Go to Database Directory || Go to Bibliography


Pace essay submission. Reproduced with permission of the author.

Comparative Study on the Buyer's Remedies Under the 1980
Vienna Sales Convention and Turkish Sales Law

Cagdas Evrim Ergun [*]
September 2002

I. Terminology and Introduction
     1. Framework of the study
     2. Some basic concepts

a. Fundamental breach of contract
b. Defectiveness v. non-conformity to the contract
II. Remedies Available to the Buyer of Defective Goods
     1. Request for specific performance
     2. Termination of the contract
a. Right to avoid the contract
b. Partial avoidance
     3. Reduction of price
a. Voluntary and compulsory reduction of price
b. Relying on price reduction in preference to damages
     4. Claim for damages
a. Comparison of basic principles
b. Direct, additional and further damages
III. Concluding Remarks: Turkey's position towards the CISG
Bibliography

I. TERMINOLOGY AND INTRODUCTION

1. Framework of the Study

This paper compares the multiple aspects of the remedies available to the buyer of defective goods under the 1980 Vienna Sales Convention [1] (the "CISG") and Turkish Sales law. Such a comparison is particularly of interest, since it gives opportunity to compare not only two different systems of law, but also multiple legal traditions. Because, on the one hand, the CISG embodies the principles of sales law of a great number of legal families, and on the other, Turkish Code of Obligations [2] (the "TCO") does not only represent Turkish domestic sales law, but also the Swiss law of Obligations [3], and the Roman law origins from which it has developed.

In dealing with those issues, consideration might usefully be divided into three sections. First, an examination will be made of the purpose and the meaning of some basic concepts. Next, a detailed analysis of the buyer's remedies, their consequences and the reasoning linking them to those consequences will be comparatively carried out under both legal systems. In the conclusion, I shall draw together a number of aspects resulting from the foregoing analysis, including comments on Turkey's position towards the CISG.

2. Some Basic Concepts

a. Fundamental Breach of Contract

The concept of "fundamental breach" is a core element of the whole analysis and it appears throughout the following parts of this essay as regards various remedies of the buyer, e.g., the avoidance remedy and the delivery of substitute goods. In terms of the CISG, a breach of contract is fundamental "if it results in such detriment to the other party as substantially to deprive him of what he is entitled to expect under the contract."[4] This requires further explanation, as the concepts of 'detriment' and 'substantial' need to be clarified as well.

During the preparatory work of the Convention, the concept of 'detriment' not only alternated indistinctively with 'injury', 'harm' and 'result', but is also exemplified by 'monetary harm' and 'interference with other activities'.[5] The degree of detriment is also at issue: it must be 'substantially depriving' in order for breach to be fundamental. The terms 'substantially depriving' and 'substantial detriment' are very often confused. To clarify the difference by an example, a deficit of 10 per cent almost always amounts to substantial detriment, but not always to 'substantially depriving' the other party of his legitimate expectations.[6] Therefore, the qualitative meaning of substantiality has to be taken into consideration as well as its quantitative meaning.[7]

Under Turkish law, there is not the concept of fundamental breach but the concept of "serious" defect.[8] The defect in the goods must be serious for seller to be liable.[9] Provided that this condition is fulfilled, the buyer may elect any of the remedies. In other words, this condition is, unlike the role of fundamental breach under the CISG, a general and common condition applied to all types of remedies.[10]

b. Defectiveness v. Non-Conformity to the Contract

It is of vital importance for our analysis to distinguish between defectiveness and non-conformity to the contract. Article 35 of the CISG basically lays down when goods are deemed to conform with the contract and sets out the principle that the goods must conform with the requirements of the contract. However, there is not any clarification on whether all cases of non-conformity constitute a defect in the goods. For example, is the delivery of an aliud to be considered as a defect in the goods? Article 35 is based on a uniform concept of 'lack of conformity' and does not make any distinction between defect in quality, defect in quantity,[11] delivery of an aliud or defects in packaging.[12] In so doing, the CISG differs from most domestic laws, including Turkish law, which often make clear distinctions between those two concepts.

