is envisaged in Article 7:106 (1) (b) PECL; Article III-2:107 (1) (b) DCFR; and Article 127 (2) (b) CESL. Failing the agreement of the parties, it is not advisable to add a rule, which, even if it is appropriate for the structure of legal relationships in some cases, favours the interests of the third party rather the interests of the obligor and the legal certainty of the obligee itself, whose contract has been subject to these Principles. Therefore, such a possibility will only be taken into account if the parties have so expressly agreed in the contract or by virtue of the applicable law according to private international rules.

Obviously, there is an exception to this general rule when the status of person who must perform the obligation is an essential aspect of the contract. In intuitu personae obligations, the obligee is not obliged to accept the performance by a person other than the obligor. This is a common rule both in civil law systems (Article 1.630 of the Colombian Civil Code; Article 765 of the Costa Rican Civil Code; Article 235 of the Cuban Civil Code; 1.237 of the French and Dominican Civil Code; Article 1.381 of the Guatemalan Civil Code; Article 1.023 of the Haitian Civil Code; Article 6:30 of the Dutch and Suriname Civil Code; Article 1.426 of the Honduran Civil Code; Article 2.064 of the Mexican Civil Code; Article 2.013 of the Nicaraguan Civil Code; Article 1.048 of the Panamanian Civil Code; Article 1.115 of the Puerto Rican Civil Code; Article 1.073 of the Saint Lucian Civil Code; Article 1.284 of the Venezuelan Civil Code) and in common law [Davies v Collins (1945), 1 All ER 247; Martin v N Negin Ltd (1945), 172 LT 275; Edwards v Newlands & Co (1950), 2 KB 534].

Finally, the rule does not prejudge the legal treatment of the relationships derived from the performance by a third person, particularly its subrogation of the obligee's rights against the obligor, which shall be determined in the frame of the legal relationship between the obligor and the third person, that is alien to the obligee and to the contract between the obligee and the obligor.

In international trade, parties are free to determine the form of payment of their pecuniary obligations (cash, documentary credits, autonomous guarantees, remittances and transfers of funds, orders of payments, negotiable instruments, bills of exchange, etc.). This is a principle sometimes envisaged in legal texts [e.g. Section 2-511 (2) UCC; Article 6.1.7 UP; 7:107 PECL; Article III-2:108 (1) DCFR; Article 124.1 CESL]. In some cases, as a manner of performance, forms of payment may be subject to restrictions established by overriding mandatory rules and control of exchanges in the law of the place of performance (e.g. Article 240 of the Cuban Civil Code), which will be taken in consideration according to paragraph III of the Preamble to these Principles.

Another usual rule, often affected by trade practices, establishes that such forms of payment do not imply acceptance of performance, insofar as it is presumed that they are accepted on condition that are honoured or “with recourse”, that is if the payment becomes effective [Article 1.394 of the Guatemalan Civil Code; Article 1.435 of the Honduran Civil Code; Article 6:46 of the Dutch and Suriname Civil Code; Article 2.024 of the Nicaraguan Civil Code; Article 1.057 of the Panamanian Civil Code; Article 1.124 of the Puerto Rican Civil Code; Section 2-511 (3) UCC; D & C Builders Ltd v Rees (1996), 2 QB 617 (CA); Article 6.1.7 (2) UP; Article 7:107 PECL; Article III-2:108 (2) DCFR; Article 124.1 CESL].

Pecuniary obligations must be paid in the agreed currency of payment [e.g. Article 771 of the Costa Rican Civil Code; Article 6:121 of the Dutch and Suriname Civil Code; Article 1.435 of the Honduran Civil Code; Article 2.022 of the Nicaraguan Civil Code; Article 1.057 of the Panamanian Civil Code; Article 1.124 of the Puerto Rican Civil Code; Article 7:108 (1) PECL; Article III-2:109 (1) DCFR).

However, in certain cases, payment in the agreed currency is not possible because of payment restrictions in the country where the obligation must be performed (Article 240 of the Cuban Civil Code; decision of the French Cour de Cassation of 11 October 1980) or because of a temporary impossibility to get the amount of currency needed. In other less usual cases, the parties simply do not agree on a currency of account because they fix the price in an undetermined way or without any reference to a concrete currency. In these cases, paragraph 1 of this Article establishes the currency of the place of payment as the currency for payment. Such a rule is expressly envisaged in some legal systems (e.g. Article 771 of the Costa Rican Civil Code; Articles 6:112 and 6:122 of the Dutch and Suriname Civil Code; Article 1435 of the Honduran Civil Code; Article 2.022 of the Nicaraguan Civil Code; Article 1.057 of the Panamanian Civil Code; Article 1.124 of the Puerto Rican Civil Code; Articles 6.1.9 (2) and 6.1.10 UP; Article III-2:109 (4) DCFR].

