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| A Dutch seller and a buyer from Singapore concluded several contracts for the sale of milk powder. In order to satisfy a Singaporean ban on food imports polluted by radioactivity, the parties agreed that the milk powder was to contain less than a certain percentage of radioactivity, which they thought would be accepted as non-polluted by the authorities of Singapore. After conclusion of the contracts the seller encountered difficulties in finding the required goods, and did not deliver them to the buyer. The buyer commenced an action for damages.
The Court stated that according to private international law rules, Dutch law and therefore CISG was applicable (Art. 1(1)(b) CISG). As to the one contract which incorporated the standard terms of the trade concerned (MPC conditions), the Court held that CISG was also applicable since the standard terms contained a choice of law clause in favour of the law of the Netherlands, a contracting State. As to the seller's allegation that the contracts were invalid, the Court held that this question was not governed by CISG (Art. 4 CISG) and denied the invalidity under the otherwise applicable domestic law (Dutch law). The Court further rejected the seller's defence that it had the right to withheld performance under Art. 71(1)(b) CISG because it could not be proved that the buyer would not perform a substantial part of its obligations to take delivery and pay the price. On the contrary, the buyer was ready to take delivery in the free trade zone in case the authorities of Singapore would consider that the radioactivity was too high and to open a letter of credit in order to guarantee payment. Finally, the Court held that the seller could not rely on Art. 79 CISG alleging that the Singaporean regulations were to be considered an impediment exempting the seller from performance, as the seller was well aware of such regulations before conclusion of the contract and therefore took the risk of not being able to supply conforming goods. The buyer was awarded damages for breach of contract by the seller. |