Question

The Seller in State A contracted to deliver 2,000 barrels of oil to the Buyer in State B for $120,000, with the price payable upon delivery. When the oil arrived, 1,970 barrels complied fully with the contract description, however, 30 barrels were contaminated and unacceptable. The Seller admits that he is responsible for this breach. At the time of delivery,oil was available in the local market for a price of $75 a barrel.

Assuming both States A and B are signatories to the Convention for the International Sale of Goods (CISG), what net payment is due to the Seller? What if this was a case of force majeure that caused the contamination? Would your answer change?

Briefly explain your answer

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Answer 1

Answer 1:

As both seller and buyer are the signatories of CISG, seller will have to oblige by his duties mentioned in the CISG. Therefore, buyer will pay him for the 1970 barrels. therefore the net amount will be = 1970* ($120000/2000) = 1970*$60 = $118200.

My decision/opinion will not change even after it is a case of force majeure. To support refer the below paragraph detailing about CISG Contract provisions :

The CISG governs contracts for the international sales of goods between private businesses, excluding sales to consumers and sales of services, as well as sales of certain specified types of goods. It applies to contracts for sale of goods between parties whose places of business are in different Contracting States, or when the rules of private international law lead to the application of the law of a Contracting State. It may also apply by virtue of the parties' choice. Certain matters relating to the international sales of goods, for instance the validity of the contract and the effect of the contract on the property in the goods sold, fall outside the Convention's scope. The second part of the CISG deals with the formation of the contract, which is concluded by the exchange of offer and acceptance. The third part of the CISG deals with the obligations of the parties to the contract. Obligations of the sellers include delivering goods in conformity with the quantity and quality stipulated in the contract, as well as related documents, and transferring the property in the goods. Obligations of the buyer include payment of the price and taking delivery of the goods. In addition, this part provides common rules regarding remedies for breach of the contract. The aggrieved party may require performance, claim damages or avoid the contract in case of fundamental breach. Additional rules regulate passing of risk, anticipatory breach of contract, damages, and exemption from performance of the contract. Finally, while the CISG allows for freedom of form of the contract, States may lodge a declaration requiring the written form.