Under Turkish law of obligations, in contrast to the CISG, the concepts of non-conformity is clearly divided into sub-categories.[13] For example, the delivery of an aliud, as a rule, does not make the goods defective, unless they also cause a defect in quality of the goods. The Turkish Supreme Court ("TSC"), does not consider the delivery of a car working with crude oil instead of one working with oil, as a defect in the car but as delivery of an aliud.[14]

II. REMEDIES AVAILABLE TO THE BUYER OF DEFECTIVE GOODS

1. Request for Specific Performance

Articles 46(2) and (3) of the CISG provides for the right to require delivery of substitute good and the right to require repair; both are based on the principle of respect for the contract (pacta sunt servanda) after the contract has been performed. The right to require delivery of substitute goods is limited to situations in which the lack of conformity constitutes a fundamental breach of contract.[15] Under Turkish law, the buyer is entitled, by virtue of Article 203 of the TCO, to require the delivery of substitute goods. However, contrarily to the CISG, the defect does not have to amount to a fundamental breach, provided that the general condition of existence of a serious defect, which is common for all forms of remedy, is fulfilled.

Article 46(3) of the CISG gives the buyer the right, under certain conditions, to require to seller to remedy the lack of conformity by repair. That right presupposes that the time limits have been respected [16] and that the request is not unreasonable. The unreasonableness of repair does not depend on the character of the breach, but rather on the nature of the goods delivered and all the other circumstances: certain goods by their very nature do not allow any repair at all or, if they do, would require expenditure out of all proportion.[17]

Under Turkish law, the TCO does not give the buyer the right to require repair. However, by virtue of Article 4(2) of the Turkish Code on Consumer Protection (the "TCCP"), the buyer (consumer) is entitled to require repair.[18] Under the TCCP, similarly to the CISG, the right to require repair presupposes that the request is not unreasonable.[19] Neither the CISG nor the TCCP exempt distributors from the obligation to repair.[20]

2. Termination of the Contract

a. Right to Avoid the Contract

By virtue of that Article 49 of the CISG, if the seller fails to perform any of his obligations, provided that such failure constitutes a fundamental breach of contract, the buyer may immediately avoid the contract.[21] The obligation that the seller fails to perform may arise either from the contract or from the CISG [22], since the term 'any obligation' is used in the wording of Article 49. Under Turkish sales law, "in the case of breach of warranty by reason of defects in the goods, the buyer is entitled to sue for rescission of the sale".[23] As the wording of the provision gives the buyer the right to "sue for rescission", it seems that the buyer may use that right only by means of an action before the court. However, it is unanimously accepted by both Swiss and Turkish scholars that the buyer does not have to sue, but his declaration of the rescission of the contract is sufficient to create the legal effects of a rescission.[24] Under both the CISG and the TCO, the avoidance, or rescission in terms of the TCO, does not retroactively terminate the contract.[25] Thus, the buyer of defective goods has also the right to claim for damages.[26]

The concept of fundamental breach is of cardinal importance, because, as pointed out by Will, it can determine the life or death of the contract.[27] The explanation has already been made of the meaning and multiple aspects of the concept of fundamental breach, and its counterpart in the TCO, concept of serious defect, in the introduction part. Both the CISG and the TCO, in addition to the fundamental breach or serious defect conditions, provide for other restrictions to the avoidance remedy. Under the CISG, there is the reasonable time clause regulated in Article 49(2) [28], and some other articles, e.g., Articles 39 [29], 43 [30] and 82 [31], also provide for the restrictions to the right of avoidance. Under Turkish law, an additional restriction, which is unfamiliar to the CISG, is regulated: in the case of action for rescission, it is at the discretion of the judge to confine to relief to damages for diminution in value in cases where the circumstances do not justify the rescission of the contract.[32]

b. Partial Avoidance

Both the CISG and the TCO give the buyer the right to partial avoidance of the contract. Under the CISG, if a part of the goods delivered is defective, the buyer may exercise his rights under Article 46 et seq. in respect of that defective part.[33] If, for example, 100 bales of cotton have been sold and delivered and ten of them are defective [34] and the 10 bales amount to a fundamental breach of contract, the buyer may, after giving appropriate notice of lack of conformity [35], declare the contract avoided in respect of the 10 defective bales and reduce the purchase price by one-tenth.

