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| A Swiss buyer and a seller located in Taiwan and in the People’s Republic of China contracted for the development, trading, licensing and marketing of kickboards and scooters. However, since the buyer left a number of previous shipments unpaid, the seller decided to suspend performance. The buyer objected to this, arguing that it was the seller to breach the contract by not delivering the goods in time. The seller brought an action against the buyer claiming payment of the purchase price plus interest.
The First Instance Court applied CISG to the merits of the dispute, since during proceedings the parties had agreed on the application of the law of Switzerland, a Contracting State. This choice of law was considered not to exclude the application of CISG (Art. 6 CISG), as CISG is part of Swiss law. As to merits, the Court held that the buyer was bound to pay the seller only for a portion of its claim. The seller then appealed but the Second Instance Court dismissed the action. Finally the seller appealed to the Federal Supreme Court complaining about the incorrect application of Art. 71 CISG. The Federal Supreme Court found the seller not entitled to rely on Art. 71 CISG, since it had not provided sufficient evidence for the court to assess whether the buyer's failure to perform a substantial part of its contractual obligation was due to a serious defect of creditworthiness occurred after the conclusion of the contract. |