Data

Date:
03-06-2017
Country:
New Zealand
Number:
--
Court:
High Court – Auckland
Parties:
National Plant and Equipment Pty Ltd v. P Mundy Heavy Equipment Ltd

Keywords

FUNDAMENTAL BREACH (ART. 25) - BUYER' FAILURE TO PAY THE PRICE - SELLER ENTITLED TO AVOID (TERMINATE) THE CONTRACT (ART. 64 CISG)

Abstract

[CLOUT case no. 2050. Abstract prepared by Petra Butler, National Correspondent]

National Plant and Equipment Pty Ltd (National Plant) is an Australian company that provides heavy earthmoving equipment for mining and civil construction businesses. Mundy Heavy Equipment is a New Zealand company that sources heavy equipment for prospective purchasers around the world. U&M is a Brazilian mining company, which in 2019 had six surplus dump trucks it wished to sell. U&M asked Mundy Heavy Equipment to obtain purchasers for the dump trucks. National Plant was one of the potential purchasers and negotiated via email and telephone toward an agreement with Mundy Heavy Equipment. In September 2019, National Plant sent Mundy Heavy Equipment a purchase order for the trucks for USD 13.2m. Ten per cent of the sum was payable immediately, and National Pl did not make immediate payment. U&M had other interested purchasers, and on 25 September told National Plant it would offer the trucks to others. When National Plant acquired finance, it paid the USD 1.32m, to Mundy Heavy Equipment to pay to U&M. In the meantime, U&M had sold the trucks to another purchaser. National Plant asked Mundy Heavy Equipment to repay the USD 1.32m. Mundy Heavy Equipment did not do so and used the funds to clear overdrafts and pay other expenses. National Plant alleged that the USD 1.32m was recoverable in restitution or by virtue of a dishonest breach of trust by Mr. Mundy. The claim rested on whether its agreement to buy the dump trucks was terminated by U&M on 25 September 2019. The agreement was between a Brazilian seller and a Queensland buyer.

The Court held that since both Australia and Brazil were parties to the CISG, the CISG would apply.

The Court stated that under Art. 53 CISG, the buyer must pay the price of the goods and take delivery of them as required by the contract and the convention. Art. 64 CISG gives the seller the right to avoid the contract when (a) if the buyer ’s failure to perform its obligations amounts to a fundamental breach of contract or (b) if the buyer does not within the time extended under article 63(1) CISG pay the price or take delivery or declare that he will do so within the extended time. “Fundamental breach” is defined in article 25 CISG as one that “results in such detriment to the other party as substantially to deprive him of what he is entitled to expect under the contract...”.

The Court held that National Plant breached the agreement when it did not pay 10 per cent of the price immediately, but that mere delay did not amount to a fundamental breach under Art. 25 CISG. Instead, it held that the alternative ground under Art. 64(1)(b) CISG was available, and when National Plant failed to meet the payment deadline, U&M was entitled to avoid (terminate) the contract. Ultimately, it was held that Mundy Heavy equipment was required to repay the USD 1.32m when National Plant requested it.

Fulltext

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Source

[Case law on UNCITRAL texts, A/CN.9/SER.C­/ABSTRACTS/222]}}}