Buyer's Right for Refraining from Performance

The buyer has a right to abstain from fulfilling their part of the contract if the seller is in breach. The buyer’s performance usually means payment. The justification for refraining from payment derives from the idea that a party is only obliged to fulfill their obligations provided that the other party fulfills theirs. The right to abstain from fulfilling the contract acts both as a threat and as protection.

A party has a right to abstain from their performance when they are obliged to perform their part of the contract after the other party has performed their obligations. This is also possible in respect of simultaneous performances, but not in situations where the buyer has agreed to pay the purchase price in advance, for example.

A buyer retains the right to withhold performance to the extent corresponding with the demand. The Sale of Goods Act sets a specific threshold as a prerequisite for complete restraint: the performance must be fundamentally deficient. If the fault in the other party’s performance is minor the restraint of the other party must be of a corresponding degree, i.e. not for instance the entire purchase price but the amount corresponding to the party's demand or the breaching party's fault.

If a party wishes to exercise their right of restraint such party must ensure that they actually have a right to do so as unlawful restraint of performance is in itself considered a breach of contract.

It is possible to refrain from performance both when the performance is delayed and when the goods are defective.