§ 62. Cancellation before the time for performance
If, before the time for performance (oppfyllelse), it becomes clear that the other party is going to commit a breach of contract (kontraktbrudd) that will give you the right to cancel, you can cancel the agreement right away. If there is time, you must notify the other party so that he can provide security and prevent the cancellation. If security is provided, you must continue.
Machine-translated from Norwegian. The Norwegian text is the one that applies. Read the original in Norwegian.Norsk English العربية Polski Українська
The text of the law (unofficial translation)
(1) If it is clear before the time for performance that a breach of contract will occur that will give a party the right to cancel, he may cancel the purchase even before the time for performance. The cancellation can be prevented if the other party immediately provides adequate security (betryggende sikkerhet) that the purchase will be performed.
(2) When time permits, the party who intends to cancel shall notify the other party so that the latter has the opportunity to provide security in order to avoid cancellation.
What does this mean?
You do not always have to wait for things to go wrong. The law gives you an opportunity to withdraw when it is obvious that it is going to happen.
The condition is strict: It must be clear that a breach of contract will occur, and the breach must be serious enough to give the right to cancel (material breach). Suspicion is not enough. The same requirement of clarity applies when a home buyer wants to cancel before the handover. Examples:
- The seller (selger) has gone bankrupt (konkurs) and obviously cannot deliver
- The buyer (kjøper) has said outright that he is not going to pay
- A supplier has shut down production of the goods
- Signs so clear that a reasonable person can see that the breach is coming
Security saves the agreement (first paragraph): If the other party quickly provides "adequate security" — a bank guarantee (bankgaranti), a deposit, other secure cover — you cannot cancel. He has given you assurance that things will go as agreed.
Duty to notify before cancellation (second paragraph): When time permits, you must notify the other party before you cancel — so he can provide security and prevent the cancellation. You must not simply cancel by surprise if you could have given him the chance.
Comparison: Suspend or cancel before the time?
| Situation | Suspend (§ 61) | Cancel before the time (§ 62) |
|---|---|---|
| Suspicion of problems | Possible | No — too early |
| Clear failure of creditworthiness | Yes | Consider it, it must be clear that the breach is coming |
| Other party has said he cannot | Yes | Yes |
| Bankruptcy or own petition for bankruptcy | Yes | Yes |
| Security is provided | Must continue | Cancellation is prevented |
Examples
Lars has ordered equipment for NOK 180,000 from a company. Delivery (levering) is agreed in 4 weeks. After 1 week he reads that the company has filed for bankruptcy — it is obvious that they are not going to deliver. Under § 62, Lars can cancel immediately, even though the delivery date is in 3 weeks. He does not need to wait for the formal breach. He notifies first — giving the company the chance to provide security — and then cancels.
Eva has sold equipment to a company that is in financial difficulties. She notifies them that she will cancel. The company immediately provides a bank guarantee for 100% of the purchase price (kjøpesum). Under § 62, Eva must refrain from cancelling. The security is adequate. The company has given her assurance that she will get her money. The agreement stands.
Common mistakes
- Cancelling on suspicion instead of clear evidence
- Forgetting to notify first so the other party gets a chance
- Rejecting security without considering whether it is adequate
- Believing that "security" must be cash — a bank guarantee can also be enough
What should you do?
When you are considering cancelling before the time:
- Assess the standard of proof: Is it clear that the breach is coming?
- Assess materiality: Will the breach be so serious that a right to cancel arises?
- Notify the other party in writing — give him the chance to provide security
- Set a reasonable deadline for security — typically a few days
- Cancel once the deadline has passed if no security has been provided
- Document everything in case of a dispute later
- § 25Cancellation in case of delay
- § 54The seller's cancellation
- § 61Suspending performance in case of expected breach
- § 63Insolvency proceedings