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CISG CASE PRESENTATION

Republic of Korea 19 December 2008 Seoul Central District Court (Crude oil case)
[Cite as: http://cisgw3.law.pace.edu/cases/081219k3.html]

Primary source(s) of information for case presentation: Case abstract

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Case identification

DATE OF DECISION: 20081219 (19 December 2008)

JURISDICTION: Republic of Korea

TRIBUNAL: Seoul Central District Court

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: 2007Gahap97810

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Singapore

BUYER'S COUNTRY: Korea

GOODS INVOLVED: Crude oil


UNCITRAL case abstract

KOREA: Seoul Central District Court 19 December 2008

Case law on UNCITRAL texts [A/CN.9/SER.C/ABSTRACTS/134],
CLOUT abstract no. 1283

Reproduced with permission of UNCITRAL

Abstract prepared by Haemin Lee, National Correspondent

The plaintiff, a Singaporean company, and the defendant, a Korean company, concluded a contract of sale on 1 March 2004 under which the former agreed to supply the defendant with crude oil in exchange for the defendant’s opening a letter of credit (L/C) by a given date. When the defendant failed to perform its obligation, the plaintiff declared the contract avoided. Soon after, it resold the oil to a third party and suffered a loss.

The court stated that the CISG was applicable since the parties had their place of business in two different contracting States to the Convention.

Referring to Articles 53 and 54 CISG, the court noted that the defendant’s failure to open a L/C constituted a fundamental breach of contract because the defendant did not comply with the obligation required under the contract. The plaintiff thus was entitled to declare the contract avoided pursuant to Articles 61(1) and 64(1) CISG.

Since the plaintiff had to resell the crude oil to another buyer at a lower price, and considering the provisions of the second contract and the storage condition inherent to crude oil, the court stated that the defendant foresaw or ought to have foreseen at the time of the conclusion of the contract that its failure to perform would lead the plaintiff to pay extra charges for the storage of the crude oil as a possible consequence (Art. 74 CISG). Therefore, the defendant must compensate the plaintiff for the difference between the contract price and the price in the substitute transaction and the extra payment for the storage (Art. 75 CISG).

The court rejected the defendant’s claim for a reduction of the damages under Article 77 of the Convention, because the defendant had failed to prove that the plaintiff had not taken any reasonable measure to mitigate the damages.

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Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 53 ; 54 ; 61(1) ; 74 ; 75 ; 77

Classification of issues using UNCITRAL classification code numbers:

53A [Obligation to pay price of good];

53B [Obligation to take delivery of goods];

54A [Obligation to pay include enabling steps];

61A [Summary of seller’s remedies];

64A [Grounds for avoidance];

74A [Loss suffered as consequence of breach];

75A [Substitute transaction after avoidance];

77A [Obligation to take reasonable measures to mitigate damages]

Descriptors: Acceptance of offer; Avoidance; Conditional sale; Consequential damages; Cover transaction; Foreseeability of damages; Fundamental breach; Letters of credit; Profits, loss of

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Editorial remarks

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Citations to other abstracts, case texts and commentaries

CITATIONS TO OTHER ABSTRACTS OF DECISION

Unavailable

CITATIONS TO TEXT OF DECISION

Original language (Korean): Unavailable

Translation: Unavailable

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Pace Law School Institute of International Commercial Law - Last updated November 8, 2013
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