Reproduced with the permission of the author

1. Introduction

2. Actio Quanti Minoris in Roman Law as reflected in Mexican Law

1. Introduction

2. Actio Quanti Minoris in Roman Law as Reflected in Mexican Law

The estimatory action is closely related to the redhibitory action. Both are contained in the same article of the Mexican Civil Code [5]. The redhibitory action permits rescission of the contract for hidden defects in the purchased goods.

The actio Quanti Minoris can be found in Roman Law through the Justinianean Compilations.[6] It arose out of the edicts of the ædiles curules,[7] a type of judge with jurisdiction over certain commercial matters; hence it is an actio ædilitia. A bona fide purchaser could pursue the quanti minoris action within one year after the actual purchase had taken place.[8]

Under Roman Law, the seller of goods was held to have given an implied warranty of quality against hidden faults or defects in the goods.[9] A hidden defect was one not obvious at the moment of the purchase. The defect had to be latent, unknown to the purchaser, not notorious or obvious.[10]

This warranty could be extended, limited, qualified, or even excluded by the contracting parties. An example of an expansion of the buyer's right was the stipulatio in dupli. It stipulated a penalty for the seller of double the contract price in the event of a serious hidden defect.[11]

In general, the buyer could protect his rights [12] through the actio empti, which was the ordinary remedy. It protected the buyer against: (i) non-delivery,[13] (ii) late delivery,[14] (iii) the delivery of different goods,[15] (iv) incorrect quantity,[16] (v) misrepresentation,[17] etc. It is important to keep in mind that a bona fide seller was not liable for damages.

The general rule for non-conforming goods within the actio empti was caveat emptor, let the buyer beware.[18] In order to improve the position of the buyer, the ædiles introduced the actio Quanti Minoris and the actio redhibitoria.

The seller was liable when he had acted in malafide, dolus or fraus. Malafide is when the seller sold goods with knowledge of the defects, and without disclosure to the buyer [19] (e.g., selling a slave that the seller knew was a thief or a runaway [20]). Dolus involved knowledge of the defect and taking steps towards concealing the defect [21] (e.g., painting a ceramic vessel to conceal cracks, or scratches), and fraus arose from an affirmation by the seller that the goods possessed certain characteristics that he knew that they did not have (e.g., selling a slave misrepresenting his/her skills or peculium,[22] or selling a farm that pays tributes to several municipalities affirming that it only pays to one [23]).

Interestingly enough, when the seller sold a slave without knowing that he was a thief, but managed to obtain a higher price by saying that the slave was a faithful one, he was also was held to have misrepresented the buyer and was liable for damages.[24]

Under Mexican Law, sales between merchants and sales concluded for the purpose of doing business are considered a commercial activity, and are governed by the Mexican Commercial Code.[25] Mexican commercial Law is within the sphere of the Federal Congress.[26] The Mexican Commercial Code provides that the Mexican Federal Civil Code [27] is of supplementary application.[28] This supplementary legislation is very important. The basic rules of Quanti Minoris are established in the Civil Code.[29]

Prior to explaining how the Civil Codes supplement the Commercial Code in the context of Quanti Minoris, it is necessary to explain in general how a piece of legislation is supplemented by another.

A statute must be supplemented by another statute or by customs and practices when it contains omissions.[30] Sometimes, the statute itself declares which statutes, or customs and practices, can supplement it. The legal system in general is supposed to have consistency. The rules for supplying omissions of an act are integrated with the legal system as a whole.[31] Customs and practices can be used to supplement the statute, as long they are not inconsistent with the written law.[32]

In order to determine whether a statute regulates an institution [33] in an incomplete way, so that it is necessary to supplement it with other statutes, the following is required: first, that the statute contains language addressing an institution; second. that this language is not sufficient to reveal what the legislature intended.[34]

The reason for such a system is that in general, when a legal regulation of an institution is separated from a code to be governed by separate legislation, it is a difficult thing for Congress to legislate on every single aspect of this legislation that was regulated within the environment of the general code.[35]

Article 2 of the Mexican Commercial Code provides that the Mexican Federal Civil Code supplements the Commercial Code on matters on which the Commercial Code legislates incompletely.[36] The Mexican Commercial Code regulates claims based on the non-conformity of the goods in articles 383 and 384.

The Federal Civil Code provides for remedies against defects in the goods. With regard to Quanti Minoris, it provides that the price that the buyer paid should be reduced to the price that the buyer would have paid, had she known of the defect in the goods. The price should be reduced in an amount decided by appraisers.[39] Clearly, it sets a standard for hidden defects by saying that they must be non-discernible, and that the buyer should not have reason to know of them.[40] It also provides that the seller is liable for loss of profits and damages if the seller had knowledge of the default.[41] Finally, it provides that in situations where both defective and non-defective goods have been purchased, Quanti Minoris is applicable only to the defective goods. This rule applies unless it is proved that the purchase would not have taken place without the defective goods.[42]

The parties can restrict or waive their right to Quanti Minoris, as long as it is not done in bad faith.[43] However, if they have not chosen to do so, there is a six month statute of limitations,[44] and once the buyer has chosen between claiming redhibition of the contract or Quanti Minoris, the buyer cannot change her mind except with the seller's permission.[45] Quanti Minoris does not apply when the buyer acquires the goods in a judicial sale.

The Law also provides some interesting sanctions against the seller. If the seller knew about the defect, the seller will be liable for damages and loss of profits in addition to receiving a reduced price.[46] If the goods perish due to the hidden defects, the seller is liable for the contract price, the expenses that the buyer incurred in reliance on the contract and loss of profits.[47] Even if the defective goods perish by an act of God, or even because of buyer's own fault, buyer would still be able to obtain the reduction of the price.[48]

The Third Chamber of the Mexican Supreme Court has held that Quanti Minoris applies to Commercial Law. Based on article 383 of the Mexican Commercial Code, the Supreme Court, held that Quanti Minoris required a written notice within 5 days upon delivery, and that it could be used, not only for hidden defects, but also for every lack of quality or quantity.[49]

The short-term availability for the buyer to use this remedy (5 days upon receipt of goods), and the considerably longer term available to the buyer to pay for the goods (30, 60, 90 days), makes the use of actio Quanti Minoris more practical as a defense to the seller's legal claim upon buyer's default on payment, than as a cause of action for the buyer. Thus, it becomes not an actio but an exceptio, or defense against seller's claim for the purchase price.

3. The Search for Quanti Minoris in U.S. Law

The U.C.C. provides for two implied warranties: the implied warranty of merchantability [51] and the warranty of fitness for a particular purpose.[52] In addition, any representation that becomes part of the basis of the bargain [53] becomes an express warranty. Those warranties constitute the U.C.C. warranty system which relates to the quality of the goods. Before the warranty system, the Common Law rule was caveat emptor, like the Roman Law for the actio empti, as we have seen [54]. The Uniform Sales Act added many exceptions to this principle. caveat emptor was finally eliminated by the U.C.C. warranty system.[55]

The implied warranty of merchantability contained in section 2-314 of the U.C.C., makes a merchant in goods of the kind liable, unless there is a disclaimer, for breach of warranty if the goods that are tendered do not pass the merchantability test. A breaching seller is, of course, liable for damages.

Redhibitory remedies in Mexican Law that apply to the sale of goods, including Quanti Minoris, are covered by the implied warranty of merchantability. However there is a distinction, because under the U.C.C. the goods must be sold by a merchant in goods of the kind; thus, the scope of the warranty is narrower. On the other hand, the U.C.C. warranty system is broader, because it does not require bad faith by the seller to make him liable for damages.

The implied warranty of fitness for a particular purpose is created when the buyer relies on the seller's skill and judgment to select goods suitable for a particular purpose. Under Louisiana Law, this would be covered by Quanti Minoris.[56]

Under Roman Law, situations where this warranty was breached would have created grounds for liability in damages, because it would have been considered a misrepresentation.[57] This interpretation is likely to be repeated in modern Romanist Legal Systems. A breach of an express warranty will give grounds for a breach of contract claim with a different statute of limitations, not Quanti Minoris as found in Jorge Rivera Surillo & Co., Inc. v. Falconer Glass Industries, Inc., 37 F.3d 25, by an American Court making an unfortunate interpretation of the Puerto Rican Civil Code.[58]

3.1.1. Right to Cure a Breach

In the United States, except for Louisiana, sales of goods are governed by article 2 of the U.C.C., Section 2-601 of the U.C.C. establishes a perfect tender rule subject to certain limitations.[59] However "[w]here the buyer rejects a non-conforming tender which the seller had reasonable grounds to believe would be acceptable with or without money allowance the seller may, if he seasonably notifies the buyer, have a further reasonable time to substitute for conforming tender."[60]

Section 2-508 of the U.C.C. gives the seller the right to cure a non conforming tender under certain circumstances. Similar to Quanti Minoris, section 2-508(2) contemplates that the buyer may accept a money allowance to cure a non-conforming delivery. However, there is a difference; Quanti Minoris is a remedy for the buyer, the right to cure is a right for the seller. Yet there is another difference. The money allowance seems more like an indemnity of the damages suffered by the buyer when taking non-conforming goods rather than a reduction of the price to the amount the buyer would have paid knowing the defects were present in the goods.