Article 206 of the TCO provides for a similar provision to Article 51 of the CISG. By virtue of Article 206(1), "where the several goods are sold together, or of a quantity of goods sold in the mass, certain parts only are affected, rescission can be claimed only as regards such parts." In other words, the buyer can treat the defective goods as the subject of a contract that is separable for remedy purposes.[36]

3. Reduction of Price

a. Voluntary and Compulsory Reduction of Price

Both the CISG [37] and the TCO [38] provide for the reduction of price as a type of remedy available for the buyer of defective goods. They have, however, a certain number of differences:

Firstly, under the CISG, it is the buyer who has the option and the power to reduce the price [39], while the TCO only empowers the court to determine the difference in value between the contract price and the actual value.[40] Secondly, Article 202(2) of the TCO gives the judge the discretion to hold the reduction of price, even though the intention of the buyer is not so. In the case of an action for rescission, if the circumstances do not justify the rescission [41], it is at the discretion of the judge to hold price reduction instead of the rescission of the contract. Consequently, under Turkish law, there are two types of price reduction remedy, namely, voluntary and compulsory price reduction, while under the CISG, that remedy has a voluntary character, i.e., it is at the discretion of the buyer to elect or not to elect that remedy.

Both the CISG and Turkish law, with respect to the calculation of the amount to reduce, adopt the same method, namely the proportional method: the buyer is entitled to claim a price reduction in the same proportion as the value of non-conforming goods has to conforming goods at the delivery date.[42] Another similarity between the two systems appears in the cases in which the buyer is not entitled to reduce the price.[43]

b. Relying on Price Reduction in preference to Damages

The price reduction remedy was initially a Roman law principle (actio quanti minoris) and thus fiercely defended by civil law countries. During the preparatory work of the CISG, as Will wrote, "Common law lawyers [...] tended to confuse it with the remedy of damages."[44] However, the price reduction remedy differs from claiming damages in many ways.

Both remedies can be exercised separately or cumulatively.[45] In some circumstances, it is preferable for buyer to rely on the price reduction remedy instead of claiming damages. The first situation where the price reduction is preferable is the case in which the buyer has difficulty in proving its loss, such as where it has purchased the goods for non-commercial purposes. If, for example, the buyer has purchased foodstuffs to donate to charity [46], it has not necessarily suffered any loss from the diminution in value of the defective goods. The buyer, therefore, would probably rely on the price reduction remedy, since it does not necessitate either any loss or proving any damage. Secondly, if the buyer has not paid the price yet, the remedy of price reduction is his best weapon, as it gives him some immediate relief, while a claim for damages remains subject to negotiation or litigation.[47]

Another situation, in which the price reduction remedy is preferred, is where the market price of the goods has fallen between the time of conclusion of the contract and the time of delivery. The method of calculating the price reduction under Article 50 is the 'proportionate' method whereas the standard method of calculating damages is the 'absolute' method. The proportionate method has already been explained above.[48] According to the absolute method, the difference between the value of defective goods at the time of delivery and the value of conforming goods at that time will be reduced from the contract price. In other words, the absolute method does not take into consideration the proportion between of defective and conforming goods, but the difference in value, and then that amount is directly reduced from contracted price (not reduced proportionally).[49]

4. Claim for Damages

a. Comparison of Basic Principles

By virtue of Art. 45(1)(b) and 45(2) of the CISG, in the case of breach of contract by the seller, the buyer has the right to claim damages as provided in Articles 74 to 77, and he will not be deprived of that right by exercising any other form of remedy. Such clarification is useful since some domestic laws do not allow that combination of damages claim with other remedies.[50] That combination is, in most cases, of interest of the buyer as it allows him to claim additional losses as well. However, there is sometimes no practical benefit of combining damages with another remedy. For instance, if the buyer relies on price reduction remedy and also claims for damages, in practice, there is no sense in doing so, since the amount claimed by the buyer by way of price reduction reduces the overall damages payable.[51]

