Damages under the CISG.docx

Damages under the CISG Introduction With regard to the application of sales agreements to international sales contracts (CISG) by the arbitration tribunal between companies, a distinction is made between three scenarios. The first of which is respect for the choice of the commercial parties by the a...

Damages under the CISG Introduction With regard to the application of sales agreements to international sales contracts (CISG) by the arbitration tribunal between companies, a distinction is made between three scenarios. The first of which is respect for the choice of the commercial parties by the arbitration tribunal in a way that is not subject to debate with regard to the sales agreement, since it expresses the law governing contracts for the sale of goods. Secondly, Article 1 of the CISG cannot be applied by the international arbitration body, as the CISG is imposed in the event that the rules of international law apply it of any of the CISG member states1. Thirdly, in the event that the arbitration panel is able to apply the sales agreements according to Article 1 which is a controversial matter. The application of the sales agreement if the two parties do not agree on the law applicable to the contract, they own businesses in member states as that clause stipulates awareness. Summing up, CISG is a treaty at the international level and is therefore binding on states and their institutions. Entitlement to damages The buyer is right to obtain compensation according to Article 45 (1) besides the seller can obtain appropriate compensation according to Article 61 (1) in CISG. This appears from the duties of the two parties that contracts impose especially for duties which were approved in accordance with Articles 30 and 53, as this is a type of breach especially for the smallest. This was done in accordance with a contractual duty that could result in entitlement to compensation as this leads to exceeding the obligation to pay compensation when terminating contracts, in accordance with Articles 81 (2). It is the responsibility under Article 74 to ensure the fulfillment of the required obligations that have been agreed upon by the parties concerned, as arbitration bodies must have jurisdiction in any of the written contracts. This includes the behavior of the parties and customs in the industries, in Articles 8 (3) of the CISG and Article 9 to deliver the goods of the contracts according to Article 35. Hence, a large number of judicial precedents from arbitration bodies and courts were found with non-conformity. This includes differences in quality and quantity besides various goods are delivered and there are defects in the packaging2. Damages and compensation of CISG The obligor shall have the right in accordance with the sales agreement to reduce prices, choose a specific performance and provide compensation or termination. This is the main remedy for violating sales contracts, as Article 74 and what comes after it do not provide any right for the harmed party to claim compensation. It must be used in accordance with Articles 45 and 61 So that the creditor has the right to obtain compensation. So, damages are determined in certain cases in which the contractor has the right to demand compensation, and there are also many means of remedy, as the methods of granting compensation are dealt with in a number of provisions in accordance with the Sales Agreement in Articles 74-77. Article 79 also specifies the requirements in cases of exemption for any of the parties for performance that is the result of hardship or force majeure. The aim of compensation for damages incurred in accordance with the sales agreement stipulated in accordance with Article 74 is that the amount be compensatory. Hence, the creditor is entitled to an amount of money equivalent to the loss resulting from non-compliance with contracts and the contractor has the right to be placed in an economic situation when the contract is executed correctly. In addition, the debtor becomes responsible for all recent losses that result from poor performance without taking the fault into account in the event that the debtor is not exempted, based on Articles 79 and 80. Article 74 contains principles that include determining liability and compensation in full according to rules that have the ability expectedly as it aims to create compatibility between the traditions of law in general and civil law. There is no dispute that full compensation is one of the foundations that cause damage. However, the precise and true goal of compensation has not been fully determined, as judicial precedents have proven that compensation is in accordance with sales agreements that contain the interest of the contractor. It is acceptable that the sales agreement does not differentiate between losses whether financial or non-financial, and does not prohibit excess compensation3. Loss No definition of loss has been set in any article except Article 74, which stipulates that loss includes a loss in profits as this includes losses in the future, which exist with regard to the concept of loss and based on the basic principle of the sales agreement. This includes abandoning the contractual relationship between all parties for a long-term period. This does not include any damages that occur partially with regard to the concept of loss. It was pointed out that the agreement in the sale is not bound by any of the principles of breach when the debtor has the right to cancel the contract. Categories of loss Direct loss - The direct loss is measured by the difference between the value for the actually receiving party and the value for the party to whom the damage occurred. In the event of termination of the contract, direct damages are calculated in accordance with Articles 75 and 76, and this is based on the actual market value as well as the costs of purchasing the cover whereby the creditor becomes entitled to obtain the costs in accordance with what is acceptable. For example, if the goods are delivered without an acceptable excuse, the buyer has the right to take agreed-upon measures to temporarily compensate for the losses that occurred as the buyer has the right to receive all the expenses that he incurred.it is possible