cc. Third Persons

Art. 79(2) addresses exemption of the promisor caused by actions of third parties:

(2) If the party's failure is due to the failure by a third person whom he has engaged to perform the whole or a part of the contract, that party is exempt from liability only if:

(a) he is exempt under the preceding paragraph; and

(b) the person whom he has so engaged would be so exempt if the provisions of that paragraph were applied to him.

The wording of this provision as well as its interplay with Art. 79(1) are not entirely clear. In scholarly writings Art. 79(2) is sometimes described as stricter, sometimes as more lenient compared to Art. 79(1), and sometimes even as merely declaratory. Since the requirements of Art. 79(2)(b) have to be fulfilled in addition to the requirements of Art. 79(2)(a) which in turn refers to Art. 79(1) the more convincing classification seems to be that of a stricter liability for third persons, i.e. not only the promisor itself but also the third person have to be exempt under Art. 79(1). What should always be kept in mind when applying Art. 79(2) is that the promisor’s liability cannot be affected by the fact that it passed its contractual duties on to a third party.

The scope of application of Art. 79(2) is, however, a small one. This is mainly due to the narrow understanding of the notion of third persons. Particularly, the seller’s own personnel usually are not third persons in this sense but part of the seller’s economic and organizational sphere. Thus, only Art. 79(1) is applicable. Also, neither upstream suppliers nor intermediary sellers are considered third persons the seller has engaged to perform the whole or part of the contract since acquiring the good is not in itself part of the seller’s contractual obligation but merely a prerequisite for the contractually required delivery of the good. Thus, as has been pointed out above, the seller is responsible for all parts of its supply chain and can only be exempt in rare cases relying on Art. 79(1).

Art. 79(2) only applies where the third person acts economically and functionally independent from the seller, outside of the seller’s organization and its spheres of control and responsibility. Examples include subcontractors such as freight carriers, independent assemblymen, or banks. In practice, drawing a clear line between Art. 79(1) and (2) is rarely necessary since the results are usually identical under both subsections.

Last modified: Friday, 23 October 2015, 6:38 PM