The second paragraph deals with a different assumption: parties do not agree on the currency of payment, they simply determine the price in a determined currency (“currency of account”). In these cases, the obligor may opt to pay in the currency of account or in the currency of the place of payment. It is also a common rule (e.g. Articles 6:121 and 6:123 of the Dutch and Suriname Civil Code; Article 6.1.9 (1) UP; Article 7:108 (2) PECL; Article III-2:109 (2) DCFR]. However, unlike most of these legal texts, if the currency of the place of performance is not freely convertible it is considered excessively burdensome for the creditor, so that the obligor shall pay in the currency of account that determines the price of the contract. It must be stressed that the US dollar, pound sterling and euro are the only convertible official currencies in the Caribbean States.

Paragraph 3 of this Article solves the problem of determining the exchange rate of the currency when the payment must or may be made in the currency of the place of payment, in accordance with preceding paragraphs. The general rule is to apply the prevailing exchange rate or the preferential at the time fixed for the payment [e.g. Articles 771 of the Costa Rican Civil Code; Article 1.395 of the Guatemalan Civil Code; Article 6:124 of the Dutch and Suriname Civil Code; Article 6.1.9 (3) UP; Article 7:108 (2) PECL; Article III-2:109 (2) DCFR]. However, this rate must be determined where the obligor makes an early or late payment in relation with the time fixed for payment in accordance with Articles 6.1.2 and 6.1.3. In this case, there are three possibilities. The first consists in maintaining the general rule, so that the exchange rate shall be the prevailing or preferential rate at the time of the undue payment; given that the fluctuation might prejudice the obligee, it may include the difference regarding to the exchange rate at the due time of payment as a part of damages derived from breach of contract because a delayed payment or a part of the compensation due to early performance [e.g., Article 6:125 of the Dutch and Suriname Civil Code; Milangos v George Frank (textiles) Ltd (1976), AC 433]. A second possibility, found in French case law, is to apply in any case the exchange rate at the agreed time of payment. Finally, a third option is represented by international texts of harmonisation of contract law [Article 6.1.9 (4)]; Article 7:108 (3) PECL; Article III-2:109 (3) DCFR], which allows the creditor to choose between claiming for payment according to the exchange rate at the agreed time of payment or according to the prevailing exchange rate at the actual time of payment. All these solutions are inspired by the same logical criterion that makes the obligor bear the risks and expenses of payment made at a time other than the agreed time. However, the rule of these Principles serves the legitimate interests of the creditor better and, above all, implies a greater economy of resources.

1. Power of the obligor to impute the payment

Where there are several obligations between one obligee and one obligor and a payment is made, which is not sufficient to satisfy all obligations, it is important to establish to which obligation among all the payment must be imputed and therefore which obligation is extinguished thereby, especially if different guarantees for different obligations exist, these are subject to different rates of interest or their periods of limitation expire in different dates. In such cases, legal systems within OHADAC coincide in declaring that, in the absence of agreement, the obligor may determine, at the time of performance, the obligation to which the payment is imputed [Article 779 of the Costa Rican Civil Code; Article 1.654 of the Colombian Civil Code; Article 239.1 of the Cuban Civil Code; Article 1.253 of the French and Dominican Civil Code (maintained in Article 195 Draft Project of reform of the French law on obligations of 2013); Article 1.404 of the Guatemalan Civil Code; Article 1.039 of the Haitian Civil Code; Article 6:43 (1) of the Dutch and Suriname Civil Code; Article 1.437 of the Honduran Civil Code; Article 2.092 Mexican Civil Code; Article 2.050 of the Nicaraguan Civil Code; Article 1.059.1 of the Panamanian Civil Code; Article 1.126.1 of the Puerto Rican Civil Code; Article 1.089 of the Saint Lucian Civil Code; Article 1.302 of the Venezuelan Civil Code; Section 258.1 of the Restatement (Second) of Contracts]. English law shares this general rule, but the obligee may reject the imputation and return the payment received within a reasonable time [Thomas v Ken Thomas Ltd (2006), EWCA Civ 1504, 21].

