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| Abstract | ||||||||||||||||||
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| A USA buyer and a Russian seller concluded a contract for the sale of goods to be shipped to a country overseas. The goods were delivered in two instalments. Upon inspection at the port of destination, part of the first instalment turned out to be defective and, consequently, was sold to the final customers at a considerably lower price. The buyer commenced an action against the seller claiming reimbursement of the price left unpaid by the final customers and compensation for lost profit, alleging that non-conformity of the first instalment had resulted in a loss of its reputation and had consequently made it difficult to resell the second instalment.
The Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce held CISG applicable in the case at hand since the parties had chosen the law of a Contracting State (in the case at hand, Russian law) as the law governing the contract (Art. 1(1)(a) CISG). As to the merits, the Tribunal found that the recognised neutral inspection agency the buyer had entrusted with the inspection of the goods at the port of destination met the requirements provided for by the contract (Art. 8 CISG). Moreover, recalling the principle of reasonableness set out in Art. 8 CISG, the Tribunal stated that, although the contract provided that the buyer would inspect the goods at the port of shipment or on loading on board, the postponement of the inspection of the first instalment till the arrival at the port of destination was reasonable, due to the technical difficulties incurred by the buyer. As a result, the Tribunal found that the buyer had a reasonable excuse for not having made the claim for lack of conformity within the time-limit agreed in the contract (Art. 44 CISG). Furthermore, the Tribunal held the buyer entitled to reduce the price (Art. 50 CISG). As to buyer's claim for further damages, the Court reduced the amount in view of the fact that the buyer had not taken all the necessary steps to mitigate the loss (Art. 77 CISG). Finally, the Tribunal dismissed the buyer’s claim concerning the second instalment. In the opinion of the Tribunal, there was no evidence that breach of contract by the seller had caused a serious loss of the buyer’s reputation, and the seller had not, nor ought to have, foreseen such a loss at the time the contract was concluded (Art. 74 CISG). |