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| Abstract | ||||||||||||||||||
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| An Ukrainian seller and a Bulgarian buyer concluded a contract for the sale of coal. The contract provided that a 10% of the price should be paid within ten days of delivery of the coal at the harbour of destination. Since part of the delivered coal was not of the agreed quality the parties entered into an agreement entrusting an independent expert organisation with the examination of the quality of the delivered coal. Without presenting the certificates about the quality control to the seller, the buyer refused to pay the due sums. Later the seller, alleging a prohibition on exports by the Ukrainian government and a strike of Ukrainian miners, did not deliver the entire amount of coal agreed upon. The seller commenced an action for payment of the outstanding price, claiming that the buyer neglected its obligation to disclose the results of the quality control. In its counterclaim the buyer put forward that the seller should pay the contractual penalty for non performance of the obligation to deliver.
The Court found that the buyer was obliged to disclose to the seller the quality control certificates as the parties had modified their contract agreeing on a price reduction which was to be determined after a quality control made by an independent expert, and the parties had not expressly excluded the buyer's duty to give notice of the results of the quality control. Moreover, though the seller did know of the lack of conformity (Art. 40 CISG), it had disclosed it to the buyer, so that the application of Arts. 39 and 38 was not impaired. In the Court's opinion, however, a contributory negligence of the parties was given. In the absence of any rules on contributory negligence in CISG, the question was settled in conformity with the law applicable by virtue of the rules of private international law (Art. 7(2) CISG), which led to the application of Bulgarian law. As to the buyer's counterclaim for payment of the contractual penalty, the Court held that the seller should pay the sum agreed upon for failure to deliver within the specified time. According to the Court, the seller was not exempted from liability for failure to perform under Art. 79 CISG. Although the public authority prohibition on exports of coal did represent an impediment beyond the seller's control, the Court observed that the prohibition was already in force at the time of the conclusion of the contract and therefore it was foreseeable. Nor was the seller exempted because of the miners' strike, since at that time the seller was already in default, which excludes any later reliance to force majeure. |