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| A US seller contracted with a Mexican buyer for the sale of Christmas trees grown in the seller’s plantation in Oregon. After a shipment of goods that met the contract requirements, the buyer ordered a much larger amount of the same product for the next season. Unable to fulfill the order in its entirety, the seller ordered four truckloads of trees from another US farm. After delivery, the buyer rejected the goods on account of lack of conformity; in addition, about 40% of the trees supplied by the other US farm were found to be of a low quality by the US Department of Agriculture (USDA) officers. Moreover, all the buyer’s contracts to resell the trees to other private companies in Mexico were rejected because of the low quality of the goods. As a result, the buyer brought an action against the seller.
As to the applicable law, the Court found that CISG was applicable as both parties had their place of business in Contracting States (Art. 1 (1)(a) CISG). As to the merits, the Court held that the seller could not rely on the provisions of Arts. 38 and 39 CISG, since it could not have been unaware of the non-conformity of the goods (Art. 40 CISG). Moreover, notice of lack of conformity by the buyer would have been in any case useless, given that, because of the lateness of season, the seller could not have cured the defects. Furthermore, the Court held the buyer entitled to recover the amount paid for the goods, including shipping and handling costs. The Court also awarded to the buyer damages for loss of profits under Art. 74. In doing so, the Court approved the buyer's decision not to claim for the losses resulting from contract rejection by its final customers (as those losses could not have been foreseeable at the time of contract conclusion) and reduced the amount of damages by the price the buyer had already obtained for the goods actually sold. |