Q 76-1
What is the idea underlying Article 76 CISG?
In cases where no substitute transaction can be pinpointed, Article 76 CISG provides for an abstract calculation of damages.
Q 76-2
(a) When is it possible to claim damages under Article 76 CISG without declaring avoidance of the contract according to C 76-1?
(b) If a calculation of damages under Article 76 CISG is not allowed, which calculation of damages will nonetheless be possible and on which provision will the claimant rely?
(c) Does the methodological order of the damages provisions indicate whether the CISG favours the method of concrete calculation of damages over the abstract method, or vice versa?
(a) In C 76-1 it was held that if the obligor unambiguously and definitely repudiates the contract, it would be a mere formality to require a separate declaration of avoidance. The obligee may rely on Article 76 CISG without prior declaration of avoidance as the seller’s requiring an explicit declaration of avoidance would constitute a venire contra factum proprium.
(b) Damages may still be asked for under Article 74 CISG. Non-performance loss must be calculated based on the value of the goods which in turn can be assessed by the market price.
(c) Articles 74 to 76 CISG seem to prefer a concrete calculation as suggested by civil law legal systems.
Q 76-3
(a) It has been said that there is a danger inherent in the method of determining the point in time relevant for determination of the market price (Art 76(1), sentence 1 CISG), in that the creditor speculatively delays avoidance of the contract. Explain this concern.
(b) Which tool does the CISG provide to counter such abuse?
(c) May the creditor be obliged to avoid the contract before the time of performance?
(a) As the market price is determined upon the time of avoidance of the contract, a creditor seeing the market rising may speculate at the expense of the debtor.
(b) Article 77 CISG (mitigation of damages).
(c) Following on from Article 77 CISG, a duty to avoid the contract before the time of performance may be imposed on the creditor in view of a market development detrimental to the debtor. However, it will extremely difficult to prove that the creditor actually foresaw such a development.
Q 76-4
(a) If the aggrieved party has undertaken a substitute transaction, is it still entitled to claim damages under Article 76 CISG? Consider, for example, the situation where the substitute transaction does not include all of the goods.
(b) Which difficulties will the respondent who wants to hinder the claimant from claiming (higher) damages under Article 76 CISG (than it would be entitled to claim under Art 75) encounter if claimant is a ‘permanent market trader’, that is it buys and sells those kinds of goods continuously?
(a) In general, if a substitute transaction has taken place, the creditor must calculate its damages according to Article 75 CISG. Where the substitute transaction does not include all of the goods, a calculation based partially on Article 75 CISG and partially on Article 76 CISG.
(b) The obligor will not be able to prove which of the contracts amounts to a substitute transaction.
Q 76-5
(a) Which criteria determine whether there is a current market price?
(b) Who must prove the existence of a current market price?
(a) Whether there is a market where the goods are usually traded. A market regularly exists for commodities and ready-made products.
(b) The burden of proof is on the creditor.
Q 76-6
How will the damages be calculated if there is no market price for the goods in question, neither at the place of performance nor at the substitute place?
If there is a concrete substitute transaction, damages will be calculated according to Article 75 CISG. Under Article 74 CISG, the value of the goods must be estimated, whereby any development of related prices may be taken into account.
Q 76-7
Compare Article 76(2) CISG to the domestic law provisions.
(a) Do the other provisions also allow for additional damages other than those representing the difference between the contract and the market price?
(b) Do they require a termination of the contract prior to the abstract calculation of the difference between the contract and the market price?
(c) Which other provision contains a similar rule as to the determination of the market price?
(a) Yes, although in Article 191(3) and 215(2) OR this is not explicitly provided for.
(b) Whereas Article 7.4.6 PICC 2016 like Article 76 CISG explicitly requires prior avoidance, neither the UCC nor the OR contains such a prerequisite.
(c) Article 7.4.6 PICC 2016.
Facebook
