SOUTHWEST UNIVERSITY OF POLITICAL SCIENCE AND LAW
Final Examination--- Spring 2005
Commercial Sales: International and Domestic
Course No. and Section:
Yan Li / Wang Heng
Please indicate whether students are limited to a specific number of pages. Any other specific instructions can be indicated here.
Limit of 3000 words for entire exam. See additional instructions on first sheet of exam.
Examination Rules. Please READ carefully.
1. There are three questions in this examination. The relative value of each question is stated at the beginning of each question.
2. With the exceptions stated in these instructions, this is an open-book examination. Thus, you may use any materials, but there is no reason for you to consult anything other than the materials we used in class. For purposes of this examination, you should assume that all questions between American parties arise in a jurisdiction that has adopted the current version of Article 2 of the Uniform Commercial Code, but has not adopted the proposed amendments. Thus, you should assume that the version of the UCC that we primarily used in class is in force. You may also assume that all countries involved in the examination have adopted the CISG.
3. You may work on this examination for any consecutive 24-hour period between June 28 and June 29.
4. You may NOT discuss or have communication about the examination or your answers with any other person once you have begun the examination until the end of the exam period. This prohibition includes phone conversations, face-to-face conversations, e-mails, eye winks, head nodding, or any other form of communication. For instance, asking the question “Have you finished the Commercial Sales exam yet?” or answering such a question would be considered a violation of this Rule. This prohibition covers communications with all persons, whether or not they are students at the Law School. I will treat violation of this Rule as cheating.
5. You need not retain or submit any notes that are not part of your final answer. You will, of course, only receive credit for what you submit at the end of the examination.
6. WORD LIMIT: THE ANSWERS TO YOUR EXAMINATION MAY NOT EXCEED A TOTAL OF 3000 WORDS. THIS IS THE TOTAL NUMBER OF WORDS FOR THE ENTIRE EXAM, NOT FOR EACH QUESTION. I WILL DEDUCT SUBSTANTIAL POINTS FROM YOUR ANSWER IF YOU EXCEED THE 3000 WORD LIMIT. You should be able to complete your exam with fewer words and should not feel compelled to reach the limit.
Good luck! Enjoy!!
(approximately ¼ of the exam)
For the past three years, Abart Corporation, a supplier of pharmaceuticals located in the United States, has been purchasing a very expensive experimental drug from Ingmar Corp., a drug manufacturer located in France. During this three-year period, Abart has sent a purchase order to Ingmar every six months for five units of the drug at $20,000 per unit. On July 1, Abart sent its usual purchase order to Ingmar. The purchase order required Ingmar to ship the drug “by air.” On July 10, Ingmar mailed its acknowledgement to Abart. The acknowledgement stated that Ingmar would ship the drug on July 20 by “the fastest means possible under the circumstances.” In the normal course, this acknowledgement would have reached Abart no later than July 14. Due to a two-day work stoppage by French postal workers, however, the acknowledgement did not reach Abart until July 16.
On July 15, Ingmar was offered $30,000 by Sofar Supplies, a German company, for an immediate shipment of the experimental drug. Due to the scarcity of raw materials and limited production capacity, Ingmar could not fill both orders for the drug. Thus, on July 15, Ingmar sent a telex to Abart that read: “As you realize from our acknowledgement, we cannot accept your offer given your requirement that we must ship by air. We must retain discretion over forms of shipment. To avoid any misunderstanding, we hereby revoke any acceptance you might think we have made of your offer.” Abart received the telex on July 15.
It is now July 17. Abart needs the drug and has consulted you to provide advice about the existence of a binding contract between itself and Ingmar. Please indicate the arguments you will make on their behalf, the responses you anticipate, and your judgment as to the final outcome.
How would your answer be different if both companies were located in the United States and the delay in receipt of the acknowledgement was due to a two-day strike by United States postal workers?
(approximately ¼ of the exam)
This part of the examination consists of a fact pattern followed by a series of statements. Please indicate whether you “Agree” or “Disagree” with each of the statements and give a brief justification for your agreement or disagreement. Your justification is more important than your conclusion. If there is more than one justification for your answer, you should provide all the relevant justifications. If you think the conclusion in the statement is correct, but the reason given is incorrect, please state the correct reason for the conclusion. If there is ambiguity about the correct answer, please explain the ambiguity and how you would resolve it. Agreement or disagreement alone will not receive any credit.