The obligor must generally give notice of the imputation to the obligee, expressly or impliedly (e.g. where the obligor pays the exact amount of one of the obligations). In any case, this is not a rigid rule. A limit generally accepted in Caribbean civil law systems provides that if the obligation produces interests payment cannot be imputed to principal, before the interests are paid (Article 780 and 783.1 of the Costa Rican Civil Code; 1.653 of the Colombian Civil Code; Article 1.254 of the French and Dominican Civil Code; Article 1.407 of the Guatemalan Civil Code; Article 1.040 of the Haitian Civil Code; Article 1.438 of the Honduran Civil Code; Article 2.094 of the Mexican Civil Code; Article 2.051 of the Nicaraguan Civil Code; Article 1.060 of the Panamanian Civil Code; Article 1.127 of the Puerto Rican Civil Code; Article 1.090 of the Saint Lucian Civil Code; Article 1.303 of the Venezuelan Civil Code), unless the obligee consents or it is otherwise agreed between the parties. The term “interest” covers both contract and legal interests.

Texts on harmonisation of contract law also provide the priority of the payment of interests and they add the preferential imputation of expenses as well [Article 6.1.12 (1) UP; Article 7:109 (4) PECL; Article III-2:110 (5) DCFR; Article 128.6 CESL], following thus the Germanic law model (Article 6:44 of the Dutch and Suriname Civil Code; § 367 BGB]. The UP, the PECL, the DCFR and the CESL allow the obligee to alter the mentioned order. The OHADAC Principles, however, in the absence of agreement, prefer that order was mandatory and imputes the payment first to expenses, secondly to interests and finally to the principal. The modification of such order, which reflects the economy of the contract in a natural way, can only be justified by a common agreement, but not by a unilateral decision of the obligee.

The OHADAC Principles also envisage a limit to the obligor's power which is recognised in some national legal systems, so that the payment of a non-expired obligation cannot be imputed before an obligation already expired (Article 1.654 of the Colombian Civil Code). On the contrary, it does not seem reasonable to oblige the obligor to pay firstly obligations guaranteed by a third person (Section 258.2 Restatement (Second) of Contracts). Obviously, the obligor may take it into account where it decides the imputation, but the consequences of its decision regarding to the guarantor shall be submitted according to the rules applicable to this relationship, regardless of the Principles.

2. Imputation by the obligee

In the absence of agreement, some Caribbean legal systems give the obligee the power to impute payments. This is a usual rule in common law countries for commercial contracts [Peters v Anderson (1814), 5 Taunt. 596; Cory Bros & Co Ltd v Owners of Turkish SS “Mecca” (1897), AC 286; West Bromwich Building Society v Crammer (2002), EWHC 2618 (Ch); Section 259 Restatement (Second) of Contracts]. This is also the rule in Cuban law, providing that the obligor does not oppose immediately (Article 239.2 Civil Code), and in the harmonised texts [Article 6.1.12 (2) UP; Article 7:109 (2) PECL; Article III-2:110 (2) DCFR; Article 128 (2) CESL]. However, the rule is not absolute and admits some exceptions. Thus, the imputation by the obligee is not possible where the obligation is not still due (Section 259 Restatement (Second) of Contracts], it is illegal [Wright v Laing (1824), 3 B & C 165; Keeping v Broom (1895), 11 T.L.R 595; A. Smith & Son (Bognor Regis) Ltd v Walter (1952), 2 QB 319] or it is disputed (Section 259 Restatement (Second) of Contracts). The fact that the limitation period has expired is not usually considered an obstacle for the obligee to impute the payment made by the obligor [Mills v Fowkes (1839), 5 Bing NC 455; Stepney Corp v Osofsky (1937), 3 ALL ER 289; comment to Section 259 Restatement (Second) of Contracts].

