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Price reduction

Another remedy available to the Buyer is price reduction (Article 50). The Buyer is entitled to reduce the price payable to the Seller. If it has already been paid he may claim repayment on the basis of Article 50 and may also be entitled to interest on this sum under Article 78. This remedy is not available in English law although it is available in a number of European countries.[119] Price reduction is said to be advantageous because it is a self help remedy. However this supposed advantage is unlikely to be of much use in the majority of international sales as in most cases the price will have already been paid and so the Buyer would have to go to court to reclaim part of the price.

The amount by which the Buyer may reduce the price is the same proportion as the value that the goods actually delivered had at the time of the delivery, in relation to the value that conforming goods would have had at that time. The time at which these values are determined is the time of delivery which will be established on the basis of the contract and Article 31. Nevertheless as Nicholas has recognised, in the majority of situations it will still be more beneficial to rely on a claim for damages.

The main situation where price reduction remains a suitable alternative is in the situation where the Seller can claim exemption from liability under Article 79. In this situation the Buyer no longer has the right to claim damages, although Article 79(5) does not restrict the Buyer's right to exercise any other remedy. The second situation where price reduction may benefit the Buyer is where the price of the goods has fallen between the conclusion of the contract and delivery. In this case the sum calculated under Article 50 will be higher than the difference in value between the defective and non-defective goods at the time of delivery. Finally, where the Buyer could have difficulty in calculating his damages he may find price reduction a more practical and speedy option.[120]

When commenting on this provision, Honnold says that at the diplomatic conference, common law layers saw little reason to obtain this "venerable legal tool", because in the rare case where force majure excuses the Seller from performance, the question of how much the Buyer should pay could be remedied by reference to domestic rules for restitution to avoid unjust enrichment. On the other hand in the case of a international convention it is perhaps more suitable to provide a rule which avoid unnecessary recourse to the disunity of domestic laws.[121]

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FOOTNOTES

* Many thanks to Robert Bradgate of the University of Sheffield, Paul Lennon of DTI - Department of Trade and Industry, Georges Racine of McCarthy Tétrault, David Pullen of Richards Butler, Stuart Miller of Osborrne Clarke, Jonathan Guest of Eversheds, Brian Burgess of Beauvoisin & Burgess, Richard Wynn Jones of Burges Salmon, and Nicholas Joyce of Linklaters for their assistance and advice during the writing of this article.

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119. Interestingly, this remedy does not appear in the UNIDROIT Principles although the remedy of price reduction is available in The Principles of European Contract Law (PECL), Article 9.401.

120. For example the remedy of price reduction avoids the problem of proof of loss that arose in Bence Graphics International v. Fasson UK Ltd (1996) N.L.J. 1577.

121. For a detailed explanation of Article 50, see: Honnold, J.O., 1999, Uniform Law for International Sales. 3^rd ed., Kluwer Law International, at p. 310.

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Pace Law School Institute of International Commercial Law - Last updated December 5, 2000

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