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| Abstract | ||||||||||||||||||
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| An international petroleum trading company from Finland (seller) entered into a contract with a US corporation (buyer) for the sale of a certain quantity of naptha. Pursuant to the agreement, the naptha was to be shipped through a vessel provided by the seller, the acceptance of which could not be unreasonably refused by the buyer. The time limit for the cargo to arrive at its destination (the port of New York) was fixed to 20 September 2001. The seller committed itself to using a vessel named “Bear G” without prior approval by the buyer. After being notified of the nomination of “Bear G”, the buyer refused acceptance but there was no chance for the seller to find a different vessel, since “Bear G” was supposed to ship two further lots of naptha purchased by different companies. Faced with a number of difficulties, the seller did not arrive at its destination until 22 September 2001, i.e. two days after the date fixed for performance. When it became apparent that the cargo’s arrival would be late, the buyer made a new offer, showing its intention to purchase the cargo provided that it arrived no later than four days after the original date set, that the goods were unloaded by lightering barges and that the sales price was reduced by a certain amount. The seller accepted this offer, but was unable to secure any barge when “Bear G” entered the port of New York. The buyer subsequently sued the seller alleging breach of contract; the seller counterclaimed lost profits resulting from the sale of goods at a price lower than that contractually agreed upon.
In a previous decision rendered by the Court [see U.S. District Court, New Jersey, CIV.01-5254 (DRD), June 15, 2005, abstract and full text in Unilex], CISG was held applicable to the case at hand pursuant to its Art. 1(1)(a) CISG. As to the merits, the Court first of all found that the buyer’s refusal of acceptance of the vessel “Bear G” was unreasonable and therefore amounted to breach of contract. The Court then addressed the question of whether late delivery by the seller amounted to fundamental breach entitling the buyer to declare that the contract was avoided (Arts. 25 and 49 CISG). In doing so, the Court excluded that the buyer could rely on paragraph (b) of Art. 49 CISG which enables the buyer to declare the contract avoided if the seller does not deliver the goods within the additional time fixed by the buyer in accordance with Art. 47 CISG. In fact, the seller would have been capable of delivering the naptha within the additional time for performance if the buyer had not wrongfully refused to accept the vessel "Bear G" and, consequently, prevented immediate unloading of the cargo. Moreover, the new agreement providing for an additional time for performance by the seller could not be considered as valid, since Art. 47 CISG precludes the buyer from asking for a reduction of price when the additional period is pending. Nor could late delivery by the seller be considered a fundamental breach under paragraph (a) of Art. 49 CISG. Had the buyer not unreasonably rejected the vessel "Bear G", the seller could have started unloading the cargo only two days after the expected date, and the buyer would have still been able to blend the naptha with other components and release the final product, as planned, onto the market prior to 30 September 2001 (i.e. before the final product's October price fall that it alleged had caused it to suffer damages). This conclusion was reached from the fact that the buyer had been capable of granting an additional four days for performance. As a result, the Court held the buyer was only entitled to recover damages resulting from a two-day delayed delivery, while the seller was granted damages arising from the buyer’s breach of contract. |