Similarly to the CISG, Turkish sales law allows the buyer of defective goods to combine a damages claim with another form of remedy. Under Article 205(2) of the TCO [52], the buyer has right to claim damages in the case of rescission of the contract. However, this provision is considered by Swiss [53] and Turkish scholars [54] as well as by Turkish Supreme Court [55] as not limited to rescission of the contract but being applicable to other remedies as well.[56]

Article 74 of the CISG adopts the principle of full compensation and considers the damage as a sum of money equal to the suffered loss including loss of profit.[57] The scope of this damage definition, in the words of Schlechtriem, is "established by comparing the situation in which the promisee finds himself as a result of the breach of contract with the situation in which he would have found himself if the contract had been correctly performed."[58] The TCO, similarly to the CISG, gives the buyer of defective goods the right to claim both the effective loss [59] and the loss of profit.[60]

b. Direct, Additional and Further Damages

The liability under Article 74 of the CISG is a strict liability independent of any fraud or fault of the part in breach.[61] Under Turkish law, however, the type of the liability of the seller depends on the type of the damage suffered by the buyer of defective goods. The TCO makes a twofold distinction with respect to damages caused by defective goods, namely direct and additional damages. In the case of direct damages caused by the defective goods, the liability of the seller is a strict liability.[62] However, in the case of additional damages, the liability of the seller is limited on the basis of his fault.[63] Although the TCO provides for right to claim damages only in the case of rescission of the contract, as indicated above [64], the buyer can claim damages when relying on another form of remedy as well. Therefore, the distinction between direct and additional damages, although the TCO adopts it only for the case of rescission, also takes place regardless the type of remedy that the buyer elects.

It is of vital importance not to confuse the concept of 'additional damages' in terms of the TCO and the concept of 'further damages' in terms of the Article 75 [65] of the CISG. Under Turkish law, although the distinction between direct and additional damages is highly discussed by Turkish and Swiss scholars, according to the majority's consideration, it mainly refers to the distinction made between the 'effective loss' [66] (damnum emergens) and the 'loss of profit' (lucrum cessans). Under the CISG, however, loss of profit is not justified as 'further damages' within the meaning of Article 75.[67]

III. CONCLUDING REMARKS: TURKEY'S POSITION TOWARDS THE CISG

Although the CISG is currently the uniform international sales law of more than fifty countries all over the world, it has not been adopted by Turkey nor by two of the world's major trading nations, viz. the UK and Japan. The question, at this point, arises whether Turkey should adopt the CISG.

It can be argued that the CISG promotes the uniformity of the private law rules governing international commercial transactions, and serves to meet the need for an impartial legal regime to govern international trade. This impartiality of the CISG, which inevitably brings a compromise character with it, is even more important when dealing with transactions between parties who do not share a common legal culture. However, it is also argued by some academics that, because of this compromise character, the CISG has not been able to unify the substance of the legal regimes, but only the appearance, since a number of important issues had to be avoided. That compromise character of the CISG, according to Rosett, has resulted in "a code with no underlying principles: largely a cut-and-paste job" [68]. A similar criticism of the efficiency of legal unification efforts has been voiced by Kotz, who argued that: "it appears justified to ask whether legal unification does not find itself in the same position as Heracles, who cuts off the one snakehead of the Hydra, only to be confronted by three others in its place."[69] However, these criticisms are not based on a fair justification taking into account and assessing both the benefits and disadvantages of the CISG. The latter, as have been analyzed above, provides for a set of rules which are both fairly simple and flexible to negotiate different legal cultures and languages, and complex enough to deal with the complexity of the international trade. It also appears from the foregoing analysis that Turkish law, being a legal system developed from Roman law origins, has a considerable number of similarities with the CISG, and the adoption of the latter would therefore not cause much complications.

