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LEGISLATIVE HISTORY

Legislative history of CISG article 76: Match-up with 1978 Draft to assess relevance of Secretariat Commentary


1978 Draft article 72 CISG article 76

(1)If the contract is avoided and there (1)If the contract is avoided and there is a current price for the goods, the is a current price for the goods, the party claiming damages may, if he party claiming damages may, if he has not made a purchase or resale has not made a purchase or resale under article 71, recover the differ- under article 75, recover the differ- ence between the price fixed by the ence between the price fixed by the contract and the current price at the contract and the current price at the time he first had the right to declare time of avoidance as well as any the contract avoided and any fur- further damages recoverable under ther damages recoverable under the article 74. If, however, the party provisions of article 70. claiming damages has avoided the contract after taking over the goods, the current price at the time of such taking over shall be applied instead of the current price at the time of avoidance.

(2)For the purposes of paragraph (1) (2)For the purpose of the preceding of this article, the current price is paragraph, the current price is the the price prevailing at the place price prevailing at the place where where delivery of the goods should delivery of the goods should have have been made or, if there is no been made or, if there is no current current price at that place, the price price at that place, the price at such at another place which serves as a other place as serves as a reasonable reasonable substitute, making due substitute, making due allowance allowance for differences in the cost for differences in the cost of trans- of transporting the goods. porting the goods.


Editorial comments

Paragraph (2) of CISG article 76 and paragraph (2) of 1978 Draft article 72 are substantively identical. Nevertheless, the Secretariat Commentary on 1978 Draft article 72 is only of limited utility, as paragraph (1) is significantly different. Substantive changes made to paragraph (1) pertain to avoidance before taking over the goods (new reference point: current price "at the time of avoidance" rather than when the avoiding party "first had the right to declare the contract avoided"); and avoidance after taking over the goods (new reference point: current price "at the time of such taking over" rather then when the avoiding party "first had the right to declare the contract avoided"). The Summary Records of Committee Meetings of the Vienna Conference contain the following explanation: "Mr. BENNETT (Australia) (on behalf of the sponsors of the amendment).... The purpose of (this article) was to provide a formula for assessing the amount due if the contract was declared avoided, in addition to any further damages recoverable under [CISG article 74]. The formula [set forth in paragraph (1) of the 1978 Draft] was based on two factors: the price fixed by the contract, which did not create any difficulty, and the current price 'at the time [the party] first had the right to declare the contract avoided'. It was the second factor that was not satisfactory, firstly, because its application was uncertain and secondly because it would encourage the parties to be too precipitate in declaring the contract avoided. The formula envisaged in [this article] should undoubtedly be such as to prevent speculation on the price, but the need to do so did not arise until the goods had been taken over, and it was at that stage that the problem of speculation could be settled, in a more limited fashion than was done in the [1978 Draft].... In the case of goods taken over before the contract was declared avoided, in order to reduce the risk of speculation that would then exist, the price applicable should be the current price at the time they were taken over. However, if the goods had not been delivered at the time the contract was declared avoided, it was not essential to reduce the risk of speculation and the most satisfactory method would then be to take the current price at the time of the actual declaration of avoidance. In such a situation, the application of that formula would be less uncertain and would not make for unduly hasty avoidance of the contract. "Mr. ROGNLIEN (Norway), speaking as co-sponsor of the amendment ... explained that its main purpose was to remedy the present provision under which the price to be assessed would be the price prevailing at the time when the party who declared the contract avoided had for the first time had the right to do so. That would be difficult to apply and would open the door to a great deal of litigation which was the very purpose of [this article] to avoid by providing for abstract damages. A party would in many cases have the right to avoid the contract some time before it would have become clear that the right existed. Particular difficulties would arise in cases of anticipatory breach. It was important not to forget that, in practice, parties would not readily be precipitate in avoiding a contract which they entered into in good faith, and they should not be encourged to do so. In the event of non-delivery of goods, for example, the buyer undoubtedly had the right to declare the contract avoided, but he would usually wait quite some time before doing so because he would be interested in obtaining the goods. In such a case, it was, incumbent upon the seller to inform the buyer that he would not perform his obligations. After being so informed the buyer would under [CISG article 77] have the duty to mitigate the loss by taking appropriate measures, and would consequently have nothing to gain by speculating in price movements thereafter. In cases of non-delivery, therefore, it seemed reasonable, for the purposes of [CISG article 76], to take the time when the contract was actually avoided and not the time when the buyer had first had the right to declare it avoided. Where the goods delivered did not conform, it was proposed to assess the abstract damages in accordance with [CISG article 76] on the basis of the price prevailing at the time when the goods had been taken over. Any further loss would be covered by [CISG article 74], either as an alternative or additional remedy" (Official Records, p. 222).


Pace Law School Institute of International Commercial Law - Last updated July 12, 1999
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