MAASTRICHT UNIVERSITY

FACULTY OF LAW

2022 Period 4

PRI 3008 INTERNATIONAL BUSINESS LAW

_________________________

BETWEEN
GEKKIES Claimant
and
PAZZOS Seller
HULLUS Freight forwarder
MOE’S TRANSPORTATION 1stCarrier
LARRY’S TRUCKING SERVICES 2ndCarrier
CURLY’S TRANSPORT 3rdCarrier
TRIODOES BANK Issuing bank

_________________________

MEMORANDUM FOR MILOTSKA

_________________________

Name: Jay Koon

Student ID Number:
Date of Submission: 30 March
Tutor: Mr
Word Count:

Honour code: I did not cheat.

________________________________

(Signature of
Introduction

1. This memorandum serves to address Gekkies, our client, with respect to its potential disputes with
Pazzos, (2) Freight forwarding agent and carriers, and (3) Triodoes

2. The analysis will proceed on the following

I. Summary of material facts

II. Potential claims against the carriers
III. Potential disputes with Triodos
IV. Potential claims against Pazzos

I. Summary of material facts

3. Our client, a Dutch liqueur wholesaler, entered into a sales contract with Pazzos, an Italian
1
for 600 bottles of Mirto from Mirto di Sardegna at €30 per The parties agreed to use a letter of
2
for For the delivery, Pazzos contracted with freight forwarder Hullus Freight Forwarding,
(“Hullus”) which arranged three transportation companies, namely Moe’s Transportation Moe”), Larry’s
Trucking Services Larry”) and Curly’s Transport Services Curly”), to transport the goods from
3
to Rotterdam When the goods arrived at Gekkies’ facility, it was found that (1) one-third of
4 5
goods were and (2) the goods were not what Gekkies

II. Potential claims against the carriers

Applicable law: CMR

4. Convention on the Contract for the International Carriage of Goods by Road (“ CMR”) applies to
6
every paid road carriage contracts between two different countries, which at least one is a contracting
In cases of Roll-on-roll-off RORO”), where the goods are not unloaded from the vehicle, CMR
nevertheless apply to the whole of the carriage, subject to the exceptions where the loss, damage of
(“LDD”):-

(1) occurred when the vehicle is on the

(2) was not caused by act or omission of the road carrier,
(3) was caused by some event which could only have occurred in the course of and by reason of
7
carriage by other

5. In the present case, there was a road carriage contract from Cagliari, Italy to Rotterdam,
8
Both Italy and Netherlands are contracting countries of When the goods were transferred from
9
to Port di Genoa on sea by Boaty McBoatface(“ Boaty”), the goods never left the hence CMR is still
applicable to the contract in accordance with

6. The exception does not apply as the potential damage during the sea carriage (the fire) was caused
10
act or omission of the road not the responsibility of the sea carrier or the crew

1
Case facts, para 1
2
ibid
3
ibid, para 2
4
ibid, para 7
5
ibid, para 8
6
CMR, art 1
7
ibid, art 2; Thermo Engineers Ltd v Anhydro A/S v Ferrymasters[1981] 1 All ER 1142
8
UNECE, ‘Legal instruments in the fields of
<http://www.unece.org/trans/conventn/legalinst_25_OLIRT_CMR.html> accessed March 2017
9
Case facts (n1), para 4
10
Case facts (n1), para 5
2
Consignment note

7. A contract of carriage is confirmed by a consignment note, although the absence, irregularity or

11
of it shall not affect the existence or the validity of the Art 9 holds that the consignment note
prima facie evidence of the making of the contract of carriage, the conditions of the contract, and the
12 13
of the goods by the Art 6 provides a list of particulars that shall be included in a consignment ,
14
although the failure to do so would not affect the validity of the Any stipulation in the contract
15
which would derogate from the provisions of the CMR would be null and

8. On the facts, the existence of a consignment note the Note”) evidenced the carriage contract
16
Cagliari to Notwithstanding the failure to comply with Art.6, the validity of the carriage
is unlikely to be disputed in the absence of strong evidence to the contrary. At the bottom of the Note,
are stipulations regarding the time limit of notifications and complaints, and limitation to exercising
17
consignee’s right to return the Insofar as these stipulations, if incorporated into the contract,
18
to derogate the limitation provisions in Art.32, they would be null and void pursuant to

