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Report to the Uniform Law Conference of Canada on Convention on Contracts for the International Sale of Goods

Professor Jacob S. Ziegel, University of Toronto
July 1981

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Article 76

(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 75, recover the difference between the price fixed by the contract and the current price at the time of avoidance as well as any further damages recoverable under article 74. If, however, the party 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 the preceding paragraph, 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 such other place as serves as a reasonable substitute, making due allowance for differences in the cost of transporting the goods.

COMMENT

1. The "current price" test in art. 76 broadly corresponds to the "available market" test in SGA 48 and 49, subject to the following differences:

(a) Art. 76 only applies where the aggrieved party has not proceeded under art. 75, i.e., he cannot ignore the results of an actual resale or covering purchase and claim higher damages. The position under the Uniform Commercial Code is unsettled although there is strong evidence that the aggrieved party was not intended to be put to his election. See further OLRC Sales Report, pp. 409-410.

(b) Time for determining current price. The draft version of art. 76 was amended on this point at Vienna and the article now contains two tests to determine the time of the currency price: first, the current price at the time of avoidance when the goods have not been taken over by the buyer and, second, where the goods have been taken over by him, the time when such taking over occurred. The reasons for the adoption of the double test were apparently based on the fact that some delegates felt that the test in the draft article (the time when the aggrieved party first had the right to avoid the contract) was too vague, and because others were concerned that the substitution of the time of actual avoidance might enable the aggrieved party to postpone avoidance to take advantage of a fluctuating market. On the other hand, the time of delivery was not generally suitable either because there might not have been any delivery as in the case of an anticipatory repudiation. Thus the version of art. 76 eventually adopted was regarded as an appropriate compromise.

The provincial Acts only deal with the determination of the market price where the buyer fails or refuses to accept and pay for the goods or where the seller fails or refuses to deliver. In each case the bench mark is the market price at the time of the wrongful failure or refusal. See OSGA ss.48-49. It is sometimes suggested that the same test applies where the buyer has rightfully rejected non-conforming goods but this seems doubtful. See further OLRC Sales Report, pp.525-27.

(c) Place for determining current price. The provincial Acts do not cover this point and the case law is sparse and inconclusive. See OLRC Sales Report, p. 524. "Where delivery should have been made", the test in art. 76(2), may be too rigid if the place of receipt of the goods and the place of delivery are different, as they often are. I prefer the test in UCC 2-713(2). viz., "the place for tender (of the goods) or, in cases of rejection after arrival or revocation of acceptance, as of the place of arrival." Presumably there is some flexibility in art. 76(2) and a court may be able to substitute the price obtaining at the place of arrival of the goods where that is a more reasonable market for a hypothetical covering purchase.

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Pace Law School Institute of International Commercial Law - Last updated April 23, 1999
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