In conclusion, having analyzed at some length the arguments favoring and rejecting the adoption, it can be seen that the advantages of adopting the CISG outweigh its disadvantages. As Hobhouse pointed out, "only conventions which demonstrably satisfy the well proven needs of the commercial community should be ratified."[70] This paper tends to argue that the CISG demonstrably satisfies the well proven needs of the commercial community, and therefore, Turkey should change its position rejecting tits ratification.


BIBLIOGRAPHY

Books

1. Bianca, C.M. & Bonell, M.J.; Commentary on The International Sales Law: The 1980 Vienna Sales Convention, Giuffrè&Milan, 1987.

2. Bilge, N., Borclar Hukuku : Ozel Borc Munabesetleri, [Law of Obligations: Special Types of Obligations], Ankara, 1971.

3. Bridge, M., The International Sale of Goods: Law and Practice, Oxford, 1999

4. Cavin, P., Vente-Echange-Donation, in Traité de Droit Privé Suisse, VII t. I/1, Fribourg, 1978

5. Edis, S., Satim, Ayiba karsi tekefful, Akitten dogan garanti, Satimin feshi, [Sales, Warranty for Defect, Guaranty arising from the Contract, Rescission of the Contract], Ankara, 1966.

6. Schlechtriem, P., Commentary on the UN Convention on the International Sale of Goods, 0xford, 1998.

7. Tandogan, H., Borclar Hukuk, [Law of Obligations] Ankara, 1988.

8. Yavuz, C., Saticinin Malin Ayiplarindan Sorumlulugu, [Liability of the Seller for Defective Goods] Istanbul, 1989

9. Yavuz, C., Turk Borclar Hukuku Ozel Hukumler [Law of Obligations: Special Provisions], 5th ed. Istanbul, 1997.

10. Zevkliler, A., Ozel Borc Iliskileri, [Special Types of Obligations] Ankara, 1998.

11. Ziegel, The Remedial Provisions in the Vienna Sales Convention: Some Common Law Perspectives, in International Sales: The United Nations Convention on Contracts for the International Sale of Goods, 1984.

Articles

1. Eiselen, S., A Comparison of the Remedies for Breach of Contract under the CISG and South African Law, available at <http://www.cisg.law.pace.edu/cisg/biblio/eiselen2.html#ii>.

2. Flechtner, H.M., Remedies Under the New International Sales Convention: The Perspective from Article 2 of the U.C.C., available at <http://www.cisg.law.pace.edu/cisg/biblio/flecht.htm>.

3. Honnold, Uniform Law for International Sales under the 1980 UN Convention, 2nd ed., Deventer, 1991.

4. Piliounis, P.A., The Remedies of Specific Performance, Price Reduction and Additional Time (Nachfrist) under the CISG: Are these worthwhile changes or additions to English Sales Law?, 1999, available at <http://www.cisg.law.pace.edu/cisg/biblio/piliounis.html>.

5. Zuppi, A.L., A Comparison of Buyer's Remedies Under the CISG with the Latin American Legal Tradition, available at <http://www.cisg.law.pace.edu/cisg/biblio/zuppi.html>.


FOOTNOTES

* Ph.D. candidate at the University of Ankara, LL.M. in European Legal Studies, University of Exeter; intern attorney at Cakmak Law Office, E-mail: <c.ergun@cakmak.gen.tr>.

1. The United Nations Convention on Contracts for the International Sales of Goods 1980, available at <http://www.cisg.law.pace.edu>.

2. Turkish Code of Obligations of 22 April 1926 (No. 818).

3. The sale of goods contracts under Turkish law is regulated by Turkish Code of Obligations, which was adopted in 1926, and was mainly a reception of the Swiss Code of Obligations with minor modifications.

4. Article 25 of the CISG.

5. Bianca, C.M. & Bonell, M.J.; Commentary on The International Sales Law: The 1980 Vienna Sales Convention, Giuffrè: Milan, 1987, p. 211. He further states that the detriment does not equal damage nor does it equal loss or any similar international or national term of art.

