- Russian Federation
- Tribunal of Int'l Commercial Arbitration at the Russian Federation Chamber of Commerce
BUYER'S OBLIGATION (ART. 53 CISG) - PAYMENT OF THE PRICE
FUNDAMENTAL BREACH (ART. 25 CISG) - PARTIES' AGREEMENT THAT GOODS NOT BE DELIVERED BEFORE A CERTAIN EVENT - EARLY DELIVERY (ART. 37 CISG) - NOT AMOUNTING TO FUNDAMENTAL BREACH
[Abstract: CLOUT case 141]
A contract was concluded in mid-November 1993 between a Swiss seller (claimant) and a Russian buyer (respondent) for the supply of chocolate confectionery products for a specified sum of money. The contract included a clause stipulating preliminary payment of the first two installments of the goods - to be delivered by two vans - within three days of receipt by the seller of a banker's guarantee from the buyer for payment of the goods. The time-limit for delivery of the goods was one week after receipt of the banker's guarantee. As a consequence of further correspondence between the parties, the delivery was timed to fit in with the forthcoming Christmas holidays.
In mid-December 1993, the seller delivered the first of the two installments on the basis of the buyer' s written statement regarding guaranteed payment of goods. The buyer took delivery of the goods having completed all the customs and other formalities required for their import. However, the buyer subsequently failed to pay for the delivered goods. When explaining its position, it cited the fact that the seller had breached the contract by dispatching the goods before the buyer had transmitted the banker's guarantee. The buyer considered that such an infringement should be regarded as a fundamental breach of contract. In addition, the buyer stated that its non- payment was due to its subcontractors' refusal to accept previously ordered goods owing to the changed economic situation in the country. The seller brought a claim for the payment of the delivered goods to the arbitral tribunal.
In settling this dispute, the tribunal noted that, under Art. 53 CISG, one of the main obligations of the buyer was to pay the price established for the goods. Violation by the seller of the terms specified for dispatch of the goods (delivery in the absence of a banker's guarantee) could not be considered sufficient grounds for discharging the buyer from its obligation to pay for the goods, since the buyer had taken delivery of them. Such violation could not be deemed a fundamental breach of contract, in the sense of Art. 27 CISG, such as to entitle the buyer to breach the contract. Under the CISG, if the violation of the contract on the part of the seller caused the buyer to suffer any damage, it would be entitled to compensation (Art. 37 CISG). However, in this particular case the buyer had not brought any such claim. The tribunal thus found in favor of the seller.
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Original in Russian:
Abstract: CLOUT Case 141, in A/CN.9/SER.C/ABSTRACT/10, 16 August 1996, reproduced with kind permission of the Secretary, United Nations Publications Board}}