However, section 2-508 does not seem to prevent the seller from acting in bad faith. What if the seller knows that the buyer needs the goods so badly that she will take them, even if they are in bad shape? Although the buyer could still sue for damages then, would Quanti Minoris work in those situations?[61] The seller has to act in good faith,[62] but good faith or bad faith is not easy to prove. Also, if the buyer decides to take the goods and sue for damages, buyer can find itself in a tight situation to prove the damages.

The Civil Law tradition tends more towards specific performance, where the Common Law tends towards damages. The seller's right to cure the contract [63] would be a specific performance approach and Quanti Minoris a monetary damages approach (thus shifting the position of the legal cultures). However, if the buyer agrees, a breach can be cured with a money allowance (a reduction in the price?), thus it is very similar to Quanti Minoris. The really strong distinction here, is that the U.C.C. favors the seller, giving him the option to cure the contract, but it only gives the buyer the option to reject the goods, to revoke her acceptance or, to put-up with the defective goods and sue for damages.

An educated guess would attribute the U.S. approach to the fact that the damages remedy is usually more expensive to the seller than the Civil Law specific performance. Under U.S. Law, damages can be quantified taking into account the resale price, while with specific performance the remedy will consist in making the seller hand over conforming goods or pay the price of substitute goods.

3.1.2. The Right to Revoke Acceptance of the Non-Conforming Goods

As we have seen, Quanti Minoris is closely related to the redhibitory action. The Mexican Civil Code enables the buyer to get rid of the goods and recover the price if she would not have purchased the goods had she known about the defects.[64] Similarly, the U.C.C. confers on the buyer the right to revoke acceptance within a reasonable time if the buyer did not notice the non-conformity due to the difficulty to notice it.[65]

That is very important because then we can conclude that U.S. law contains an equivalent to the redhibitory action. Thus the Quanti Minoris stands alone as a remedy with no equivalent in the Common Law family. This does not mean that the issue of hidden defects is not addressed in U.S. law. There is concern for at least one of the problems that gave rise to Quanti Minoris.

However, we must take into account the fact that the right to revoke acceptance is more similar to the Mexican rescission of a commutative contract than to redhibition, because revocation of acceptance requires a material breach,[66] and is not subject to a perfect tender rule analysis.[67] In fact, revocation of acceptance seems to be very similar to the thirty-day provision of the Mexican Commercial Code to make a claim based on hidden defects in the goods.[68] However, the Mexican remedy differs from the U.C.C. in that the Mexican Commercial Code does not require, as mentioned before, a material breach.

3.1.3. The Right to Withhold Damages Against the Price

The provision of the U.C.C. which has the closest resemblance to the Quanti Minoris is the right that the buyer has to deduct damages from the price under section 2-717.[69] That is true, at any rate, if we interpret Quanti Minoris as a right to deduct damages. However, besides the theoretical point that reduction of the price and damages are not the same,[70] there are some practical differences.

First, Quanti Minoris, measures the reduction in the price departing from the agreed bargain. It does not take into account the actual effects in the buyer's position (e.g., if it is more expensive for the buyer to repair the goods than to actually reduce the price).[71] It measures the reduction of the price by taking into account the value that the goods had at the time of the bargain, and not at the time of delivery of the goods.[72]

Second, the amounts that result from the two procedures are quite different. One of the reasons is that reduction of the price is not designed to protect any of the buyer's interests (expectation, reliance), but to compensate the buyer by keeping the bargain and preventing the unfair [73] enrichment of the seller.[74]

Third, section 2-717 of the U.C.C. gives a buyer the right to withhold payment of the price, not for just any lack of quality like under the Mexican Civil Code or just for lack of quantity and quality like under the Mexican Commercial Code breach, but for every breach of the contract.

3.1.4. Money Allowance in the Event of Casualty to Identified Goods

Under U.C.C. section 2-613, if, without seller's fault, identified goods suffer a casualty that damages them in such a fashion that they no longer conform to the contract and the risk is still on the seller, the buyer has the option of accepting them with a money allowance from the contract price or avoiding the contract.[75]

This provision has the same effect in some cases as would application of Quanti Minoris under the Mexican Commercial Law,[76] but it still has several restrictions: (1) it is only applicable when there is no fault; (2) it applies only in cases of lack of quantity; and (3) a casualty is necessary. Mutantis mutandis, the Mexican Civil Law does not allow Quanti Minoris for lack of quantity and it requires hidden defects.

Despite being primarily a Common Law country, the United States has two Civil Law jurisdictions: Louisiana and Puerto Rico. Thus local State Courts and United States Federal Courts with power over these jurisdictions have had exposure to the Civil Law and have heard several cases involving the application of Quanti Minoris. In addition, there is a U.S. Supreme Court case containing language about Quanti Minoris. Given CISG Article 50, any U.S. Court can now find itself applying this provision.

The Monte Alegre Tenant, 22 U.S. 616 (1824) [77] involved a judicial sale. The Marshall of the District Court of Maryland, according to one interlocutory of the Court, sold to the Consul of Portugal six hundred and fifty three seroons of Brazilian tobacco for $15,495.00. The tobacco was sold by samples and sent to Gibraltar.

In Gibraltar, the tobacco was found to be unmerchantable. One part of the shipment was rotten and the other could only be sold for a very low price ($4,818.22). The buyer sued the District Court for breach of the express warranty that, he alleged, the Court made when its marshal sent a sample.

The Circuit Court held that judicial sales were not subject to any warranties. The business of the court that sold the tobacco is not to sell, and if it sells pursuant to an interlocutory judgment, it is as part of its duties in making justice, and not as an act of business.

On appeal before the Supreme Court, The respondents (the District Court that sold the tobacco), relied on a very long explanation of the available case law. Finally, when the Common Law sources were "nearly exhausted" it relied on an explanation of redhibitory defect (hidden defect) remedies available under the Civil Law, and relied on one Civil Law exception that makes redhibitory remedies unavailable in judicial sales.[78]

3.2.2. Puerto Rico

In Jorge Rivera Surillo & Co v. Falconer Glass Industries, Inc., 37 F.3d 25 (1994), JRS (Jorge Rivera Surillo) entered into a contract with a contractor of the Navy to replace the windows of a building in a naval base. Then JRS bought from Falconer Glass Industries, Inc. the glass that it was going to need to replace the windows.

The contract contained several specifications as to the kind of glass, and required it to be delivered and stored in unopened containers. The glass was delivered in April of 1991 and was stored in the JRS warehouse until February 1992. When installation began three days later, the windows began to show rainbow-like stains. Further laboratory tests showed that the glass did not meet the Navy's requirements.

JRS sued Falconer for breach of contract, since the contract specified certain characteristics in the goods. The District Court held that since the non-conformity took two or three days to appear it was a hidden defect, and dismissed applying the 30 day statute of limitations to claim either redhibition or Quanti Minoris for hidden defects. It held that it was not admissible to use the general action for breach of contract with a longer statute of limitations to circumvent the 30 day statute of limitations established for redhibition or Quanti Minoris.[79]

This would result will be inadmissible in Mexican Civil Law, because in Mexican Civil Law the plaintiff's theory of breach of contract when an express warranty had been breached would have been accepted.

3.2.3 Louisiana

There are many federal cases dealing with Quanti Minoris in Louisiana.[80] However, it is somewhat different than the Roman Quanti Minoris, or the Mexican version. Under Louisiana law, the buyer does not have a choice between Quanti Minoris or redhibition. It is up to the courts or jury to decide whether the buyer would have bought the goods knowing of their condition, therefore awarding a reduction in the price; if the court or the jury finds that the buyer would not have bought the goods, it will award redhibition. If the value impairment is not substantial, the buyer will obtain a reduction of the price even if the claim was for redhibition.[81]

As we have seen, Quanti Minoris is known in several U.S. jurisdictions. Its use has not penetrated to other states through Federal jurisdiction because Federal courts apply state law for contract issues and contract law is state law in the United States.[82]

There is one very interesting problem involving the use of contractual forms. When dealing with a Louisiana client, U.S. companies, other than those residing in Louisiana, are not always aware that the usual disclaimer of "all warranties including but not limited to the implied warranty of merchantability" is not enough to disclaim the implied warranty of quality that the redhibitory remedies establish and can find themselves with the problem that under Louisiana law the disclaimer against redhibitory defects has to be express.[83]

In the U.S. courts, there have been three cases with language on the remedy of reduction of the price under the CISG: Interag Co. Ltd. v. Stafford Phase Corp., 1990 WL 71478 (S.D.N.Y. May 22, 1990), and S.V. Braun, Inc. v. Alitalia-Linee Aeree Italiane, S.P.A., 1994 WL 121680 (S.D.N.Y. April 6, 1994). And more recently in MCC-Marble Ceramic Center, Inc. v. Cerámica Nuova D'Agostino S.P.A. the court refers to CISG Article 50.[84]

In Interag v. Stafford, Stafford bought sweaters from Interag, sending a check for the purchase price through the mail. Stafford stopped payment alleging defects in the goods. Interag sued for fraud and Stafford counterclaimed for damages, measuring the amount of damages by taking into account the resale price of the sweaters. Interag filed a motion to compel Stafford to produce the resale information. Stafford refused, arguing that Hungarians are well known for "stealing their clients accounts."[85]