Although civil law systems do not usually bestow such a power on obligees, if the obligee, due to the inactivity of the obligor, imputes the payment on the receipt to some obligations and the obligor accepts such an imputation, the obligor loses the right to reject the imputation afterwards, apart from cases or fraud by the obligee or a similar cause that avoids it (Article 1.654 of the Colombian Civil Code; Article 781 of the Costa Rican Civil Code; Article 1.255 of the French and Dominican Civil Code; Article 1.405 of the Guatemalan Civil Code; Article 1041 of the Haitian Civil Code; Article 1.437.2 of the Honduran Civil Code; Article 2.052 of the Nicaraguan Civil Code; Article 1.059.2 of the Panamanian Civil Code; Article 1.126.2 of the Puerto Rican Civil Code; Article 1.091 of the Saint Lucian Civil Code; Article 1.304 of the Venezuelan Civil Code).

Paragraph 2 of this Article gives the obligee the right to impute payments if the obligor has renounced its right. Usually, if the obligor pays without imputation, the obligee may impute the payment in the receipt or in any other way, providing that it gives notice in due time to the obligor. The non-performance of this duty does not avoid the imputation, but could lead to damages derived from the prejudice for the obligor caused by such a lack of due diligence. In any case, the obligee may only impute the payment to expired or due obligations that are nor controversial or disputed. Otherwise, imputation shall be ineffective. The Article does not refer to the legality of the obligation from which the imputed obligation derives, insofar as illegality is a question excluded from the Principles in accordance with Article 3.3.1, but it does not prejudge that illegality could avoid the imputation if this is the effect foreseen in the national, international or supranational law establishing the illegality of the obligation.

3. Imputation criteria, failing the imputation by the obligor and by the obligee

Most civil law systems provide legal criteria of imputation in the absence of imputation by the obligor. Other systems envisage these criteria also in the absence of a subsidiary imputation by the obligee [Article 1.655 of the Colombian Civil Code; Article 783 of the Costa Rican Civil Code; Article 239.3 of the Cuban Civil Code; Articles 1.256 of the French and Dominican Civil Code; Article 1406 of the Guatemalan Civil Code; Article 1.042 of the Haitian Civil Code; Article 6:43.2 of the Dutch and Suriname Civil Code; Article 1.439 of the Honduran Civil Code; Article 2.093 of the Mexican Civil Code; Article 2.053 of the Nicaraguan Civil Code; Article 1061 of the Panamanian Civil Code; Article 1.128 of the Puerto Rican Civil Code; Article 1.092 of the Saint Lucian Civil Code; Article 1.305 of the Venezuelan Civil Code; Section 260 Restatement (Second) of Contracts; Article 6.1.12 (3) UP; Article 7:109 (2) PECL; Article III-2:110 (4) DCFR; Article 128 (4) CESL]. There is no perfect convergence about these criteria, sometimes inclined to the favor debitoris principle, sometimes to the opposite favor creditoris principle. The most usual order is the following: due obligations, obligations more favourable to the obligor, and obligations that first arisen [Article 783 of the Costa Rican Civil Code; Article 1256 of the French and Dominican Civil Code, maintained in Article 195 Proposals for the reform of the French law on obligations of 2013); Article 1.406 of the Guatemalan Civil Code; Article 6:43.2 of the Dutch and Suriname Civil Code; Article 2.093 of the Mexican Civil Code; Article 2.053 of the Nicaraguan Civil Code; Article 1.092 of the Saint Lucian Civil Code]. Under other legal systems, due obligations prevail and failing that those that the obligor chooses or are more onerous, or simply the more burdensome among the due obligations (Article 1.655 of the Colombian Civil Code; Article 1.042 of the Haitian Civil Code; Article 1.439 of the Honduran Civil Code; Article 1.061 of the Panamanian Civil Code; Article 1.128 of the Puerto Rican Civil Code). Some of them only envisage the preferential order of due or expired obligations (Article 239 of the Cuban Civil Code).

Paragraph 3 follows the rule in Article 1.305 of the Venezuelan Civil Code, which contains the most widespread criteria in international texts [Article 6.1.12 (3) UP; Article 7:109. (3) PECL; Article III-2:110 (4) DCFR; Article 128 (4) CESL]. According to a principle already present in the preceding paragraphs, first due or expired obligations must be preferred. This criterion gives preference to the performance of obligations and therefore benefits both parties. Failing that, the second criterion prefers the imputation to the obligation that entails more risks or less guarantees for the obligee, thus facilitating the contract's efficiency and maximising the internalisation of risks of breach of contract. Failing that, the same economic inspiration leads to prefer the payment of the most onerous obligations for the obligor. Finally, the last solution aims at an objective criterion that is merely temporal.

