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For the PECL definition of "non-performance", go to PECL art. 1:301(4) and the comment and notes that accompany this definition. For the PECL definition of "fundamental non-performance", see the match-up of CISG art. 25 with PECL art. 8:103. For the PECL definition of "reasonableness", go to PECL art. 1:302 and the comment and notes that accompany this provision.
A contractual party's right to cure a non-performance under the condition that such cure does not create any -- or at least any excessive -- hardship for the aggrieved party, has emerged from Common Law traditions to become almost a staple of modern contract law, and of modern sales law in particular.
Different justifications to the principle may be cited, whether in terms of risk allocation, good faith obligations, or the relational approach to contract as a framework of relations between parties that shifts the analytic emphasis from overt rules (whether set contractually or by statute) to the actual framework of relations and interests involved. Be the theoretical overview what it may, the principle of cure is perhaps the most important deviation from strict doctrines of liability for breach, and as such it maintains an important relation to the doctrine of contract avoidance ("termination" in the context of the PECL), as discussed below.
Curing a non-performance may be relevant in various contexts: payment, defective or missing documents, non-conforming or non-delivered goods, etc. In the PECL -- which apply to any and all contractual transactions, not only sales or international sales -- Art. 8:104 recognizes a non-performing party's general right to cure, limited by parameters that will be discussed presently. In the CISG -- divided as it is into seller's and buyer's rights and obligations -- the right to cure non-performance depends upon the nature of the non-performance and the time of cure, and is divided into different typical situations, covered by several articles. Some grant parties the right to cure defective performance prior to the time of the projected performance as contracted: in those cases, cure limits aggrieved parties' power to declare contracts avoided in situations of anticipatory breach. Thus, Art. 34 relates to curing defective or non-conforming documents, and Art. 37 deals with breach in respect to goods. Other articles refer to the aggrieved party's power to require curative performance, such as Art. 46(2) and (3). These are relatively non-controversial issues, and one may argue that refusal to allow cure prior to the time set for performance is ad definitio a breach of good faith obligations. Indeed, the true meaning of cure pertains to a defaulting party's right to cure a defective performance or non-performance after the time of the projected performance has passed. Thus this commentary deals with the seller's right to cure under CISG Art. 48 and PECL Art 8:104, which extend the right to cure once the fact of breach has been established.
Although both the PECL and CISG recognize a right to cure under certain conditions, they differ both in general approach as well as in the specific rights granted. This may not be surprising, as the PECL applies to any and all contractual transactions, not only sales or international sales; however, the seller's right to cure is closely related to the buyer's right to avoid the contract, an issue on which the CISG and PECL share similar approaches. Indeed, the relation between cure and avoidance must be a central topic for analysis once the nature of the right to cure has been clarified.
One must distinguish between a breaching party's general (or unqualified) right to cure and a qualified right. A general right means that within certain timeframe constraints and other objective constraints, the breaching party may exercise the right unilaterally, independent of anything the aggrieved party may do in respect to the breach. A qualified right means that the breaching party's right to cure a non-performance depends upon the aggrieved party's failure to use some power or exercise some right that renders cure unavailable.
The primary right that aggrieved parties may hold and whose exercise would frustrate any subsequent attempt to cure is the right to declare the contract avoided. Once the contract is legally avoided there can be no cure. Thus a contractual regime may subject the power to avoid the contract to the right to cure. In such cases, the breaching party is immune - at least temporarily, until the curative period is over and cure fails -- from the aggrieved party's power to declare the contract avoided. In all other cases, any post-avoidance communication or indeed curative performance by the breaching party would fail qua cure, amounting to an offer of a new or modified contract which may or may not excuse past breaches.
The following discussion analyzes the relations between cure and avoidance of the contract in the PECL and CISG on these theoretical lines. Both the CISG and PECL allow for post-breach cure and both restrict the right to circumstances discussed in detail below; however, while the CISG allows for cure subject to avoidance of the contract, the PECL makes no such overt, general qualification. As argued below, contextual considerations both rationalize this discrepancy and mitigate it.
When analyzing cure mechanisms, two initial questions emerge: What failures of performance may be cured? Under what restrictions? While the latter question is dealt with in detail below, the former requires special initial attention. Under CISG Art. 48(1) the seller is allowed to cure "any failure" to perform his obligations. As scholars comment, this is a general provision, which covers fundamental and non-fundamental breaches alike. Likewise, PECL Art. 8:104 covers all "tenders of performance" that do not "conform to the contract," whether the non-conformance be fundamental or not, as long as the delay in performance itself does not constitute a fundamental non-performance. The breaching party's right to cure, then, initially operates independently of the distinction between fundamental and non-fundamental breaches, on which its inverse right -- the aggrieved party's right to avoid the contract -- hinges.
However, unlike the CISG, PECL Art. 8:104 restricts the right to cure to those cases in which the very delay in performance does not constitute a fundamental non-performance. In cases where "time is of the essence" as the Comment to PECL 8:104 puts it, the only way to achieve cure is through the aggrieved party setting a Nachfrist period; otherwise, the non-performing party has no right to cure. Indeed, this point requires some clarification: PECL Art. 8:104 sets apart a category of curative tenders that, while indeed remedying the initial non-performance at the time of the projected contractual performance -- whether fundamental or not (e.g., a non-conformity of goods) -- would, if allowed, constitute a fundamental non-performance at the time of cure. In transactions in which the time of performance is of the essence, the delay inherently associated with any curative performance may be such as to constitute a fundamental non-performance, even if the initial failure of performance was not fundamental and indeed cured. In such cases, the non-performing party has no right to cure and, accordingly, the aggrieved party has no obligation to accept cure. In granting the right to cure, Art. 8:104 is indifferent to the question of the fundamentality of the initial non-performance, but would not allow the curative tender itself to amount to a fundamental non-performance. Otherwise, the right to cure under Art. 8:104 exists in all (and only in all) cases where the delay itself -- while ad definitio amounting to a non-performance in relation to the contract -- does not constitute a fundamental non-performance.
In both the CISG and PECL, the crucial question of the relation between the seller's right to cure and the buyer's right to avoid the contract arises; ultimately, that question will determine in what cases the right to cure may actually take effect as a right rather than a newly-arrived agreement between the parties. This topic must be analyzed in detail, as follows.
The independent or "race" model according to which whichever is invoked earlier in time, whether the right to cure or a declaration of avoidance, becomes effective, rendering the other unavailable; but no a-priori normative hierarchy is established.
In the remainder of this section, the three models are invoked in the contexts of the Convention and the European Principles while remarking on the differences between their approaches as well as that of the UNIDROIT Principles. As we shall see, both PECL and CISG take the unconditional model (2) as their general framework while weaving in elements of the independent model (3) as well.
The relation between cure and avoidance of the contract in the CISG has been subject to considerable controversy within the drafting committee, and remains in academic controversy today.
Obviously, whether the right to cure is contingent upon the contract not having been avoided is a major relational characteristic of the contractual framework. However, both PECL and to an even greater degree the CISG apply a stringent approach to the buyer's right to avoid the contract following breach by the seller. To wit, declaring the contract avoided is generally reserved -- with one significant exception -- to fundamental breaches. This means that the right to cure is unqualified in the sense defined above in both PECL and CISG for any non-fundamental breach.
That he has failed to do so. The non-fundamental breach is then "upgraded" and avoidance of the contract becomes available.
On the face of it, this seems to belie the cure doctrine of CISG Art. 48. In fact, however, the two doctrines sit very well together due to the curative nature of the Nachfrist mechanism. In fact, whether the buyer allows a curative period on a Nachfrist mechanism such as CISG Art. 47 or PECL Art. 8:106, or whether the seller invokes cure based on the provisions discussed here, are two sides of the same coin and probably of little practical importance. Because the requirements of reasonableness direct both doctrines, the curative period in both cases is of the same nature.
The first clause of PECL Art. 8:104 simply states the right to cure a non-conforming tender at any time prior to the designated time for performance; it is therefore the counterpart of CISG Art. 37 rather than Art. 49 and relatively non-controversial. The second clause of Art. 8:104 grants a non-performing party the right to cure after the designated time to perform has passed (of course, following the sphere of application of the PECL, in any contractual context and not limited to sellers). However, unlike the CISG, this right under PECL is limited to cases where the delay would not amount to a fundamental non-performance. The nature of this limitation is discussed below in the section devoted to cure; it does not affect the clear rule that, in all cases of non-fundamental non-performance, the non-performing party maintains a general right to cure.
What is being cured under Art. 8:104? The language here is somewhat peculiar: it is a "tender of performance" that "does not conform" to the contract. The term "tender performance" appears elsewhere in the Principles though infrequently; in most cases, to "tender performance" seems to mean "to perform", whether the performance conforms to the contract or not. To emphasize this, the examples given in the PECL Comment on cure include both cases of sales and of services. Art. 8:104 also indicates that cure occurs in cases where the other party refused "acceptance" of the performance, although parties under PECL generally have no right to reject non-conforming tender and the so-called "perfect tender" of the UCC � 2-601 is unknown to it. The defining words are, therefore, "tender conforming to the contract," similar to that used in Art. 9:401 (Right to Reduce Price). What does "non-conformity" of tender to the contract (as opposed of non-conformity of goods) mean?
- Specifically, is the language of "non-conforming tender" different in any material sense from the simpler "non-performance" more prevalent in the PECL?
- Is the right to cure under Art. 8:104 reserved to cases where some performance was tendered, as opposed to total failure to perform?
There is nothing in the short PECL Comment on cure to indicate such a construction. While legal regimes sometimes distinguish between complete failure to perform and partial failure, and while one can admit to the logic of allowing for cure in cases of debtors who at least tried and managed to complete a portion of their obligations, such a distinction is generally reserved to specific areas of law and is justified by specific contexts. It does not seem correct to make it a core precept of the general principle of cure.
Thus, for the time being and until tribunals and cases offer casuistic constructions of Art. 8:104 the conclusion should be that there is no essential difference between "tender non-conforming to the contract" and "any failure to perform," the more overt language of the CISG Art. 48(1).
The CISG's treatment of the relation between cure and avoidance of the contract changes drastically in respect to fundamental breaches . Under CISG Art. 48(1) the seller is allowed to cure "any failure" to perform his obligations. On the other hand, under Art. 49(1) the buyer may avoid the contract where the seller's failure amounts to a fundamental breach, whether the seller offers to cure or not.
The relation between the two competing rights is set up in Art. 49(1) where the operative language makes the seller's right to cure "subject to Art. 49." Art. 49 regulates avoidance of the contract following either fundamental breach or "constructed fundamentality" following failure to perform throughout a Nachfrist period. As the second case in fact allows for cure -- initiated by the aggrieved buyer -- the remainder of this section will discuss cure in cases of fundamental breaches. What does "subject to Art. 49" mean?
