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transnational law transnational law (lex mercatoria or international business law) and "Damages in case of non-performance" 2016-03-01 13:58:16

No. VII.1 - Damages in case of non-performance

The aggrieved party is entitled to damages for loss caused by the other party's non-performance of its contractual obligations. It is entitled, subject to the provisions of Principle VII.2 and Principle VII.3.1, to receive such a sum of money by way of damages as will, so far as possible, put him in the same position as if the contract had been performed.

1 The Principle, together with the Principle VII.3.1 establishes the principle of full compensation as the corner stone of the law on damages. The party suffering the damage is entitled to full compensation for the harm it has sustained as a consequence of the other party's non-performance. At the same time, the damages claimed and received must not enrich the party suffering the damage. This limitation is relevant for the recovery of future harm, including lost profits.

2 By referring to the recovery of damages "caused" by the other party's non-performance, the Principle refers to the need for a causal nexus between the non-performance and the damages. Establishing such nexus may be problematic in cases in which a party claims compensation for future damages.

Please cite as: "Commentary to Trans-Lex Principle , "


Arbitral Awards
Court Decisions
International Legislation
Model Laws
Model Terms
National Legislation
Principles / Restatements
Contract Clauses
1. Full Compensation
Employment Contract
Defaulting Liabilities

Each of Party A and Party B shall perform this Contract in good faith. If either party breaches any provision herein, it shall be regarded as a default. Unless otherwise agreed herein, if either party defaults, making it impossible to perform this Contract, the other party may terminate this Contract and the breaching party shall compensate the non-breaching party for all the losses sustained thereby.

Sales & Purchase Contract
Specific Performance

The parties recognize that irreparable injury will result from a breach of any provision of this Agreement and that money damages will be inadequate to fully remedy the injury. Accordingly, in the event of a breach or threatened breach of one or more of the provisions of this Agreement, any party who may be injured (in addition to any other remedies which may be available to that party) will be entitled to one or more preliminary or permanent orders (i) restraining and enjoining any act which would constitute a breach or (ii) compelling the performance of any obligation which, if not performed, would constitute a breach.

Trigger Price Transactions

(...) Calculation of any damages pursuant to this Section X shall be incorporated as necessary in the calculation of damages set forth in Section Y to assure that the non-failing Party will be fully compensated for its actual loss incurred because of the other Party's failure.

Claims against the Sellers

If a Guarantee made by the Sellers (...) is incorrect, the Sellers shall, at the Seller's option, in their sole discretion and subject to the limitations (...) put either the Purchaser and the Companies of the Group into the position they would have been in had the Guarantee been correct or shall pay damages within the meaning of Sections 249 et seq. German Civil Code.

Protection of Ownership Interests of the Purchasers

If any Seller Party fails to perform any of its obligations hereunder, any Agent or Purchaser may (but will not be required to) perform, or cause performance of, such obligation, and such Agent’s or such Purchaser’s costs and expenses incurred in connection therewith will be payable by Seller as provided in Section X.

Specific Enforcement

It is agreed and understood that monetary damages would not adequately compensate an injured party for the breach of this Agreement by any other party, that this Agreement shall be specifically enforceable, and that any breach or threatened breach of this Agreement shall be the proper subject of a temporary or permanent injunction or restraining order. Further, each party hereto waives any claim or defense that there is an adequate remedy at law for such breach or threatened breach or any requirement for posting of a bond.


Each of the parties hereto acknowledges and agrees that in the event of any breach of this Agreement, each non- breaching party would be irreparably and immediately harmed and could not be made whole by monetary damages. It is accordingly agreed that the parties hereto (a) will, to the extent permitted by law, waive, in any action for specific performance, the defense of adequacy of a remedy at law and (b) shall, to the extent permitted by law, be entitled, in addition to any other remedy to which they may be entitled at law or in equity, to an order compelling specific performance of this Agreement in any action instituted in the United States District Court for the Southern District of New York.


