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| Abstract | ||||||||||||||||||
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| A Spanish seller and a buyer based in Lybia entered into an agreement for the sale of grated coconut. The agreement provided that the seller would deliver the goods to Lybia under a FOB clause. Upon arrival in Tripoli harbour, the local authorities discovered that the expiration date of the goods had elapsed, thus they were found to be unfit for human consumption and were forbidden entry. The seller maintained that the goods were in fact edible, only the labels had been wrongly printed. Nevertheless, the goods were shipped back to Spain. Once returned, the seller refunded the buyer only part of the price paid. The buyer then filed a suit invoking termination of contract because of lack of conformity of the goods and right to damages. The seller objected that the goods were defective but only the labels which, as it had offered in vain to do, could have been easily replaced by the proper ones. Thus, contrary to what the buyer put forward, the contract had been terminated by mutual agreement and the only admissible legal action by the buyer would be an action for compensation, which in the case at hand had to be regarded as precluded as the limitation period under the applicable Spanish law had elapsed.
The Court of first instance rejected the buyer’s claim. The buyer appealed. First of all the Appellate Court found that CISG had to be applied in the case at hand since the applicable law was to be that of the country in which the contract had been concluded, i.e. Spain, a Contracting State (Art. 1(1)(b) CISG), the sale fell within the Convention’s scope of application and the parties had not excluded its application (Art. 6 CISG). As to the merits, the Court found that, in principle, the buyer was entitled to damages as per Arts. 74 et seq. CISG and that the action was not time-barred since Spanish law, which was to be applied in lieu of CISG (Art. 4), provides for a period of 15 years. Nevertheless, the Court rejected the buyer’s claim holding that it had failed to prove fully the damages it had suffered. |