- Does it mean that under CISG the seller's right to cure is qualified, in that in case of fundamental breach it can be cut off through the buyer's exercise of his power to declare the contract avoided?
- Or does it even indicate that cure is not designated for cases of fundamental breaches at all?
If either of these is the proper construction of the relation between Arts. 48 and 49, then the right to cure in cases of fundamental breach under CISG seems limited indeed; it would then also stand in contrast to the PECL's much more liberal approach to cure. In the following, I shall argue that the proper construction of the relation between cure and avoidance of the contract under PECL in fact allows for cure even in cases of fundamental breach, although in those cases they are indeed subject to being cut off by the buyer's exercise of the right to avoid the contract; hence a qualified right to cure in the terms specified above.
It is worthwhile to note that under UNIDROIT Principles the breaching party's right to cure is unequivocally stronger than the aggrieved party's power to terminate the contract. UNIDROIT Principles Art. 7.1.4(2) states that "The right to cure is not precluded by notice of termination"; the Comment adds that "If the aggrieved party has rightfully terminated the contract � the effects of termination � are also suspended by an effective notice of cure. If the non-performance is cured, the notice of termination is inoperative." This is not the place for a comprehensive critique of this approach; to this commentator, it seems unattractive in the extreme in the sense that rightful terminations of contracts may posthumously be rendered inoperative, thus introducing serious uncertainty into the calculations of the aggrieved part who has terminated the contract rightfully and wishes to move on; it also plays havoc with the conceptual integrity of termination of contract. Nor does the PECL contain a similar provision, as discussed below.
According to Professor Honnold, the seller's right to cure under Art. 48, being more specific than the general right to avoid the contract, prevails over the buyer's right to avoid the contract. With respect, such a construction might hold absent the operative words "subject to Art. 49." As the clause stands, following a long and tortured legislative history in the drafting committee, it clearly regulates the relationship between cure and avoidance by creating a hierarchy between them: cure is available only inasmuch as the power to avoid the contract under Art. 49 has not been rightfully exercised. As Professor Ziegel puts it, "no right to cure survived avoidance of the contract by the buyer." Thus, under terms of CISG Art. 48(1), the buyer's right to avoid under Art. 49 is an independent right unaffected by the seller's intentions to cure. This conclusion is strengthened by Art. 48(2) that deals with suspension of the buyer's power to declare the contract avoided during a curative period requested by the seller: the aggrieved buyer's communicative act (including failure to communicate) is necessary for such a suspension. Had the seller's right to cure been preemptive in relation to the buyer's power to avoid the contract, no such communicative act on behalf of the buyer would be necessary: the buyer would then have been automatically enjoined from exercising the power to avoid the contract during the period specified in the seller's notice (which would not then be a "request" at all) (for discussion see below). Case law generally supports this conclusion, although cases exist in which courts remark, at least in obiter dicta, and contra the analysis presented here, that buyer's right to avoid the contract is in some manner contingent upon giving the seller a proper opportunity to cure the defect.
As noted above, unlike the CISG, PECL Art. 8:104 restricts the right to cure to those cases in which the very delay in performance does not constitute a fundamental non-performance. This is not a matter of competition between the non-performing party's right to cure and the aggrieved party's power to terminate the contract (under PECL Art. 9:301), that would obviously kick in in such cases. Whether the aggrieved party intends to terminate or not, in cases where "time is of the essence" as the PECL Comment on Art. 8:104 puts it, the only way to achieve cure is through the aggrieved party setting a Nachfrist period, i.e., suspending its power to terminate the contract for the duration of the curative period.
While the CISG, in the opening words of Art. 48(1), sets the relations between cure and avoidance of the contract, the PECL does not overtly make the right to cure subject to the buyer's power to terminate the contract. In the terms discussed above, the right to cure in Art. 8:104, although limited to the classes of cases discussed above, is general rather than qualified.
This would seem to indicate a stronger right to cure in the PECL than in the CISG that would extend to the relation between cure and termination. However, as noted above, Art. 8:104 limits the right to cure to cases where the delay in performance would not amount to a fundamental non-performance. Under PECL 9:301, only fundamental non-performances allow the buyer to terminate the contract. It thus follows that the seller has no right to cure in any case where due to the delay the buyer holds the power to terminate the contract, even if the buyer eventually does not exercise that power.
Under PECL Art. 8:104, the question of whether the seller's right to cure is or is not subject to the buyer's power to terminate the contract simply cannot occur in cases where the power to terminate stems from the very delay associated with the curative tender.
What about cases of fundamental non-performance that may be cured without the delay amounting to fundamental non-performance? Such cases potentially involve two competing norms: ostensibly, they allow for the non-performing party's right to cure under Art. 8:104, as well as for the aggrieved party's power to terminate the contract under Art. 9:301. What is the relation between these two norms?
Had there been no overt solution to this question we would have to move towards jurisprudential considerations such as offered by Honnold, e.g., examining whether there is some established solution to a clash of the two norms (such as the application of the more specific over the more general one), or employ some general framework of risk allocation. In the context of the PECL, however, interior analysis shows that the power to terminate the contract is generally independent and effectively not contingent upon the right to cure, as follows.
The general way in which termination of contract in the PECL is executed is through appropriate notices (see Art. 9:301). It is typical of the PECL that it regulates substantive rights through a regulation of the corresponding notices. Art. 9:303(3)(a), allows the aggrieved party to give a notice of termination either before or after a late tender -- such as cure -- has been made; the only restriction is that for a post-cure notice of termination to be effective it must be given in reasonable time. This is therefore not merely a procedural rule regarding the proper way to exchange notices but a regulation of the relations between termination and cure in the PECL. Under PECL Art. 9:305(1) that governs the effects of termination of contract, "Termination of the contract releases both parties from their obligation to effect and to receive future performance." Cure is obviously a future performance (the language of Art. 8:104 is "tender of performance" but the semantic difference is meaningless), and so termination of the contract under PECL releases the aggrieved party from any obligation to receive cure, exactly as its effect is to relinquish her right to enforce the contract through specific performance.
PECL Art. 9:303(3)(b) mitigates the harshness -- for the non-performing party -- created by the strict hierarchy in favor of termination over cure in Art. 9:303(3)(a). It determines that in cases in which the aggrieved party "knows or has reason to know" of forthcoming cure in reasonable time, it must notify the curing party of its refusal to accept cure in order to maintain its power to terminate the contract. Failure to notify the curing party accordingly will render termination of the contract unavailable and the road to cure open; however, a notice of refusal to accept cure would keep the power to terminate the contract alive. Even then -- unless the refusal to accept cure includes or is constructed to include a notice of termination of the contract -- the right to cure under Art. 8:104 would still hold. Only a termination of the contract would relieve the aggrieved party from her obligation to accept cure. The conclusion then must be, that the right to curative performance depends on the contract not having been previously terminated.
Art. 9:303(3)(b) is a relational protection of the non-performing party's reliance interests in the context of curative performance, but it obviously recognizes the aggrieved party's power to terminate the contract, which can be rendered ineffective only under the specified circumstances indicated. Note, that the onus-creating language in PECL Art. 9:303(3)(b) relating to the aggrieved party "knows or has reason to know" is wider than under the corresponding CISG Art. 48(2) and (3), according to which the information relating to the forthcoming cure must be communicated by the breaching party itself. The PECL recognizes that there are instances in which the aggrieved party should assume that cure is forthcoming, even absent direct communication from the breaching party to that effect.
Of course, the aggrieved party's notification to the non-performing, cure-aspiring party under 9:303(3)(b) may be that it refuses cure and hereby terminates the contract; like under the CISG, the PECL does not offer non-performing parties a preemptive right to cure in cases of fundamental and tantamount non-performances (there are no other relevant cases in fact), unless the aggrieved party assents to accept cure or unreasonably fails to notify the curing party that it would not accept it.
The analytic conclusion then must be that the power to terminate the contract under PECL - which exists only in cases of fundamental and tantamount breaches -- is independent of any allowance for cure, except where the aggrieved party's power becomes suspended under Art. 9:303(3)(b). This differs from the approach of several national legal systems. As Professor Zimmermann explains it, in German sales law the right to "supplementary performance" is the aggrieved buyer's "primary right." Although not spelt out as such, termination of the contract under German law generally becomes available to the aggrieved party following the breaching party's failure to cure. That is not the approach of either the CISG or the PECL.
Under PECL, Termination of the contract releases the aggrieved party from the obligation to accept cure and thus nullifies the non-performing party's right to cure, which otherwise exists in relation to both fundamental and non-fundamental non-performances alike (with the exception of the fundamentality of the delay itself, as discussed above). The aggrieved party is allowed to terminate the contract even after a curative tender, as long as it does so in reasonable time. Of course, a successful cure may frustrate the availability of post-cure termination if the cure -- as successful cure should -- renders the non-performance at the time of cure non-fundamental.
Both the CISG and PECL allow for some measure of preemptive cure, i.e., cure that renders avoidance of the contract unavailable, whether temporarily or irrevocably. This does not mean, however, that preemptive cure is given the normative status of right that unilaterally tramps rights and powers held by the aggrieved party. Under the CISG Art. 48(2), if the aggrieved buyer allows the seller to cure during the time indicated in his request (whether by assenting or failing to reply), she is barred from avoiding the contract during that period. Note, however, that the decision whether to suspend the power to avoid the contract or not remains with the aggrieved buyer: she may always answer in the negative to a seller's request. As the seller's right to cure operates whether the buyer consents to accept cure or not, the buyer's refusal to accept cure in itself has no legal effect other than keeping her power to avoid the contract effective. However -- as concluded above -- nor is the buyer's power to avoid the contract effected merely by the seller's intention or efforts to cure. That power becomes available only in cases of fundamental and tantamount breaches, and we conclude that those are the cases in which Art. 48(2) really matters.
The question of preemptive cure becomes relevant in cases of fundamental breach, because otherwise the seller has no right to avoid the contract. Yet the only way in which cure can be preemptive in those cases is when the buyer agrees in advance to withhold exercising her power to avoid the contract for an indicated duration; and under both PECL and CISG the buyer's silence operates as such an assent to cure.
Under the risk-allocating terms of CISG Art. 48(1) (no unreasonable delay, no inconvenience to buyer, and assumption of costs by seller), the seller holds an unqualified right to cure in all cases of non-fundamental breach. However, the seller's right to cure in cases of fundamental breach is qualified in that it may be cut off and become unavailable if the seller rightfully avoids the contract under Art. 49(1), unless the buyer has assented to accept cure or failed to object to it, which would result in suspension of her power to avoid the contract under Art. 48(2).