The responsible parties

9. It is trite law that freight forwarders who does not provide carriage service but merely arrange for
19
carriers to deliver the goods are not considered as In the case of multiple carriers, different
apply to subcontracting and successive carriage. Where only one consignment note is presented, it is
20
probable for the contract to be a successive

10. In successive carriages, succeeding carriers become a party to the carriage contract (under the
terms) by reason of his acceptance of the goods and consignment note, and each of the carriers shall
21
responsible for the performance of the whole In such case, legal proceedings in respect of
for LDD may be brought against the first, the last, and the carrier who performed the carriage during
22 23
the LDD An action may be brought simultaneously against several Art.37 also provides
recourse to the carriers to resolve the liabilities and compensation among

11. On the facts, Hullus could not be responsible as it is a freight forwarding agent who did not
any carriage service. Larry should not be claimed against either as it was neither the first nor the last
24
and no incident or accident occurred during its Our client is advised to claim against Moe (the
carrier) and Curly (the last carrier) under Art.36. Actions should be brought against both parties at the
time.

Claims against Moe and Curly

Obligations and liabilities of

11
CMR (n6), art 4
12
ibid, art 9
13
ibid, art 6
14
ibid, art 4; Carole Muarry and David Holloway and Daren Timson- Schmitthoff’s Export Trade: The
Law and Practce of International Trade [Eleventh Edition], (Sweet & Maxwell 2007) 382
15
CMR (n6), Art 41
16
Case facts (n1), page 4
17
ibid
18
Datec Electronics Holdings Ltd and others v United Parcels Service Ltd[2007] 1 WLR 1325 at 30
19
Brian Harris, Ridley’s Law of the Carriage of Goods by Land, Sea and Air [Eighth Edition],
Sweet & Maxwell, 2010) at p.388
20
CMR (n6), art 35
21
ibid, art 34
22
ibid, art 36
23
ibid
24
Case facts (n1), para 6
3
 25
12. As each of the road carriers shall be responsible for the performance of the whole the
facts, the obligations and liabilities of the carriers will be analysed collectively. A carrier is liable for
26
between the time when he takes over the goods and the time of

13. On the facts, goods in one of the containers (three in total) are completely damaged the damaged
goods”). The damage was caused by a series of events during the carriages performed by Moe and
respectively:-

(1) During Moe’s carriage, the container of the damaged goods was burnt as a result of the
falling asleep with a lit cigarette in the driving compartment on board a vessel (smoking was
permitted thereon);
(2) When the goods arrived our client’s facilities under Curly’s carriage, the truck’s brake
working and crashed into the facilities. During the crash, the burnt container smashed into
containers, breaking all the goods in the burnt container. It is arguable that the fire had resulted
the container being more vulnerable than it was, damaging the goods inside during the
(3) Before the crash, Curly’s driver had been driving continuously from Strasbourg to
(which would normally take around 6 hours). During the carriage, the driver felt extremely
but, instead of getting rest, he consumed 4 cans of energy drink at once. Such act might
caused the crash as:

a). studies shown that drivers who took caffeinated energy drink would experience effects
27
to alcohol intoxication (e.g. delayed reaction
b). a professional driver should have acquired the skills of stopping a vehicle during
28
failure (such as switching to a lower gear and using and
c). when the truck could not be stopped, a professional driver should have directed it to a
that would cause minimal damage, instead of our client’s storage

Exemptions

14. Where the above arguments are accepted by a court, the carriers would try to apply the
under CMR:-

(1) Art.17(2) provides that, inter alia , carriers’ liability could be exempted where the LDD
caused by circumstances the carrier could not avoid and the consequences of which he was
29
to prevent. The burden of proof of it is on the
(2) Art.17(4) further provides a catalogue of special risks, inter aliathe sensitive nature of
30
the the application of which would form a rebuttable presumption that could exempt
31
carrier’s If the carriers successfully proved the existence of the special risks,
would be a presumption that the LDD was caused by the special risks, and it is our client’s
32
to prove In order to rely on Art.17(4)(d), the carriers must also prove that they
taken all incumbent steps in the circumstances with respect to the choice, maintenance and use
33
such

