- Tribunal Supremo
CONTRACT FOR SUPPLY AND INSTALLATION - BETWEEN TWO SPANISH COMPANIES - REFERENCE TO UNIDROIT TO CONFIRM THAT SOLUTION PROVIDED BY APPLICABLE DOMESTIC LAW (SPANISH LAW) IS IN CONFORMITY WITH INTERNATIONAL STANDARDS
SUPPLY OF GOODS NOT CONFORMING TO SPECIFICATIONS OF CONTRACT - FUNDAMENTAL NON-PERFORMANCE - RIGHT TO TERMINATE CONTRACT - REFERENCE TO ARTICLE 7.3.1 OF UNIDROIT PRINCIPLES
"Company A supplied to company B a robotised automated system. The system was later modified, extended and assembled by company A following the request of Company B. Shortly after the system was installed, company B notified company A of termination for breach of contract and offered to return the system to the supplier given that the system did not comply with the specifications of the contract.
Company A filed a claim against Ccmpany B for payment of amounts due under the agreement. Company B as defendant counterclaimed filing for the resolution of the agreement for breach of the claimant’s obligations. The Court of Appeal ruled that company B was entitled to terminate the agreement and to be reimbursed with the amounts paid.
The Supreme Court confirmed the ruling of the Court of Appeal based on the breach of fundamental or essential obligations of a party to an agreement. The ruling, in addition to Spanish jurisprudence and the Civil Code, makes reference specifically to the modern codes of contractual obligations which are based on the line of thought of English law which may be summarised as the right of a party to terminate an agreement in case of non-performance of the other party may be considered as an essential breach, as in Article 7.3.1 of the UNIDROIT Principles."
(cf. C. Doria in "Perspectives in Practice of the UNIDROIT Principles 2016", IBA Publication 2019, p. 269-270)