Each Party agrees to indemnify and hold harmless the other against any and all liability, loss and costs, expenses or damages, including but not limited to, any and all expenses whatsoever reasonably incurred in investigating, preparing or defending against any litigation, commenced or threatened, or any claim whatsoever or howsoever caused by reason of any injury (whether to body, property, personal or business character or reputation) sustained by any person or to any person or property, arising out of any act, failure to act, neglect, any untrue or alleged untrue statement of a material fact or failure to state a material fact which thereby makes a statement false or misleading, or any breach of any material representation, warranty or covenant by either Party or any of its agents, employees, or other representatives. Nothing herein is intended to nor shall it relieve either party from liability for its own willful act, omission or negligence. All remedies provided by law, or in equity shall be cumulative and not in the alternative.

Indemnity of Seller

Purchaser agrees to indemnify, defend and hold Seller harmless from and against any and all Losses (as hereinafter defined) arising out of or resulting from the breach by Purchaser of any representation, warranty, covenant or agreement contained in this Agreement or the schedules and exhibits hereto. For purposes of Section X, the term Losses​ shall mean all damages, costs and expenses (including reasonable attorneys' fees) of every kind, nature or description, it being the intent of the Parties that the amount of any such Loss shall be the amount necessary to restore the indemnified party to the position it would have been in (economically or otherwise), including any costs or expenses incident to such restoration, had the breach, event, occurrence or condition occasioning such Loss never occurred (...)


The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement are not performed by any party in accordance with their specific terms or were otherwise breached by such party. The parties accordingly agree that, in addition to any other remedy to which the parties are entitled at law or in equity, each party is entitled to injunctive relief to prevent breaches of this Agreement by the other party and otherwise to enforce specifically the provisions of this Agreement against the other party. Each party expressly waives any requirement that the other party obtain any bond or provide any indemnity in connection with any action seeking injunctive relief or specific enforcement of the provisions of this Agreement.

Services Contract
Money Damages Insufficient

Distributor agrees that money damages would not be a sufficient remedy for any breach by Distributor of the confidentiality provisions of this Agreement and that in addition to all other remedies, the Company shall be entitled to specific performance and injunctive or other equitable relief as remedy for such breach. Distributor further agrees to waive any requirement for the Company to secure a bond or post other security in connection with such remedy - (International Contracting: Law and Practice - Larry A. DiMatteo - §9.02 - S. 326).

The Agent shall be entitled to compensation for damages which may arise out of the Principal's inability to meet his commitments, according to the contract or to business customs (...) Should this contract be improperly terminated or revoked, as a result of which either party sustains damages, the party improperly terminating the contract shall be obliged to compensate the other party for the damages such party sustained, taking into account the extent of efforts made and material and non-material capabilities provided to serve the Agency prior to such improper termination.

Validity Period and Breach of Agreement

(...) urther, if the other party has been subject to other losses, the party that unilaterally discontinues this agreement is liable for a full amount payment of compensation.

Joint Venture

(...) Each Member acknowledges that monetary damages alone would not be adequate compensation for a breach of this Section X and the Members agree that a non breaching Member shall be entitled to seek a decree or order from a court of competent jurisdiction for specific performance to restrain a breach or threatened breach of this Section X or to require compliance by a Member with this Section X (...)

Remedies Cumulative

Each right, power and remedy provided for in this Agreement or now or hereafter existing at law, in equity, by statute or otherwise shall be cumulative and concurrent and shall be in addition to every other right, power or remedy provided for in this Agreement or now or hereafter existing at law, in equity, by statute or otherwise, and the exercise by any Party of any one or more of such rights, powers or remedies shall not preclude the simultaneous or later exercise by such Party of any or all of such other rights, powers or remedies.

Specific Performance

The Parties agree that irreparable damage will result if this Agreement is not performed in accordance with its terms, and the parties agree that any damages available at law for a breach of this Agreement would not be an adequate remedy. Therefore, the provisions hereof and the obligations of the Parties hereunder shall be enforceable in a court of equity, or other tribunal with jurisdiction, by a decree of specific performance, and appropriate preliminary or permanent injunctive relief may be applied for and granted in connection therewith. Except as otherwise limited by this Agreement, such remedies and all other remedies provided for in this Agreement shall, however, be cumulative and not exclusive and shall be in addition to any other remedies that a party may have under this Agreement (...)

