CISG CASE PRESENTATION

Facts

Claimant [seller] contracted with Respondent [buyer] to sell equipment, spare parts and services. The parties mutually agreed to increase the price that was originally established and change the payment conditions. Due to financial difficulties, [buyer] was unable to finance the purchase and sought cancellation of the contract. [Seller] refused to cancel the contract and claimed damages for non-fulfillment of the contractual obligations. [Buyer] would not accept delivery of the goods, which were then stored at [seller's] expense. [Seller] attempted to resell the goods, but was unsuccessful.

Applicable law

The contract was silent on substantive law, but provided that "any dispute, controversy or claim that cannot be settled by the parties shall be submitted to arbitration in accordance with the Rules of Arbitration of the International Chamber of Commerce in Paris."

"[T]he question of whether the United Nations Convention on the International Sale of Goods ("UN-Sales Convention") applies in the present case need not be addressed because the result reached by the Arbitrator would be [the] same if the UN Sales Convention applied." [page 107]

[Seller's] claim for damages

According to the contract, [buyer] was to pay [seller] 20% of the total contract value in advance and 80% by bank transfer within 10 days from the date of receipt of shipping documents. [Buyer] paid the advance payment and [seller] submitted to [buyer] the shipping documents. However, [buyer] failed to pay the balance. Thus, [seller] has a contractual claim for payment of the remaining purchase price.

[Seller] is also entitled to claim interest on the remaining purchase price, and storage and transportation costs for the goods.

[Buyer's] counter-arguments

[Buyer] argued that [seller] could not demand payment of the purchase price and transfer ownership of the goods to [buyer], because [seller] retained title for himself. The contract provides "that the equipment will remain the exclusive property of [seller] until payment has been received by [seller] and title to the equipment stored at the freight forwarder will pass to [buyer] upon receipt of payment by [seller] on his account. [Seller] was still the owner of the goods because he had not yet received payment from [buyer]; thus, the issue is whether the [seller] is entitled to claim the contract value.

"The retention of title is a means of securing payment of the purchase price. Should the buyer default with the payment then the seller can either rescind the contract and take possession of the contract goods or the seller can stick to the contract and demand payment of the purchase price. (Koziol/Welser, Grundri des Burgerlichen Rechts II 152; Aicher in Rummel, ABGB § 1063 Rz et seq.; see also Articles 62 to 65 UN Sales Convention and Schlechtriem, Internationales UN-Kaufrecht 132 et seq.)."

In this case, [seller] stuck to the contract and demanded payment. Therefore, [buyer] was obligated under the contract to take delivery and pay the purchase price. The fact that [seller] retained title in the goods does not usurp him of his claim for the purchase price. [page 108]