6. Example given by Canadian Delegate in the Plenary Meeting, The CISG Official Records, II, 206 No. 12.

7. Bianca, C.M. & Bonell, M.J., op. cit. at p. 214.

8. Article 194(1) of the TCO.

9. Turkish Supreme Court, Yarg. 13. H.D., 13 October 1989, E.1989/3242, K.1989/5829.

10. The CISG stipulates an additional condition for buyer to be entitled to elect avoidance of contract. This condition requires that the defect, in addition to being objectively serious, is not capable of remedy by repair or delivery of substitute goods (See Schlechtriem, P., op. cit. at p. 419). Under Turkish law, however, such a condition is not required. Once the defect is serious, the buyer may, as a rule, rely on any remedy.

11. Although Article 41 makes a distinction between defects in quality and defects in title, it is of only limited importance with regard to possible remedies. See Schlechtriem, P., Commentary on the UN Convention on the International Sale of Goods, 0xford, 1998, p. 276.

12. Schlechtriem, P., op. cit. at p. 275. He also says that "the delivery of aliud must be considered a lack of conformity no matter how extreme the deviation."

13. Yavuz, C.; Turk Borclar Hukuku Ozel Hukumler [Law of Obligations: Special Provisions], 5th ed. Istanbul, 1997, p. 97.

14. Yarg., 11 H.D. 5 May1987, E. 949, K. 2708. However, in another case, the TSC held that the delivery of cow milk instead of ship milk makes the good defective, since the difference between two types of milk is also related to the quality of the good. Yarg. 13. H.D. 11 November 1987, E. 4785, K. 5503.

15. Article 46(2) of the CISG provides that "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."

16. Article 46(3) stipulates that "a request for repair must be made either in conjunction with notice given under article 39 or within a reasonable time thereafter."

17. Bianca, C.M. & Bonell, M.J., op. cit. at pp 338-339.

18. The CISG obviously does not recognise the right to require repair to consumers, as Article 2(a) expressly excludes consumer purchases from the sphere of application of the CISG.

19. Unreasonableness under the TCCP refers to the same concept as under the CISG. See Zevkliler, A.; Ozel Borc Iliskileri, [Special Types of Obligations] Ankara, 1998, p. 102.

20. Schlechtriem, P., op. cit .at p. 391; Yavuz, C., op. cit. at p. 159.

21. Avoidance of the contract releases both parties from their performance obligations under the contract: the seller is relieved of its duty to deliver and transfer the property of the goods and the buyer is relieved of its duty to take delivery and pay the price.

22. e.g. Articles 30 et seq. of the CISG.

23. Article 202 of the TCO.

24. Cavin, P., Vente-Echange-Donation, in Traite de Droit prive suisse, vol. VII, t. I/1, Fribourg, 1978, p. 96; Yavuz, C., op. cit. At p. 134, Zevkliler, A., op. cit. at p. 97; Tandogan, op. cit. at I/1, p. 190.

25. The discussion about various types of termination of the contract is outside the scope of the present work. Thus, we will leave aside the distinction between avoidance and rescission of a contract. Suffice it here to point out that, as regards their legal effects, the avoidance of contract under the CISG, and the rescission in terms of the TCO refer to the same concept.

26. Combination of damages claim with avoidance of the contract, both under the CISG and the TCO, is analyzed in Part II.5.b supra.

27. Will, M., Fundamental Breach, in Bianca, C.M. & Bonell, M.J., op. cit. at p. 205.

28. Under Article 49(2) of the CISG, which establishes the reasonable time clause, "... in cases where the seller has delivered the goods, the buyer loses the right to declare the contract avoided unless he does so:... (b) in respect of any breach other than late delivery, within a reasonable time: after he knew or ought to have known of the breach; ..."

29. Article 39 of the CISG obliges the buyer receiving defective goods to give notice of the lack of conformity to the seller within a reasonable time after he has, or ought to have discovered it, at the latest within two years from the date of the physical handing over.

30. Article 43 of the CISG obliges the buyer receiving goods which are not free from third party claims to notify the seller in due time, i.e., within a reasonable time.