4. Final solution based on a pro rata calculation

Where any of the objective criteria of imputation are available, the final solution is the proportional imputation to all obligations. The rule in paragraph 4 of this Article is that usually followed by most legal systems [Article 783.4 of the Costa Rican Civil Code; Article 239.3 of the Cuban Civil Code; Article 1.256 of the French and Dominican Civil Code (maintained in Article 195l of the Proposals for reform of the French law on obligations of 2013); Article 1.406 of the Guatemalan Civil Code; Article 1.042.2 of the Haitian Civil Code; Article 6:43.2 of the Dutch and Suriname Civil Code; Article 1.439.2 of the Honduran Civil Code; Article 2.093 of the Mexican Civil Code; Article 2.053.2 of the Nicaraguan Civil Code; Article 1.061 of the Panamanian Civil Code; Article 1.128.2 of the Puerto Rican Civil Code; Article 1.092 of the Saint Lucian Civil Code; 1.305 of the Venezuelan Civil Code; Article 6.1.12 (3) UP; Article 7:109 (3) PECL; Article III-2:110 (4) DCFR; Article 128 (4) CESL].

5. Imputation of performance of non-pecuniary obligations

Imputation of non-pecuniary obligations is rare. However, in contracts with successive performance, the obligor obliged by a non-pecuniary obligation (e.g. the delivery of goods in a supply contract) often does not perform one or more deliveries at the fixed time, and when it makes a delivery it must be determined the obligation to which that delivery is imputed. In these cases, the criteria of imputation of payments may be applied by analogy (mutatis mutandis), provided that the non-pecuniary obligations are of the same nature. This rule, established in Article 6.1.13 of the Unidroit Principles, also obeys the fact that most of the legal systems analysed do not distinguish between imputations related to pecuniary or non-pecuniary obligations.

1. Obligation of the parties to accept performance of obligations

This Article states the obligation of the parties not only to perform its obligations but to accept and not to prevent the performance by the other party. Therefore, refusal to accept or obstruction of the performance of the obligations of the other party implies breach of contract the consequences of which are determined in the following chapter. The rule presumes the performance by the obligor; it does not prejudge cases where refusal to accept the performance is justified, for example, owing to non-compliance with goods or defective performance, since in these cases there is “non-performance” of the contract by the obligor, the consequences of which in relation with the obligee's performance shall be governed by the rules included in the following chapter or those applicable according to the specific nature of the contract and applicable trade practices depending on the type of contract (e.g. Article 86.2 CISG).

2. Refusal to accept pecuniary obligations

The rule distinguishes between pecuniary and non-pecuniary obligations. For pecuniary obligations, civil law systems usually provide two legal institutions that often go together and enable the obligor to accomplish its obligations: tender of payment followed by deposit, although some legal systems only envisage the deposit (Articles 1.656-1.665 of the Colombian Civil Code; Articles 797-802 and 1.084 of the Costa Rican Civil Code; Article 254 of the Cuban Civil Code; Articles 1.408-1.415 and 1.930 of the Guatemalan Civil Code; Articles 1.257-1.264 and 1.961 of the French and Dominican Civil Code (Articles 205-207 Proposals for reform of the French law on obligations of 2013); Articles 1.043-1.050 of the Haitian Civil Code; Articles 1.454-1.459 of the Honduran Civil Code; Articles 6:66 a 6:71 of the Dutch and Suriname Civil Code; Articles 2.097-2.103 of the Mexican Civil Code; Articles 2.055-2.068 and 2.670 of the Nicaraguan Civil Code; Articles 1.063-1.067 of the Panamanian Civil Code; Articles 1.130-1.135 of the Puerto Rican Civil Code; Articles 1.093-1.099 of the Saint Lucian Civil Code; Articles 1.306-1.313 of the Venezuelan Civil Code).

Conversely, common law systems do not have a similar institution. The tender of performance constitutes an attempted performance. The obligor may prove that it has tried to perform the obligation [Startup v Macdonald (1843), 134 ER 1029], which enables it to claim for damages. But if the creditor refuses a tender of money, such a refusal does not free the debtor from its obligation of payment, so that it must be ready to pay if the creditor calls for it. The judicial deposit is a mechanism only available in cases of judicial claim (e.g. Part 35 Civil Procedural Rules of Jamaica of 2002).

