A Spanish buyer entered into a contract for the sale of wire rods to be governed by CISG. As the goods failed to arrive on the date agreed upon, the buyer informed the seller that any further delay in delivery would cause it severe loss due to its own obligations towards third parties. The first shipment of the goods arrived two days later than the date agreed in the contract. On the same day, the buyer contacted the seller again indicating that if the rest of the goods did not arrive on time, it would be forced to find a new supplier. A few days later, the seller fearing that the buyer would not pay, notified the latter that it would suspend delivery of the outstanding goods. The seller unilaterally decided to suspend delivery, that was however resumed one month later. After the new delivery had been performed, the buyer returned three truck loads alleging lack of conformity and refused to pay for them. The seller then sued the buyer for the price of the goods returned, as well as for the costs of storage during the period it had suspended delivery.
The Court of First Instance rejected the seller’s claims both because the goods did not conform to the contractual specifications, and the delivery was late. The Court also dismissed the claim for storage costs because it found that the seller had no right to unilaterally suspend delivery of the goods.
The Appellate Court confirmed the lower court’s judgment only in part. In so doing, the Court found that the buyer was not entitled to return the goods, as it had not provided adequate evidence to demonstrate that the goods did not conform to the contractual specifications. However, the Court rejected the seller’s argument that, on the assumption of an anticipatory breach of contract by the buyer, the seller had the right under Art. 71 CISG to suspend performance. Indeed, the Court found that from the buyer's repeated communications concerning the consequences of late delivery as well as the lack of quality it could not be inferred that it would not perform a substantial part of its obligations. The Court found, therefore, that the seller should have continued to supply the goods and had no right to recover costs associated with storage. |