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| Two parties, both distributors of agricultural chemical products, entered into a long-term commercial relationship. A dispute arose between them. The court of first instance granted the seller’s claims only partially and both parties appealed.
The Appellate Court dismissed the appeal of both parties. As to the seller’s claims, the Appellate Court agreed with the Court of first instance in assuming that the seller was not entitled to payment of one of the orders placed by the buyer. Since the parties had reached an agreement to avoid (terminate) the contract, the buyer was released from its obligation to pay the purchase price pursuant to Article 81(1) CISG (CISG being the law governing the contract). As to the buyer’s claims, the Court of Appeal denied that the buyer was entitled to set off with a counterclaim against the seller's claim. After recalling that set-off is a matter excluded from CISG (Art. 4 CISG), the Court applied Italian law and concluded that requirements for set-off under the Italian Civil Code had not been satisfied. The Court also excluded that the buyer had a right of retention, finding that the requirements of Article 71 CISG had not been fulfilled in the case at hand. Given that the seller had made cover sales, the buyer was no longer interested in the seller’s performance, which meant that the necessary connection between performance and counter-performance was lacking. Finally, the appellate Court confirmed that the buyer was not entitled to damages because of lack of timely inspection and notification of non-conformity of part of the goods delivered (Arts. 38 and 39 CISG). |