Paragraph 2 of Article 6.1.10 of these Principles takes into consideration this diversity of solutions and adopts a flexible criterion, such that the possibility of an alternative performance through the tender of payment and/or deposit is only available where this is a way of performance admitted in accordance with the national law of the place of payment [Article 7:111 PECL; Article III-2:112 (1) DCFR]. The rule fits in with a traditional principle of generally accepted private international law and according to which the conditions of performance of obligations are not subject to the law of the contract, but to that of the place of performance.

3. Refusal to accept non-pecuniary obligations

Cases of refusal of non-pecuniary obligations create more difficult problems and more alternatives. Refusal to accept “obligations to do” or provisions of services prevent the obligor from performing its obligations through the fault or delay of the obligee. This has two effects: first, the obligor is not responsible for breach of contract and has the right to suspend the performance of its own obligation; secondly, the obligee does not perform its obligation to receive or accept the other party's performance, so that it is in breach of contract with the consequences established in the following chapter. Other additional consequences for the obligee who is late are, for example, the impossibility of rescinding the contract by invoking force majeure when the performance becomes impossible due to an event occurring after its unjustified refusal to accept the performance by the obligor.

The most controversial cases deal with the refusal to accept an “obligation to give” that is to accept a tangible or material good. Where such a refusal is unjustified, some legal systems, particularly in the field of sale contracts, oblige the seller to take reasonable steps to preserve the goods (Article 253 of the Cuban Civil Code; Section 20 of the Sale of Goods Act of 1979; Section 22 of the Sale of Goods Act of Antigua and Barbuda; Section 22 of the Sale of Goods Act of Montserrat; Section 22 of the Sale of Goods Act of Bahamas; Section 22 of the Sale of Goods Act of Trinidad and Tobago; Section 22 of the Sale of Goods Act of Belize; Section 21 of the Sale of Goods Act de 1895 of Jamaica; Article 85 CISG). Other legal systems qualify this duty more precisely, by allowing the obligor to sell the property it is liable to rapid deterioration or its preservation is unreasonably expensive. In this case, the obligation to deliver the goods becomes an obligation to pay the replacement value of the said good (Article 6:90 of the Dutch and Suriname Civil Code). The PECL also envisage this solution in Article 7:110, which includes the possibility of obtaining discharge from the obligation by depositing the property on reasonable terms with a third person to be held to the order of the creditor, and notifying the creditor of this, as in Article III-2:101 (1) DCFR and in Article 97 of the CESL. In other legal systems, a limited responsibility of the obligor is only provided when there is a fraud or a serious fault of the obligee (e.g. Article 1.883 of the Colombian Civil Code and Article 2.292 of the Mexican Civil Code) or they merely state the transfer of risks to the obligee (Article 106 Proposals for reform of the French law on obligations of 2013). In common law systems, the general rule is that refusal to accept performance implies breach of contract that allows the obligor to terminate the contract according to the general rules on breach of contract [Stein, Forbes & Co Ltd v County Tailoring Co Ltd (1916), 86 LJKB 448 (KB)]. The resale of the goods by the seller in case of refusal of the buyer to accept them implies the immediate termination of the contract according to the rules in Section 48 of the Sale of Goods Act of 1979; Section 48 of the Sale of Goods Act of Antigua and Barbuda; Section 48 of the Sale of Goods Act of Montserrat; Section 48 of the Sale of Goods Act of Bahamas; Section 48 of the Sale of Goods Act of Trinidad and Tobago; Section 49 of the Sale of Goods Act of Belize; Section 47 of the Sale of Goods Act of Jamaica; RV Ward Ltd v Bignall (1967), 1 QB 534 (C.A)].

The solution proposed in paragraph 3 of this Article is deliberately open, aiming to facilitate the adoption of solutions adapted to the circumstances. It takes into account solutions resulting from comparative studies. The delay of the obligee constitutes non-performance of its obligations and the obligor, in the light of the circumstances, should take all reasonable measures to mitigate the consequences of this non-performance by the obligee, including, if necessary the preservation of goods or their disposal when preservation expenses are excessive.