15. In the present case, the carriers may make the arguments

25
n21 above
26
CMR (n6), art 17(1)
27
The Telegraph, ‘Warning to drivers over energy drinks’
wardrop/6224196/Warning-to-drivers-over-energy-drinks.html> accessed 30 March
28
Wikihow, ‘How to stop a car with no brakes’ <http://www.wikihow.com/Stop-a-Car-with-No-
accessed 30 March 2017
29
CMR (n6), art.18(1)
30
ibid, art.17(4)(d)
31
ibid, art.18(2)
32
ibid
33
ibid, art.18(4)
4
 (1) Art.17(2) applies because the cause of damage was the failure of the brake of the
However, the argument would not likely succeed since Art.17(3) holds that the
34
exemptions could not apply by reason of the defective condition of the vehicle and
(2) the fragile nature of the glass bottles constituted the special risks in Art.17(4)(d). In reply, the
that goods in the unburnt containers survived the crash and remains undamaged is a
indicator against the presumption of special risks, and the crash was not attributable wholly to
glass bottle nature of the goods.

Limitation of liability

16. In the likely event that liability is established and the exceptions do not apply, the carriers would
attempt to limit the amount of damages pursuant to Art.25. While Art.25(1) stipulates that the carrier shall
liable for the amount by which the goods have diminished in value, by reference to the value calculated
Art.23 (calculation of loss), the compensation may not exceed the amount payable in the case of
loss 35which is 8.33 36
1 SDK worth about €0.80 37
The sender, however, may
38
the stipulated limit by declaring in the consignment note a value for the

17. On the facts, the value of the goods was not declared in the consignment note, hence the limitation
Art.23(3) would apply. Accordingly, the available damages would not exceed €6.664 per KG. Given the
that the Mirtos were sold at the price of €30 per 750ml bottle (which likely weighs less than 39the damages
would be barely sufficient to recover the actual

Wilful misconduct

17. Nevertheless, the above exemptions and limitations of liability could not be relied upon where
damage was caused by the carrier’s wilful misconduct or “by such default on his part as… is considered
40
equivalent to wilful The tests for wilful misconduct varies from different

(1) The Dutch test, a subjective and carrier-friendly one, is whether the driver was aware of the
41
realised that the risk of occurrence is high and nevertheless In Overbeek,42a case
where the driver leaving the truck parked on a public road over the weekend and caused
consignment to be stolen amounted to wilful misconduct, the Dutch court held that
misconduct was acting “recklessly with knowledge that damage would probably result”, i.e.
acting person must not only be aware of the specific danger connected to his behaviour, but
must also be aware that the chance that the danger will materialise is considerably greater
43
the chance that the danger will not materialise, and proceed to act in spite of his
(2) In Italy, however, the interpretation of the article is based on the concept of lata culpa dolo
44
aequiparaur”, a conduct characterised by carelessness and negligence, regardless of
45
to cause The Italian Supreme Court held that the carrier’s decision must be such as
reduce the risk of loss of or damage to the goods to a minimum, and failing of such would
Art.29 46It is a less carrier-friendly test compared to the Dutch

34
ibid, art.17(3)
35
ibid, art.25(2)(a)
36
ibid, art.23(3)
37
Case Facts (n1), para 12
38
CMR (n6), art.24
39
Case Facts (n1), p.3
40
CMR (n6), art.29(1)
41
Civil Code of the Netherlands (BW)
42
Overbeek v Chgna, HR 5 januari 2001, NJ 2001, 391
43
ibid
44
Otmar J. Tuma, The Degree of Default under Article 29 CMR, Rev. dr. unif. 2006, 585
45
Corte di Cassazione, 19 Nov. 2001,
46
ibid
5
18. In respect of the issue of wilful misconduct, the place where the action is brought is an important
Art.31(1) states that the plaintiff may bring an action

(i) any court or tribunal of a contracting country designated by

(ii) where the defendant is ordinary resident
(iii) the place where the goods were taken over,
(iv) the place designated for

19. On the facts, the residences of the carriers are unknown. The goods were picked up in Italy and
47
to It follows that at least Dutch and Italian Court would be two available options of our
Although the claim, if brought before a Dutch court, would still have a fair chance of success, it is advised
bring the carriers before an Italian Court, if available, as it would be far easier to establish wilful
Our client could argue as follows, with a high chance of