At issue was how to measure the value of the goods. The Southern District Court of New York held that the proper way to measure the value of the goods is the price of resale not the experts' testimony.[86] According to the extract of the case, available on the Unilex Database,[87] the Court's interpretation of article 50 and section 2-714 of the U.C.C. suggests that the provisions correspond, however, from the reading of the entire case, it was rather a use of the U.C.C. to supplement the CISG. This is an unfortunate approach, because if courts in every country begin to interpret the provisions of the Convention based on analogies with their own domestic laws, the uniformity of the CISG will be rendered meaningless. Under Mexican Law a Court would have used experts' testimony.[88]

If the Court wanted to look for an analogy within U.S. law it should have at least looked for it in the case law of Louisiana or Puerto Rico, because Article 50 of the CISG comes from the Civil Law tradition. Article 50 of the CISG and section 2-714 of the U.C.C., are distinguishable. Reduction of the price and damages are not the same. They do not protect the same interest,[89] nor do they arrive to the same amounts.[90] Their scope of application is different.[91] Fortunately, the Second Circuit when affirming Stafford deprived the case of any binding effects.[92]

In Braun v. Alitalia, a German seller (Braun) sold to Nikex, a Hungarian Foreign Trading Company, bathing suit material for $339,401.47. Buyer withheld approximately $100,000.00 from the contract price alleging lack of quantity and quality. A clerk in Alitalia (one of the carriers) mistakenly had written a lower quantity in the invoice, which damaged seller's bargaining position with buyer. After negotiations, seller managed to recover some of the withheld money. Seller sued Alitalia in tort alleging that the clerical mistake in the invoice had caused the price to be reduced. Seller alleged that buyer was entitled to withhold the payment under Article 50 of the CISG because of Alitalia's misstatement. The Court held that seller's theory was inconsistent with seller's position during the negotiations with buyer in which it affirmed that the goods were conforming and, also, that seller failed to prove the causal connection between Alitalia's errors and buyer's position.[93]

In Marble Ceramic v. Ceramica Nuova,[94] an Italian company sold ceramic tiles to a U.S. retailer, and one of the seller's forms that was written in Italian was signed by buyer. Later, buyer brought a suit claiming a breach of contract because seller failed to satisfy certain orders; seller argued that buyer had defaulted in its payments of previous deliveries. The form contained language authorizing the seller to cancel future contracts if the buyer defaulted in its payments. Buyer submitted affidavits trying to show that being bound by the form was never intended in the contract and also alleged that the missing payments were not due because buyer had unilaterally reduced the price as a result of certain non-conformities. Seller moved for summary judgement based on the U.C.C. parol evidence rule and the court granted summary judgment. In appeal the court found that the parol evidence rule is a rule of substantive law and that the CISG precludes its application because the CISG permits inquiries into the subjective intent of the parties. The Court, however, found that summary judgment was correct against an Article 50 reduction of the price because the buyer never complained about the quality of the goods.

4. The Quanti Minoris in the CISG

Article 50 of the CISG provides the buyer with the unilateral right to reduce the price of the purchased goods if they do not conform to the contract, to the amount that buyer would have been paid had she known of the non-conformity,[95] unless the seller cures the non-conformity.

Article 50 contains several differences from the Mexican legal system, and even from the Roman Law. In Roman Law [96] and the Mexican Civil Code,[97] the remedy is against hidden defects and not just any non-conformity. The Mexican Commercial Code made this remedy available against any lack of quality or quantity.[98] Article 50 of the CISG makes it available against any non-conformity.

From a remedy Article 50 of the CISG transformed the Quanti Minoris cause of action into a non-judicial defense against a seller's claim for the purchase price. In ten cases found and analyzed,[99] Article 50 was never used between the contracting parties offensively; it has mostly been used as a counterclaim or as a defense stemming from the buyer's withholding of the payment.

The CISG provides that in case of non-conformity the seller is liable for damages even if the non-conforming delivery was not the seller's fault. Thus the fundamental ratio legis of Quanti Minoris has disappeared.[100] Now the only reason for its existence is to provide for yet another remedial option to the buyer.[101] Nevertheless, as we will see, Quanti Minoris still has various uses.

Article 50 of the CISG has several elements that should be analyzed separately: (1) it is a unilateral right of the buyer: (2) it is a proportional reduction of the purchase price, whether it has been paid or unpaid; (3) it is available to the buyer when the goods do not conform; (4) the seller can prevent the buyer from using it by repairing the goods; (5) the seller cannot rely on some defenses available against a claim for damages.

4.2.1. It Confers a Unilateral Right on the Buyer

Article 50 of the CISG makes it clear that the buyer "may exercise unilaterally" [102] this right. During the negotiation of the Convention it was felt that the Article had to be clear on this point. A statement by the UNCITRAL Secretary-General [103] and repeated proposals of the UK to give the buyer a "substantive right" [104] to reduce the price, instead of a declaration of its reduction, eventually succeeded in convincing the drafting committee to clarify the article.[105]

The language of ULIS that said "the buyer may declare the price to be reduced" was changed to "the buyer may reduce the price".[106] There are cases addressing the issue. One German Court sustained the buyer's unilateral right to reduce the price,[107] while another German Court held that a valid declaration of the reduction of the price was necessary. In the latter case, the Court held the buyer who failed to do so liable for the entire price.[108]

4.2.2. It Is a Proportional Reduction of the Price Applicable Whether or Not the Price Has Been Paid

Article 50 of the CISG states that the buyer may reduce the price regardless of whether it has been paid or not.[109] This language arose from a critique of Article 46 of ULIS by members of the UNCITRAL working group.[110] They pointed out that many times the price of the goods is paid in advance or with a letter of credit. There is, however, no record of cases where reduction of the price was used in a situation where the buyer had already paid the price.[111]

The calculation of a proportional reduction of the price was an issue of a real concern during the negotiations of the CISG. Reduction of the price was often confused with a right to set-off damages.[112] The matter has continued to worry U.S. commentators on the Convention.[113]

The best way to explain the price reduction calculation is with this simple mathematical model.[114]

The goal of this formula is to enable the buyer to preserve the bargain. If the buyer made a good bargain she may keep its advantages and if she had made a bad bargain she could theoretically keep the disadvantages.[115] It is important to take into account that, since it is up to the buyer to sue for damages [116] or to reduce the price in case of non-conformity, the buyer will be unlikely to wish to keep the bargain if it was a bad bargain.

There is agreement that this remedy enables the bargain to be preserved. There have been also problems in determining the time and place for measuring the value of non-conforming and conforming goods.[117]

With respect to the time as to which to establish the value of the goods, the Convention makes it clear (in opposition to some national legal systems) [118] that it is the time of delivery, both for the value of the non-conforming goods and for conforming ones. "[T]he buyer may reduce the price in the same proportion as the value that the goods actually delivered had at the time of the delivery bears to the value that conforming goods would have had at that time . . . ".[119] This approach, proposed by the representative for Norway produced some controversy.[120] In fact, it was disputed to the very last minute. It was argued about both during the meeting in which it was discussed and during the final approval of the article.[121]

As for the place to measure the market value in calculating the reduction, the representatives of Argentina, Portugal and Spain made a joint proposal to include language determining that the prevailing value would be that of the residence of the buyer. The representative of Norway, while expressing his preference to avoid such a complicated question, suggested the place of delivery was a better reference point.[122] The joint proposal was defeated.[123] As we have seen, in Interag v. Stafford,[124] there is also an issue concerning the method of measuring the value of the delivered goods.

4.2.3. It Is Available When the Goods Do Not Conform to the Contract

The remedy operates only in cases of non-conformity.[125] There were proposals during negotiations to broaden the scope of Article 50. It was proposed that it should apply as remedy for defects of title [126] and for late delivery.[127] The proposal to allow reduction of the price for defect of title was criticized on several grounds, including lack of a formula to reduce the price in this situation, willingness to leave the third-party rights out of the Convention, and fear that other remedies would be displaced.[128] Finally, the Norwegian representative withdrew the proposal saying that the matter should be left up to the courts.[129] What has been decided by a German court is that reduction of the price is not available for late deliveries.[130]

There are some commentators that consider that Article 50 may be applicable to international sales where the goods are subject to third-party claims [131]. I disagree with this approach on the following grounds:

1) When a proposal is withdrawn because the other parties strongly criticized it, it is a defeat, the proposal for using Quanti Minoris as a remedy when the goods were subject to third-parties claims was defeated.[132]

2) Quanti Minoris historically has been used against hidden defects, the Civil Law remedy against disturbance of one's right to quiet enjoyment of property is another; if the actual disturbance takes place, the remedy is to sue the seller for damages.[133]

3) Quanti Minoris was included in the CISG besides damages because there was a cultural controversy between the world's main legal traditions about how to remedy a non-conformity; there is not such a controversy about how to remedy third-party claims that disturb possession, the remedy is a claim for damages.

4) And it is difficult to arrive to an accurate result in the calculation of the market value of goods subject to third-party claims; the calculation of damages is easier.

4.2.4. The Seller Has the Right to Cure the Delivery

Article 50 allows the seller, in the same way as in a damages situation, to cure the delivery. Under Mexican law Quanti Minoris is one of the remedies that the buyer has to obligate the seller to cure.[134] It seems very reasonable that the seller can opt to cure the defect rather than being obligated to receive less money. The courts have been quite clear on the seller's right to cure and the buyer's obligation to let the seller cure.[135]

4.2.5. Circumstances Beyond the Seller's Control are Unavailable as Defenses

Under Article 79 of the CISG, the seller is not liable in damages if default is caused by situations beyond his control (acts of God, force majeure, fait du prince, strike, etc.). That, as well as Quanti Minoris, can be seen as a relic of the Roman Law requirement of fault in order to allow a claim for damages. The relevant fact is that Article 79(5) does not bar the use of remedies other than damages.

