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| A German buyer and a Spanish seller entered into an agreement for the sale of cars. The agreement provided that the seller would deliver the goods to Dubai, while the buyer would pay for the price and transportation costs before the goods were to be delivered. The agreement also provided that the buyer would subsequently sell the goods to its own customers in the Middle East. Before delivery, the seller became aware that the buyer’s customer was probably planning to resell the goods in Japan, where the seller already had an exclusive distributor. The seller therefore notified the buyer that it would not deliver the goods. The buyer then asked the seller to fulfill its obligations, but the seller refused to do so. However, the seller returned the entire amount paid by the buyer for the goods minus € 257.12 for bank costs. The buyer then filed a suit for the outstanding amount, plus interest. It also asked lost profits as a result of its inability to resell the goods to its own customer, as well as legal fees. In doing so, the buyer argued that it had fulfilled all of its obligations under the contract and that it had no obligation to guarantee that its customer would not resell the goods outside the region. On its part, the seller asserted that the buyer had breached its obligation to resell the goods exclusively to parties in the Middle East and that such behaviour amounted to an anticipatory breach of contract; as a result, it was no longer bound to pay interest, nor the remaining € 257.12 which had been withheld for bank costs.
The Court found CISG to be applicable since both Spain and Germany are Contracting States (Art. 1(1) CISG) and that a contract had been formed in accordance with Art. 23 CISG. As to the merits, the Court found that the buyer had not committed any anticipatory breach because its obligation was only to deliver the goods to a subsequent customer in the Middle East, not to control where this customer was going to resell the goods. Moreover, the Court found that the contract at hand was neither a distributorship contract, nor an instalment contract governed by Art. 73(2) CISG, since it had been agreed that there would be only one delivery of the goods. Thus, the seller could not avoid the contract by claiming for an anticipatory breach by the buyer. The Court then found that, since the buyer had fulfilled its obligations while the seller had breached its obligation to deliver the goods, the buyer was entitled to declare the contract avoided (Art. 49(1)(a) CISG) and consequently to collect damages under Article 45 CISG, as well as those provided for by Arts. 74 – 77 CISG. The Court first found that the buyer had the right to recover the amount it had previously paid to the seller, as required by Art. 81(2) CISG, plus interest on that amount, per Art. 84(1) CISG. The Court then awarded the buyer legal fees as well as lost profits (Art. 74 CISG) calculated as the difference between the purchase price and the price agreed upon by the buyer and the subsequent customer. |