As in the case of deposit of payment, most civil law systems recognise the possibility of alternative performance through the deposit of the goods (Articles 1.656-1.665 of the Colombian Civil Code; Articles 797-802 and 1.084 of the Costa Rican Civil Code; Article 477 of the Costa Rican Commercial Code; Article 254 of the Cuban Civil Code; Article 332 of the Cuban Commercial Code; Articles 1.408-1.415 and 1.830 of the Guatemalan Civil Code; Articles 1.257-1.264 and 1.961 of the French and Dominican Civil Code (Article 205-207 of the Proposals for reform of the French law on obligations of 2013); Articles 1.043-1.050 of the Haitian Civil Code; Articles 1.454-1.459 of the Honduran Civil Code; Articles 2.097-2.103 of the Mexican Civil Code; Articles 2.055-2.068 and 2.670 of the Nicaraguan Civil Code; Articles 1.063-1.067 of the Panamanian Civil Code; Article 768 of the Panamanian Commercial Code; Articles 1.130-1.135 of the Puerto Rican Civil Code; Articles 1.093-1.099 of the Saint Lucian Civil Code; Articles 1.306-1.313 of the Venezuelan Civil Code; Article 146 of the Venezuelan Commercial Code). This possibility is, however, not characteristic of common law systems, where deposit is only for payments in case of judicial claim (e.g. Part 36 Civil Procedural Rules of Jamaica of 2002). As in deposit of payments, it seems reasonable to allow such a deposit only where it is available as an alternative performance according to the national law of the place of delivery. Besides, the final rule in paragraph 3 fits in the generally admitted principle of private international law according to which manners of performance of obligations are not subject to the contract law, but to the law of the place of performance.

Given that the refusal to accept the performance leads to the non-performance by the obligee, it must be taken into account that expenses arising from such a refusal by the obligor are considered as damage whose indemnity is on the obligor according to the rules on breach of contract in chapter 7. That is why it is not necessary to include a rule such as that included in Article 7:110 (4) PECL [Article 1.883 of the Colombian Civil Code; Article 1.084 of the Costa Rican Civil Code; Article 255 of the Cuban Civil Code; Article 1.830 of the Guatemalan Civil Code; Article 2.292 of the Mexican Civil Code; Article 2.670 of the Nicaraguan Civil Code; Article 308 of the Saint Lucian Commercial Code; Section 37 of the Sale of Goods Act of 1979; Section 38 of the Sale of Goods Act of Antigua and Barbuda; Section 38 of the Sale of Goods Act of Montserrat; Section 38 of the Sale of Goods Act of Bahamas; Section 38 of the Sale of Goods Act of Trinidad and Tobago; Section 39 of the Sale of Goods Act of Belize; Section 37 of the Sale of Goods Act of Jamaica. Therefore, the obligor's diligence in preserving the goods or even in transferring them to avoid their loss or minimise the storage expenses is actually a evidence of the general duty to mitigate the consequences of a breach of contract, which is a general principle of the doctrine of breach of contract. Likewise, damage suffered as a result of the deposit is due to the obligee's refusal to accept the performance and justifies the obligor's right to compensation.

This Article is inspired by Articles 6.1.14 to 6.1.17 of the Unidroit Principles. It exclusively deals with the obligation to obtain public authorisations and licences that are necessary for the validity and efficacy of the contract and especially with its regime of imputation and expenses. It does not determine the consequences of the lack of these authorisations or permissions where they are conditions of validity of the contract or of some of its terms, or they limit in any way the efficacy of the contract. These questions shall be governed by the general rules on illegality and especially by those related to force majeure. Particularly, if the authorisation is denied or its grant is excessively or unreasonably delayed, the parties may invoke the termination of the contract by force majeure or legal impossibility. Therefore, a specific regime such as the one included in Articles 6.1.16 and 6.1.17 of the Unidroit Principles is not considered necessary.

Given that obtaining public licences or authorisations is an overriding mandatory requirement imposed by a specific national law, usually the law of the place of performance, following the rule in paragraph III of the Preamble to these Principles the regime of imputation to one party of the obligations to apply and negotiate these permissions shall be firstly that of the national law requiring the authorisations. Failing specific rules within that law or if these are not mandatory, the regime of imputation shall be that agreed by the parties in the contract, as paragraph 1 states.

In the absence of an agreement between the parties, paragraph 2 introduces a rebuttable presumption, which obeys firstly an economic principle. If only one of the parties has its place of business in the country which requires the authorisation, this party is considered as being in the best position to apply and negotiate, because of its better knowledge of the context and this minimises the expenses. This presumption must not be interpreted rigidly. According to the general rules on contract interpretation, it may be considered in the light of circumstances that this rule is unreasonable. That is the case where the party established in the country where the authorisation must be obtained is not the party performing the characteristic part of the contract and therefore lacks the experience and know-how of the party performing the characteristic part, who is established in another country but is most accustomed to the administrative procedures pertaining to the contract in question.