Lease Contract
Deposit and Payment

Within the lease term, if Party B fails to pay Party A and/or management organization any rent, management fee or any other fee or late fee by the specified time, or if Party B breaches this Contract, Party A shall have the right to deduct from the deposit an amount equal to the overdue rent or fee or to the amount of loss sustained by Party A without giving Party B any prior notice. Party B shall, within 15 days after Party A raises its written request, supplement the deposit by the deducted amount. If Party B fails to supplement the deposit within the time specified above, Party A shall have the right to immediately terminate this Contract and repossess the House, while Party B shall compensate Party A for all the resulting losses sustained by Party A.


Within the lease term, if all or any part of the House is damaged due to any force majeure or any circumstance beyond the control of Party A, making it impossible to use the House, Party A, within 60 days after the foregoing damage occurs, shall have the right to choose to (1)  Declare this Contract terminated due to the foregoing damage, or (2)  Renovate and repair the House and negotiate with Party B to determine the time needed for such renovation and repair. During the period of renovation and repair, Party B do not have to pay the rent until the day when the reconstruction or repair ends.

Defaulting Liabilities

If Party A fails to provide Party B with such documents as duplicated copies of the real property right certificate for the House, Party A's business license, etc within ten working days after execution hereof, or if any of the foregoing documents provided by Party A cannot be used for the purpose as agreed in Article 1 hereof, Party B shall have the right to rescind this Contract and claim the losses sustained thereby from Party A. Within the lease term hereunder, if Party A unilaterally terminates this Contract without any cause, Party A shall return the deposit (equal to three months' rent) to and compensate Party B for an amount equal to three months' rent. If Party B unilaterally terminates this Contract or if this Contract is terminated due to any default on the part of Party B, the deposit (equal to three months' rent) already paid Party will be used as the liquidated damages and not be returned. In addition, Party B shall compensate Party A for an amount equal to three months' rent.

2. Aggrieving Party to Support Additional Costs
Sales & Purchase Contract

Failure of Buyer to provide such shopping space or to give such instruction shall be a breach of the contract and Buyer shall bear any additional costs incurred therefrom and all risks of the goods.


If the packaging does not fulfil any of the criteria mentioned above, the goods are considered as not being in due form. Without further consultations 5% of the order value may directly be deducted for increased logistic and handling costs.

Costs of Collection

Purchaser shall pay all costs, charges, and expenses including attorney's fees, reasonably incurred or paid by the Company (including attorney's fees for any appeals taken) because of the failure of the Purchaser to perform and comply with the terms and conditions of this agreement including payment of monies due and every such payment shall bear interest from the date at the highest rate permitted by law - (International Contracting: Law and Practice - Larry A. DiMatteo - §7.12 - S. 252).

(...) if direct losses of Party A resulting from the breach of Party B are in excess of the foregoing compensation or penalties, Party A shall be entitled to claim against Party B.

Loan Contract
Expenses; Indemnification for Litigation

(...) The Borrower shall be obligated to pay (...) if any Event of Default occurs, all out-of-pocket expenses incurred by the Administrative Agent or any Lender, including fees and disbursements of counsel, in connection with such Event of Default and collection, bankruptcy, insolvency and other enforcement proceedings resulting therefrom.

Merger Agreement

The Escrow Participants agree to indemnify, compensate, reimburse, and hold Parent and its officers, directors, and affiliates, including the Surviving Corporation (the Indemnified Parties​), harmless against all claims, losses, liabilities, damages, Taxes, costs and expenses, including reasonable attorneys' fees and expenses of defense, interest, fines and penalties (hereinafter individually a Loss and collectively Losses​) paid, incurred or sustained by the Indemnified Parties, or any of them (including the Surviving Corporation), as a result of (...) any inaccuracy in or breach of any representation or warranty of the Company set forth in this Agreement as of the date of this Agreement (...) any failure by the Company to perform, fulfill or comply with any covenant or obligation applicable to it contained in this Agreement (...)

3. Determination of Cases where Allocation of Damages may be Awarded
Sales & Purchase Contract

Subject to Section X, each Party assumes full responsibility and liability for and shall indemnify and save harmless the other Party from all liability and expense on account of any and all damages, claims or actions, including injury to and death of persons, arising from any act or accident occurring when title to the Gas is vested in the indemnifying Party unless the act or accident was the result of the willful misconduct or gross negligence of the indemnified Party, its agents or assigns.