Under PECL Art. 1:804, the right to cure is not qualified for either fundamental or non-fundamental non-performances, although it is limited in cases where time is of the essence, as discussed above. However, under Art. 9:303(3)(a) the aggrieved party's power to terminate the contract is unaffected by later cure as long as the notice of termination is given in reasonable time after cure was performed. This provides a strong incentive to non-performing parties to communicate their intention to cure so as to bring about the suspension of the aggrieved party's power to terminate the contract under Art. 9:303(3)(b), as otherwise their cure will not operate preemptively.
Cure may accrue costs and internalize risks that are not allocated between the parties in the contract. If any exist, the CISG Art. 48(1) allocates them to the seller. As far as the buyer is concerned, the curative performance is to be as close as possible to the projected contractual performance. Obviously, any associated costs which would effectively serve to remove or reduce the seller's susceptibility to a lawsuit for breach of contract must be borne by the seller. The PECL is silent on this point, but as this rule seems germane to the logic of cure it must hold under it, as well. Also, as cure is a substitute performance, PECL Art. 7:112, according to which each party must bear "the costs of performance of its obligations", will apply here, by analogy if not directly.
There must be a limit to the period during which the aggrieved seller must accept cure. CISG Art. 48(1) limits cure only to cases where it can be achieved without unreasonable delay. This language, similar to the "unverzüglich" of the BGB [German Civil Code] or the "interpellation suffisante" prevalent in the French Code Civil, indicates a relatively shorter period than the "reasonable time" under which a declaration of avoidance must be given according to CISG Art. 49. It is therefore a further application of the general principle of reasonableness that, as Professor Kritzer has argued, is a general principle of the CISG.
In cases where the seller has indicated to the buyer the length of the intended cure period -- as must be the case when the breach is fundamental (under CISG Art. 49(2)) and is prudent also when it is non-fundamental -- that indication, subject to the requirement of reasonableness, will determine the period for cure. In no case other than when he has explicitly accepted is the buyer obligated to accept cure later than that.
The PECL's generally stringent approach to delay bears an interesting relation to the parallel requirement in CISG Art 49(1). PECL Art. 8:104 in fact uses language that appeared in early drafts of the CISG and was later scrapped for the "unverzüglich" principal. In the context of the PECL, the general obligation to act in good faith and fair dealing (Art. 1:201) governs the substantial right to cure. It should be added, that in similar contexts the PECL treats delayed performance more severely than the CISG. For instance, while avoidance of contract for non-fundamental breaches is available under CISG in cases of non-delivery only (following a Nachfrist period, see CISG Art. 49(1)(b)), PECL allows avoidance following Nachfrist in the wider category of cases of non-fundamental delays in performance (see PECL Art. 8:106(3)).
May there be cure in a time that is longer than "reasonable"? Honnold emphasizes, that the seller's request according to Art. 48(2) should not necessarily be restricted to the conditions of cure of Art. 48(1); seller may therefore request to perform cure under different conditions, to which the buyer may agree or not, but will be held to if she fails to respond to the said request.
What if the seller's request under Art. 48(2) and (3) does not indicate a time frame for cure? According to some sources, such an indication is a sine qua non of the request and without it, it can have no effect. To this commentator, this seems too harsh; if the seller does not indicate a time for cure, the default time indicated in Art. 48(1) -- namely, "without reasonable delay" -- would kick in and govern the undertaking to cure. Art 48(2) allows the seller to attempt to divert from the minimal time requirement, but does not oblige him to do so.
The performance of cure does not obliterate the fact that a breach was in fact performed. Thus, although the performance of appropriate cure virtually substitutes for that of the original contractual obligation (hence making both avoidance of the contract and any order for specific performance inappropriate), it does not preclude an additional order for damages. Under CISG Art. 48(1) these are damages "as provided for in this Convention" i.e., including those damages covered by Art. 74. (A dictum by an Austrian court suggests that while CISG generally provides for reliance as well as expectation damages for breach of contract, cure generally revokes the availability of the latter. However, one must note that while in cases of successful cure expectation damages will not be awarded on the merits (that, after all, is what cure is aimed to achieve), it does not follow that this is the proper construction of the damages clause in Art. 48. Even cure that is identical to the projected contractual performance in all save the time of performance may fail to compensate for loss of some of the projected (and foreseeable, etc.) added value to the buyer expected from the contract. There is no reason to indemnify the seller from liability in such cases. From this perspective, what cure affords breaching sellers (and to what it subjects aggrieved buyers) is, in fact, the possibility of mitigating any damages to which the seller would otherwise be liable through substitute performance. There is no guarantee that the substitute performance will cover the entire loss to the buyer generated by the breach.
PECL Art. 8:104 says nothing about damages; however, it does not preclude further damages in cases of cure and the same logic should apply here. Thus the general PECL clauses that make damages available to aggrieved buyers would operate here. Cure would not preclude damages, although it would contribute towards there mitigation, and a perfect performance of cure would mitigate those damages completely.
While avoidance is declared, cure is performed. However, declaring the intention to cure (or otherwise making it known to the aggrieved party, cf. PECL Art. 9:303(3)(b)) may carry with it a legal effect in the sense of shifting a certain communicative onus to the aggrieved party who wishes to retain the power to avoid the contract. This is true for both PECL (as discussed cursorily above) and the CISG, as follows.
While PECL Art. 8:104 does not indicate any special mode for notices of cure exchanged by the parties -- and is thus subject to the regular rules governing communication, set in Art. 1:303, and indirectly those governing notices of termination in Art 9:303 -- the CISG designates an entire communicative system to govern the establishment of cure, Art. 48(2), (3) and (4). This system governs, however, more than merely the ways in which notices in the context of cure are to be exchanged between the parties, as it regulates some of the substantive rights of the parties contingent on their communicative behavior.
Under both CISG and PECL (and unlike under the UNIDROIT Principles), cure may be exercised without notice to the aggrieved buyer. CISG Art. 48(2), however, discusses the case in which the seller "requests" the buyer's approval of the seller's intended cure. (Literally, the relevant language is "accept[ing] performance", by the buyer, a slightly awkward wording within the context of the CISG which does not operate under the perfect tender rule and thus buyers have no right to reject performance other than by avoiding the contract).
There are two separate operations involved here. In the case on non-fundamental breach, the seller is not so much "requesting" anything as much as giving notice of cure; it is not a request because the buyer has no right to refuse. The operation of the request is much more significant under conditions of fundamental breach. As under such conditions the buyer retains the right to avoid the contract, the seller in fact offers to cure the breach under condition that the buyer forebear from exercising her right to declare the contract avoided. The buyer may, of course, refuse the offer to cure and exercise her power to avoid the contract (or not avoid it, as the case might be, and resort instead to other remedies, such as damages). But if she agrees to "accept" cure, or simply fails to respond to the request within a reasonable time, she will become estopped from exercising her right to avoid the contract or reducing the price for the duration indicated in the request. Note that this is an exception to the general rule of the CISG Art. 18(1) according to which "Silence or inactivity does not in itself amount to acceptance."
The harshness of this rule is mitigated by Art. 48(4) according to which a request according to Art. 48(2) becomes effective upon receipt by the buyer (itself an exception to the general rule in Art. 27 where it suffices to dispatch the notice). Of course, whether a breach is fundamental or not may be controversial; the buyer herself may be unsure of the availability of avoidance, the seller unsure whether she holds a right to cure. Art. 48(2) provides a strong incentive to the cautious seller to communicate with the buyer and sort this out. There is no prejudice to the seller for if the breach is non-fundamental than she retains to right to cure whatever the buyer's response may be. Yet it would prevent the situation of a seller engaging in costly cure while buyer intends to declare the contract avoided. The "race" between cure and avoidance is thus best resolved through application of CISG Art. 49(2).
1. Senior Lecturer in Law and Jurisprudence, Faculty of Law, University of Haifa, Israel. The author gratefully acknowledges the hospitality of Professor Reinhard Zimmermann, director of the Max Planck Institute for Comparative Private and Private International Law in Hamburg, under whose auspices this commentary was written, as well as that of its Fellows and other staff. Comments on a prior draft by Dr. John Felemegas and Prof. Albert H. Kritzer were invaluable.
2. For a survey of national systems see Ole Lando & Hugh Beale eds., Principles of European Contract Law: Parts I and II, Kluwer Law International (2000) 368-370; also Treitel, Remedies, �276. Such is the general case in Common Law, expressed already in Borrowman, Phillips & Co. v. Free & Hollis, (1878) 4 Q.B.D. 500. See Jacob S. Ziegel, "The Remedial Provisions in the Vienna Sales Convention: Some Common Law Perspectives" in Galston & Smit (ed.), International Sales: The United Nations Convention on Contracts for the International Sale of Goods, (Matthew Bender, 1984) pp. 9-1 to 9-43, available online at <http://cisgw3.law.pace.edu/cisg/biblio/ziegel6.html>. The English Sales of Goods Act does not include a seller's general right to cure, while the UCC �2-508 famously does. For elaboration on the position of English law see and Goode, Commercial Law 298-301; Rex J. Ahdar, "Seller Cure in the Sale of Goods", 1990 Lloyd's Mar. Com. L. Q. 364. Other commentators are more skeptical concerning the availability of post-breach cure under English law; see Anette Gärtner, "Britain and the CISG: The Case for Ratification -- A Comparative Analysis with Special Reference to German Law" in Review of the Convention on Contracts for the International Sale of Goods (CISG), Kluwer Law International (2000-2001) 59-81, available online at <http://cisgw3.law.pace.edu/cisg/biblio/gartner.html>; see also Sale and Supply of Goods, Law Com. 85, Scot. Law Com. 58 (1983) para 2.38 according to which "There is great uncertainty, at least in English law, as to the existence and extent of the seller's right to repair or replace defective goods".
3. See Jonathan Yovel, "Comparison between provisions of the CISG (Buyer's right to avoid the contract: Article 49) and the counterpart provisions of the PECL (Articles 9:301, 9:303 and 8:106)", available online at <http://cisgw3.law.pace.edu/cisg/biblio/yovel49.html>.