31. Under Article 82 of the CISG, the right of avoidance is lost when the buyer is unable to restitute the goods substantially in the condition in which he received and cannot rely on the 3 exemptions provided in the 2nd paragraph.

32. Article 202(2) of the TCO. Under the CISG, the reasoning behind limiting the avoidance and delivery of substitute goods remedies to instances of fundamental breach is the same as the purpose behind Article 202(2) of the TCO. Both try to avoid disproportionate hardship on the seller. See Bianca, C.M. & Bonell, M.J., op. cit. at pp. 337-338; Tandogan, op. cit. I/1, p. 118; Yavuz, C., Saticinin Malin Ayiplarindan Sorumlulugu, [Liability of the Seller for Defective Goods], Istanbul, 1989, pp. 143 to 145

33. By virtue of Article 51 of the CISG, if the seller makes a delivery that includes some non-conforming goods or that contains less than the agreed quantity of goods, the buyer is entitled to avoid the missing or non-conforming portion of the delivery.

34. Example given by Honnold, Uniform Law for International Sales under the 1980 UN Convention, 2nd ed., Deventer, 1991, 316.

35. Article 39 of the CISG.

36. Second paragraphs of both Article 51 of the CISG and Article 206 of the TCO provide for the similar rights. Under Article 206(2) of the TCO, "if severance of the defective items cannot be effected without material prejudice to the buyer or the seller, the rescission shall extend to the whole of the subject matter of the sale." In terms of the CISG, the buyer may avoid the contract in its entirety if the defect in the good amounts to a fundamental breach, i.e. not only in respect of that part but also in respect of the contract in its entirety. Although the wording used in Article 51(2) of the CISG and that used in the TCO, namely the fundamental breach in the CISG and the material prejudice in the TCO, are different, their purpose and meanings are quite similar. Tandogan, op. cit. at I/1, p. 195.

37. Art. 50 of the CISG establishes that if the goods do not conform to the contract, the buyer may reduce the price in the same proportion as the difference between the price of the delivered goods at the time of the delivery and the value that conforming goods would have had at that time.

38. Article 202(1) of the TCO.

39. In practice, however, any price reduction by the buyer must certainly be reasonable, otherwise it would be disputed by the seller and subject to review by a court, and during these proceedings, the burden of proof on the value of the goods (both the value of delivered goods and conforming goods) is squarely on the buyer. See Piliounis, P.A., op. cit.

40. Article 202 of the TCO.

41. Also analysed in part III.3 infra.

42. Turkish Supreme Court, 13. H.D., 26 December 1997, 7580/10807, and 13. H.D., 10 November 1980, 5071/5769; Bridge, M., The International Sale of Goods: Law and Practice, Oxford, 1999 p. 101; Yavuz, C., op. cit. at p. 148; Tandogan, op. cit. at p. 189.

43. The second sentence of Article 50 of the CISG states that if the seller has remedied any failure to perform in accordance with Article 37 or Article 48, or if the buyer refused performance under these articles, he cannot reduce the price. A similar rule is stated in the Article 203(2) of the TCO. But, differently from the CISG, that provision is only applicable in the cases where goods are not sent from a distance. In other words, the seller has a similar right under Turkish "except in cases of goods being sent from a distance." The TCO, with respect to some provisions, makes a distinction between contracts concluded between present parties and between parties being in different places at the time of conclusion of the contract. Seller's right to remedy the defect, provided for in Article 203(2) of the TCO, constitutes an example of that distinction.

