Case: Plaintiff is a Spanish agricultural trading company (S), German defendant (B) sells fruit juices. The parties have concluded and partially performed two contracts for the supply of orange juice. The sales contracts contained a clause according to which “German law is to be applied” to the contracts. First, the parties concluded a contract for the supply of 500,000 liters of orange juice at a price of €1/kg, which was duly fulfilled by both parties. In a second contract, the defendant ordered 2 million liters of orange juice from the plaintiff at a price of €0.5/kg within a specific period of time. According to the plaintiff, 1 million liters of this were delivered. The plaintiff demands payment of the purchase price from the defendant. [Buyer] says that [Seller]'s deliveries were defective. According to the contractual agreements, the plaintiff was supposed to deliver "direct juice", but that was not the case (disputed). Plaintiff was first notified of the defects by email dated March 4, 2012 . In a meeting with representatives of the plaintiff on April 25, 2012, the manager of the defendant stated that the defendant would „no longer perform“ the contract. Defendant spent € 200,000 on cover purchases, which it now claims from claimant as damages. Defendant also spent €10,000 for an expert. It offsets this claim against the payment claim. In a brief dated July 2, 2012, the defendant also invokes a reduction in price due to the difference in price compared to juice concentrate. The plaintiff, on the other hand, states that it had properly performed its contractual obligations. Regarding the amount of damage, the plaintiff argues that the defendant's cover purchases were all made before the - disputed - cancellation of the contract on April 25, 2012, which also did not take place within a reasonable period of time, and therefore cannot be compensated. Which legal claims may both parties have against each other? Solution: In this case, the following legal claims between the parties are possible: 1. Claims of the claimant (seller) (S): S is entitled to claim payment of the purchase price for the delivered 1 million liters of orange juice in accordance with the terms of the second contract. However, according to Article 53 of the Vienna Convention on the International Sale of Goods (CISG), the buyer has the right to withdraw from the contract in the event of a nonsubstantial breach of contract. Article 53 The buyer must pay the price for the goods and take delivery of them as required by the contract and this Convention. It is important to note that S must ensure that the quality of the goods conforms to the contract. If the goods have been delivered in an inadequate quality, the seller may be liable to compensate the buyer for the loss incurred by the buyer as a result of the defects in the goods. 2. Claims of the defendant (buyer) (B): B is entitled to claim damages for losses incurred as a result of defects in the goods delivered and failure to fulfill the terms of the contract. Pursuant to Article 45 CISG, if the goods delivered do not conform to the contract, the buyer is entitled to demand a reduction of the price or withdraw from the contract. Article 45 (1) If the seller fails to perform any of his obligations under the contract or this Convention, the buyer may: (a) exercise the rights provided in articles 46 to 52; (b) claim damages as provided in articles 74 to 77. (2) The buyer is not deprived of any right he may have to claim damages by exercising his right to other remedies. (3) No period of grace may be granted to the seller by a court or arbitral tribunal when the buyer resorts to a remedy for breach of contract. In accordance with Article 75 CISG, B is entitled to recover damages incurred as a result of covering its needs from another supplier in the event that S fails to fulfill its obligations. Article 75 If the contract is avoided and if, in a reasonable manner and within a reasonable time after avoidance, the buyer has bought goods in replacement or the seller has resold the goods, the party claiming damages may recover the difference between the contract price and the price in the substitute transaction as well as any further damages recoverable under article 74. B is entitled to withhold payment under the contract in the amount of the damages incurred due to defects in the goods and additional examination costs. Under CISG rules, S may require B to fulfill its obligations under the contract, including payment of the purchase price for the goods delivered. However, if B refuses to perform the contract due to non-substantial defects of the goods, S may demand judicial resolution of the dispute and oblige B to perform the contract. B is entitled to demand the replacement of the defective goods with the corresponding goods or a reduction of the price if the goods do not conform to the contract. According to Article 46 CISG, the buyer is entitled to one of these claims if the goods do not conform to the contract. In this situation, it is important to consider the specific terms of the contract, the nature of the defects in the goods and the circumstances of the performance of the contract. The resolution of the dispute may require the application of the principles of good faith and fair dealing, as well as an analysis of the applicable law and CISG legal rules. Article 46 (1) The buyer may require performance by the seller of its obligations unless the buyer has resorted to a remedy which is inconsistent with this requirement. (2) If the goods do not conform with the contract, the buyer may require delivery of substitute goods only if the lack of conformity constitutes a fundamental breach of contract and a request for substitute goods is made either in conjunction with notice given under article 39 or within a reasonable time thereafter. (3) If the goods do not conform with the contract, the buyer may require the seller to remedy the lack of conformity by repair, unless this is unreasonable having regard to all the circumstances. A request for repair must be made either in conjunction with notice given under article 39 or within a reasonable time thereafter.