4. Commentators frequently use "right" and "power" interchangeably. Hohfeld's analytic language would be useful here (Hohfeld supplied a Saussurian-style analytic syntax whereby legal concepts are defined through their relation to other concepts): to claim that A holds a right -- properly defined -- correlates with B's duty; A's liberty correlates with B's lack of right to object, and A's power correlates with B being subject to that power in the sense that using the power would change the normative array of rights, duties, liberties, powers, subjections, immunities etc. between the parties. Thus the "right to declare the contract avoided" is, properly speaking, a legal power (it changes the parties' legal relations), as is the buyer's power to set a Nachfrist period; but as the seller's "right to cure" does not in itself change the relational framework yet does require the buyer to accept the curative tender it is, properly speaking, a right. Had it required no compliance from the buyer -- had it been performed, say, by the seller and a third party -- cure would be, properly speaking, a liberty. See Welsley Hohfeld, Fundamental Legal Conceptions as Applied in Juridical Reasoning (New Haven: Yale University Press, 1964 ). For an application of the Hohfeldian matrix to the analysis of contractual relations see Jonathan Yovel, "What is Contract Law 'About'? Speech Act Theory and a Critique of 'Skeletal Promises'", 94 Northwestern U. Law Rev. (2000) 937-962.
5. See PECL Art. 9:305.
6. See Ziegel, supra note 2 at 9-21.
7. See, e.g., UNIDROIT Principles Art. 7.1.4(2); BGB [German Civil Code] �323(1); see also infra note 34 and keyed text.
8. Cure may, of course, be reached at in this way as well. Such may be the case even when declarations of avoidance were deemed ineffective (e.g., because the alleged breach was not fundamental). In such cases, following a new agreement the question of the scope of seller's obligation, although in essence being curative in nature and in relation to the prior contractual relations between the parties, is a matter of general contractual interpretation. Courts would take into consideration the curative context, but allow that parties have since undertaken a new allocation of performances and risks. Such was the case, e.g., in France 26 April 1995 Cour d'appel [Appellate Court] Grenoble (Marques Roque Joachim v. Manin Rivière), available online at <http://cisgw3.law.pace.edu/cases/950426f2.html>.
9. See Chengwei Liu, "Cure by Non-Conforming Party: Perspectives from the CISG, UNIDROIT Principles and PECL, available online at <http://cisgw3.law.pace.edu/cisg/biblio/chengwei1.html>.
10. Ole Lando & Hugh Beale eds., Principles of European Contract Law: Parts I and II, Kluwer Law International (2000) 368-372.
11. While avoidance and enforcement of the contract also negate each other in the same normative space - they maintain opposite obligations for the parties -- it is only the aggrieved party that chooses between them.
12. See infra note 34 and keyed text.
13. Official Records of the United Nations Conference on Contracts for the International Sale of Goods, Vienna 10 March -- 11 April 1980, A/CONF. 97/19, at 40 et seq., available online at <http://cisgw3.law.pace.edu/cisg/text/link48.html>.
14. See Yovel, supra note 3.
15. For reasonableness being a general principle of the CISG (and in this somewhat mitigating the absence thereof of a general obligation to act in good faith) see Albert H. Kritzer, "Overview Comments on Reasonableness", available online at <http://cisgw3.law.pace.edu/cisg/text/reason.html>: "Reasonableness is specifically mentioned in thirty-seven provisions of the CISG and clearly alluded to elsewhere in the Uniform Sales Law. Reasonableness is a general principle of the CISG." See also comments by Jelena Vilus, available online at <http://cisgw3.law.pace.edu/cisg/text/reason.html#vilus>; rpr. in Homenaje a Jorge Barrera Graf, vol. 2, Mexico: Universidad Nacional Autónoma de Mexico (1989) 1440-1441. For the definition of reasonableness recited in the Principles of European Contract Law and references to reasonableness in Continental and Common Law domestic rules, doctrine and jurisprudence, go to <http://cisgw3.law.pace.edu/cisg/text/reason.html#def>. For further discussion regarding the correlation between the PECL's definition of reasonableness and the meaning of this term to CISG legislators when they used the concept in drafting the Convention's provisions, see <http://cisgw3.law.pace.edu/cisg/text/reason.html#over>.
16. See especially PECL Arts. 6:108 (quality of performance), 7:103 (Early Performance), 9:201 (Right to Withhold Performance) and 9:303 (Notice of Termination).
17. See supra note 10.
18. See Peter Schlechtriem, "Interpretation, gap-filling and further development of the UN Sales Convention" available online at <http://cisgw3.law.pace.edu/cisg/biblio/schlechtriem6.html>.
19. Such is the case with the construction of "non-delivery" in CISG Art. 49(1)(b) that authorities agree is different from "partial delivery"; see Yovel, supra note 3. In other contexts, some legal systems allow defenses against enforcement of negotiable instruments in cases of completer failure of consideration tendered but not in cases of partial failure, etc.
20. For a similar criticism see Christopher Kee, "Commentary on the Manner in which the UNIDROIT Principles May Be Used to Interpret or Supplement Article 48 of the CISG", July 2004, available online at <http://cisgw3.law.pace.edu/cisg/principles/uni48.html>.
21. See John Honnold, Uniform Law for International Sales under the 1980 United Nations Convention, Kluwer Law International, 3d ed. (1999); pp. 320-21, available online at <http://cisgw3.law.pace.edu/cisg/biblio/ho48.html>. With respect, I dispute this jurisprudential point on the following grounds. Cure is certainly more specific than breach in general, in the sense that the set of all the cases of cure is a sub-set of all the cases of breach (it is complemented by the set of non-cured breaches). Had avoidance been available for any breach, the set of all available avoidances would then be identical with the set of all breaches and Honnold's argument would hold. However, under both CISG and PECL avoidance of the contract is generally limited to cases of fundamental breach (and even then not to all such cases, as reasonable time limitations render avoidance unavailable in some cases). There are cases where cure is available but avoidance is not, namely the set of non-fundamental breaches. Hence both the set of all instances of cure and the set of all rightful avoidances are both independent subsets of the general set of breaches -- they maintain a certain zone of convergence, namely, the set of fundamental breaches that where the contract has not been avoided -- yet none is more or less specific than the other. Indeed, to claim that the set of instances of cure is in some sense a subset of the set of available avoidances is simply assuming that which is to be determined.
22. I use the term "clause" here according to the American usage of normative rather than textual structure, viz., to designate a complete and separate norm, even if within the formal structure of the text holding it, it does not occupy a separate position.
23. See UNCITRAL Digest of case law on the United Nations Convention on the International Sale of Goods (8 June 2004), A/CN.9/SER.C/DIGEST/CISG/48; Digest 2. Available at: <http://www.uncitral.org/english/clout/digest_cisg_e.htm>. See also John O. Honnold, Uniform Law for International Sales Under the 1980 United Nations Convention (Kluwer 1980) 296 (hereafter cited as "Honnold"); Michael Will, "Article 48" in Bianca-Bonell Commentary on the International Sales Law, Giuffrè: Milan (1987) 347-358 available online at <http://cisgw3.law.pace.edu/cisg/biblio/will-bb48.html>; and Mirghasem Jafarzadeh, "Buyer's Right to Withhold Performance and Termination of Contract: A Comparative Study Under English Law, Vienna Convention on Contracts for the International Sale of Goods 1980, Iranian and Shi'ah Law" (2001) available online at <http://cisgw3.law.pace.edu/cisg/biblio/jafarzadeh1.html>.
24. Some courts appear to have in fact established a different hierarchy. In one German case, the court held that the right to avoid the contract under Art. 49(b)(2) was not available to a buyer who did not allow the seller the proper opportunity to cure; hence, the declaration of avoidance in that case was deemed unlawful. However, in that case the court also ruled that no fundamental breach was committed as the goods that were delivered -- fabrics for the manufacture of goods -- passed the relevant tests of conformity. As this was not a case of non-delivery, Art. 49(b) could not apply and, if avoidance of the contract was unavailable, that must have been the cause, not the relations between avoidance of the contract and cure. Furthermore, this case should be read in the context of CISG Arts. 47 and 48(2), as the seller has communicated to the buyer his intention to cure; the unavailability of avoidance during the ensuing period follows Art. 48(2), not necessarily an inverse relation between Arts. 48 and 49 to the one argued for above. Additionally, the court held that by sending samples of fabric instead on the curing goods themselves seller has performed lawfully, as there was no certainty that buyer would accept the substitute goods. To this commentator, it seems that the court deemed that the seller has performed reasonably and in good faith in attempting to cure the alleged breach. In itself, however, that cannot change the normative hierarchy between avoidance of the contract (which under CISG as under PECL is not a matter of fault but one of objective performance) and cure under CISG. Indeed, the fact that the power to avoid is normally suspended following Art. 48(2) is a logical corollary of that hierarchy; it would be redundant otherwise. Germany, 24 September 1998 Landgericht [District Court] Regensburg; case presentation including English translation available online at <http://cisgw3.law.pace.edu/cases/980924g1.html>.
25. Ziegel, supra note 2, at 9-21. Such is also Professor Schlechtriem's opinion, see Peter Schlechtriem, Uniform Sales Law -- The UN-Convention on Contracts for the International Sale of Goods (Manz, Vienna: 1986) pp. 76-77, available online at <http://cisgw3.law.pace.edu/cisg/biblio/schlechtriem.html>. Professor Schlechtriem adds that this construction was objected to at the committee by the German delegation that wished to strengthen the right to cure so that it does not become subject to cut off by avoidance of the contract, but that this approach was not ultimately accepted. For case law where the court had -- among other determinations -- accepted the buyer's effective declaration of avoidance of the contract as putting an end to the availability of cure by the breaching seller see Italy 24 November 1989 Court of First Instance Parma (Foliopack v. Daniplast), presentation including English translation available online at <http://cisgw3.law.pace.edu/cases/891124i3.html>.
- ICC Arbitration Case No. 7531 of 1994, CLOUT case No. 304, case presentation available at <http://cisgw3.law.pace.edu/cisg/cases/947531i1.html>.
See also Official Records of the United Nations Conference on Contracts for the International Sale of Goods, Vienna, 10 March-11 April 1980 (United Nations publication, Sales No. E.81.IV.3), p. 41.
27. As well as contra the proper construction of CISG Art. 49 that requires no grace period for performance as a condition for declaring the contract avoided.
28. See supra note 24; other courts casually argue that "[seller] offered to repair the defect: [buyer] should have accepted this proposal, instead of seeking avoidance of her contract with the [seller]", even in cases of alleged fundamental breach; Switzerland 27 April 1992 District Court Locarno Campagna, case presentation including English translation available at <http://cisgw3.law.pace.edu/cases/920427s1.html>. Such dicta, in consideration of the above argument, seem to reflect preferred rather than the applicable law.
29. See supra note 10.
30. Termination for non-fundamental delays in performance is also available, following a Nachfrist period set by the buyer (see PECL Art. 8:106(3)); however, in such cases it is pointless to ask cure is available as the essence of the Nachfrist mechanism is the granting of a curative period, although set by the buyer rather than by the seller.
