(a) A party in breach of a contract, at its own expense, may cure the breach at its own expense if:

(1) the time for performance has not yet expired, the party seasonably notifies the aggrieved party other of its intention to cure and, within the contract time, makes a conforming performance; or

(2) the party had reasonable grounds to believe the performance would be acceptable with or without money allowance, seasonably notifies the other party of its intent to cure, and provides a conforming tender within a further reasonable time after the contract time for performance; or

(b) In a license other Other than in a mass-market license, the party in breach shall must promptly and in good faith make an effort to cure if:

(1) it receives timely notice of a specified non-conformity and a demand for cure from the aggrieved party;

(2) the aggrieved party was required to accept a non-conforming performance that completed the initial act enabling of use because the non-conformity was not a material breach of contract; and

(3) the cost of the effort to cure effort for for the party in breach of contract would not be disproportionate to the adverse effect of the nonconformity on the aggrieved party.

(c) A breach of contract that which has been cured may not be used to cancel a contract or refuse a performances. However, mere notice of intent to cure does not preclude cancellation or refusal.

a. The Draft proposes adding new subsection (a)(2) to correspond to existing Article 2. Article 2 provides, in addition to the language in (a)(1), that: "Where the buyer rejects a non-conforming tender which the seller had reasonable grounds to believe would be acceptable with or without money allowance, the seller may if he seasonably notifies the buyer have a further reasonable time to substitute a conforming tender."

b. Subsection (a)(3) allows cure if the contract has not been cancelled. This allows cure 1) if the breqach was not an adequate basis for cancellation, and 2) if the aggrieved party has a right to cancel, but has not done so.

1. General Application. The idea of cure applies in both directions, giving either the licensor or the licensee (whichever is in breach) an opportunity to cure under the stated conditions. For licensees' cure often relates to missed payments, failures to give required accounting or other reports, and misuse of information. For licensors, depending on the context, the issues often focus on timeliness of performance, adequacy of delivery product, breach of warranty and the like.

The rule that a breaching party may, if it acts promptly and effectively, eliminate the effect of its breach and preserve the contract is embedded in modern law. Restatement (Second) of Contracts 237 provides that a condition to one party's performance duty in a contract is that there be no uncured material breach by the other party. However, although the idea of cure is embedded in modern law, there is significant disagreement in pertinent statutes and statements of contract law as to the scope.

a. The UNIDROIT Principles go the furthest in establishing a right to cure indicating that cure is not precluded by termination for breach and by not limiting the right to cure in any manner related to the timing of the performance. Cure is neither more nor less possible if it occurs before expiration of the agreed time for performance than if it occurs afterwards. The UNIDROIT Principles condition cure on "prompt" action and allow it if "appropriate in the circumstances" and if the other party has no "legitimate interest" in refusing cure. UNIDROIT art. 7.1.4

b. Article 2 distinguishes between cure made within the original time for performance (essentially allowing a right to cure) and cure occurring afterwards (which it restricts to cases where the vendor expected the tender to be acceptable).

c. The UN Sales Convention does not distinguish between cures occurring within or after the original agreed date for performance. It allows the seller to cure if it can do so without unreasonable delay and without causing the buyer unreasonable inconvenience or uncertainty. Sales Convention art. 48. However, the cure right is subject to the party's right to declare the contract "avoided" (e.g., canceled) if the breach was a fundamental breach of contract.

2. Right to Cure. This Article employs the standard of materiality of breach as a precondition for cancellation or refusal of a performance and this may shape the scope of the cure right. As drafted, the Section allows cure if it is prompt. The proposed language follows existing Article 2 in creating a right to cure if cure occurs before the end of the contract period for the performance or if there was a prompt cure after a reasonable expectation that the performance would be acceptable.

3. Permissive Cure. In all other cases, cure is subject to prior cancellation or refusal by the other party. This places control in the aggrieved party who suffered a material breach. In understanding the scope of this concept, it is important to recognize that in the mass market and in other cases of contracts involving rights in a copy of information, refusal of the tender of the copy may constitute cancellation of the contract itself because the entire transaction focused on providing rights and capabilities associated with the information delivered on a copy. In such cases, no special notice or words of cancellation are required.

4. Obligation to Cure. Subsection (b) applies to cases where the licensee accepts a performance because the material breach standard is not met even though some defect exists. It creates an obligation to attempt a cure. Failure to undertake the effort is a breach, but if the effort occurs and fails, there is no additional breach of contract.