Seller contracted to deliver 1,000 barrels of oil to Buyer for $14,000. When the oil arrived,...

Seller contracted to deliver 1,000 barrels of oil to Buyer for $14,000. When the oil arrived, 975 barrels complied fully with the contract description. Twenty-five were contaminated and unacceptable. Oil in comparable barrels was available in the local market for a price of $18 a barrel in 25-barrel lots. Seller offered not to charge Buyer for the barrels. Is there a contract under the CISG? If so, what payment is due to the Seller?

Expert Solution

As there was a contract for the delivery of 1,000 barrels of oil to Buyer for $14,000. so as per CISG, the seller has the responsibility of delivering all 1000 barrels of oil to the buyer as per the quality mentioned in the contract. But as in the case, it is provided that only 975 barrel were as per the quality standard mentioned in the contract and 25 were non-confirming to the quality standards, thus the buyer has two option, first to reject the entire lot completely and sue the seller for any damage or he can accept the conforming barrels of oil and do not pay for the non-conforming barrel of oil. The difference between the contracted price and market price of oil barrels can be deducted from the payment to the seller.

As there are an offer and acceptance of the proposal and delivery is also proposed by the seller, thus all the conditions of the contract are present.

However, the seller can only charge for the conforming products as per eh contract.

Thus the payment to a seller will be decided as below=

Per barrel price as per contract =$14

The total price of conforming barrels of oil = 975*$14=$13650.

The difference in the price =$4

Damage that can be deducted from the seller' payment= 25*$4 =$100

So total payment to the seller = $13650-$100=$13550

keosha answered 2 years ago

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