32. Reinhard Zimmermann, "Liability for Non-Conformity: The New system of Remedies in German Sales Law and its Historical Context," 10th John Maurice Kelly Memorial Lecture, Dublin 2004, at pp. 38-9.
33. See BGB �� 437 et seq.
34. BGB � 323(1). That is the general case; there are specific clauses such as � 635 (for contractor's option to cure). BGB � 323(2) lists several categories of exemptions and scattered clauses add to those (e.g. � 440 and the obvious � 325(5)).
35. Cure obviously becomes available also in cases of non-fundamental non-delivery if the buyer has set a Nachfrist period. Failure to cure throughout that period makes avoidance of the contract available to the buyer under CISG Art. 49(1)(b).
36. Honnold's proposal to internalize the offer to cure into the construction of the fundamentality of the breach would have been a brilliant resolution to the relation between cure and avoidance; unfortunately it was not accepted. See Ziegel, supra note 2, at 9-21. See also Michida, "Cancellation of Contract",27 Am.J. Comp. L. 286-288 (1979), available online at <http://cisgw3.law.pace.edu/cisg/biblio/michida.html> Occasionally courts would determine that willingness to cure may reduce the severance of the breach from fundamental to not-fundamental; see Germany 31 January 1997 Oberlandesgericht [Appellate Court] Koblenz, CLOUT case No. 282, case presentation available online at <http://cisgw3.law.pace.edu/cisg/cases/970131g1.html>. This is an attractive relational notion, consistent with the PECL's general obligations of good faith and fair dealing; however, I doubt whether it may hold under the CISG's approach to avoidance of contract, see Yovel, supra note 3.
37. Germany 9 June 1995 Oberlandesgericht [Appellate Court] Hamm, CLOUT case No. 125, case presentation available including English translation available online at <http://cisgw3.law.pace.edu/cases/950609g1.html> (costs for replacing defective windows).
38. By analogy because in curing, the seller is not performing an obligation but excersicing a right. The purported gap in Art. 8:104 -- the allocation of costs and risks associated with cure -- calls for completion by analogy from within the PECL before we proceed to external sources of construction.
39. ICC Arbitration Case No. 7754 of January 1995, ICC International Court of Arbitration Bulletin 2000, 46, case presentation available at <http://cisgw3.law.pace.edu/cases/957754i1.html> (the conditions are satisfied when, e.g., defective motors can easily be adjusted in due time and at minimal costs).
40. See BGB � 121. German courts acknowledged a possible discrepancy between "reasonable time" and "without unreasonable delay," even when the facts happened to satisfy both; see Germany 17 September 1991 Oberlandesgericht [Appellate Court] Frankfurt, case presentation including English translation available at <http://cisgw3.law.pace.edu/cases/910917g1.html> (in this case a one-day delay in sending an avoidance telex after the breach was discovered at a trade fair was judged both reasonable and unverzüglich). In another case, an Italian buyer of a used car was allowed to avoid the contract three months after she discovered the car was previously stolen and title cannot be transferred; the court accepted the time as pertinent to the various inspections required. Had the seller attempted to cure, however, it might have been determined that the condition of "without reasonable delay" could not be met: Germany 22 August 2002 Landgericht [District Court] Freiburg, case presentation including English translation available at <http://cisgw3.law.pace.edu/cases/020822g1.html>.
41. E.g. Arts. 1139, 1146.
42. See ICC Arbitration Case No. 9083 of August 1999, case presentation including English translation available online at <http://cisgw3.law.pace.edu/cases/999083i1.html>.
43. See supra note 15.
44. See Official Records of the United Nations Conference on Contracts for the International Sale of Goods, Vienna 10 March -- 11 April 1980, A/CONF. 97/19, at 40 et seq., available online at <http://cisgw3.law.pace.edu/cisg/text/link48.html>.
45. Namely, seller may cure "if he can do so without such delay as will amount to a fundamental breach of contract". Art. 44 (later became Art. 48) of the 1978 Draft. See Official Records, supra note 44.
47. See Official Records of the United Nations Conference on Contracts for the International Sale of Goods, Vienna, 10 March-11 April 1980 (United Nations publication, Sales No. E.81.IV.3), 41, para. 14.
48. In one French case, reliance damages were awarded the aggrieved buyer for expenses incurred in the process of cooperating with the performance of cure by the seller (applying extra transportation, etc.) In that case, however, the damages were assessed as 10% of the full sale price. To this commentator, this seems a dubious approach: determining damages must be an empirical, verifiable matter. Damages added to cure -- the "whether" covering expectation or reliance interests -- should be determined according to evidence pertaining to actual losses suffered (including loss of expected gain), as opposed to a lump sum or a neat proportion of the total sale price. See France 26 April 1995 Cour d'appel [Appellate Court] Grenoble (Marques Roque Joachim v. Manin Rivière), case presentation including English translation available online at <http://cisgw3.law.pace.edu/cases/950426f2.html>.
49. It may be argued that the damages clause in CISG Art. 48 is redundant because such cases as would fall under it would fall under the more general Art. 45(2) according to which "The buyer is not deprived of any right he may have to claim damages by exercising his right to other remedies." That would be a jurisprudential mistake, as under CISG (and PECL) cure is not a right of the aggrieved buyer but of the breaching seller. So although both clauses are consistent they do not cover the same cases. Contra Oberlandesgericht Hamm, supra note 37.
50. See Austria 14 January 2002 Oberster Gerichtshof [Supreme Court], case presentation including English translation available online at <http://cisgw3.law.pace.edu/cases/020114a3.html>. The court also curiously refers to cure as a "right" of the aggrieved buyer although under CISG (and PECL) the seller does not generally have an obligation to cure; she has a right to cure, as analyzed above. Had there been a buyer's right to impose cure and a seller's obligation to make one, and the seller would default on that, that would have to become an issue separate from her breach of the contractual obligation itself. Obviously, nowhere in the CISG is a party obligated to perform more than the contract stipulates. Of course, under certain conditions the buyer has a right to specific performance that needs be enforced in court (see CISG Arts. 28, 46) but that is a different matter entirely, not to be mixed with that of cure cure. Switzerland 5 November 2002 Handelsgericht [Commercial Court] des Kantons Aargau, case presentation including English translation available at <http://cisgw3.law.pace.edu/cases/021105s1.html>.
51. Contra Liu, supra note 9 at 5.
52. In terms of speech acts, the matter of request is not determined literally but as a matter of contextually constructing a communicative performance: under Art. 48(3) a "notice" by the seller that she intends to cure within a specified time is assumed to amount to such a request. This is an "indirect" speech act; see Jerrold Fodor, Semantics (New York: Crowell, 1977), at p. 57 et seq.
53. See Jonathan Yovel, "Comparison between provisions of the CISG (Buyer's right to avoid the contract: Article 49) and the counterpart provisions of the PECL (Articles 9:301, 9:303 and 8:106)", available online at <http://cisgw3.law.pace.edu/cisg/biblio/yovel49.html>.
54. Seller must then allow "reasonable time" for the buyer to answer. See Finland 12 November 1997 Turku Court of Appeal, case presentation including English translation available at <http://cisgw3.law.pace.edu/cases/971112f5.html>. See also when a communication "reaches" an addressee, CISG Art. 24.
Like the commentaries to the UNIDROIT Principles and the U.S. Restatements, the comments to the PECL help explain the text. The PECL notes identify civil law and common law antecedents and related domestic provisions. With the permission of the Commission on European Contract Law, these comments and notes are presented below. The source of this material is Ole Lando & Hugh Beale eds., Principles of European Contract Law: Parts I and II, Kluwer Law International (2000) 368-372.
This section states the right to cure a non-confirming tender by making a new and conforming tender if there is still time to do so. For this purpose the party making the non-conforming tender will still be in time to cure the defect if he makes a new tender either before the due date for performance or where the delay is not such as to constitute a fundamental non-performance. This will depend on whether time is of the essence or has become of the essence, e.g. by the giving and expiry of a notice under Article 8:106. In either of these cases there is no right to cure under this Article.
Illustration 1: In May S, a commodity dealer, contracts to sell a quantity of cocoa to B and to ship this by 1st September. In mid-July S ships the cocoa to B buy upon arrival the cocoa is lawfully rejected buy B as not in accordance with the contract description. S has until 1st September to ship a fresh quantity of cocoa which conforms with the contract.
Illustration 2: The facts are as in Illustration 1 except that the cocoa does not reach B until 2nd September, on which date he rejects it. Assuming (as is usually the case upon a commercial sale of a commodity) that time of delivery is of the essence, it is too late for S to make a new and conforming tender.
Most national laws recognise in some form a defaulting party's right to cure a non-performance. However, except for the U.S. UCC � 2.508 on the seller's right to cure, no statutes have expressed the rule in the same general terms as Article 8.104. However the article seems to correspond to ENGLISH and SCOTTISH law: for England see Borrowman Phillips & Co. v. Free & Hollis (1878) 4 Q.B.D. 500 (C.A.) and Goode, Commercial Law 298-301; for SCOTLAND, McBryde 328-329 and Strathclyde Regional Council v. Border Engineering Contractors 1997 S.C.L.R. 100.
CISG art. 48 and ULIS art. 37 provide a general right for the seller to cure even after the date for delivery, as long as the buyer has not terminated the contract. However the seller cannot cure in cases where this would lead to unreasonable inconvenience or uncertainty of reimbursement for the aggrieved party.
The DANISH Sale of Goods Act, � 49 gives the seller a right to cure if he can do it before the buyer becomes entitled to terminate the contract because of late performance, and it is apparent that the buyer will not be put to expense or inconvenience thereby. In contracts other than sale of goods and related contracts (such as leasing), the right for the defaulting party to cure is wider. He may cure unless the aggrieved party will suffer serious inconvenience thereby. The aggrieved party will not be permitted to terminate the contract unless his request for cure has proved in vain, see Gomard, Obligationsret II 67 f. The FINNISH and SWEDISH Sale of Goods Acts allow the seller a right to cure in the same manner as CISG, see � 34 and Ramberg, Köplagen, 402 H.
DUTCH law has introduced the right to cure a non-performance. The aggrieved party may refuse performance by the party in default if the latter does not offer payment of due damages and costs at the same time (cf. BW art. 6:86). This right to cure ends at the moment the aggrieved party notifies the defaulting party that he claims damages instead of performance (BW art. 6:87) or sets the contract aside (BW art. 6:25).
Under GERMAN law a seller can only exceptionally cure a non-conforming tender after the non-performance has occurred. In contracts for work and materials the contractor may cure before the owner can terminate or claim price reduction or damages, see BGB �� 634 and 635 and v. Caemmerer Schlechtriem (-Huber) � 48 n.10.
