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CISG number

Arts. 74, 75, 76

Relationship between Articles 55, 56 and 57

470. Prior to examining the provisions on damages, the Committee considered the relationship between articles 55, 56 and 57.

471. It was generally agreed that articles 56 and 57 were illustrations of the operation of article 55 in particular circumstances. Article 56 dealt with the case where the buyer had, bought goods in replacement or the seller had resold the goods. In these situations the measure of damages would be the difference between the contract price and the price in the substitute; transaction plus any additional damages, including loss of profit, as might be allowed under article 55. However, if there had not been a substitute transaction and if there was a current price for the goods, the measure of damages would be the difference between the contract price and the current price on the date that the contract was avoided plus any addition damages, including loss of profit, as might be allowed under article 55. In other cases, damages would be calculated according to the general formula in article 55. [page 58]

472. Furthermore, the Committee was agreed that a party who had in fact arranged a substitute transaction of the nature described in article 56 should not be allowed to claim damages under article 57 where that article would provide for a higher measure of damages.

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CISG number

Art. 76

484. The text of article 57, as approved by the Working Group on the International Sale of Goods, is as follows:

Paragraph (1)

Relevant date for determination of current price

485. The Committee considered a proposal that damages under paragraph (1) be based on the current price on the date delivery was performed or ought to have been performed.

486. Support for this proposal was based on the view that calculating the current price on the date that the contract was avoided would permit a party to speculate on whether his damages would increase because of future price changes if he were to delay the date on which he declared the contract avoided.

487. However, another view was that this proposal could cause difficulties in practice, particularly in cases of non-performance where there was no fixed delivery date but delivery was to be made within a fixed period pursuant to article [page 59] 17(b) or within a reasonable time after the conclusion of the contract pursuant to article 17(c). It was also noted that the proposed new method of calculation of current price might still permit speculation. In any case, any abuses of the method of calculating damages under this article would be dealt with by the principle of mitigation of damages contained in article 59.

488. The Committee decided not to retain the proposal to base the calculation of damages on the current price on the date delivery was performed or ought to have been performed. However, in view of the difficulties which were expressed in relation to the current text the Committee decided to adopt a compromise proposal that the current price be calculated on the day on which the party first had the right to declare the contract avoided. Although it was stated that this test might encourage the seller to avoid the contract before he otherwise would, the general view was that this test selected a sufficiently clear and objective date for the calculation of the current price and one which did not encourage the party claiming damages to speculate on the future price level.

Paragraphs (2) and (3)

489. As noted in paragraph 471 above, the Committee decided that article 57 was an illustration of the general rule of damages set out in article 55. It also decided that a party who had in fact arranged a substitute transaction of the nature described in article 56 should not be allowed to claim damages under article 57 where that article would provide for a higher measure of damages.

490. The Committee referred to the Drafting Group the same proposal in respect of article 57(3) as is described in paragraph 482 above in respect of article 56(2).

Decision

491. The Committee recommends that the Commission should adopt the following text, now renumbered as article 58:

"Article 58

"(1) If the contract is avoided and there is a current price for the goods, the party claiming damages may, if he has not made a purchase or resale under article 57, recover the difference between the price fixed by the contract and the current price at the time he first had the right to declare the contract avoided and any further damages recoverable under the provisions of article 56.
"(2) For the purposes of paragraph (1) of this article, the current price is the price prevailing at the place where delivery of the goods should have been made or, if there is no current price at that place, the price at another place which serves as a reasonable substitute, making due allowance for differences in the cost of transporting the goods." [page 60]

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