As we have said, the ratio legis [136] for Quanti Minoris has disappeared with the CISG acceptance of damages without fault for tender of non-conforming goods.[137] However Article 50 of the CISG can be used in several situations: the right to withhold payment and to set-off damages; the right to preserve the bargain; prevention of certain breaches; and reallocation of unforeseeable risks to the seller.

4.3.1. The Right to Withhold Payment and Set-off Damages

Under the U.C.C., the buyer has the right to set-off damages in case of breach by the seller.[138] There is language in the negotiating history of the Convention that suggests that this solution is permitted under the CISG only if authorized by the local law. During the negotiation of Article 88 about buyer's right to resell the goods in case of avoidance, the UNCITRAL Secretariat commented as follows:

In order to understand this situation, it must be assumed that withholding of the price [140] and set-off of the price [141] as against damages are different institutions.

Set-off requires reciprocal debts between the parties. Each party is simultaneously debtor and creditor of the other. Both debts also have to be due.[142] Only then they can be set-off against each other.[143] The problem is that damages are due only upon a declaration by a judge or an agreement by the parties; otherwise the party claiming to be entitled to damages could set them off arbitrarily, leaving the other party without a right to due process. Such conduct is forbidden under Article 17 of the Mexican Constitution, because the aggrieved party would be substituting its judgment for that of the Courts.[144] Therefore, a seller cannot set-off damages against the price.

The contracting party's right to withhold the his/her performance does not require that the debts be due, nor does it require a judicial declaration.[145] However, it is not available against the seller who has tendered defective goods because this right is limited only to cases expressly provided for in the Civil Code. This restrictive application has been hotly debated among Civil Law commentators for at least a century.[146]

The right to withhold payments, or the performance of other obligations, is recognized by the Federal Mexican Civil Code for several situations.[147] The Code empowers a non-breaching party to withhold his part of the obligation upon an overdue performance or suspected breach by the other. The closest analogy to the reduction of the price context is the right of the buyer to withhold payments because of defects of title of the goods.[148] However, there is no equivalent language to entitle the buyer to a similar right where she has received non-conforming goods.

Several scholars have advocated broadening the right to withhold the price contained in the Mexican Civil Code to cover all similar situations.[149] They argue that similar situations deserve similar solutions.[150] However, there is another group that states that this right is only available when codified in an Act. In the most important Mexican jurisdiction, there is a set of Circuit Court cases with binding effect (jurisprudence) that adopted the restrictive view.[151]

However, this jurisprudence [152] is only binding in the First Federal Circuit that comprehends Mexico City, and due to the scholarly turmoil about the right to withhold damages, a Court in another circuit could rule differently because of the special context (a tax issue) of the First Federal Circuit set of cases.

The Court held that the buyer's allegation of fear of defects in title to real property did not entitle him to withhold property taxes, because the obligation to pay taxes and the obligation to pay the price, are obligations which are different in nature. Additionally, "because it is a rule that contains an exception, applicable only in the cases that [the Civil Code] provides, according to Article 11 of the Civil Code."[153]

Thus a buyer setting-off damages against the price, theoretically, will be holding money to which she is not entitled to. However, the right to counterclaim is perfectly legal under Mexican Civil and Commercial Law. The buyer setting-off its damages against the price would be doing what the court would do. If after hearing the seller's claim for the price and the buyer's counterclaim for damages, the Court finds that the buyer is entitled to damages, the Court will set-off the amounts in the sentence or during the process of its enforcement.

If the Court finds that there was no right to set-off damages, the buyer who withheld payment will be liable for the price due and its legal interest.[154] On the other hand, if the Court finds that the buyer was entitled to damages under the Convention, the buyer will still be overdue in payment because the damages can be set-off only upon issuance of a judgment. The buyer will be liable for interest accrued during the trial for the withheld payment.[155]

Such an inconvenience can be easily avoided if at the moment of setting-off damages the buyer also notifies the seller of her intention to reduce the price.[156] Buyer will be liable for interest only for the amount of set-off damages exceeding the rightful reduction of the price if it is the case that there is one. It is very important to keep in mind that the reduction of the price does not preclude suing or counterclaiming for damages.[157]

There is a very recent case in a U.S. Court where a buyer intended to justify a default in its payments on the grounds of Article 50, however, the Court held that it should have complained about the quality of the goods.[158]

It is also important to keep in mind that the CISG does not make clear what the interest rate is under Article 78. It can be the domestic rate at the creditor's or seller's place of business (statutory or average lending interest), the legal interest rate at debtor's place of business, the legal rate of the jurisdiction whose law governs the contract, the legal rate of the place of payment, or the legal rate of the country whose currency is employed in the transaction. There are cases holding each one of these theories.[159] Litigating this issue can become extremely cumbersome and expensive.

4.3.2. The Right to Preserve the Bargain

Honnold [160] has pointed to one very important issue regarding Quanti Minoris: when prices are unstable, there can be significant differences between the results under Article 50 and damages under Articles 74 through 77 of the CISG. However, I disagree with Professor Honnold's view that these differences are irrational. I rather endorse the view that Article 50 has a different objective than damages -- to preserve the bargain. If the seller dislikes the reduction of the price he can always cure the delivery.

These differences are easily understandable if we use an example:

Suppose PEMEX (Mexican Petroleum Company) agrees to sell 10,000 barrels of crude oil to Shell at $15 each, totaling $150,000. C.I.F. New Jersey, payment to be made 30 days after delivery. As a quality term, it has been agreed that the oil will contain no more than 1% sulfur.[161] PEMEX timely delivers 10,000 barrels of crude oil but it contains 2.27% sulfur. The market price of the 1% or less sulfuric oil is $15 dollars per barrel while the market price for a barrel containing between 2 and 2.5 % sulfur is $13.50 dollars.

Therefore, pursuant to Article 50 Shell will end up paying PEMEX $13.50 per barrel. That is a reduced price of $135,000.00 (a reduction of $15,000.00). If PEMEX objects, it must go to court to challenge the reduction.

Under Article 74 of the Convention, damages, if Shell did not resell, will be the difference between $13.50 and $15.00 dollars per barrel. Shell can sue PEMEX for $15,000.00 in damages, but whether or not it has right to set-off the damages against the price is a matter of the local law that the conflicts of laws rules point to.[162] If they point to Mexican law, damages cannot be set-off against the price. If Shell cannot set-off the damages, it will have to sue PEMEX, so Article 50 is more convenient.

If Shell was planning to resell this petroleum to Topco at $16.00 per barrel, it will have an action for damages for loss of profit it would have obtained, had the oil conformed to the contract.[163] This, of course, provided that PEMEX foresaw the lost profits.[164]

Now suppose that Israel bombs Iraq's state of the art nuclear facility and Iraq retaliates with scud missiles. To attack Iraq, Israel invades Jordan, and the Arab countries decide to attack Israel. Egypt attacks Israel and on its way closes the Suez canal and, in addition, there is a Pan-Arab oil embargo against the countries that support Israel. The PEMEX oil is delivered. Crude oil prices skyrocket to become three times as much as before the anti-Israel Pan-Arab coalition. In this situation, the most profitable course for Shell is to accept the oil and to claim damages because the barrel price of crude oil containing 1% sulfur is $30.00 against $25.50 price for crude oil containing 2.5% sulfur. The buyer is able to collect $45,000.00 in damages instead of $15,000 for price reduction.

But what will happen in the same situation if suddenly Iraq takes serious steps towards improving its standing with the United Nations. It begins by selling its weapons to pay its debts, it indemnifies Kuwaiti citizens and government for the war, and enacts a statute of reconciliation to protect Kurds. Saddam Hussein calls for democratic elections and Newsweek magazine names him man of the year. As a result, the embargo against Iraq is lifted. Thousands of barrels of crude oil come into the market and the market price falls by one-half. In this case, if PEMEX delivers crude oil containing 2.5% sulfur, the available damages will fall one-half and it will be better for the buyer to reduce the price in proportion to the 10% difference of quality in the oil.

This result has been labeled irrational. However, the breaching seller always has the opportunity to cure. In fact, if there is a non-conformity it is usually the seller's fault. On the other hand, the buyer's ability to chose between Quanti Minoris and damages is no different from being able to chose between specific performance and damages instead of avoidance of a contract. The non-breaching party has a choice between being bound to a breached contract or not, whatever is in her best interest.

However, the difference between damages and reduction of the price in the PEMEX example is illusory, because the buyer will be better off rejecting the goods and purchasing replacement goods at the current market price. In this situation there would be plenty of crude oil in the market, and a fall in the prices would be due to this circumstance.

