International sale of goods – The case of the application of the Vienna Convention (CISG) and in particular the seller’s liability
A key position among the most important sectors of international trade worldwide is undoubtedly occupied by the sale of goods/moveable goods, as the sector of trade that fuels, as a driving force, the growth of economic activities worldwide. However, the sale of goods to or from abroad clearly poses a multitude of risks for the parties, mainly due to the geographical distance between the parties involved, the procedure and cost of transporting the goods to be sold and the difficulties of communication due to language differences. In addition to these, however, especially in international sales, the contracting parties have in addition, in the event of any legal dispute arising from the contract, to deal with legal issues such as the determination of the applicable national law and the jurisdiction of the courts, creating all of the above as individual elements of an area that poses many risks for every business, stemming primarily and to a greater extent from the differences in the relevant regulations of national laws between them on the subject of the contract in question.
A solution to a large extent to the above issues arising in the international sale of goods has been provided by the Vienna Convention (CISG) of 1980, which has now been ratified by more than 97 states, including Greece, making it one of the most successful international conventions worldwide. In particular, the United Nations Convention onContracts for the International Sale of Goods (“Convention on Contracts for the International Sale of Goods” – “CISG“), adopted respectively by the United Nations Conference in Vienna on 11.04.1980.
According to the provision of the Article 1 para. b’ of the said Convention, states that it applies to contracts for the sale of movable property, provided that the goods are not purchased for personal, family or household use (thus excluding sales to consumers), and between parties established in different States, where the rules of private international law indicate that the law of a Contracting State is applicable, unless the parties have excluded its application either by providing (expressly) that it does not apply or by choosing the law of a non-Contracting Party as the applicable law (b
The above Convention contains directly applicable rules of substantive law, which, within its scope of application, prevail over the corresponding provisions of national law, in accordance with Article 28§1 of the Constitution (see also Eph.Aθ 5745/2010). Its provisions regulate all the relations of the parties to contracts for the sale of movable property (except for specific cases such as grounds for invalidity of the contract of sale and seller’s liability for death/personal injury caused by the object of sale – Article 5 of the Contract), which also include the obligations of the buyer, which consist in the payment of the price and the receipt of the sold movable property.
Article 11 of the Convention also establishes the informal nature of the sales contracts for its drafting and amendments. If the buyer is not obliged to pay the price at a different fixed time, he has to pay it when the seller makes the movable property or its documentary evidence available to the buyer, in accordance with the sales contract and this Contract (Art.58§1(a)). The buyer is obliged to pay the price at the time stipulated in the sales contract or resulting from it and the Contract, without any invitation or compliance with any formalities on the part of the seller (Article 59 of the Contract) and is obliged to take delivery of the goods.
The Convention adopts the idea of a single form of non-performance, i.e. a single and general ground of liability, which is the concept of breach of contractual obligation, implying any form and gravity of breach of any primary or ancillary obligation of the seller or the buyer, i.e. any case of abnormal development of the obligation, on the part of the debtor and covers all those cases which, under the CC, would either be characterised by the debtor’s inability to pay or default, or by the debtor’s failure to fulfil his obligations, or which would entail the application of the provisions of the special law of the CC. It is also important to note that the existence or not of fault is irrelevant for the creation of liability, i.e. the liability of the debtor is objective and is linked only to the objective fact of contractual breach, (see. and ΕφAθ 3877/2011). If the buyer fails to fulfil any of his obligations under the sale contract or the Contract, the seller may: (a) exercise the rights provided for in Articles 62 to 65, (b) claim damages as provided for in Articles 74 to 77, and indeed cumulatively with the right of withdrawal (Article 61§1 of the Contract), the grounds for which (withdrawal) include the unfulfilled expiry of the time limit set by the creditor for the debtor to fulfil his obligations.
As regards the right to compensation, this is regulated in Article 74 of the Convention, which provides that compensation for breach of contract by one party consists of an amount equal to the loss, including loss of profit, suffered by the other party as a result of the breach. Such damages may not exceed the loss which the party in breach of contract foresaw, or ought to have foreseen, as a possible consequence of the breach of contract at the time when the contract was made in the light of the facts and circumstances which he knew or ought to have known at the time. Consequently, all material, positive and consequential damages caused by the breach of contract (i.e. positive interest, full compensation), with the exception of the damages referred to in Article 5 of the Contract, as well as incidental damages, are compensated in money, regardless of the fault of the defaulting party, such as the lender’s costs of avoiding or mitigating the adverse consequences of the default for the lender and, in the event of a default by the buyer, the costs of unnecessarily placing things at the disposal of the buyer, which are considered to be such foreseeable damages (M.P.R. 54/2021).
More generally, as regards the covered damages, these are covered if (and to the extent that) the defaulting debtor had foreseen (or ought to have foreseen) these damages as a possible consequence of the breach of contract, at the time the contract was drawn up, in accordance with the foreseeability criterion (PolPrThes 22513/2003). In particular, the provision of Article 74§2 of the Vienna Convention defines two groups of cases. The first includes, according to the subjective criterion, those damages foreseen by the person who breached his contractual obligations, as set out above, while the second – and more important because of the evidentiary difficulties of the first group – includes those which, according to the objective criterion, he ought to have foreseen, as a possible consequence of the breach of the contract at the time when it was drawn up in the light of the facts and circumstances which he knew or ought to have known at the time, that is to say, those which a third party in the circumstances in which the contract was drawn up could have foreseen, so that unusual risks are outside the scope of the provision. The decisive criterion according to the prevailing case law is not an empirical prediction, but a normative perception that is based on whether one party could expect the other party to assume the relevant risk, and the decisive time for “foreseeability” is the time of conclusion of the contract, while any knowledge of the debtor acquired after that point in time or foreseeability that arose after that point in time is irrelevant
However, according to Article 79§1 of the said international Convention, a contracting party shall not be liable for non-performance of one of its obligations if it proves that the non-performance was due to an obstacle beyond its control and that it could not reasonably have been expected to have been aware of the obstacle at the time of the conclusion of the contract or to have avoided or overcome it or its consequences, while under the third paragraph of the same Article the exemption provided for in this Article shall apply for as long as the obstacle persists. As obstacles, texts beyond the debtor’s sphere of influence are mainly “external” events, such as natural phenomena (earthquakes, floods, etc.), political and social events (war, general strikes, revolutions, sabotage, etc.), sudden legislative restrictions, such as import or export embargoes, exchange restrictions (P. Kornilakis, “The seller’s liability for non-performance under the Vienna Convention on the International Sale of Goods – Law 2532/1997”, in “Contemporary issues of contract law in their national and European dimension”, 2012, p.121). Moreover, according to Article 80 of the same Convention, a party may not invoke non-performance by the other party if the non-performance was caused by an act or omission of the first party.
Finally, according to Article 7§2 of the Convention, matters falling within the scope of the Convention which are not expressly dealt with by it are regulated in accordance with the general principles on which the Convention is based or, in the absence of such principles, in accordance with the law applicable under the rules of private international law (P.Kornilakis, ΕιδΕνοχΔ I, p. 115). Such issues that are not regulated by the Convention and do not arise from its general principles are the default as the triggering event of the obligation to pay interest, but also the interest rate due (CFR 5745/2010) as well as the limitation period of the claims of both parties.
