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Damages under the United Nations Convention on Contracts for the International Sale of Goods

Bernard Prívara (Školiteľ: JUDr. Klára Svobodová) | pridané: 24. mája 2009

Abstrakt diplomovej práce:

The thesis deals with the problem of damages and interest on late payment under the 1980 United Nations Convention on Contracts for the International Sale of Goods . It begins by summarising the history of damages and the Convention. Following chapters describe preconditions of accrual of liability for damage, allow for the case of avoidance and emphasise the need to mitigate the loss. The last chapter deals with interest on late payment. Due to the vagueness of the

This thesis disserts upon damages under the United Nations Convention on Contracts for the International Sale of Goods. Apart from brief historical excursus including the regulation of damages in Roman Law, it is focused exclusively on present issues in international trade. Theoretical and practical parts are interlinked throughout the paper, as it seemed more practical in this one case.

The pivotal part of the thesis – accrual of liability for damage – is dealt with in Chapter 3. First, it talks about five elementary preconditions for accrual of liability for damage: wrongfulness, occurrence of loss, causality between the two preceding preconditions, foreseeability and absence of circumstances excluding liability. Since it is not clear what kinds of loss can be compensated under the Vienna Convention, it also includes enumeration of those kinds where compensability is possible as well as those where it is not. Although only marginally, it also mentions the problem of party autonomy, namely validity of clauses regulating different areas, such as penalties, liquidated damages, exemption clauses, etc.

Chapter 4 is devoted to situations, when the contract has been avoided. It follows the logic of the Convention’s provisions, namely Articles 75 and 76, which are general rules for measuring and claiming the loss incurred due to the avoidance. While the first half of this Chapter deals with the possibility to recover the difference between the contract price and the price of the substitute transaction, the second half with the possibility to recover the difference between the price fixed in the contract and the current price at the time of avoidance.

Chapter 5 talks about the obligation of promisee to mitigate the loss, which is laid down in Article 77. In particular, it deals with the intention of this Article to prevent the aggrieved party from claiming damages that could have been avoided. Hence, if the aggrieved party did not take reasonable measures to mitigate the loss resulting from the breach, the party in breach may claim a reduction in the damages to the extent the loss ought to have been mitigated. Besides scope of application, the accent is put on reasonableness of the actions that should be taken by promisee. Reimbursement for expenses to mitigate the loss is also mentioned.

Chapter 6 – interest on late payment – represents a relatively independent part; nevertheless it is immediately concerned with the subject of damages. In this Chapter author tries to provide interpretation of the vague provision of Article 78. At first, it deals with prerequisites of application and a relationship between interest on late payment and damages. Then cases of cessation of a duty to pay interest are included. Since the rate of interest is not explicitly mentioned in the Convention, it is usually fixed by the agreement of the parties to the contract. In the absence of such an agreement, usage and practices established between the parties shall be applied. Should all the abovementioned methods fail, then Article 7(2) shall be applied.

The reason why the author decided to write a thesis on this topic is obvious, since the present globalised world provides merchants with unprecedented opportunities for their business. Lifting trade barriers and intensifying call for unification and harmonisation made international trade easier than ever before. Amongst the results of unification efforts, the 1980 United Nations Convention on Contracts for the International Sale of Goods takes prime position. Having been adopted by an overwhelming majority of developed countries, the Convention provides a legal framework for transactions whose value is calculated in billions of Euros.

However, the number of contracting states and different perspectives quite logically led to austerity and consequently vagueness of its provisions. For this very reason the author tries to at least partly elucidate some of its vague provisions. Prima facie, it may seem that their ambiguity and sometimes rather inconsistent practice of courts dramatically decrease foreseeability and render the uniform interpretation almost impossible. But it is their flexibility and being free of legal shorthand that contributed to this popularity. Hence, what may seem as a handicap to lawyers appears as an advantage to merchants. In the end it is due to say that the author is willing to admit that uniform interpretation is not always possible, however he believes that practice of courts provide guidelines which, if followed, can lead to an anticipated conclusion and thus make the Vienna Convention one of the most successful unification acts in the present world.

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PRÍVARA, Bernard: Damages under the United Nations Convention on Contracts for the International Sale of Goods [ Diplomová práca ] Univerzita mimo Slovenska, Fakulta, Katedra. Školiteľ: JUDr. Klára Svobodová. Rok obhajoby: 2009