No. V.1.4 - Principle of simultaneous performance; right to withhold performance

(a) The parties to a bilateral contract are required to render their respective performances simultaneously, unless they have agreed on or circumstances indicate a different order of performance. 

(b) If performance of an obligation by one party is dependent upon performance of another obligation arising out of the same contract by the other party, each party may withhold performance until tender of performance by the other party. Where one party has performed in part, the other party cannot refuse to perform if to do so would be contrary to good faith, having regard in particular to the relatively slight or trivial nature of the default ("exceptio non adimpleti contractus", "inadimplenti non est adimplendum").

1 A scenario in which the parties are not under a duty to perform simultaneously as provided for in Subsection (a) would be a contract which provides for delivery and deferred payment or delivery on credit or, vice-versa, for payment in advance of delivery.

2 The question as to whether the performance of an obligation is dependent upon performance of another obligation by the other party as provided for in Subsection (b) is a matter of contract interpretation. This always applies to those core obligations of a contract which constitute a direct exchange of promises and which are characterized in some jurisdictions as "synallagmatic" or "reciprocal" ("do ut des"), i.e. the duty of the seller to deliver the goods sold and the duty of the buyer to pay the sales price. There may be contracts in which two obligations are so closely connected by the will of the parties as expressed in the contract that they may be qualified as "dependent" even though they would not be characterized as "synallagmatic" or "reciprocal" in those jurisdictions.

3 Subsection (b) makes it clear that the exercise of the right to withhold performance is always subject to the Principle of good faith (Trans-Lex Principle I.1.1). The principle of proportionality mentioned in Subsection (b) is derived from the Principle of good faith. It would be contrary to good faith (and amount to an abuse of right) to rely on the non-performance of a relatively minor obligation by the other side in an attempt to avoid performance of an essential obligation of the party invoking the right to withhold performance, see Fouchard Gaillard Goldman On International Commercial Arbitration, 1999, No. 1486.

4 The relative triviality of non-performance by one party, however, is but one illustration of a more general restriction of the scope of subsection (b) by the requirement of good faith. The overriding Principle of good faith may restrict a party's right to invoke a right to withhold performance also in other scenarios outside the ambit of Subsection (b).