4.3.3. Preventing Hoodwinks

The CISG does not have a perfect tender rule, but rather adopts a fundamental breach approach. There is the possibility to prevent the seller from committing a breach that, because it has caused no real damage the buyer, would permit him to obtain higher profit than if he had he strictly complied with the contract. Here is an example:

"Paley & Tologist ("P&T"), a law firm, agreed in writing to purchase 200 new IBX personal computers from Random Accessories, Inc., a computer dealer, for $200,000, delivery by November 1. Random warranted that the computers would be merchantable and that all components would be "100% original IBX equipment." On November 1, Random delivered 200 IBX computers to P & T's offices. After the Random truck departed, P & T's office manager noticed that all the computers were equipped with keyboards manufactured by Clonics, Inc. The Clonics keyboards, while cheaper than the standard IBX computer keyboard, are considered by many (but not all) to be superior to the IBX model . . ."[165]

Under the U.C.C.'s perfect tender rule,[166] it is clear that the buyer can even reject all the computers if the seller does not cure the tender. However, the buyer does not have similar rights under the CISG.[167] If the buyer feels that she has no reason to pay more for what could cost less, Article 50 can be applied with it understood that if the seller does not want the price to be reduced he can always cure. The buyer, obviously will have difficulty claiming damages since the Clonics keyboards are, for some superior to the IBX components. However in the eyes of a lawyer trained in the Roman Law tradition there is no reason why the seller should make a bigger profit than under the original deal. Similarly there is no reason for the buyer to pay more than the real worth of what she has bought.

Now imagine that CAPLASTCO, a plastics plant in California, requires oil with no more than 5% sulfur content. CAPLASTCO'S agent contacts PEMEX to buy 100 barrels of crude oil. At the time of request, PEMEX does not have 5% sulfur oil. CAPLASTCO needs the oil desperately. CAPLASTCO'S agent buys the only oil available, oil containing less than 1% sulfur that is more expensive. A contract is entered into for crude oil containing less than 1% sulfur at $15.00 Ex. Works PEMEX `s plant in Salina Cruz.

The ship takes one week to arrive to California. Upon arrival the oil is tested and a 2.5% sulfur content is found. PEMEX managed to obtain at the last minute this lower quality oil. Suppose that it makes no difference to the buyer to use oil with 1%, 2.5% or 5%, thus the buyer is not suffering any expenses whatsoever. Under Article 50 of the CISG the buyer will be still be able to reduce the price. Would the buyer be able to claim damages? It certainly will not be easy, but it will not be fair to let PEMEX charge for 1% sulfur oil if it has delivered oil with 2.5% sulfur content which is sold for a lower price. Here Article 50 applies; this is perhaps the clearest example illustrating that damages and Quanti Minoris are not the same.

4.3.4. Reallocation of Unforeseeable Risks to the Seller

Since there is no liability for damages where the seller's failure to perform is due to unexpected circumstances (the CISG's equivalent to acts of God, force majeure or fait du prince).[168] In cases where the seller's breach is excused but the buyer wants to keep defective goods, the buyer would be assuming the seller's risk if the buyer had to pay the full price. Therefore, Article 50 has the very important function of placing the risk back on the seller in such situations at least to certain extent.[169]

An example will be useful to explain this:

Quasimarán Galindo Santibáñez, also known as "El Saldiuvas", owns a famous taco stand in in Tijuana, Mexico. Zaccarias Bermejo, "Zac", is a manager of Mexican descent who runs a mall in San Isidro, California. One Saturday night, while getting drunk in Tijuana, "Zac" tasted Saldiuvas's tacos and thought that they would to be ideal to be served during the Mall's special sale for "Cinco de Mayo" (5^th of May) [170] that was going to take place the following week. Zaccarias asked Saldiuvas for his telephone number. The following Monday Zac called Saldiuvas and they agreed on a sale of 1,000 basket tacos [171] (tacos de canasta) at one dollar each taco to be delivered at the Mall in San Isidro at 5:30 p.m. Had Zac been sober when he tasted the Saldiuvas' tacos he would have realized that the price was a windfall for the Saldiuvas because he used to sell four tacos for one dollar not one taco for one dollar.

On the 5^th of May Saldiuvas timely prepared the tacos and at 4:30 p.m. he was timely on his way to San Isidro. However, due to drug enforcement tensions between the Mexican and the U.S. governments, the U.S. customs on the Mexican Border received the order to check in a secondary inspection every vehicle entering the U.S. Therefore, Saldiuvas instead of taking 30 minutes to cross the border took two hours and a half. When he finally made it to the Mall, the tacos were cold. To be able to serve the tacos to his impatient customers, Zac had to buy two microwave ovens in the Mall's JC Penney store; he paid $59.99 plus tax each.

Zac, in order to mitigate damages, spend $119.98 plus tax, but he had no claim against the Saldiuvas because the delay was due to circumstances beyond Saldiuvas control. However Saldiuvas usually sells at the end of the night his remaining cold tacos for one fourth of its price. Therefore, Zac could easily reduce the contract price by three fourths, ending in a better position than if he had been able to sue for damages.

Saldiuvas also ends in a better position than if the contract had been avoided because he still was able to sell his tacos at the same price of hot tacos as Tijuana. At the same time, Saldiuvas did not have to return to Tijuana and try to sell 1,000 cold tacos at a quarter for four tacos, that is the ordinary price for cold tacos

4.3.5. Understanding Quanti Minoris Through the Morality of its Uses

Quanti Minoris is concerned with the promise, the moral duty to keep it and more specifically with the moral right of the buyer to have the promise kept. Quanti Minoris is not as concerned with the actual economic efficiency of the promise as the damages remedy. Reliance and expectation damages as well as damages to prevent unjust enrichment are remedies that focus on the economic aspect of the transaction more than the moral aspect.[172]

The use of Quanti Minoris or damages as remedies can lead to some differences.[173] The differences between damages and Quanti Minoris are due to a moral consideration rather than an economic one. The moral for the Civil Law remedy of specific performance is the same as for Quanti Minoris: Give the buyer what she had paid for or, in a more limited situation, allow the buyer to pay only to the extent of the seller's compliance with his promise.

When the reduction of the price is greater than damages due to price fluctuations,[174] this greater amount does not respond to the willingness to make a promise effective from an economic point of view because damages are more than enough for those purposes. We must assume that there is an interest other than economic that is being protected. This interest is the willingness to bind the buyer to his promise only to the proportion (qualitative and quantitative) that the seller has complied with the promise given in exchange of the buyer's promise. This approach becomes even clearer where the buyer may very well suffer no further losses and still be able to reduce the price.[175] The buyer will not be under moral obligation to pay the same price for something that was cheaper.

This different attitude towards a breaching seller is little less than a clash of civilizations following Huntington's theory.[176] It is in fact a religious tension. The morality aspect in contract law is deeply rooted in the Civil Law tradition, whose main sources are Roman and Canonical Law. Civil Law developed for many centuries along with Catholicism, which explains why the Civil Law is permeated with Catholic moral approaches.[177]

Aquinas considers it a sin to lend money for interest and, in general, regards any kind of speculation including every departure from the fair price in sales as also a sin.[178] The price for something sold must be the fair price (its real price) because a sale is for the mutual benefit of both parties and that which is done for mutual benefit should not be done for the benefit of one party and to the detriment of the other.[179] Aquinas also holds that a seller who does not warn the buyer about defects in the goods is committing fraud and the sale is illegal. And if the seller ignores the defect he is under obligation to compensate the buyer.[180]

This theory changed gradually with the Protestant rationalist way to understand Christianity and the development of the spirit of capitalism.[181] Common Law may be viewed as a product of the Protestant views, so it is not surprising that it reflects them.

Thus, this is one of these aspects in which agreement is difficult to achieve, so if the Civil and Common Law countries want to preserve a relative uniformity in their international sales contracts, they have to learn to live with the difference and with the ambiguity that permits consensus. A Common Law lawyer sounds as good attacking Quanti Minoris as a Civil Law Lawyer will sound if attacking non-fault damages.

If we say that CISG is a marriage of the Civil Law and the Common Law families we will have to assume this tension as a normal one, akin to those encountered within families with different cultural and religious backgrounds.[182] Respect for each party's conceptions is necessary to preserve the union. A comparison with a family would be the tensions of an inter-religious marriage (a Catholic and a Protestant) when it comes to decide which church is the couple attending on Sundays or which priest should take care of the baptism of their children.

This tension, if used with intelligence, is not bad. It can temper the excesses of one approach or the other. When the non-fault system is established it is yet necessary to allow some relief to the seller in cases beyond his control.[183] But that will be this time harsh for the buyer, so it avails the buyer the opportunity to use Quanti Minoris in such cases.[184]

5. Conclusions

* Pace Essay submission, June 1998.

LL.M. Candidate, University of Pittsburgh School of Law. Attorney at Law, 1997, University of Guadalajara School of Law. I wish to thank the MacArthur/Ford/Hewlett and Magdalena O. Vda. de Brockmann (MOB) foundations for the grants and the Consejo Nacional para la Ciencia y la Tecnologia (CONACYT) for a scholar loan that have made possible this LL.M. program for me. I also want to thank Professor Harry Fletchner for his insight in this paper, Professor Kevin Deasy for his help with the Blue Book and my friends Alejandro Osuna Gonzalez, Jose Luis Syquia and Shirley Shwarzbergh for their support, suggestions and proof reading. Also special thanks to Jorge Addame Goddard for his advice in the early conception of this paper. And last but not least, thanks to Natalia for all the happiness and support that she gave me these last months.

1. Hereinafter CISG or Convention.

2. Guillermo Cabanellas de las Cuevas & Eleanor C. Hoague, Diccionario Jurídico/Law Dictionary Español-Inglés/Spanish-English (Heliasta ed., 1993).