* * *
RZK is an American commodities trading company, dealing in the sale of agricultural products. In October 2004, RZK entered into a contract to ship 12,000 apple trees to Beijing Importing (“BI”), a company in China. The contracts indicated that the trees to be sold originated from Meiers Apple Farms near Seattle, Washington (“Meiers”). This was the entire annual production of Meiers. Their trees are highly valued for the quality of the apples they produce. The contract between RZK and BI stated that the price was “$40 per tree, FOB Port of Seattle, shipment on the vessel Grand Voyage,” with a shipment date between December 15 and December 30, 2004. Payment was to be made when BI received the bill of lading and invoice from RZK, even though that would likely precede the time when the shipment arrived in China.
On December 26, RZK arranged to have the 12,000 apple trees loaded onto the vessel Grand Voyage. RZK received from the ship owner a bill of lading that described the shipment as “12,000 apple trees.” The Grand Voyage left the Port of Seattle on December 30, 2004. RZK sent the bill of lading, along with an invoice for $480,000, to BI. BI received these documents on January 15, 2005. It immediately instructed its bank to pay RZK the amount of the invoice, and RZK’s bank in the United States received the funds from BI’s bank on the next day. At that time, the Grand Voyage was scheduled to arrive in China on January 25, 2005.
Unknown to BI, on January 2, 2005, RZK had entered into a contract with Titan Orchards (“Titan”), an apple producer in New York state. In this contract, RZK agreed to sell Titan Orchards 12,000 apple trees “originating from Meiers Apple Farms near Seattle, Washington.” Delivery of the trees was scheduled for March 1, 2005. The contract between RZK and Titan stated that: “Title to the trees that are the subject of this contract passes immediately to buyer on execution by the parties of this contract.” The contract between RZK and Titan also stated that it was governed by the substantive contract law of the State of New York.
Also unknown to BI was that in the early morning hours of January 15, prior to the presentment of the documents to BI, the Grand Voyage had suffered a significant rupture and was in danger of sinking. In order to avoid loss of the ship, the captain ordered that cargo be jettisoned to lighten the ship’s load. Among the cargo that was discarded were 6,000 of the trees being shipped to China. BI received the remaining 6,000 trees in late January 2005.
Please respond to the following statements.
1. BI did not own the trees at the time they were destroyed because BI had not paid for them at that time.
2. BI is not responsible for the lost trees because BI had not paid for them at the time they were destroyed.
3. At the time that the trees were destroyed, Titan Orchards had title to all 12,000 trees.
4. Assuming that Meiers has no more trees, and assuming, regardless of your answers above, that Titan owns the remaining 6,000 trees, Titan can require RZK to get the trees back from BI and deliver them to Titan.
(approximately ½ of the exam)
Menina Mills (“Menina”), a firm located in North Dakota in the United States, near the Canadian border, is in the business of manufacturing and selling animal feed. Menina also sells pigs to its feed customers. In early 2002, Menina entered into two agreements that were basically identical in their substantive terms. Both agreements were entered into with the Yorks, a family of pig farmers that owned two pig farms. One of the farms was located in Montana in the United States. The second was located in British Columbia, Canada. The agreements between the Yorks and Menina provided that Menina was to obtain pigs from Perennial Hogs and resell those pigs to the Yorks. Menina was to deliver the pigs to the Montana pig farm under the first agreement and to the British Columbia farm under the second agreement.
The agreements required the Yorks to purchase a total of 5,000 young pigs (2,500 under each agreement) per year from Menina for the period beginning on July 1, 2002 and ending on June 30, 2005. The pigs were to be delivered in approximately equal monthly installments on the first day of each month during the period when the contract was in force. Upon delivery, the pigs were to be graded by the Yorks as either “grade A,” “substandard,” or “rejected.” Pigs weighing 8 pounds or more were to be classified as “grade A.” Pigs weighing less than 8 pounds were to be classified as “substandard.” Sick, crippled, damaged or dead pigs not acceptable to the Yorks were to be classified as rejects and not counted as part of the quantity delivered to the Yorks. If a pig was graded as “substandard,” then the York could elect either to: (1) reject it, in which case the Yorks would not have to pay for that pig; or (2) accept it and pay a reduced price for that pig. The agreements required the Yorks to pay $32.00 per “grade A” pig and $24.00 per “substandard” pig that the Yorks elected to accept. In addition, since Menina’s primary objective was to sell feed to the Yorks, the agreements required that if the Yorks chose not to feed the pigs Menina products, then the price of each accepted pig, whether “grade A” or “substandard,” would increase by $3.00 per pig. Payment was to be made within 30 days of the delivery of the pigs.