Services Contract
Direct Damages

Each of the Parties shall be liable to the other for any direct damages arising out of or relating to its performance or failure to perform under this Agreement; provided, however, that the liability of X and Y, whether based on an action or claim in contract, equity, negligence, tort or otherwise, for all events, acts or omissions shall not exceed, in the aggregate, an amount equal to the amounts paid under this Agreement during the {X} months preceding the claim.

Construction & O&M Contract
Presenting Claims

In no event shall the Company be liable for any act or omission or default unless the claim is presented to it at its office within {X} days from the date of exportation of the goods in a written statement to which sworn proof of claim shall be attached - (International Contracting: Law and Practice - Larry A. DiMatteo - §7.12 - S. 252).

No Responsibility for Governmental Requirements

It is the responsibility of the Purchaser to know and inform the Company of the marking requirements of the country of importation, and all other safety and health regulations, and all other requirements of law or official regulations. The Company shall not be responsible for action taken or fines or penalties assessed by any governmental agency against the shipment - (International Contracting: Law and Practice - Larry A. DiMatteo - §7.12 - S. 252).

Damage to the Works Before & After Taking Over

The Contractor shall be liable for and shall make good any damage to the Works, which occurs before taking over. The Purchaser shall, however, be liable for any such damage if the damage is caused by the Purchaser's negligence. The Contractor shall only be liable for damage to the Works after taking over to the extent that the damage is caused by a defect (...) or negligence by the Contractor when remedying a defect (...)

Damage to Property

The Contractor/Purchaser shall be liable for damage to the Purchaser's/Contractor's other property than the Works when such damage is caused by the Contractor's/Purchaser's negligence.

4. Repartition of Liabilities
Sales & Purchase Contract
Failure to Perform

If either Party fails on any Day to Schedule and receive or deliver the Contract Quantity, as provided in Section X, that Party shall be liable for, and shall pay the other party, the following damages: (a) Buyer's Failure. If the quantity Buyer receives and purchases on any Day is less than the applicable Contract Quantity and the Sales Price is less than the Contract Price, then Buyer shall be liable for and shall pay to Seller a dollar amount equal to the product of (i) the difference between the Contract Price and the Sales Price, and: (ii) Buyer's Deficiency Quantity. In addition, Buyer shall pay Seller an amount equal to ten percent (10%) of the amount calculated pursuant to the first sentence of this subsection (a) to cover Seller's administrative and operational costs and expenses. (b) Seller's Failure. If the quantity Seller sells and delivers on any Day is less than the applicable Contract Quantity and the Replacement Price is greater than the Contract Price, then Seller shall be liable for and shall pay to Buyer a dollar amount equal to the product of (i) the difference between the Replacement Price and the Contract Price and; (ii) Seller's Deficiency Quantity. In addition, Seller shall pay Buyer an amount equal to ten percent (10%) of the amount calculated pursuant to the first sentence of this subsection (b) to cover Buyer's administrative and operational costs and expenses.


In order to provide for just and equitable contribution in circumstances in which the indemnification provided for in paragraph (x) of this Section is due in accordance with its terms but is for any reason held by a court to be unavailable from the Parent Company on grounds of policy or otherwise, the Parent Company and the Underwriter shall contribute to the total losses, claims, damages and liabilities (including legal or other expenses of investigation or defense) to which they may be subject in such proportion so that the Underwriter is responsible for the percentage that the underwriting fee is of the sum of such fee and the purchase price of the Bonds specified in Section X and the Parent Company is responsible for the balance (...)

Services Contract
Validity Period and Breach of Agreement

If, because of Party A's wrong broadcasting or omission in broadcasting of advertisements, damages have been caused to clients or consumers, Party A shall bear the liabilities. In the case where damages have been caused to clients or consumers, and resulting in legal disputes because of the truthfulness of the content in the advertisement Party B provides to Party A and because of problems in the procedures, Party B shall bear the liabilities.

A project of CENTRAL, University of Cologne.