Example 1: Two mining companies enter into a joint venture to exploit together a diamond mine in country X. One of the parties has its place of business in country X while the other is in country Y. The project requires obtaining public authorisations from the authorities of country X to explore and exploit the deposits. The party established in country X is responsible for the application and management of these authorisations.

Example 2: The owner of a large plot of land in country X enters into an agreement with a foreign oil firm to exploit its property. The contract requires obtaining several public authorisations from different ministries in country X (industry, agriculture, environment, etc.). Although the rule firstly imputes the owner the duty to obtain such authorisations, this is not reasonable and the foreign oil firm shall be responsible for these formalities as the characteristic performer which has the necessary experience and know-how to manage the application and negotiation of authorisations.

The obligation to apply for and manage the authorisation by the party obliged to perform the obligation that is subject to authorisation is subsidiary. At first, this rule links the regime of the authorisation with the characteristic performance. Such a presumption is applicable when none of the parties has its place of business in the country where the authorisation must be obtained and, on the contrary, where more than one party is established in such a country. Likewise, this subsidiary rule shall be applied where the imputation of that duty to the party established in the concerned country would not be considered as reasonable.

The duty to apply for and to manage the authorisation comprises, in accordance with paragraph 3, completing the formalities necessary for obtaining the authorisation with due diligence, in accordance with the best efforts rule. This is a very important requirement, since refusal or failure to obtain the authorisation entitles either of the parties to terminate the contract, on the grounds of legal impossibility. While the party that is not responsible for obtaining authorisations does not have to prove the insurmountable and external nature of the legal event that makes performance impossible or constitutes a force majeure, providing that this party has duly collaborated with the other party during the procedure of authorisation, especially in relation to information provided, the party obliged to obtain the authorisations must prove its best efforts and due diligence if it wishes to terminate the contract as a result of legal incapability. In this sense, the requirement of a diligent notice is also suited to the conditions required to justify the non-performance and terminate the contract for reasons of incapability or force majeure.

Furthermore, the obligation to apply for and manage negotiate authorisations includes the obligation to bear the expenses resulting from the procedure in question. This is simply the application of the general principle that provides that the performance of an obligation entails the assumption of the expenses arising thereof, as it is stated in the following Article.

The costs and expenses derived from the performance of obligations may be expressly or implicitly fixed in the contract. In many cases, the party that should bear the expenses is determined in accordance with the uniform commercial terms used (INCOTERMS) or trade practices. If the contract does not specify these criteria, the generally accepted rule in commercial trade is that each party must bear the expenses of the performance of its obligations [Article 1.629 of the Colombian Civil Code; Article Colombian 909 Commercial Code; Article 784 of the Costa Rican Civil Code; Article 337 of the Cuban Civil Code; Article 1.248 of the French and Dominican Civil Code (Article 192 of the Proposals for reform of the French law on obligations of 2013); Article 1.399 of the Guatemalan Civil Code; Article 1.034 of the Haitian Civil Code; Article 6:47.1 of the Dutch and Suriname Civil Code; 1.433 of the Honduran Civil Code; Article 2.086 of the Mexican Civil Code; Article 382 of the Mexican Commercial Code; Article 2.009 of the Nicaraguan Civil Code; Article 1.055 of the Panamanian Civil Code; Article 1.122 of the Puerto Rican Civil Code; Article 256 of the Puerto Rican Commercial Code; Article 1.084 and 1.405 of the Saint Lucian Civil Code; Article 330 (5) of the Saint Lucian Commercial Code; Article 1.297 of the Venezuelan Civil Code; Section 29.6 of the Sale of Goods Act of 1979; Section 30.5 of the Sale of Goods Act of Antigua and Barbuda; Section 30.5 of the Sale of Goods Act of Montserrat; Section 30.5 of the Sale of Goods Act of Bahamas; Section 30.5 of the Sale of Goods Act of Trinidad and Tobago; Section 31.5 of the Sale of Goods Act of Belize; Section 29.5 of the Sale of Goods Act of Jamaica; Article 6.1.11 UP; Article 7.112 PECL; Article III-2:113 (1) DFCR].