If it appears, after the agreement has been entered into, that a party will not perform a material part of its contractual obligations, because of either:
- A serious inadequacy in its ability to perform;
- Insolvency; or
- The way in which it is preparing to perform, or is actually performing, the agreement,
The other party may apply to the court to obtain an order authorizing it to defer performance of its own obligations.
Breach by the seller
If the seller breaches his obligations, the purchaser is entitled to claim damages. In addition, if the goods delivered do not comply with the contractual provisions, the purchaser may require the seller either to deliver replacement goods if the non-compliance is such as to constitute a material breach, or to remedy the non-compliance.
A purchaser may also give the seller a reasonable extension of the time period in which to perform its obligations.
A purchaser may apply to the court for cancellation of the contract if the seller is in material breach of the contract or has failed to deliver the goods during any extension of the time period that may have been granted.
Breach by the purchaser
If the purchaser fails to perform his obligations, the seller is entitled to claim damages. The seller may also give the purchaser a reasonable extension of the time within which to perform his obligations. He cannot take any action against the purchaser during the extension period.
In the event of a failure to pay the contract price or any other sum that may be due, the seller is entitled to claim interest on the amount concerned, calculated at the legal rate for commercial matters in the relevant member state, without prejudice to any compensation he may also claim for damages suffered.
LIMITATION PERIOD
All claims must be filed within two years, failing which they will lapse.
The limitation period stops running if the claimant takes action to interrupt it such as by serving a writ or a formal demand for payment or, if arbitration has been provided for, by beginning arbitral proceedings.
The limitation period is interrupted as regards any other person who may jointly and severally be liable with the defendant if he is informed in writing of the proceedings filed by the claimant.
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