3. Rafael de Pina, Diccionario de Derecho. (Porrúa eds. 8^th ed. 1979) (1964).

4. See Guillermo Floris Margadant, "Quanti Minoris" in Enciclopedia Juridica Omeba (Editorial Bibliográfica Argentina, 1954).

5. Codigo Civil para el Distrito Federal [C.C.D.F.] art. 2144 (Mex.) "In the case of Article 2144, the buyer can demand recission of the contract and payment of the expenses incurred by reason of it, or the diminution in price in such proportion as is determined by appraisers." (trans. Abraham Eckstein and Enrique Zepeda Trujillo)

6. See D. XXI.1.21.

7. For an interesting description of the ædilitian edicts See Alan Watson. The Imperatives of the Aedilician Edict in Studies in Roman Private Law. (The Hambledon Press, 1991).

8. Rudolph Sohm. The Institutes (James Crawford Ledlie Trans., Clarendon Press 1907) 400-401.

9. See Sheldon Amos, History and Principles of the Civil Law of Rome 227 (W.M. W. Gaunt & Sons eds. 1989).

10. See Rudolph Sohm, The Institutes (James Crawford Ledlie Trans., Clarendon Press 1907) 400-401.

11. See Sheldon Amos, History and Principles of the Civil Law of Rome 227 (W.M. W. Gaunt & Sons eds. 1989) 228

12. Women were not sui juris (they were unable to contract) in Roman Law. There is not sexist intention when speaking only in masculine.

13. D.XIX.1.1.

14. D.XIX.1.3.3

15. D.XIX.1.1.

16. D.XIX.1.

17. D.XIX.1.6.4.

18. Black's Law Dictionary (6^th ed. 1990).

19. See A.E. Pérez Duarte y N, "Mala Fe" in Diccionario Jurídico Mexicano (Porrúa eds. 1996)(1984).

20. D.XVIII.1.13.1.

21. See Ignacio Galindo Garfias, "Dolo Civil" in Diccionario Jurídico Mexicano (Porrúa eds. 1996)(1984).

22. D.XVIII.1.13.4.

23. D.XVIII.1.13.6.

24. D.XVIII.1.13.3.

25. See Código de Comercio [Cód.Com.], Art. 75 (Mex).

26. Constitución Política de los Estados Unidos Mexicanos [Constitution] Article 73(X).

27. Mexico has 32 Civil Codes, one for each state and one for the Federal District (Mexico City); the latter is applicable for all federal matters. Its official name in Spanish is Código Civil para el Distrito Federal en Materia Común y para toda la República en Materia Federal.

28. Código de Comercio [Cód.Com.], Art. 2 (Mex).

29. Codigo Civil para el Distrito Federal [C.C.D.F.] Arts. 2119-2162.

30. See Manuel González Oropeza, "Ley Supletoria" in Diccionario Jurídico Mexicano (Porrúa eds. 1996) (1984).

31. Unlike the opinion of Manuel Oropeza and most Mexican Commentators, within the 4^th Judicial Circuit, in order to supplement a statute, the statute must expressly provide that it can be supplemented and must pinpoint the supplementing statutes. See SUPLETORIEDAD DE UNA LEY A OTRA. REQUISITOS PARA SU PROCEDENCIA. "Elsa Blomeier Eppen" III part S.J.F. 430 Tribunales Colegiados de Circuito (9a época 1996).

32. That is a far different approach than under the U.S. legal system, which considers that when Congress has passed a statute legislating on something and this statute does not contain an institution that a similar thing contains, this omission is deemed to have been made on purpose, so the courts respect it.

33. Institution will be used in this paper as a practice preserved by the law. See Rolando Tamayo y Salmorán. "Institución" in Diccionario Jurídico Mexicano (Porrúa eds. 1996) (1984).

34. See LEY, SUPLETORIEDAD DE LA. "Maria Celia Herrera et al." IV S.J.F. Tribunales Colegiados de Circuito 671 (9a época 1995). All the Mexican jurisprudence information was found in the excellent website kept by the Mexican Supreme Court. (January-April 1998) http://www.scjn.gob.mx

35. See Manuel González Oropeza, "Ley Supletoria" in Diccionario Jurídico Mexicano (Porrúa eds. 1996) (1984).

36. See also SUPLETORIEDAD EN MATERIA MERCANTIL, 49 Cuarta Parte S.J.F. 51 S.C.J.N. Third Chamber (civil law) (7a época 1973).

37. Cód. Com Art. 383. (Trans. Abraham Eckstein and Enrique Zepeda Trujillo, West Publishing Company, 1996).

38. Cód. Com Art. 384. I disagree with the translation by Eckstein and Zepeda because it excludes one important aspect of this article that is the cure. Their translation says as follows: "Article 384. Unless otherwise provided, a seller shall be obligated to guarantee against eviction and to indemnify the buyer in such event." And the Mexican Commercial Code says as follows: "El vendedor, salvo pacto en contrario, quedará obligado en las ventas mercantiles a la evición [eviction] y saneamiento [cure]." Words in English between brackets and bold type provided.

39. C.C.D.F. Art. 2144.

40. Código Civil para el Distrito Federal [C.C.D.F.] (Mex). Art. 2143 "The seller is not responsible for patent discernible defects, nor for hidden defects if the buyer is an expert by trade or profession and should have known of them.", Art. 214. (Trans. Eckstein and Zepeda)

41. C.C.D.F. Art. 2145. "If it is established that the seller had knowledge of the hidden defects and failed to disclose it to the buyer, the buyer shall have the same options as provided by Article 2144, and in addition shall be entitled to be indemnified for damages and losses if he elects to rescind the contract." (Eckstein and Zepeda)

42. C.C.D.F. Art. 2150 "If two or more animals are sold for a lump sum or at a designated price for each, a hidden defect in one of them shall only give rise to rescission in respect to the affected one and not as to the remainder, unless it is apparent that the buyer would not have acquired the healthy animal or animals without the defective animal, or the sale was from a herd and the defect may be contagious." And 2152 "The provisions of Article 2150 are applicable to the sale of any other property." (Eckstein and Zepeda).

43. C.C.D.F. Art. 2158. "Parties may limit, waive or increase their liabilities for defects for which a sale can be rescinded, as long as they act in good faith." (Trans. Eckstein and Zepeda). Remember mala fide, dolus and fraus.

44. C.C.D.F. Art. 2149 "Claims arising under the provisions of Articles 2142 to 2148 inclusive, shall lapse after six (6) months from the delivery of the subject matter of the sale, without prejudice to the special provisions referred to in Articles 2138 and 2139." (Trans. Eckstein and Zepeda).

45. C.C.D.F. Art. 2146 "If a buyer has the right to elect damages or rescission and a choice is made, the buyer cannot elect a different remedy without the consent of the seller." (Trans. Eckstein and Zepeda).

46. See C.C.D.F. Art. 2145.

47. C.C.D.F. Art. 2147 "If the subject of a sale perishes or alters its nature by reason of pre-exististing defects known to the seller, he shall bear the loss and be liable to make restitution of the price paid, in addition to the expenses involved by the contract and for damages and losses." (Trans. Eckstein and Zepeda).

48. C.C.D.F. Art. 2160 "If the sold property with rescindable defects is lost through fortuitous causes or through the fault of the buyer, he shall nevertheless have the right to a reduction in price by reason of the defect." (Trans. Eckstein and Zepeda).

49. See COMPRAVENTA MERCANTIL, OPORTUNIDAD EN QUE EL COMPRADOR DEBE DEDUCIR LAS ACCIONES DE "QUANTI MINORE" Y REDHIBITORIA "Antiguo Molino "El Carmen", XCVII S.J.F. 260. S.C.J.N. Third Chamber (civil) 5a época 1948.

50. See William Burnham, Introduction to the Law and Legal System of the United States 397 (1995).

51. U.C.C. section 2-314

52. U.C.C. section 2-315

53. U.C.C. section 2-313.

54. However as Professor Harry Flechtner correctly observes, under Common Law, an intentional express warranty created obligations of quality for the seller. That was also true under Roman Law, that is the reason why a breach of express warranty would be a breach of contract and not of implied warranty of quality.

55. See Stanley D. Fazio, A Comparison of Redhibition in Louisiana and the Uniform Commercial Code, XIX La. L. Rev. pp. 174,

56. Id. at 180. See also Louisiana AFL-CIO v. Lanier Business Products, Inc., 797. F.2^nd 1364.

57. Remember the case of the seller making affirmations of fact about things that he does not know D.XVIII.1.13.3.

58. The case will be analysed in point 3.2.2.

59. It basically imposes on the seller the burden to deliver the goods with the exact quantity and quality as agreed in the contract, with the buyer excused from compliance if the seller fails to do so. It differs from the substantial performance rule that provides that a tender must be accepted unless it is so different from the original contract that it will constitute a material breach of the contract. See J.E. Murray. Contracts. (The Michie Company 4^th ed. 1991) (1969).

60. U.C.C. section 2-508(2) indent provided.

61. Obviously the buyer would be able to sue for damages, but the buyer will still have to sue and to pay an attorney.

62. Restatement 2d Contracts section 205.

63. U.C.C. section 2-508(2).

64. Arts. 2142 "In a sale of an asset for a specified price, the transferor of the asset is obligated to warrant against hidden defects that make it unfit for the use for which it is intended, or diminish its use, so that had the buyer known of such defect he sould not have bought it or would have offered a lesser price." (Trans. Eckstein and Zepeda). See also 2144.

