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| A Spanish buyer entered into a contract with a U.S. seller for the sale of a printing machine. Once delivered, the machine failed to function. The buyer sued the seller for breach of contract alleging lack of conformity of goods and claimed for damages, included the price of another printing machine bought from a third party. In response, the seller argued that it did not breach the contract because it was the buyer’s conduct (inappropriate conditions for placement, lack of adequate electricity and potable water)
which led to the failure of the equipment, not the equipment itself. The Court of First Instance ruled in favour of the buyer but awarded it only part of the damages claimed. Both of the parties appealed. The seller submitted the same issues argued before the lower court, while contesting the damages awarded to the buyer arguing that even assuming it had breached the contract, there was no direct link between the breach and the damages awarded to the buyer. The latter argued that the judgment in its favour should have included the cost of the replacement printing machine it had purchased. As to the applicable law, the Court of Appeal found that CISG applied since both Spain and the U.S. are signatories to it (Art. 1(1)(a)). As to the merits, the Appellate Court affirmed all of the findings of the lower court, but it found that the expense the buyer had incurred in purchasing replacement machinery should have been included in the damages awarded. The Court found that the seller had breached its obligations set forth in Arts. 25, 30, and 35 CISG, reasoning that even if the conditions in which the purchaser placed the machine were inadequate, the expert testimony, along with other evidence presented, demonstrated that the machine was not fit for buyer’s purpose known to the seller (aliud pro alio doctrine). The Court noted also that in the light of Article 60 CISG (requiring a buyer to make reasonable efforts to take delivery of goods purchased), the buyer’s actions did not amount to a breach of contract. Thus, referring to Articles 45, 74, and 81 CISG, the Court ordered the seller to pay the buyer the price of the printing machine plus damages. |