44. Will, M., Reduction of Price, in C.M. & Bonell, M.J., op. cit. at p. 368.

45. Schlechtriem, P., op. cit. at 372.

46. Example given by Piliounis, P.A., op. cit.

47. Schlechtriem, P., op. cit. at 373.

48. See part II.4.a supra.

49. To give an example, the seller contracts to sell 1.000 of tomatoes, and 10% is delivered defectively. The price of the tomatoes falls by 10% between the times of contracting and delivery. If the buyer relies on the price reduction remedy, the reduced price would be 810 (value of the goods delivered) * 1.000 (contract price) divided by 900 (hypothetical value of conforming goods), which is equal to 900. However, if the buyer relies on a claim for damages, according to the absolute method, the difference between 900 (value of conforming goods) and 810 (value of delivered goods), which is 90, will be directly reduced from the contracted price, 1.000. So, the tomatoes will cost to the buyer 910. As seen on the example, price reduction is more beneficial for the buyer than a claim for damages when the price has fallen between the times of contracting and delivery.

50. Will, M., Claiming Damages, in C.M. & Bonell, M.J., op. cit. at p. 331.

51. Schlechtriem, P., op. cit .at p. 368.

52. Article 205(2) of the TCO provides that "the seller is under duty ... to make good ... the damages directly resulting to the buyer by the delivery of defective goods."

53. e.g. Cavin, P., Vente-Echange-Donation, in Traite de Droit prive suisse, vol. VII, t. I/1, Fribourg, 1978, p. 103. The comments of Swiss scholars and case law of the Swiss Federal Court are also taken into consideration when analyzing the Turkish Law of Obligations, since the TCO, as mentioned in the introduction part, was adopted in 1926 as a reception of the Swiss Code of Obligations.

54. For example, Yavuz, C., op. cit. at p. 154-156; Tandogan, op. cit. at vol. I/1 Ch. 10, VIII, 3.

55. Yarg. 13. H.D., 4 November 1986, 4397/5272; YKD. 1989, p. 690-691.

56. An examination will be made of that viewpoint in part II.5.b supra.

57. Article 74 of the CISG states that: "Damages for breach of contract by one party consist of a sum equal to the loss, including loss of profit, suffered by the other party as a consequence of the breach. Such damages may not exceed the loss which the party in breach foresaw or ought to have foreseen at the time of the conclusion of the contract, in the light of the facts and matters of which he then knew or ought to have known, as a possible consequence of the breach of contract."

58. Schlechtriem, P., op. cit. at 553.

59. Analyzed in part II.5.b supra.

60. Article 205(3) of the TCO provides that "the seller is liable to any additional damage caused, unless he establishes that he was in no wise in default." The concept of additional damage covers the loss of profit.

61. Bianca, C.M. & Bonell, M.J., op. cit. at p. 540.

62. Article 205(2) of the TCO.

63. ibid. Article 205(3).

64. See fns 58, 59 and 60 supra.

65. Article 75 of the CISG provides that any further damages may be recoverable pursuant to the general principles set out in Article 74.

66. That is, the diminution of the injured party's property, see Bianca, C.M. & Bonell, M.J., op. cit. at p. 543.

67. Schlechtriem, P., op. cit. at p. 577.

68. Rosett, A., "Critical Reflections on the United Nations Convention on Contracts for the International Sale of Goods" (1984) 45 Ohio State LJ 265, fn. 32 at 589, also available at <http://cisgw3.law.pace.edu/cisg/biblio/rossett.html>.

The overriding principle underlying the Convention, according to him, was to find a text that everybody would accept and nobody would reject; see: Eiselen, S., "Adoption of the Vienna Convention for the International Sale of Goods in South Africa", 116 South African Law Journal, Part II (1999) 323-370, fn. 180, also available at <http://cisgw3.law.pace.edu/cisg/biblio/eiselen.html>.

69. Kötz, H., "Rechtsvereinheitlichung-Nutzen, Kosten, Methode, Ziele" (1986) 50 Rabels Zeitschrift fürausländisches und internationales Privatrecht 1, fn. 6 at pp. 12-20. See: Eiselen, S., op. cit. at fn. 231.

70. Hobhouse, J.S., "International Conventions and Commercial Law: The Pursuit of Uniformity" (1990) 106 LQR 531, fn. 7 at p. 535; see: Eiselen, S., op. cit. at fn. 247.


Pace Law School Institute of International Commercial Law - Last updated June 11, 2003
Go to Database Directory || Go to Bibliography
Comments/Contributions