65. U.C.C. section 2-608.

66. "lot or commercial unit whose non-conformity substantially impairs its value" U.C.C. section 2-608.

67. José Ramón Sánchez-Medal Urquiza, La Resolución de los Contratos por Incumplimiento (Porrúa eds. 1989) 74.

68. Cód. Com. Art. 383.

69. Albert H. Kritzer, Guide to Practical Applications of the U.N. Convention on Contracts for the International Sale of Goods (Kluwer Law and Taxation Publishers, Suppl. 10, July 1994, Detailed Analysis-437.

70. See. Eric E. Bergsten & Anthony J. Miller. The Remedy of Reduction of Price. XXVII Am.J. of Comp.L. 1. 256 (1979).

71. Pretura di Locarno -Campagna, UNILEX No. 6252 (April 27, 1992) (Switzerland).

72. That is somehow different in Article 50 of the CISG where the value of reference apparently is the one at the place of tender or the buyer's place of business.

73. The term unfair enrichment is used to say that it would not be fair to enable the seller to collect the normal price for goods that have less worth. The term unjust enrichment is not used in order to avoid confusion with a more precise term to describe the U.S. contract law rule.

74. See John O. Honnold, Uniform Law for International Sales Under The 1980 United Nations Convention 392-395 (Kluwer Law and Taxation Publishers 1991).

75. U.C.C. Art 2-613. See also Albert H. Kritzer, supra note 69.

76. See Cód. Com. Art. 383.

77. The Monte Alegre was originated as a prize case.

78. As seen above it is also true for Mexican Law.

79. For Louisiana Law, the opposite result is suggested in a purchase of not particularized goods the delivery of goods that are not of the contracted quality can "well" constitute a breach of contract. See Stanley D. Fazio, A Comparison of Redhibition in Louisiana And the Uniform Commercial Code, XIX La. L. Rev. at 177-178.

80. A query in WestLaw found 272 federal cases with language mentioning Quanti Minoris.

81. See Morris N. Palmer Ranch Co. v. Campesi, 647 F.2d 608 affirmed in 487 F.Supp. 1062 (M.D.La. Mar 24, 1980)

82. See Gulf South Mach., Inc. v. Kearney & Trecker Corp., 756 F.2d 377 (1985), cert. denied.

83. See Gulf South v Kearney.

84. See http:cisgw3.law.pace.edu/cases/980629ul.html

85. See Interag v. Stafford 1990 Westlaw 71478 [http://cisgw3.law.pace.edu/cases/900522ul.html].

86. See Interag v. Stafford, id..

87. UNILEX, A Comprehensive and Intelligent Data Base [on C.D.] on the UN Convention on Contracts for the International Sale of Goods, a project supervised by Professor M.M. Bonell for Transnational Publications of Irvington. New York.

88. C.C.D.F. Art. 2144.

89. See Harry Flechtner, More U.S. Decisions on the U.N. Sales Convention: Scope, Parol Evidence, "Validity" and Reduction of Price Under Article 50. 14 J.L. & Com. 153.

90. See John O. Honnold, Uniform Law for International Sales Under The 1980 United Nations Convention 392-5 (Kluwer Law and Taxation Publishers 1991).

91. See CISG Art. 79.

92. See Interag Company v. Stafford Phase Corp., 983 F.2d 1047.

93. Braun v. Alitalia, 1994 WL 121680 (S.D.N.Y.).

94. See 144 F.3d 1384 [http:cisgw3.law.pace.edu/cases/980629ul.html].

95. Stating that the reduced price is what the buyer would have paid had she known the non-conformity, is a mere presumption of the Romanist Quanti Minoris. The reality is another, judges have enough work figuring out what was in the mind of the parties when they executed a contract as to get themselves into the nightmare of finding out what would have been in the parties' minds had the circumstances differed. The way of calculating Quanti Minoris solves the problem: It is assumed that if the buyer bought grade A tomatoes at 90% of the market price she also would have paid 90% of the market price for grade B tomatoes.

96. Supra. Section 2.1.

97. C.C.D.F. Article 2142 of the Mexican Federal Civil Code.

98. Cód. Com. Art. 383.

99. Unilex Database and the Pace Internet website "http://www.cisg.law.pace.edu"

100. The ædiles set Quanti Minoris in order to avoid the harsh effects of the rule caveat emptor that limited the actio empti.

101. Jorge Adame Goddard in an e-mail to the writer of this paper.

102. Fritz Enderlein, International Sales Law: United Nations Convention on Contracts for the International Sale of Goods 197 (Oceana 1992).

103. See UNCITRAL, Report on the Obligations of the Seller of the Secretary-General. Compiled by John Honnold. Documentary History of the Uniform Law for International Sales 133-134 (Kluwer Law and Taxation Publishers, 1989).

104. U.N. G.A. International Conference of Plenipotentiaries. 02/21/1980 and it was agreed that there was a right to unilaterally reduce the price. U.N. G.A. International Conference of Plenipotentiaries. 23^rd Sess. 03/26/1980. U.N. G.A. Secretariat. Comments. Compiled by John Honnold. Documentary History of the Uniform Law for International Sales 400, 432, 580 and 581 (Kluwer Law and Taxation Publishers, 1989).

105. See U.N. G.A. International Conference of Plenipotentiaries. Reform Proposals. And further Draft proposal of the Drafting Committee. Compiled by John Honnold, Documentary History of the Uniform Law for International Sales 689-690 (Kluwer Law and Taxation Publishers, 1989).

106. Article 50 of the CISG.

107. LG Aachen, UNILEX No. 41 O 198/89 (April 3, 1990) (GE). [http://cisgw3.law.pace.edu/cases/900403g1.html].

108. OLG München, UNILEX , No. 7 U 4419/93 (March 2, 1994) (GE) [http://cisgw3.law.pace.edu/cases/940302g1.html].

109. M. Will mentions that a modification was made expressly to clarify this situation. M. Will Article 50 in C.M. Bianca and M.J. Bonell Commentary on the International Sales Law. The 1980 Vienna Sales Convention (Giuffrè, 1987)

110. UNCITRAL. Working Group. 3^rd Sess. Jan. p. 109 and UNCITRAL. Report on the Obligations of the Seller by the Secretary-General. Both compiled by John Honnold. Documentary History of the Uniform Law for International Sales 106 and 133-134 (Kluwer Law and Taxation Publishers, 1989).

111. Unilex Database.

112. UNCITRAL Working Group 3^rd Sess. Compiled by John Honnold, Documentary History of the Uniform Law for International Sales 106 (Kluwer Law and Taxation Publishers, 1989).

113. See Harry Flechtner, More U.S. Decisions on the U.N. Sales Convention: Scope, Parol Evidence, "Validity" and Reduction of Price Under Article 50. 14 J.L. & Com. 153. See also John O. Honnold, Uniform Law for International Sales Under The 1980 United Nations Convention 391-398 (Kluwer Law and Taxation Publishers 1991).

114. M. Will, Article 50 in C.M. Bianca and M.J.Bonell Commentary on the International Sales Law. The 1980 Vienna Sales Convention 371 (Giuffrè, 1987).

115. M. Will, Article 50 in C.M. Bianca and M.J.Bonell Commentary on the International Sales Law. The 1980 Vienna Sales Convention 370 (Giuffrè, 1987).

116. See Jorge Adame Goddard, Contrato de Compraventa Internacional 278 (1995)

117. See Jorge Adame Goddard, Contrato de Compraventa Internacional 278 (1995)

118. See Fritz Enderlein, International Sales Law: United Nations Convention on Contracts for the International Sale of Goods 197 (Oceana 1992).

119. Article 50 of the CISG.

120.. U.N. G.A. Diplomatic Conference. 1^st Comm. Del. 23^rd meeting. John O. Honnold, Documentary History of the Uniform Law for International Sales (Kluwer Law and Taxation Publishers, 1989).

121. The representative of Iraq voted against this article (in a 43 to 1 decision). He stated that he voted this way because "he believed that it would be more equitable for the buyer to be able to calculate the reduction of price on the basis of the value that the goods would have had at the time of the signing of the contract." U.N. G.A. Diplomatic Conference. 6^th Plenary Meeting. John O. Honnold, Documentary History of the Uniform Law for International Sales 746 (Kluwer Law and Taxation Publishers, 1989).

122. Consistently with that opinion, the representative from the Netherlands pointed that a buyer not necessarily would chose its place of residence for delivery and that, also, the matter could be complicated by resale while the goods are still in transit. John O. Honnold, Documentary History of the Uniform Law for International Sales (Kluwer Law and Taxation Publishers, 1989).

123. U.N. G.A. Diplomatic Conference. 1^st Comm. Del. 23^rd meeting. John O. Honnold, Documentary History of the Uniform Law for International Sales 580 (Kluwer Law and Taxation Publishers, 1989).

124. 1990 WL 160905 (S.D.N.Y.).

125. Jorge Adame Goddard, El Contrato de Compraventa Internacional 275 (1994)

126. U.N. G.A. Diplomatic Conference, 23^rd Meeting. John O. Honnold, Documentary History of the Uniform Law for International Sales (Kluwer Law and Taxation Publishers, 1989) 581, 582.

127. See UNCITRAL Secretary General, Report on the Obligations of the Seller of the Secretary-General. John O. Honnold, Documentary History of the Uniform Law for International Sales 137 (Kluwer Law and Taxation Publishers, 1989).

