The function of the termination clause for buyer’s breach of contract

Abstract

According to the Chilean Civil Code (arts. 1877 y ss.), the parties of a sale contract are allowed to introduce a termination clause in case of breach by the buyer (the roman lex commisoria). This agreement typically gives the seller the right to terminate the contract (“simple termination clause”). However, the parties could also agree that contrat will be terminate “ipso facto” in case of breach (“qualified termination clause”). This article explores the function of those clauses, within the context of a legal system where it is recognised the seller’s right to termination, in case of breach, as a default rule (art. 1489 CC).