Breach of contract in the capacity

In sales agreement Germany company [D] with Italian company [C]has concluded in Art. 6 that in case of arise of dispute out of the agreement, German law was applicable and further provided for the jurisdiction of German courts. This agreement was made in the month of March. Subsequently, another Italian financing company [F] intervened for placing order on behalf of Italian company [C] introduced the following amendments in the month of May to the agreement which was duly signed by D, C [in the capacity of lessee] and F [in the capacity of supplier]:

“This agreement shall be submitted in all its aspects to Italian law and it is deemed to have been concluded in Italy. All questions which might be raised relating to the construction and/ or implementation of the present agreement shall be submitted to the International Chamber of Commerce of Paris. " Consequent to the occurrence of breach of contract, sole arbitrator concluded that although  May agreement superseded the March agreement and the specified jurisdiction clause mentioned in May agreement would bind the parties. Pursuant to Art. 1 of CISG:

(1) This Convention applies to contracts of sale of goods between parties whose places of business are in different States: (a)    when the States are Contracting States; or (b)    when the rules of private international law lead to the application of the law of a Contracting State (2) The fact that the parties have their places of business in different States is to be disregarded whenever this fact does not appear either from the contract or from any dealings between or from information disclosed by, the parties at any time before or at the conclusion of the contract.

Further sole arbitrator stated that Germany and Italy were both parties to the CISG although the place of business of the parties were in different states which has satisfied the basic criterion of Art. 1(1) of the Convention. After perusing facts of the case, the tribunal made the following interim award: 1. May Sales agreement is governed by UN Convention on Contracts for CISG. 2. For such contractual matters not governed by UN Convention on Contracts for CISG, Italian law is applicable.

In the present case, assuming that a jurisdiction clause existed in the contract, and with the fact that English Law would be applicable,  the provisions of English law are attractive protecting the interests of buyer. The defense of seller in foreign courts Case 90:  CISG 49(1)(a); 78;84(1) 1989 Seller: Italy Buyer : Switzerland Goods involved : goods Facts of the case: The order contained that goods will be delivered within 10-15 days and were not delivered as per the delivery schedule.

After reassurance from the seller, that the goods will be dispatched within a week to the buyer, the order was still pending for delivery even after two months. Instantly, the buyer sent a cancellation of order and asking for refund of price, which was refused by seller. The buyer commenced a legal action against seller for breach of contract. The court concluded that as per article 49(1)(a) of CISG the seller had committed a breach of contract.

Without even recommending the case to CISG, the court confirmed that interest on the price was payable according to the Italian statutory interest rate. This was much in contrary to what is provided in Art. 84(1) of CISG  with regard to accrual of interest. The court held that interest will be paid from the date of avoidance of contract. With the above case,  it can be ascertained that non-delivery of goods is a breach of contract and it protects buyer interests and seller’s explanation of facts and further levy of damages for breach of contract.