(1) First, under either test, there was wilful misconduct when the Moe’s driver decided to lit
cigarette inside the driving compartment (and subsequently falling asleep) on Boaty.
to prohibition of smoking on board, and his capacity as a professional driver, he was likely to
aware of the risk of his acts when he decided to do so. The English TNT Global SpA holding
that the driver falling asleep during carriage was not wilful misconduct could be distinguished,
48
the key to the argument is the lit The causation of the damage would, however,
disputed by the carrier since the goods were not damaged immediately after the
(2) Further, Curly’s driver have also committed wilful misconduct. As discussed at §13, the
had been weary during carriage but considered not to take rest. As a driver and a person
common sense, he would likely have known the side-effects of energy drinks and
consequences of driving over-caffeinated. Even the subjective test of wilful misconduct
likely be satisfied. The causation would also not be a big problem as the driver’s conduct
his reaction time and ability to control the truck in emergency, thereby causing the crash.
the Italian test, what the driver had unarguably increased the risks of damaging the

Conclusion

20. It is advised that our client has a high chance of succeeding in establishing wilful misconduct, thus
avoiding the carriers to rely upon the exemptions or limitations of liability provided in the

III. Potential dispute with Triodos Bank

Applicable Law: UCP 600

22. In the contract with Pazzos, the parties have chosen to open a letter of credit as the payment
Our client appointed Triodos Bank Triodos”) as the issuing bank. Since our client was not satisfied with
delivered goods, it intended to instruct Triodos to withhold

23. The applicable law where a letter of credit is concerned is Uniform Customs and Practice for
Documentary Credits 2007 ( “UCP 600 ”). It is a set of private rules/practice giving rise to legal rights
49
obligations when incorporated into banking payment In accordance with the definitions of
our client is the applicant and Triodos is the issuing bank (which issued the letter of credit). The
payment procedure is stipulated in Art.7 and

Principle of

47
Case facts (n1), para 3
48
TNT Global SpA v Denfleet[2007] EWCA Civ 405
49
Roy Goode and Herbert Kroneke & Ewan Transnational Commercial Law: Texts, Cases and
Materials [Second Edition], (Oxford University Press, 2015) at
6
24. The principle of autonomy is one of the most fundamental concepts relating to letter of credits. A
50
is by nature separated from the underlying and the bank is responsible for the document
51
of a transaction Where there is presentation of documents complying with the letter of credit,
52
must be honoured by the The only exception of that rule is that where a fraud is found in the
53
transaction, the bank is obliged to withhold The bank has a duty to examine the documents
54
reasonable care, and determine whether the documents are in strict compliance with the letter of

25. On the facts, the letter of credit requires presentation of: (1) a copy of the consignment note signed
the first carrier and (2) a certificate of authenticity and a guarantee that Pazzos’ Mirto Mirto di Sardegna is
55
the highest

26. No document has been presented hitherto and it is unclear whether Pazzos would present them in
future. If Pazzos present the prescribed documents in stricht compliance with the letter of credit, Triodos
not entertain our client’s request to withhold payment, regardless of other claims our client might
However, our client may run two arguments, despite the difficulties, in order invoke the fraud
56
(1) First, applying the Sztejn case where the fraud was present where the seller had
failed to ship any goods ordered, our client may prove that Pazzos had deliberately delivered
57
wrong kind of
(2) Second, in the guarantee that Pazzos’ Mirto di Sardegna is of the “highest quality”, the Mirto
Sardegna may be interpreted as those our client received. As they are no longer, or never, of
“highest quality”, any statement of that would be a misstatement and thereby triggering
exception 58

Conclusion

27. Under UCP600, our client would unlikely obtain an injunction from a court enjoining Triodos
withhold payment, unless the fraud exception is successfully

IV. Potential claims against Pazzos

Issues

28. We are instructed to advice our client on (1) whether it could ignore the arbitration clause and
the claim to a Dutch court and (2) the major claims against Pazzos before a

