CISG CASE PRESENTATION

UNCITRAL case abstract

SPAIN: Supreme Court (Civil Division, Section 1) 3 September 2010

Case law on UNCITRAL texts [A/CN.9/SER.C/ABSTRACTS/115],
CLOUT abstract no. 1126

Reproduced with permission of UNCITRAL

The parties were in dispute over certain breaches of a share purchase contract. The main issue concerned the determination of the extent of compensation awarded for breach of contractual obligations. The appellant claimed, inter alia, that the lower courts had failed to apply article 75 of CISG and to follow certain legal precedents, including the judgement of the Supreme Court of 14 May 2003 (RJ 2003, 4749), basing that claim on the grounds that replacement purchases were equivalent to lost profit.

In relation to those two issues, the Supreme Court considered that, according to case law, the purchase of replacement goods "consists of allowing the buyer, following breach of contract by the seller, and provided that it acts in good faith, to acquire similar goods (of the same quality and amount) from an alternative source and, if applicable, to claim from the seller the difference between the contract price and the price in the substitute transaction." The Court concluded that article 75 of CISG could not be applied since article 2(d) stated that the Convention did not apply to sales of shares.

Moreover, in relation to the second issue, the Court considered that replacement purchases as provided for in article 75 of CISG could not be regarded as equivalent to lost profit, as had been clearly highlighted in the judgement of 14 May 2003, which, with reference to the purchase of a number of batches of must, stated that "[...] there is a clear confusion, in the judgement under appeal, between replacement purchases and lost profit", because "if the buyer, in order to avoid the consequences of breach of contract, acquires batches of must for a higher price than the contract price, the cost of those batches will constitute damnum emergens ("arising damage", or actual loss) paid out of the buyer's assets; this bears no relation to lost profit, which relates to the amount expected to be made upon resale of what was acquired." The Supreme Court also considered that the judgements that the appellant claimed had been violated were not applicable to the case, since they related to very different cases; the case under examination concerned the sale of shares for a lower price than was initially offered, whereas the appellant was seeking to apply the rules governing replacement purchases, which applied to such goods as crops and wine but not to shares.