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| Abstract | ||||||||||||||||||
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| A German company entered into negotiations with an Italian company for the purchase from the latter of 200 tons of bacon to be delivered in 10 instalments. The offer contained a request that the bacon be delivered wrapped. The reply by the Italian company stating that the bacon would be delivered unwrapped, was accepted by the German company in writing with no objections. The buyer, after taking delivery of the first four instalments, refused to take delivery of the last 6 instalments. The seller resold the goods for approximately 25% of the contract price and commenced action to recover damages pursuant to Art. 74 CISG.
The court held that the contract was validly concluded since the seller's reply to deliver the bacon unwrapped constituted a counter-offer according to Art. 19 CISG, which the buyer accepted in writing without any objection. The buyer alleged that the parties had orally agreed that in case of complaints by the veterinary department and the custom's office about the condition of bacon, the buyer would be entitled to refuse the goods. While admitting that under the CISG, in principle, oral agreements could contradict a written contract term, the court held that in the case at hand the buyer had failed to prove the existence of such oral agreement. According to the court the seller was entitled to avoid the contract (Art. 64(1)(a) CISG) insofar the buyer's failure to take delivery of more than half of the goods constituted a fundamental breach. The court stated that following Art. 77 CISG and the principle of mitigation of damage therein laid down, the seller was not only entitled but even obliged to resell the goods in accordance with Art. 75 CISG. However, since the seller was able to recover only about 25% of the contract price, there was no resale 'in a reasonable manner' as required by Art. 75 CISG; therefore the court granted damages in accordance with the criteria set forth in Art. 76 CISG. Finally, the court held that the seller was entitled to interest on the unpaid price (Art. 78 CISG). The rate of interest was determined by applying German private international law rules, which led to the Italian statutory interest rate. |