Please cite as: "Commentary to Trans-Lex Principle ,"
Arbitral Awards
CRCICA Award no.142/1999, in: Mohie EldinI. Alam Eldin, Arbitral Awards of the Cairo Regional Centre of InternationalCommercial Arbitration II (1997-2000), The Hague 2003, 25
ICC Award No. 2291, Clunet 1976, at 989 et seq.
ICC Award No. 7110, 10 ICC Bull. No. 2, 1999, at 1029 et seq.
ICC Award No. 7539, Clunet 1996, at 1030 et seq.
ICC Award No. 8264, 10 ICC Bull. No. 2, 1999, at 62 et seq.
ICC Case No. 4629 (1989), YCA 1993, 11 et seq.
ICC Final Award No. 11849, YCA 2006, at 148 et seq.
ICSID Ad-Hoc Committee, Award of May 3 1985, Klöckner Industrie-Anlagen GmbH v. Republic of Cameroon, YCA 1986, at 162 et seq. (also published in: ICSID Rev.-FILJ 1986, at 90 et seq.; ICSID Rep. 94, 95 et seq.; Clunet 1987, at 163 et seq.)
ICSID Award of October 21, 1983, Klöckner v. Republic of Cameroon, Clunet 1984, at 409 et seq. (also published in: ICSID Rep. 1994, 9 et seq.; J.Int‘l Arb. 1984, 145 et seq.; YCA 1985, 71 et seq.)
Court Decisions
Permanent Court of International Justice, Judicial Year 1937, The Diversion of Water from the Meuse, Netherlands v. Belgium, Judgment No. 25 (29 June 1937)
Black, Henry Campell, Black's Law Dictionary, 6th ed., St. Paul 1990
Blessing, Marc, Das neue internationale Schiedsgerichtsrecht der Schweiz - Ein Fortschritt oder ein Rückschritt?, in: Böckstiegel (ed.), Die internationale Schiedsgerichtsbarkeit in der Schweiz (II), Cologne, Berlin, Bonn, Munich 1989, at 13 et seq.
Dasser, Felix, Internationale Schiedsgerichte und Lex Mercatoria, Zürich 1989
Derains, Yves, note to ICC Award No. 3540, Clunet 1981, at 921 et seq.
Derains, Yves, note to ICC Award No. 7539, Clunet 1996, at 1034 et seq.
Domingo, Ortega, Rodriguez-Antolin, Zambrana, Principios de Derecho Global, Navarra, 2006
Farnsworth, Allan, Contracts, 2nd ed., Boston, Toronto, London 1990
Ferrari, Franco, Das Verhältnis zwischen den Unidroit-Grundsätzen und den allgemeinen Grundsätzen internationaler Einheitsprivatrechtskonventionen, JZ 1998, at 9 et seq.
Ferrari, Franco, The CISG's Interpretative Goals, Its Interpretative Method and Its General Principles in Case Law (Part II), IHR 5/2013, at 181 et seq.
Fouchard Gaillard Goldman on International Commercial Arbitration (edited by Emmanuel Gaillard and John Savage) The Hague 1999
Jenks, Edward et al., A Digest of English Civil Law, London, Sydney, Calcutta, Winnipeg, Wellington 1921.
Liebs, Detlef, Lateinische Rechtsregeln und Rechtssprichwörter, 4th ed., Munich 1986
Magnus, Ulrich, Die allgemeinen Grundsätze im UN-Kaufrecht, 59 RabelsZ 1995, at 469 et seq.
Marrella, Fabrizio, La nuova lex mercatoria, Principi Unidroit ed usi di contratti des comercio internazionale, CEDAM, Tratto di dritto commerciale e di dritto publico dell‘economia, Volume 30, Padova 2003
O'Neill, Philip; Salam, Nawaf, Is the Exceptio Non Adimpleti Contractus Part of the New Lex Mercatoria, in: Gaillard (ed.), Transnational Rules in International Commercial Arbitration (ICC Publ Nr. 480,4), Paris 1993, at 147 et seq.
Paulsson, Jan, La Lex Mercatoria dans l‘Arbitrage C.C.I, Rev.d.Arb. 1990. at 55 et seq.
Ripert, Georges, Les Règles du Droit Civil Applicables aux Rapports Internationaux (Contribution à l'Etude des Principes Généraux du Droit Visés au Statut de la Cour Permanente de Justice Internationale), 44 Rec.Cours 1933-II, at 569 et seq.
Romero, Eduardo Silva, Note to ICC AwardNo. 11855, Clunet 2007, at 1298 et seq.
Treitel, G.H., Remedies for Breach of Contract: A Comparative Account (1988)
International Legislation
UNIDROIT Convention on International Financial Leasing (Ottawa, 20 May 1988).
United Nations Convention on Contracts for the International Sale of Goods (CISG)
Vienna Convention on the Law of Treaties of 1969
Model Laws
A Contract Code: Drawn up on Behalf of the English Law Commission
Draft Common Frame of Reference (EU) - DCFR (2008)
Model Terms
UNECE-General Conditions for the Supply of Plant and Machinery for Export.
National Legislation
Bürgerliches Gesetzbuch - German Civil Code
Civil Code Québec
Contract Law of the People's Republic of China
Czechoslovak International Trade Code
Ethiopian Civil Code
Italian Codice Civile
Nieuw Burgerlijk Wetboek - New Netherlands Civil Code ( Dutch Civil Code )
Russian Civil Code
Schweizer Obligationenrecht - Swiss Law of Obligations
UK Sale Of Goods Act 1979, Chapter 54
Principles / Restatements
Principles of European Contract Law - PECL
UNIDROIT Principles of International Commercial Contracts
Contract Clauses
1. Right to Withhold Performance provided by Contract
Sales & Purchase Contract
Default Remedies
If a Party is in default, then the Performing Party shall have, in addition to any and all other remedies available hereunder or pursuant to law, the right to withhold or suspend deliveries/receipts or payment and/or to specify an Early Termination Date and to liquidate any or all Forward Contracts (including any portion of a Forward Contract not yet fully delivered) then outstanding at any time (...)
Payment and Adjustments
(...) In the event X shall fail to make payment when due of all amounts, Y, in addition to all other remedies available to Y in law or in equity, shall have the right, but not the obligation, to withhold further performance by X under this Agreement until all claims Y may have against X under this Agreement are fully satisfied.
Investment Agreement
Purchase and Sale of Sale Shares

Each Seller irrevocably waives any rights of pre-emption conferred on them by the Articles of Association of the Company or otherwise over any of the Sale Shares. Buyer shall not be obliged to complete the purchase of any of the Sale Shares unless the purchase of all the Sale Shares is completed simultaneously. 

A project of CENTRAL, University of Cologne.