128. U.N. G.A. Diplomatic Conference, 23^rd Meeting, John O. Honnold, Documentary History of the Uniform Law for International Sales 581-2 (Kluwer Law and Taxation Publishers, 1989).

129. U.N. G.A. Diplomatic Conference, 23^rd Meeting, John O. Honnold, Documentary History of the Uniform Law for International Sales 581-2 (Kluwer Law and Taxation Publishers, 1989).

130. See LG Düsseldorf UNILEX No. 36 o 178/95 (May 03, 1996) (GE).

131. Intellectual property rights are also third-party rights.

132. See Supra note 127.

133. Other remedies are: If the buyer has not yet paid the price he or she may withhold it. And if when a claim is filed for the sold goods the buyer may summon the seller so he answers the claim. See Ignacio Galindo Garfias. Evicción in Diccionario Jurídico Mexicano (Porrúa eds. 1996) (1984)

134. Cure can be deemed the same as "saneamiento". In fact, literally they mean the same. And "saneamiento por vicios ocultos" (curing hidden faults) is what the seller is doing when he gives a price allowance under Quanti Minoris. C.C.D.F. Art. 2142.

135. See OLG Koblenz UNILEX No. 2 U 31/96 (January 31, 1997) [http://cisgw3.law.pace.edu/cases/970131g1.html], AG Cloppenburg UNILEX No. 2 C 425/92 (April 14, 1993) (Germany) [http://cisgw3.law.pace.edu/cases/930414g1.html], and Pretura di Locarno -Campagna, UNILEX No. 6252 (April 27, 1992) (Switzerland) [http://cisg23.law.pace.edu/cases/920427s1.html].

136. The reason or occasion of the law. Black's Law Dictionary.

137. Supra. See also John O. Honnold, Uniform Law for International Sales Under The 1980 United Nations Convention 313 (Kluwer Law and Taxation Publishers 1991).

138. U.C.C. section 2-717

139. UNCITRAL Secretary-General, Commentary on the Draft Convention on Contracts for the International Sale of Goods. John O. Honnold, Documentary History of the Uniform Law for International Sales 453 (Kluwer Law and Taxation Publishers, 1989). Indent provided. See also John E. Murray & Harry M. Flechtner, Sales and Leases 209 (West Publishing Co. 1994).

140. This is equivalent to the Mexican [Derecho de Retención].

141. This is equivalent to the Mexican [compensación].

142. C.C.D.F. 2188 "For compensation to apply, both obligations must be of a liquidated amount and their payment is due. If either is not so, compensation can only be applied with the express consent of the parties." (Trans. Eckstein and Zepeda).

143. Ignacio Galindo Garfias, Retención, in Diccionario Jurídico Mexicano (Porrúa eds. 1996) (1984)

144. There is language in several Mexican Court opinions suggesting that the damages quantity must be quantified in the sentence or afterwards.

145. Ignacio Galindo Garfias, Retención, in Diccionario Jurídico Mexicano (Porrúa eds. 1996) (1984)

146. Manuel Borja Soriano, Teoría General de las Obligaciones. (Porrúa eds 13^th ed. 1994).

147. See C.C.D.F. Art. 810(II), 2299, 2524, 2528, 2533, 2708, 2886 and 2887.

148. C.C.D.F. Art. 2299 "An installment buyer, or buyer who is waiting for the setting of the price, who is disturbed or justifiably fears he will be disturbed in his possession of or rights to the subject-matter of the sale, may suspend payment not already made until the seller warrants his possession or posts guarantees to insure it, unless otherwhise agreed." (Eckstein and Zepeda). Please remember that there was a proposal to include the right to reduce the price against defects of title under Article 50 of the CISG.

149. Manuel Borja Soriano, Teoría General de las Obligaciones (Porrúa eds 13^th ed. 1994).

150. See also Sergio T. Azua Reyes.,Teoría General de las Obligaciones (Porrúa eds 1993) 293, 294.

151. See COMPRAVENTA, EL DERECHO A RETENER EL PRECIO NO AUTORIZA LA SUSPENSION DEL PAGO DE CONTRIBUCIONES (ALCANCE DEL ARTICULO 2299 DEL CODIGO CIVIL PARA EL DISTRITO FEDERAL), "Julio Cesar Rovirosa Herrera" III parte-1 S.J.F. 194 Tribunales Colegiados de Circuito (8va época 1989).

152. Under Mexican Law there is a distinction between Jurisprudence (jurisprudencia) and opinion (tesis). The jurisprudence consists of five cases in a row arriving to the same conclusion and is binding and the opinion is only influential (very influential).

153. In Spanish the language reads as follows ". . . además se trata de una disposición que contiene una regla de excepción, aplicable únicamente a los casos contemplados expresamente en ella, conforme al articulo 11 del Código Civil . . ."

154. CISG Art. 78.

155. Article 362 (last paragraph) of the Mexican Commercial Code provides that the debtors that are overdue in their payments would pay, in the absence of an express agreement by the parties, a 6% yearly interest.

156. Under the CISG, in order to prevent double counting, the damages that the buyer is able to recover if she has used Article 50 is the amount in excess of the actual reduction of the price and the additional losses due to the non-conforming goods. Therefore it is not double counting but availing the use of two theories to recover from the seller. In addition she may claim damages for non-conformities of the tender other than directly related to the goods themselves (e.g., late delivery). See CISG Art. 45(2). See also Jorge Adame Goddard, El Contrato de Compraventa Internacional 281-3 (1994). However, as seen, the distinction can have some other consequences like in the case where the buyer needs to set-off or withhold damages.

157. Jorge Adame Goddard, El Contrato de Compraventa Internacional 279-82 (1994).

158. See MCC-Marble Ceramic Center, Inc. v. Ceramica Nuova D'Agostino, S.P.A., 144 F.3d 1384 [http://cisgw3.law.pace.edu/cases/980629ul.html].

159. UNILEX Database.

160. John O. Honnold, Uniform Law for International Sales Under The 1980 United Nations Convention 392 (Kluwer Law and Taxation Publishers 1991).

161. It seems that sulfur in oil is a great example to explain the reduction of the price. See also Harry Flechtner, More U.S. Decisions on the U.N. Sales Convention: Scope, Parol Evidence, "Validity" and Reduction of Price Under Article 50, 14 J.L. & Com., passim.

162. John O. Honnold, Uniform Law for International Sales Under The 1980 United Nations Convention 394 (Kluwer Law and Taxation Publishers 1991).

163. CISG Art. 45 (2).

164. CISG Art. 74.

165. John E. Murray et Harry M. Flechtner, Sales and Leases 140 (West Publishing Co. 1994).

166. section 2-601

167. Arts. 25 and 49(1).

168. CISG Art. 79.

169. See Harry Flechtner, More U.S. Decisions on the U.N. Sales Convention: Scope, Parol Evidence, "Validity" and Reduction of Price Under Article 50, 14 J.L. & Com. 153. See also John O. Honnold, Uniform Law for International Sales Under The 1980 United nations Convention 311-3 (Kluwer Law and Taxation Publishers 1991).

170. "Cinco de Mayo" is considered the most important Mexican-American celebration.

171. The basket tacos is a traditional Mexican food that is usually sold in the street. The tacos are made with warm tortillas and filled with potatoes, beans, ground meat or pork rinds. They must be served hot, otherwise they lose a lot of their great taste. In order to keep the tacos hot while selling them in the street, the tacos are wrapped in napkins then kept in baskets, that keep them hot for several hours. Canasta in Spanish means basket; this is where the name tacos de canasta comes from.

172. American Contract Law is more concerned with economic efficiency that with morality. See J.E. Murray. Contracts, 1-18 (The Michie Company 4^th ed. 1991) (1969).

173. Supra 4.3.2, 4.3.3.

174. Supra 4.3.2

175. Supra 4.3.3

176. See Samuel Huntington, The Clash of Civilizations? in The Clash of Civilizations? The Debate, passim. (Foreign Affairs).

177. During the middle ages the Catholic Church imposed severe sanctions against what it considered immoral dealing. See Marchands et Banquiers du Moyen Age, Jaques Le Goff, 70-99 (P.U.F 1980).

178. Thomas of Aquinas, Vernon J. Bourke (ed. & trans.), The Pocket Aquinas 223-225 (Washington Square Press 1960). Thomas of Aquinas' works are considered by many the most authoritative guidelines in the Catholic doctrine, his ideas are still in good currency. See also Marchands et Banquiers du Moyen Age, 72-75.

179. See Thomas of Aquinas, Tratado de la Justicia 233 (Carlos Ignacio González trans, 6^th ed.Porrúa, 1998) (1477).

180. On the other hand, the buyer is under obligation to compensate the seller if the goods happened to be worth more than the price actually paid. See Thomas of Aquinas, 235 (Carlos Ignacio González trans, 6^th ed.Porrúa, 1998) (1477).

181. See Max Weber, The Protestant Ethic and the Spirit of Capitalism., Chpts I, II, 41-43, 58, 72-95 (Tlalcott Parsons trans., Charles Scribbner's Sons) (1958).

182. See Sara G. Zwart, The New International Law of Sales: A Marriage Between Socialist, Third World, Common, and Civil Law Principles, 13 N.C.J. Int'l L. & Com Reg. 109.

183. See CISG Art. 79.

184. Supra 4.3.4

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