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| Abstract | ||||||||||||||||||
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| A French buyer placed several orders to an Italian seller over a period of two years concerning bra foamed cups to be used in the production of swimsuits. In June 2003, the buyer placed an order for 3500 items and the seller delivered the goods; yet, during the production process, the goods showed defects and the buyer informed the seller thereof. In July 2003, the buyer placed a new order for 14100 items, a great amount of which showed the same defects. At the beginning of November, 2003, after an exchange of communications between the parties, the seller declared itself willing to re-manufacture all the goods and ship them at its own expenses within five weeks, on condition that the buyer would comply with certain payment requirements. Few days later, the buyer confirmed its previous orders (though reducing the number of items requested), and placed a new order. Subsequently, the seller informed the buyer that the date of delivery would be postponed, and that the unit price indicated in the last order would increase. The buyer objected to these conditions, and in December, 2003, cancelled all its orders. As a result, the buyer brought an action against the seller claiming termination of contracts plus damages.
The Court of First Instance ruled in favour of the buyer and the seller appealed. The Appellate Court first held that the matter at hand was governed by CISG (art. 1(1)(a) CISG). As to the merits of the dispute, the Court found that, since the buyer placed an order to the seller, and the latter accepted it by delivering the goods, a first contract was entered into June, 2003(art. 18(3) CISG). However, this contract had not been duly performed, since the seller did not deliver conforming goods within the additional period granted by the buyer to perform (arts. 35 and 47 CISG). Therefore, the Court held that the buyer was entitled to terminate the contract pursuant to arts. 26 and 49 CISG. Moreover, the Court found that in July, 2003, the parties had entered into a second contract, whose terms as to quantity, delivery date and payment conditions had been modified by mutual agreement in November, 2003. Since the seller did not respect the new contractual terms, but it proposed to increase the price and postpone the date of delivery, the buyer had rightfully terminated the contract in accordance with arts. 26 and 49 CISG. Furthermore, the Court excluded that the parties had entered into a third contract with respect to the order placed in November, 2003. In fact, the seller’s reply to the buyer’s order contained materially different terms relating to the unit price and the time of delivery, thereby amounting to a counter-offer according to Art. 19 CISG. Regarding the buyer’s claim for damages, the Court found that, by waiting three days from discovery of lack of conformity before interrupting the production of the goods, the buyer had failed to mitigate its loss as required by Art. 77 CISG. Finally, the Court held that the buyer was not entitled to recover the difference between the contract price and the price of the substitute transaction concluded after the avoidance of the sale contracts, since the cover sale could not be considered ”reasonable” under Art. 75 CISG. In fact, the buyer purchased bra cups in replacement at a price higher than the one charged by the seller, and accepted a delivery date subsequent to the one the seller had proposed. |