Applicable law: CISG

29. UN Convention on Contracts for the International Sale of Goods (“ CISG”) applies to contracts for
sale of goods between parties whose places of business are in different states and either (a) the states
59
contracting states, or (b) the rules of private international law lead to CISG is applicable to the present
contract through Art.1(1)(a) as it is undisputedly a contract of sale of goods (bottles of Mirto), and both

50
UCP 600, art.4
51
ibid, art.5
52
ibid, art.15
53
ibid, art.34
54
ibid, art.14
55
Case facts (n1), para 12
56
Sztejn v. Henry Schroder Banking Corporation, 31 N.Y.S. 2d 631 (1941)
57
Case facts (n1), para 8.
58
United City Merchants (Investments) Ltd v Royal Bank of Canada (The American Accord)[1983] 1 AC
168
59
CISG, art.1(1)
7
 60
seller and buyer are in contracting states, namely Italy and The parties also agreed that any
61
will be supplemented by Dutch which is permitted under Art.7(2).
62
30. The parties have agreed to INCOTERM CIF(Cagliari) into the The effect is to
‘take precedence over the [relevant and incongruent] provisions of the CISG’, such as the transfer of
63
(Art.67 holds that risk passes to the buyer when the goods are handed over to the first However, the
effect of the INCOTERMis of little relevance in respect of the potential claims, as it does not assist
discussion on the arbitration clause or the main potential claims against

31. Where an arbitration clause is incorporated into a contract, rules of International Chamber
Commerce Arbitration and UNCITRAL Model Law 2006 would be applicable due to the doctrine
separability (where the arbitration clause is separated from the underlying contract). Be that as it may, on
issue of incorporation, an arbitration clause, notwithstanding its independent nature, is not to be
64
separately from other terms of the

Incorporation of arbitration clause (standard

32. On the signed purchasing order, there is a very small printing, which read “For our specific terms
65
conditions, please consult our company’s The alleged website of Pazzos is entirely in Italian,
66
language our client does not The pertinent issue is whether any standard terms (containing
alleged arbitration clause) was incorporated into the contract by such

33. The inclusion of standard terms under CISG is determined according to the rules for the formation
67
interpretation of contracts under If the offeree failed to read an incorporation clause, the conduct
68
the offeree ‘creates the objective impression that the offer was Standard terms are incorporated
where (i) the parties have agreed to their incorporation at the time of the contract formation and (ii) the
69
party had a reasonable opportunity to take notice of the

34. Where the terms are available and retrievable

(1) Where there is an incorporation clause in the offer referring to the website, the offeree has
reasonable opportunity to take notice of the standard terms if they are generally accessible
70
the internet at the time of
(2) Where there are several sets of standard terms and it is not clear which set will apply, the
cannot be regarded as reasonably available. It is not up to the offeree to guess or inquire
71
set of terms are applicable to the
(3) Where the parties are negotiating by electronic means, it would generally suffice if the
terms are contained in an attachment to the email or can be accessed by clicking on a
72
leading to the applicable
(4) Where the negotiation was taken by other means – the question then becomes a factual issue
73
whether the terms were reasonably available to the other at the time of

60
Pace Institute of International Commercial law, ‘CISG: List of Contracting
<http://www.cisg.law.pace.edu/cisg/countries/notables.html > accessed 31 March
61
Case facts (n1), para 1
62
ibid
63
CISG Advisory Council Opinion No.13, Inclusion of Standard Terms under CISG,para 10.9
64
Habas Sinai Ve Tibbi Gazlar Isthisal Endustri A.S. v Sometal S.A.L.[2010] 1 All ER (Comm) 1143 at 51
65
Case facts (n1), p.3
66
Case facts para 10
67
CISG Advisory Council Opinion No.13, Inclusion of Standard Terms under CISG (n63), rule 1
68
ibid, para 1.8
69
ibid, rule 2
70
ibid, para 3.4
71
ibid, para 3.5
72
ibid
73
ibid
8
35. In terms of the language of the terms, CISG advisory council stated the

“In keeping with the general principle accepted above that the standard terms should be made
available to the other party, it is necessary that the standard terms must be in a language that the
recipient could reasonably be expected to understand. Standard terms that are in a different
language will not be accessible to the other party at the time of contracting if it is not in a
language that it could reasonably be expected to understand such as the language of the contract,
the language of the negotiations or the language used by the other party in communications
between the parties. The language commonly used in the place where the other party has its usual
place of business can also be regarded as an acceptable language. If the standard terms are not
in a language that the other party could reasonably be expected to understand, the standard terms
must be disregarded.” 74(emphasis added)