The only provision in the ITALIAN Civil Code which provides the right to cure a non-performing tender is art. 1192 which gives the seller who has performed by delivering goods of which he had no right to dispose the right to tender goods which he does have the right to dispose of. However case law and legal writers agree in general that, whenever the aggrieved party does not accept a tender of performance because it does not conform to the contract, the defaulting party may make a new and conforming tender as long as the other party has not brought an action for termination (Giorgianni 80; Cass. 31 July 1987 no.6643, in Foro It., 1988, I, c. 138). CC art. 1512 allows the court to give the debtor extra time to repair or replace defective goods if the contract on usages provide a warranty that the goods will operate correctly for a period of time, see Castronovo, Contract and Tort 281 ff.
In SPANISH law the defaulting debtor may cure his default at any time before the creditor has given him notice of default (CC arts. 1100 and 66) or, according to some writers, before the creditor has terminated the contract (Diez Picazo II, 622; Lacruz-Delgado, II, 1, � 23, 184; contra, Albaladejo, II, 1, � 32.4). The cases take a pragmatic approach, requiring the creditor to accept the performance if refusal would be contrary to good faith. In the Law on Real Estate Sales late payment must be accepted before the seller has specifically demanded termination, CC art. 1504.
In GREEK law the question appears to be unsettled. In the absence of a stipulation in the contract, it is doubtful whether a result similar to Article 8.104 can be reached on the basis of CC art. 188 requiring performance in accordance with good faith and business usage (cf. Spiliopoulos in Erm.AK III/I, Intro. to arts. 534-562, nos. 46-47, 1972).
In FRENCH BELGIAN and LUXEMBOURG law an offer to cure made by the defendant in an action for résolution will sometimes prevent this being granted. The court's decision on this matter cannot be reviewed by the Cour de Cassation (Cass. Civ 1, 15 Feb. 1967, B.I No. 68, p. 50). In other cases when the offer has been made slightly late the court has held that the delay did not amount to a sufficiently serious non-performance to justify termination, see Cass. Civ. 24 Feb. 1970, B.I No 67 p.54.
In AUSTRIAN law there is no express provision that would correspond to Article 8:104. However a supplier of a defective good may prevent termination by replacing it by a conforming one.

matches:
art. 1
art. 25
art. 8
art. 1
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Art. 37
Art. 46
Art. 48
Art 8
Art. 48
Art. 8
Art. 8
Art. 8
Art. 8
Art. 8
Art. 48
Art. 47
Art. 8
Art. 8
Art. 37
Art. 49
Art. 8
Art. 8
Art. 8
Art. 9
Art. 8
Art. 8
Art. 48
Art. 48
Art. 49
Art. 49
Art. 49
Art. 49
Art. 49
Art. 7
Art. 48
Art. 49
Art. 49
Art. 48
Art. 49
Art. 48
Art. 8
Art. 9
Art. 8
Art. 48
Art. 8
Art. 8
Art. 8
Art. 8
Art. 9
Art. 9
Art. 9
Art. 9
Art. 8
Art. 9
Art. 9
Art. 8
Art. 9
Art. 9
Art. 48
Art. 9
Art. 48
Art. 48
Art. 48
Art. 49
Art. 48
Art. 1
Art. 9
Art. 9
Art. 48
Art. 7
Art. 48
Art. 49
Art. 49
Art 49
Art. 8
Art. 49
Art. 8
Art. 48
Art. 48
Art. 48
Art. 48
Art 48
Art. 48
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IN RE: William C. HINDENLANG, Debtor. United States of America, Appellant, v. William C. Hindenlang, Appellee.
Before: DAUGHTREY and MOORE, Circuit Judges; COHN,* District Judge. Robert W. Metzler (argued and briefed), Kenneth L. Greene (briefed), U.S. Department of Justice, Appellate Section Tax Division, Washington, D.C., for Appellant. William B. Fecher (argued and briefed), Alan J. Statman (briefed), Reisenfeld & Statman, Cincinnati, Ohio, for Appellee.
William C. Hindenlang, a Chapter 7 debtor in bankruptcy, seeks to discharge certain federal tax liabilities under 11 U.S.C. § 727. The United States argues that Hindenlang falls under the exceptions to discharge provision in 11 U.S.C. § 523(a)(1)(B), which prohibits discharge of taxes for which the debtor did not file a return. Here, Hindenlang filed Forms 1040 only after the Internal Revenue Service (“IRS”) had calculated its own assessment of Hindenlang's liability by its authority under 26 U.S.C. § 6201, after which Hindenlang's late-filed forms served no purpose under tax law, and therefore the United States argues that his Forms 1040 were no longer “returns” under § 523(a)(1)(B). The district court ruled in favor of Hindenlang. We hold that Hindenlang's Forms 1040 were not returns, and we therefore REVERSE the judgment of the district court.
The basic facts are not in dispute. William Hindenlang did not file federal income tax returns for years 1985 through 1988. The IRS sent Hindenlang notice of proposed deficiency letters (“thirty-day letters”) for years 1985 through 1987 in April of 1990, and one such letter for the 1988 taxable year in December of 1990. When the debtor did not consent to the proposed liability, the IRS prepared substitute returns (“Substitutes for Returns” or “SFRs”) for the relevant years and sent them to Hindenlang. See 26 U.S.C. § 6020(b). Again Hindenlang neither responded to nor executed the SFRs, leading the IRS to send out formal notice of deficiency letters (“ninety-day letters”).1 Hindenlang did not file a petition in the Tax Court challenging any of these deficiency notices. Therefore, in 1991, after waiting the statutorily prescribed ninety days, the IRS assessed the deficiencies against Hindenlang.
Finally, in 1993, two years after assessment, Hindenlang sent the IRS what was purported to be individual income tax returns for the years in question.2 Hindenlang used the proper Forms 1040, see 26 C.F.R. § 1.6012-1(a)(6), and calculated the taxes substantially the same as in the SFRs previously prepared by the IRS. Hindenlang still did not pay any of the deficiencies.
On January 22, 1996, Hindenlang filed a Chapter 7 bankruptcy petition. He then instituted an adversary proceeding seeking a bankruptcy court determination that the tax liability in question was dischargeable pursuant to 11 U.S.C. § 727(a).3 Both parties moved for summary judgment. The bankruptcy court granted summary judgment to Hindenlang, and the district court affirmed. See United States v. Hindenlang (In re Hindenlang ), 214 B.R. 847 (S.D.Ohio 1997).
Bankruptcy court orders granting summary judgment are final appealable orders and are reviewable by the district court. See Oakland Gin Co. v. Marlow (In re Julien Company ), 44 F.3d 426, 428 (6th Cir.1995). We have jurisdiction over bankruptcy appeals pursuant to 28 U.S.C. § 158(d), which authorizes appellate jurisdiction over final decisions of the district courts that reviewed bankruptcy court determinations pursuant to § 158(a).
The issue of whether Forms 1040 filed after the IRS has made an assessment can constitute returns for purposes of § 523(a)(1)(B) is a question of law, to be reviewed de novo. See Wesbanco Bank Barnesville v. Rafoth (In re Baker & Getty Fin. Servs.), 106 F.3d 1255, 1259 (6th Cir.), cert. denied, 522 U.S. 816, 118 S.Ct. 65, 139 L.Ed.2d 27 (1997). For purposes of summary judgment, this court must consider all the relevant facts in a light most favorable to the nonmoving party and determine whether the movant must prevail as a matter of law. See General Elec. Co. v. G. Siempelkamp GmbH & Co., 29 F.3d 1095, 1097 (6th Cir.1994). There are no material disputed fact issues in this case, so we proceed to the legal issue.
(C) with respect to which the debtor made a fraudulent return or willfully attempted in any manner to evade or defeat such tax.
11 U.S.C. § 523(a)(1) (emphasis added).
Under this provision, when a debtor files for bankruptcy, “tax on or measured by income or gross receipts” for the last three taxable years is not dischargeable. See 11 U.S.C. §§ 507(a)(8)(A), 523(a)(1)(A). Furthermore, only taxes for which a return was filed more than two years before the petition for bankruptcy are dischargeable. See § 523(a)(1)(B)(ii). Finally, if “the debtor made a fraudulent return or willfully attempted in any manner to evade or defeat such tax,” the tax is not dischargeable. See § 523(a)(1)(C).
This provision appears to serve two purposes. First, the requirement of a two-year waiting period after filing a late return but before seeking discharge prevents a debtor who has ignored the filing requirements of the Internal Revenue Code from waiting until the eve of bankruptcy, filing a delayed but standard tax return form, and seeking discharge the next day. It is, in a sense, a provision affording notice and an opportunity to act, giving the IRS time to seek payment by levy or court proceeding. Second, § 523 forbids discharge when the debtor has acted fraudulently or in a manner calculated to evade or defeat a tax. This corresponds with the notion that “good faith and candor are necessary prerequisites to obtaining a fresh start.” Industrial Ins. Servs., Inc. v. Zick (In re Zick ), 931 F.2d 1124, 1129 (6th Cir.1991) (citation omitted).
Hindenlang filed Forms 1040 for the years in question after the IRS had already made independent assessments of his tax liability. He waited the requisite two years required by § 523 before filing for bankruptcy. The government does not claim that the Forms 1040 were fraudulent in any respect. Finally, the government does not attempt to argue that the act of filing late Forms 1040, however delinquent, could be construed as an attempt to evade or defeat taxes due under § 523(a)(1)(C). The government's argument is that once a taxpayer has been assessed a deficiency, a Form 1040 submitted by the taxpayer to the IRS no longer qualifies as a return under § 523(a)(1)(B). We are left, therefore, with the threshold question of what constitutes a return under § 523(a)(1)(B) of the Bankruptcy Code.
See also 26 C.F.R. § 1.6011-1(a), (b). Most individuals are required to file returns. See 26 U.S.C. § 6012. As the Supreme Court has stated, “[t]he purpose [of the return] is not alone to get tax information in some form but also to get it with such uniformity, completeness, and arrangement that the physical task of handling and verifying returns may be readily accomplished.” Commissioner v. Lane-Wells Co., 321 U.S. 219, 223, 64 S.Ct. 511, 88 L.Ed. 684 (1944). “[I]t is clear that the existing tax system could not function properly if the great majority of taxpayers did not report the correct amount of tax without the government's prior determination of tax liability.” bernard Wolfman, James P. Holden, Kenneth L. Harris, Standards of Tax Practice § 201 (1995). Although the general view is that substantial compliance is sufficient to comply with the law, see boris I. Bittker & Martin J. McMahon, Jr., Federal Income Taxation of Individuals § 40.1 (1988), the Internal Revenue Code does not specifically set out how accurate, thorough, or complete the requisite form must be in order to qualify as a return under the many sections of the Code that reference a return. The Code also does not specify when a late tax form will no longer qualify as a return under the tax law.
