Q 84-1
What is the idea underlying Article 84 CISG?
Article 84 aims at the equalisation of benefits subsequent upon the avoidance of the contract.
Q 84-2
What is the relationship between Articles 84(1) and 78 CISG?
Article 84(1) CISG absorbs the rule stated in Article 78 CISG that interest must be paid on unpaid sums. However, the purpose of the two provisions is different: Article 84(1) is of a restitutionary nature (see Q 84-1), whereas Article 78 aims to compensate for delayed payment. The distinction has an impact on the calculation of the interest rate (see Q 84-3).
Q 84-3
What are the solutions adopted in case law concerning the determination of the applicable interest rate? Which solution is the most convincing?
In C 84-1, the view was adopted that the interest rate should be determined in application of domestic law. In C 84-2, the court applied the interest rate at the seller’s place of business ‘as the interest yielding investment of the money occurs there’. Other approaches suggest the application of the interest rate at the buyer’s place of business or the application of the interest rate of the state whose currency has been agreed on in the contract. Considering that Article 84(1) CISG is based on the idea that the seller must account for the benefits it has derived from receipt and use of the purchase price, it seems that a general principle can be formulated according to which the interest rate at the seller’s place of business should be applied, because the seller’s opportunity to use the money for which it might otherwise have had to take out a loan existed at its place of business. It therefore seems that the interest rate can be determined from within the Convention and that there is no need to resort to domestic law.
Q 84-4
Will the buyer be entitled to claim compensation of expenses that led to an increase in value of the goods? On which provision of the CISG could such a right be based? Consider, in particular, the situation:
(a) where the expenses were necessary to preserve the value of the goods,
(b) where the buyer incurred expenses which now turn out to have been in vain (such as installation of goods, instruction and training costs for the personnel),
(c) where the goods were sold and the buyer had expenses for advertising, transport, personnel and similar costs.
The question must be solved with a view to the purpose of Article 84(2): the parties should be reinstated in the economic status in which they were before the exchange of performances. Thus, expenditures necessary to preserve the goods should be compensated. The expenditures in the third scenario should, as a rule, also be compensated; otherwise, the seller would not only be reinstated in its original economic position but it would even benefit from the failed contract at the expense of the buyer. Finally, the loss in the second case should also be compensated, as those costs arose specifically in connection with the failed transaction.