36. Austrian cases holding that there is incorporation if the terms are presented in one of the
75
internationally common were rejected by CISG advisory council, stressing that no
76
treatment should be given to some languages, and the term “world language” is not

37. Our client has a high chance of successfully arguing against the incorporation of the standard terms
the following arguments:-

(1) the reference is unclear as it does not provide a hyperlink, but only informed our client to
“our company’s website” (our client may have trouble locating it on the internet), which
it not generally accessible;
(2) (on the assumption that more than one set of standard terms were available on Pazzo’s
the terms were not reasonably available since our client had no means to find out which was
applicable set of terms; and
(3) the terms were not presented in a language that our client could reasonably be expected
understand – our Dutch client could not reasonably be expected to understand Italian terms,
the contract was concluded in

Conclusion

38. Base on the above analysis, it is advised that the alleged arbitration clause contained in the
terms would unlikely be incorporated into the contract. Our client would have no trouble bring the
case before a Dutch court instead.

Substantive claims against Pazzos

Delivery of non-conformity goods

39. Since risks transferred to our client when the damages occurred, the seller is not liable for the
caused by the carriers. However, a seller is liable for any lack of conformity which ‘exists at the time
77
risk passes to a buyer’, even if the lack of conformity becomes apparent only after that

40. Our client’s case against Pazzos is that the parties contracted for the delivery of Mirto “Rosso”),
then Pazzos breached its duty as a seller by delivering non-conforming goods (Mirto Blanco Blanco”)) 78

74
ibid, para 6.5
75
Austria, 17 December 2003 Supreme Court (Tantalum powder case); Austria, 1 February 2005
Court Innsbruck (Powdered tantulum
76
CISG Advisory Council Opinion No.13, Inclusion of Standard Terms under the CISG, para 6.6
77
CISG (n59), art.36(1)
78
ibid, rt.35(1)
9
41. Mirto di Sardegna is a popular liqueur made from berries of the myrtle plant, two Mirto are made
79
different berries, resulting to different colour and On the purchasing order, it only stated the
of “Mirto di Sardegna”, but no reference as to the type of Mirto. We are instructed that our client
80
requested, during negotiation, for In deciding whether delivery of Rosso was part of the
contractual interpretation is the most significant

Contractual interpretation; Parol Evidence Rule; Plain Meaning

81
42. A CISG contract may be proved by any As a general rule of contractual
82
contracts are to be interpreted according to actual when it is insufficient, ‘statements and conducts
83
to be interpreted from the point of view of a reasonable All facts and circumstances of the
84
including inter alia the parties’ negotiation, are to be taken into Hence, unlike in the common law
jurisdiction, extrinsic evidence would generally be given due regard when searching the true meaning of
85
contractual The Parol Evidence Rule and the Plain Meaning Rule do not apply as it would impede
86
goal to search for the parties’ actual

43. Following the above principles, our client could substantiate his claim

(1) Given the fact that our client is a wholesaler, it is not commercially realistic, and would not be
actual intent to receive any kind of Mirto (could be a fortioriif any contract of resale
is shown);
(2) From a reasonable person’s perspective, the request for Mirto Rosso would be given effect in
contract. Arguments otherwise would lead to an absurd result - Pazzos would then be
under the contract, to deliver any type of Mirto, or a combination in any
(3) If there is any written evidence on the request, it would be a decisive indication. But even if
87
written evidence is available, the request could be proved by It is reasonable to
conclude that the existence of a request for a specific type of Mirto would be more probable
the non-existence, thus our client should be entitled to receive Mirto

44. The forceful arguments above would give our client a high chance of an interpretation in favour of
In that case, it follows that at the time the risks were transferred to our client, the goods were already not
88
conformity with the contract, and Pazzos thereby breached its duty as a

Exemptions
89
45. A seller may rely on the exception if the breach was caused by an impediment beyond its In
this case, the exception would be impertinent since the delivery of wrong type of Mirto was hardly
impediment beyond Pazzo’s