The district court applied a four-part test to determine whether a filing with the IRS constitutes a “return.” In order for a document to qualify as a return: “(1) it must purport to be a return; (2) it must be executed under penalty of perjury; (3) it must contain sufficient data to allow calculation of tax; and (4) it must represent an honest and reasonable attempt to satisfy the requirements of the tax law.” Hindenlang, 214 B.R. at 848.
This test was derived from two Supreme Court cases: Germantown Trust Co. v. Commissioner, 309 U.S. 304, 60 S.Ct. 566, 84 L.Ed. 770 (1940), and Zellerbach Paper Co. v. Helvering, 293 U.S. 172, 55 S.Ct. 127, 79 L.Ed. 264 (1934). In Germantown, the Court was asked to decide whether a fiduciary Form 1041 filed by the petitioner, that stated no tax was due, qualified as a return under § 275(a) of the Revenue Act of 1932. Id. at 306, 60 S.Ct. 566. The determination would control the onset of the limitations period for assessing a deficiency. Id. at 307, 60 S.Ct. 566. The Court held “that where a fiduciary, in good faith, makes what it deems the appropriate return, which discloses all of the data from which the tax ․ can be computed,” a proper return has been filed. Id. at 309, 60 S.Ct. 566. The Court in Zellerbach, also discussing the date at which the limitations period against the IRS begins to run for deficiency assessments, held that “[p]erfect accuracy or completeness is not necessary to rescue a return from nullity, if it purports to be a return, is sworn to as such, and evinces an honest and genuine endeavor to satisfy the law.” 293 U.S. at 180, 55 S.Ct. 127.
The Tax Court, in Beard v. Commissioner, 82 T.C. 766, 1984 WL 15573 (1984), aff'd, 793 F.2d 139 (6th Cir.1986), combined the principles of Zellerbach and Germantown to arrive at the four-part test quoted above. See 82 T.C. at 777. A number of bankruptcy courts, and others, have since adopted or approved of this basic format. See, e.g., Billman v. Internal Revenue Serv. (In re Billman ), 221 B.R. 281, 282 (Bankr.S.D.Fla.1998); Pierchoski v. Internal Revenue Serv. (In re Pierchoski ), 220 B.R. 20, 24-25 (Bankr.W.D.Pa.1998); McGrath v. United States (In re McGrath ), 217 B.R. 389, 392 (Bankr.N.D.N.Y.1997). See also 13 mertens, The Law of Federal Income Tax § 47.50 (1992) (citing Zellerbach and listing the same four-part test). Both parties in this case, and the district court below, applied the Beard test to define “return,” and we will adopt it as the applicable test.
We next apply the four-part test to this case. First, there is no question that the Forms 1040 submitted by Hindenlang purported to be returns. Hindenlang used the proper form required by IRS regulations and filed the completed forms with the IRS. Second, Hindenlang executed these forms under penalty of perjury. Third, the forms included all the data needed to calculate Hindenlang's tax liability. Indeed, as indicated above, the forms were simply mirror images of the Substitutes for Returns completed by the IRS. The disputed issue is whether Hindenlang's Forms 1040, filed after the IRS had made a formal assessment, “represent an honest and reasonable attempt to satisfy the requirements of the tax law.” Hindenlang, 214 B.R. at 848.
Hindenlang has not indicated any tax purpose under the Internal Revenue Code for filing his Forms 1040. Although filing a return commences a three-year statute of limitations on the Secretary's authority to enter an assessment, see 26 U.S.C. § 6501(a), a document purporting to be a return but filed after the assessment has already been made is too late to have any effect on this limitation. Furthermore, the Internal Revenue Code's ten-year limitation on the IRS's right to collect on the assessment through levy or judicial proceeding begins at the moment the assessment is made, regardless of whether a return was filed. See 26 U.S.C. § 6502(a)(1).
Hindenlang's purported return also would have failed to mitigate or absolve him from civil or criminal liability had the IRS sought to impose such liability. Willful failure to file a timely return is a misdemeanor under 26 U.S.C. § 7203. Late filing of a return or a document purporting to be a return does not remove this criminal liability. Failure to file a return without reasonable cause also subjects a delinquent taxpayer to a five-percent penalty per month up to a maximum of twenty-five percent of the taxes owed. See 26 U.S.C. § 6651(a)(1). Hindenlang filed his Forms 1040 with the IRS well past any time that would bring him under the twenty-five-percent maximum.
Under Hindenlang's theory, a person filing a Form 1040 after assessment would be better off in bankruptcy than someone who did not, even though the Form 1040 serves no tax purpose. Nothing in § 523(a)(1) of the Bankruptcy Code suggests that a document that does not qualify as a return under the Internal Revenue Code should nonetheless qualify as a return for purposes of bankruptcy discharge. Such a result would create an unjustifiable inconsistency in the law. We conclude that 11 U.S.C. § 523(a)(1), which refers to tax returns that are required by the Internal Revenue Code to be filed, sought to encompass only those documents that would qualify as returns under the Internal Revenue Code.
We conclude that if a document purporting to be a tax return serves no purpose at all under the Internal Revenue Code, such a document cannot, as a matter of law, qualify as an honest and reasonable attempt to satisfy the requirements of the tax law.7 Therefore the document is not a “return” for purposes of 11 U.S.C. § 523(a)(1)(B).
1. Under 26 U.S.C. §§ 6212(a) and 6213(a), the taxpayer has ninety days after the notice of deficiency to petition the Tax Court for a redetermination of the deficiency, during which time the IRS may not assess the deficiency. Afterwards, the taxpayer must pay the tax and then may sue for a refund. See 26 U.S.C. § 7422(a) and 28 U.S.C. § 1346(a).
2. Hindenlang filed his Forms 1040 as an individual owing taxes as a standard calendar-year taxpayer. Such returns normally must be filed by April 15 following the close of the calendar year. See 26 U.S.C. §§ 6012 & 6072.
3. Under § 727(a), “[t]he court shall grant the debtor a discharge, unless” the debtor falls within any of the applicable exceptions to discharge provisions of the bankruptcy code.
4. We do not address the issue of the definition of return for purposes of § 523(a)(1)(B) when a taxpayer seeks to discharge state, municipal, or other tax liability.
5. The government suggests a hypothetical situation where a Form 1040 filed after assessment by the IRS could serve a tax law purpose. The government argues that if a taxpayer were to file a Form 1040 after an assessment, the document would constitute a return to the extent that it resulted in a higher tax obligation than the assessment, and presumably that additional amount would be dischargeable. The crux of this theory is that this hypothetical taxpayer made a good faith attempt to comply with the tax law to the extent of the additionally calculated tax. We are not faced with this issue and need not resolve it at this time.
6. Our decision is not inconsistent with the Supreme Court's holding in Badaracco v. Commissioner, 464 U.S. 386, 104 S.Ct. 756, 78 L.Ed.2d 549 (1984). In Badaracco, the Court held that an amended and corrected return filed after a fraudulent return does not trigger the three-year statute of limitations for assessment under 26 U.S.C. § 6501(a). Id. at 394, 104 S.Ct. 756. Instead, once a false or fraudulent return has been filed, under § 6501(c)(1) the three-year statute of limitations is irrevocably tolled. Id. The Court specifically noted that Zellerbach did not render the fraudulent return a nullity. In Badaracco, however, the Supreme Court refused to allow the taxpayers to declare their fraudulent filings null and void and thereby erase an undesirable consequence of their fraudulent acts.
7. We do not conclude that were Hindenlang able to show a tax purpose for filing a Form 1040 after the IRS has made an assessment, he would automatically satisfy the fourth prong of the Beard test. The government could still produce particularized evidence showing that such a late filing of a Form 1040 was neither an honest nor reasonable attempt to comply with the tax law. We save resolution of that hypothetical case for another day.


Richard Keith Litteral and Candace Litteral (the “Debtors”) are before the court on the Chapter 13 Plan that they filed in this case on August 18, 2004, as amended (the “Plan”). Caniff Funeral Home, Inc. (“Caniff”) opposes confirmation of the Plan due to its provision for the avoidance of Caniff’s judicial lien under § 522(f) of the Bankruptcy Code. Having considered the Plan and the arguments of counsel, the court concludes that the Debtors are not entitled to avoid the lien, through the Plan or otherwise.
On August 18, 2004 the Debtors filed a voluntary petition for relief under Chapter 13 of the Bankruptcy Code, commencing this case. The Debtors’ Schedule D (Creditors Holding Secured Claims) listed Caniff as holding a $6,000 claim secured by a judgment lien on the property located at 511 Old Buckley Road in Ashland, Kentucky (the “Property”). The claim was not listed as contingent, unliquidated, or disputed, the Property was valued at $70,000, and the unsecured portion of the claim was stated to be zero. The schedule recited Caniff’s address as 528 Wheatley Road, Ashland KY 41101. The schedules also indicate that Fifth Third Mortgage Company holds a mortgage on the Property in the amount of $45,876.
The certificate of service attached to the Plan indicated that copies were mailed to creditors, including Caniff, at the addresses set forth in the schedules. On August 19, 2004 a § 341(a) meeting of creditors was scheduled for September 15, 2004. On August 27, 2004 Caniff’s attorney filed a Notice of Appearance and a Proof of Claim, asserting a claim in the amount of $8,644.49; the face of the Proof of Claim does not assert that the claim is secured, but a recorded copy of a Notice of Judgment Lien on Real Estate, claiming a lien on all real property located in Boyd County, was attached. On October 14, 2004 Fifth Third Mortgage Company filed a Proof of Claim asserting a claim in the amount of $45,693.00, secured by a mortgage on the Property. The Plan was amended on October 25, 2004 and November 1, 2004, but the provision quoted above was unchanged.
Caniff has never filed an objection to confirmation of the Plan. It was, however, represented at the continued hearing on confirmation of the Plan, conducted on November 10, 2004. Caniff’s attorney at that time challenged the Plan language quoted above, and counsel for the Debtors responded that Caniff is barred from opposing the relief due to its failure timely to object to confirmation of the Plan. The attorney for Beverly M. Burden, the trustee for the Debtors’ estate (the “Trustee”), confirmed that there is equity in the Property in excess of the Debtors’ exemption. Counsel for the Trustee also stated that, if the Debtors prevail vis-à-vis Caniff, the Plan is confirmable; otherwise, the Debtors should have an opportunity to amend the Plan properly to address Caniff’s claim.