to claim all rental costs for a commodity without obtaining a replacement except in the event that the buyer obtains the goods and they contain defects but does not resort to canceling the contracts as he has the right, based on Article 74, to obtain compensation in exchange for alternative transactions4. The seller also has the right to obtain a bridge loan in the event that the buyer delays paying the purchase prices at the previously agreed upon time without an acceptable excuse. So, any additional costs incurred by either party will be incurred due to the other party’s unreliable non-compliance of the reduction of damages in relation to losses. Examples: The buyer's expenses aimed at preserving the goods through storage especially those that are received late or have a defect so they are returned to the seller again. Also, the acceptable expenses are an obligation on the buyer to ensure the safety of the goods and their compliance with the conditions, and if proof of the opposite occurs, the seller will be contacted. The seller’s expenses related to storage operations were rejected by the buyer or refused to avoid a greater loss. In turn, the expenses incurred by the seller as a result of the lack of authority for the shipping process are provided by the buyer. Special cases Disgorgement of profits Due to the large differences between judicial precedents that are applied to public and civil law regarding matters of squandering of profits in CISG vertically, the arbitrator must consider awarding compensation according to the foundations of squandering of profits. Total profits are only in a number of cases, such as force majeure circumstances. On the practical side, in cases related to the sale of goods at the international level, the creditor does not bear any loss, and in return, the debtor has the ability to return the profits in accordance with Article 74.On the other hand, the producer is obligated to provide goods and manufacture them contractually based on human rights and ethical standards.He reduces production costs by relying on production mechanisms that are not in line with the agreement and accordingly there is an increase in profits. The seller contractually obligated to sell goods according to ethical or human rights standards, reduces his production costs by resorting to non-conventional production mechanisms and thus increasing his profits; or the buyer supplies to a specific market, such as the European Union, NAFTA or Mercosur, in exchange for an express term in the contract with the goods purchased and thus makes a profit5. Legal costs The unified application of the CISG does not need to rely on matters that help recover legal costs in order to be classified, whether procedural or substantive according to the court’s law. This may cause an uneven application and interpretation with regard to the CISG as it is possible to obtain the costs of legal fees if the contract stipulates that. This identifies the possibility of obtaining costs that are not subject to the judiciary as a form of compensation, in accordance with Article 74, especially if the activity is not subject to the judiciary, and non-judicial costs include legal costs. They are related to transgressions or the pursuit of rights according to the contract when a demand for performance occurs and the majority does not work to support the recovery of litigation costs, in accordance with Article 74 of CISG. Conclusion According to the Sales Agreement contract (CISG), it is possible to claim compensation in the event of non-compliance with the terms of the contract or its invalidation such as the system for damages according to the Sales Agreement is in accordance with Article 74. The law requires the debtor to place the creditor in the position in the event of non-compliance with the implementation of contracts based on its terms. The sales agreement gives the debtor the opportunity to choose in the event of any fundamental breach to the extent that the debtor has the right to terminate the contract and calculate the damages in accordance with the law and Article 74.This is done in a tangible way by fulfilling what is required in accordance with Article 75, where the debtor has the right to obtain the costs in accordance with the text of Article 75 in the event that the creditor does not comply with proving the required good faith or proving that he was exposed to force majeure circumstances that caused him damage. References Petra Butler (2018) Damages Principles under the Convention on Contracts for the International Sale of Goods (CISG)Available at https://www.lexology.com/library/detail.aspx?g=b60441e5-1582-4856-9aa9-c52e8e025be4 Gotanda, M Djordjevic in UN Convention on Contracts for the International Sale of Goods (2018), Article 76, para. 17. Bonell, Michael and Liguori, Fabio, (2009) 'The U.N. Convention on the International Sale of Goods: A Critical Analysis of Current International Case Law' Felemegas, John, (2014) 'The United Nations Convention on Contracts for the International Sale of Goods: Article 7 and Uniform Interpretation. Pace Review of the Convention on Contracts for the International Sale of Goods (CISG). Ferrari, Franco, (2005) 'What Sources of Law for Contracts for the International Sale of Goods? Why One Has to Look Beyond the CISG' 25 International Review of Law and Economics 314. Petra Butler (2018) Damages Principles under the Convention on Contracts for the International Sale of Goods (CISG)Available at https://www.lexology.com/library/detail.aspx?g=b60441e5-1582-4856-9aa9-c52e8e025be4↩ Gotanda, M Djordjevic in UN Convention on Contracts for the International Sale of Goods (2018), Article 76, para. 17.↩ Bonell, Michael and Liguori, Fabio, (2009) 'The U.N. Convention on the International Sale of Goods: A Critical Analysis of Current International Case Law'↩ Felemegas, John, (2014) 'The United Nations Convention on Contracts for the International Sale of Goods: Article 7 and Uniform Interpretation. Pace Review of the Convention on Contracts for the International Sale of Goods (CISG).↩ Ferrari, Franco, (2005) 'What Sources of Law for Contracts for the International Sale of Goods? Why One Has to Look Beyond the CISG' 25 International Review of Law and Economics 314.↩