Remedies

Available remedies

79
ibid, para 12
80
Case facts (n1), para 8
81
CISG (n59), art.11
82
ibid, art.8(1)
83
ibid, art.8(2)
84
ibid, art.8(3); CISG Advisory Council Opinion No.3, Parol Evidence Rule, Plain Meaning Rule,
Contractual Merger Clause and the CISG, para 3.2
85
CISG Advisory Council Opinion No.3, Parol Evidence Rule, Plain Meaning Rule, Contractual Merger
Clause and the CISG(n84), para 2.2
86
ibid, para 2.7 and 3.2
87
CISG (n59), art.11
88
ibid, art.35(1)
89
ibid, art.79(1)
10
46. Where it is proved that Pazzos delivered non-conforming goods and no exemption applies, Pazzos
has the right to deliver replacements before the date for delivery, if it does not cause our client
90
inconvenience or However, given the fact that Pazzos has no stock of Rosso available, and they
91
not intend to deliver replacement upon it is unlikely that the right would be

47. It follows that our client may have the following remedies available, subject to different
requirement(s):-
92
(1) Specific performance – our client may require performance by the seller of his
However, in the case of non-conformity, performance could only be requested where the
93
conformity constitutes a ‘fundamental breach of (will be addressed in the next
(2) Damages – our client may claim for damages consist of a sum equal to the loss it
94
consequential to the The damages must be foreseeable at the time the contract
concluded. In this case, the loss may not be obvious (unless contract of resale could be
if the market prices of different Mirtos are similar. Our client also has the right to ask of
95
proportionate price
(3) Avoidance – our client may also avoid the contract if the seller’s failure to perform his
96
amounted to a fundamental

Fundamental breach

48. A fundamental breach is defined as a detriment that substantially deprived the other party from
97
they were entitled to expect under the Once fundamental breach is found, the CISG articles
98
impair the buyer’s remedies would not be In determining whether there is a fundamental
due regard should be given to the following

(1) Terms of the contract – where the parties had explicitly agreed on certain features of the
99
the failure to perform such has been held as fundamental
(2) Purpose for which goods are bought – a decisive factor is whether the goods are improper for
100
use intended by the The issue of a potential “resalability” becomes relevant where
101
buyer is in the resale If a resale can reasonably be expected from the buyer in
102
normal course of business, a fundamental breach is
(3) Possibility of replacement – when a seller refuses to remedy a defect, it could be concluded
103
the seller was not intending to perform a substantial part of his contractual a
104
fundamental breach may be deemed to have

49. The seller may contend that:-

(1) The parties did not explicitly agree on the delivery of

90
ibid, art.37
91
Case facts (n1), para 8
92
CISG (n59), art.46(1)
93
ibid, art.46(2)
94
ibid, art.74
95
ibid, art.50
96
ibid, art.49(1)
97
ibid, art.25
98
ibid, art.70
99
CISG Advisory Council Opinion No.5, The buyer’s right to avoid the contract in case of non-conforming
goods or documents, para 4.2
100
ibid, para 4.3
101
ibid
102
GERMANY, OLG Frankfurt a.M., 18 January 1994, CISG-online
103
GERMANY, LG Berlin, 15 September 1994, CISG-online
104
CISG Advisory Council Opinion No.5, The buyer’s right to avoid the contract in case of non-conforming
goods or documents,para 4.4
11
 (2) Given our client’s capacity as a wholesaler, resale of Blanco should not be any more difficult
other types of wine, and could be expected from their ordinary course of
(3) They had no intention not to perform any part of the contract as they did not consider delivery
Blanco was a breach of contract.

50. In reply, our client may first try to prove the parties’ agreement as discussed at §43, and any
contract with third parties may evidence that only Rosso would fit the purpose. It is advised that our client
a fair chance of success in proving a fundamental breach, but it still contingent to whether further
could be rendered.

Conclusion

51. Based on the above analysis, it is advised that our client has a fair chance of success in arguing
seller has delivered non-conformity goods. A range of remedies is available to our client. However,
evidence is required to increase the likelihood of establishing the seller’s fundamental breach, which is
only way our client could be adequately

nd
Dated the day of April 2017

12