The avoidance of a lien pursuant to § 522(f) of the Bankruptcy Code must be sought by motion and “[t]he motion shall be served in the manner provided for service of a summons and complaint by Rule 7004.” Fed. R. Bankr. P. 4003(d), 9014(a), (b). The Debtors did not seek the avoidance of the lien by motion, and it does not appear that the Plan was served on Caniff in accordance with Rule 7004. See id. R. 7004(b)(3). Accordingly, the provision in question may be improper. See 11 U.S.C. § 1322, 1325(a)(1); compare In re Thomas, Nos. 97-28232 JKF, 98-20274 JKF, 98-23115 JKF, 97-28213 JKF, 98-20905 JKF, 1999 WL 1102991, at *5 (Bankr. W.D. Pa. Dec. 3, 1999) (citing In re McKay, 732 F.2d 44 (3d Cir. 1984)), vacated in part on other grounds sub nom. Nat’l Tax Funding, L.P. v. Thomas, Nos. Civ.A. 01-385, Civ.A. 01-386, Civ.A. 01-387, Civ.A. 01-388, Civ.A. 01-389, 2002 WL 32093127, at *2 (W.D. Pa. Mar. 21, 2002), with In re Williams, 166 B.R. 615, 618-19 (Bankr. E.D. Va. 1994); cf. Ruehle v. Educ. Credit Mgmt. Corp. (In re Ruehle), 307 B.R. 28 (B.A.P. 6th Cir. 2004) (affirming order vacating confirmation of plan containing provision for discharge of student loan).
However, objections to confirmation of Chapter 13 plans in this district and division must be filed and served “at or prior to the date first set for the meeting of creditors” and “shall be noticed for hearing at the hearing on confirmation of the plan.” Bankr. E.D. Ky. R. 3015-3(a)(1) (as amended by Standing Order ¶ (a)(1) (eff. Aug. 1, 2000)). The language challenged by Caniff was contained in the original version of the Plan, and Caniff did not file an objection to confirmation at or prior to September 15, 2004 (or thereafter). Accordingly and because Caniff has not requested an enlargement of the deadline for objections and has made no attempt to show that its neglect in failing timely to object was excusable, see Fed. R. Bankr. P. 9006(b)(1)(2), Caniff will not now be heard to challenge the lien avoidance provision of the Plan.
Nevertheless, even treating the provision as tantamount to a properly served § 522(f) motion and considering Caniff to be in default, the court may exercise its discretion to deny the relief sought if and to the extent that the Debtors’ substantive claim for avoidance lacks merit. E.g., Aldabe v. Aldabe, 616 F.2d 1089, 1092-93 (9th Cir. 1980); In re Taylor, 289 B.R. 379, 382 (Bankr. N.D. Ind. 2003); In re Wall, 127 B.R. 353, 355 (Bankr. E.D. Va. 1991). Section 522(f)(1) authorizes the avoidance of a judicial lien “to the extent that such lien impairs an exemption to which the debtor would have been titled under subsection (b) of this section.” 11 U.S.C. § 522(f)(1)(A). In determining whether a judicial lien impairs an exemption, the court is required to add the amounts of the lien sought to be avoided, all other liens on the property, and the exemption; if the total exceeds the value of the property, the judicial lien may be avoided to the extent of the excess. 11 U.S.C. § 522(f)(2)(A), (B). Here, Caniff asserts a lien in the amount of $8,644.49, Fifth Third Mortgage Company’s lien on 511 Old Buckley Road is in the amount of $45,693.00, and the amount of the Debtors’ homestead exemption is $10,000.00, K.R.S. § 427.060; In re Bush, 196 B.R. 378, 379 (Bankr. W.D. Ky. 1995). These sums total $64,337.49, which appears to be substantially below the value of that property ($70,000.00, according to the Debtors). Accordingly, Caniff’s judicial lien does not impair the Debtors’ exemption.
For the foregoing reasons, the court will enter a separate order denying confirmation of the Plan, with leave for the Debtors further to amend the Plan to delete Paragraph III.E. and provide a treatment of Caniff’s claim that complies with the Bankruptcy Code.


text:
The Supreme Court could revisit a 40-year-old precedent that allows government agencies to force public sector workers to pay union dues, an issue the court deadlocked on in 2016 following the sudden death of Antonin Scalia.
The National Right to Work Foundation will file two petitions on Tuesday with the high court challenging coercive dues schemes for government employees (Janus v. AFSCME), as well as monopoly bargaining rights for home health aides that receive Medicaid dollars (Hill v. SEIU). The suits seek to overturn Abood v. Detroit Board of Education, a 1977 case that enabled government agencies to require the payment of union dues or fees as conditions of employment.
This is not the first time that public sector workers have attempted to overturn Abood. In 2014, the Supreme Court struck down an agreement initiated by imprisoned Democratic Illinois Gov. Rod Blagojevich that forced home healthcare providers that receive Medicaid reimbursements to pay union dues. The court ruled in Harris v. Quinn that those workers could not be considered actual government employees because the workers’ primary employers were patients, rather than the state government. The decision led many states to end similar practices, but stopped short of overturning Abood.
Public sector workers who objected to union representation felt that the decision authored by Justice Samuel Alito opened up the possibility of ending forced union participation for all public workers. In 2014, California public school teacher Rebecca Friedrichs initiated a suit against the California Teachers Association arguing that she was forced to fund her union’s political positions. Friedrichs, a former union official, argued that government unions were inherently political because they negotiate over the disbursement of taxpayer dollars and other budget questions.
The Friedrichs case reached the Supreme Court in January 2016, and several justices appeared sympathetic toward the teacher’s legal challenge during oral arguments.
However, the case failed to definitively resolve the constitutionality of forced dues for government workers. Justice Scalia died suddenly in February 2016. The court issued a 4-4 deadlock, which handed a victory to government unions because lower courts affirmed the Abood precedent. The High Court then rejected a bid from Friedrichs and her attorneys to rehear the case when a ninth judge was confirmed to the court.
Messenger said that Janus largely follows the precedent set by Harris v. Quinn and will build off of the Friedrichs argument regarding dues payments as forced political speech. Hill v. SEIU addresses the issue beyond the monetary concerns of workers; it challenges whether the government has the right to declare an organization an “exclusive representative” without a compelling interest. The case was brought by several home healthcare workers in Illinois, many of whom were freed from the burden of paying union dues by the Supreme Court in 2014. While they now avoid automatic deductions by SEIU, the union continues to be treated as the “exclusive representative” of all home health aides in the state.
Messenger compares the situation to a hypothetical bill in which Texas passed legislation saying that it would treat the National Rifle Association as the face of all gun-owners in the state or if the federal government forced all doctors to associate with the American Medical Association for the purpose of lobbying. Such an arrangement would grant “special powers for lobbying the state” to a government-favored organization at the expense of other individuals.
Neither of the unions involved in the cases, American Federation of State, County & Municipal Employees Local 31, nor the Service Employees International Union, Healthcare Illinois, Indiana, Missouri, Kansas, returned a request for comment.

matches: v. v. v. v. v. v.


text:
A. It is not necessary to speak of the form of what are often called Anglo-Saxon letters, as all Teutonic, Celtic, and Latin manuscripts of the same age are written in letters of the same form. There is one exception: the Anglo-Saxons had, with great propriety, two different letters for the two distinct sounds of our th: the hard þ in thin and sooth, and the soft ð in thine and soothe, vide Þ, þ.
prep. acc. To, for; in A worlda world to or in an age of ages ; in seculorum seculum, Ps. Th. 18, 8, = on worlda world, Ps. Lamb. 20, 5, = on worulda world, Ps. Th. 103, 6.
, indecl; f. A law; lex :-- Dryhtnes á the Lord's law, Andr. Recd. 2387; An. 1196. vide Ǽ.
prep. Omit:Ps. Th. 18, 8 belongs to á.
(ó); adv. Ever.Add: A. always; semper.I. in reference to eternity, 1. alone Ealle gesceafta woldon á bión; ǽlcere wuhte is gecynde ðæt hit wilnige ðæt hit á sié, Bt. 34, 12; F. 152, 18. 2. defined by adverbs Á forþ éce, Az. 112. A forþ heonan, Cri. 582.
[O. Sax. O. Frs. á: O. H. Ger. ar- (ir-, ur-) : Goth. us-.] v. ǽ-.
= on Á felda in agro, Chrd. 68, 1.
á ðý Ever the; unquam eo Á ðe, á ðý deórwyrþran ever the more precious, Bt. 14, 2 ; Fox 44, 2. Á ðý má ever the more, Bt. 40, 2 ; Fox 236, 30. Á ðý betera ever the better, Bt. 13; Fox 38, 9. v. ðý.
ever the; unquam eo, Bt. 13 ; Fox 38, 9. v. ðý.
e; f. An oak Aac-tún Acton Beauchamp, Worcestershire, Cod. Dipl. 75 ; A. D. 727; Kmbl. i. 90, 19. v. Ác-tún.
a pile He mycelne aad gesomnode he gathered a great pile, Bd. 3, 16; S. 542, 22. v. ád.
es; m. A reed of a weaver's loom. Exon. 109 a; Th. 417, 22 ; Rä. 36, 8; Cod. Lugd. Grn. v. ám.
honour In aar naman in honore nominis, Bd. 2, 6; S. 508, note 43: 5, 11; S. 626, note 36. v. ÁR; f.
an oath He ðone aaþ gesæh he saw the oath. Th. Dipl. A. D. 825; p. 71, 12. v. Áþ.

matches: v. v. v. v. v. v. v. v.


text:
The item American heritage represents a specific, individual, material embodiment of a distinct intellectual or artistic creation found in Bryn Athyn College, Swedenborg Library.
Vol. 6 (1954/1955)-15 (1963/1964). 1 v.; v. 16 (1964/1965)-20 (1968/1969). 1 v.; v. 6 (1954/1955)-33 (1981/1982). 1 v.; v. 34, no. 1 (Dec. 1982)-38, no. 8 (Dec. 1987). 1 v.; v. 6, no. 1 (Dec 1954)-45, no. 8 (Dec 1994). 1 v.; Subject index: v. 6 (1954/1955)-17 (1965/1966). 1 v.; v. 6 (1954/1955)-40 (1989). 1 v.; Dec. 1954-Dec. 1989. 1 v.; Dec. 1954-Dec. 1994. 1 v.; v. 6, no. 1 (Dec 1954)-50, no. 8 (Dec 1999). 1 v.
Issues for Sept. 1949 and Dec. 1954- omit the notation "new series."
Began with v. 1, no. 1, Jan./Feb. 1947; ceased with Nov./Dec. 2001.

matches: v. v. v. v. v. v. v. v. v.