Menina also entered into an agreement with Perennial Hogs in early 2002. Under this agreement, Menina was to purchase from Perennial Hogs all the pigs necessary to supply the Yorks. The same grading system described in the agreements between Menina and the Yorks was employed in this contract. Menina agreed to pay Perennial Hogs $32.00 for each “grade A” pig, and $24.00 for each “substandard” pig that Purina chose to accept. Perennial Hogs was also obligated to use only Menina products in feeding the pigs that were the subject of this contract.
On July 1, 2002, Menina tendered its first deliveries of pigs to the Yorks. These deliveries consisted of 200 pigs to the Montana farm and 200 pigs to the British Columbia farm. Menina billed each of these deliveries as consisting of 200 “grade A” pigs and thus billed the Yorks $6400 for these pigs. Menina has never been paid for the pigs.
On August 1, 2002, Menina tendered an additional 200 pigs to each of the Montana and British Columbia farms. The Yorks, however, rejected each delivery. They indicated that they were facing significant financial difficulties and would be unable to accept any more pigs under the contract. In fact, the Yorks have not accepted any more pigs. When, in late August 2002, Menina threatened to bring a lawsuit against them, however, the Yorks stated that the July delivery of pigs to each farm had contained 15 percent “substandard” pigs. Mr. York told Menina, “Sure, we expected there would be a few substandard pigs in the lot. But there were so many in there that the delivery was essentially useless to us. All pig farmers understand that you only expect about 4 or 5 percent substandard pigs in any delivery.”
It is now early 2006. Menina has now brought a lawsuit in Montana against the Yorks for breach of both contracts. Menina has claimed that the Yorks owe $6400 for the July 2002 delivery. They also claim damages for the difference between the contract price of $32.00 per pig and $18.00, the market price for pigs on August 1, 2002, for each of the 14,600 pigs that the Yorks were supposed to accept under the contracts (calculated as 15,000 pigs over three years, less the 400 accepted on July 1, 2002). The market price for similar pigs at this point in time is $27.00 per pig. In addition, Menina claims $3.00 per unaccepted pig, since those pigs were not fed with Menina products.
The Yorks have claimed that they did not breach the contracts because Menina’s initial performance demonstrated its inability to provide conforming goods. They have not claimed any damages from Menina. They have demonstrated, however, that Menina has resold all of the pigs that the Yorks were to have purchased at prices in excess of the market rate, and in some instances at prices in excess of the $32.00 per pig that the Yorks were to have paid under the Agreement. The Yorks have contended, therefore, that if they are found to be the breachers, their damages should be limited to $3.00 per pig. Finally, the Yorks contend that even if they must pay more than $3.00 per pig, the damage calculation suggested by Menina is inaccurate. The Yorks note that the market price of pigs on August 1, 2002 was at a very low point. They suggest that the market price since then has fluctuated between $18.00 per pig and $40.00 per pig. They contend, therefore, that any damages should be calculated by looking at the market price on the first day of each month that the contract was in force and, assuming that an equal number of pigs would have been delivered each month, using that figure to determine market prices in the damage formulation.
Please analyze the arguments of each party under each of the contracts. If there are additional arguments that each party should make, please indicate what they are and what responses the other party might make.
END OF EXAM
1. Under CISG:
A. The arguments I would make on Abart’s behalf
B. The responses Ingmar would make as I anticipate
A1: There is a binding contract between Abart and Ingmar based on the understanding of usual deals in last three years plus the terms of acknowledgement “the drug would be shipped on July 20 by the fastest means possible under the circumstances”. When Abart sent the usual purchase order to Ingmar, both parties knew and could not have been unaware the intent of the sale of experimental drug as what have been done in last three years;
B1: There is no contract between them. The acceptance has been revoked effectively;
A2: According to the CISG art.14, Abart’s order on July 1 is an offer and to art.18, Ingmar’s acknowledgement on July 10 is an effective acceptance. Because the reply to the offer with a different terms not materially altering the terms of the offer constitutes an acceptance (art.19(2)). And delivery by air or by shipment is not considered to alter the terms of the offer materially according to the art.19(3);
B2: Article.19(3) indicates the different terms relating “place and time of delivery” is considered to alter the terms of the offer materially, the acknowledgement change the time of delivery, so it is an counter-offer, not an acceptance;
A3: Given Article 8(1)’s directive to use the subjective intent of the parties to interpret their statements and conduct, and 8(3) to give due consideration to all relevant circumstances of the case including……to determine the intent of the parties, the acknowledgement given by Ingmar on July 10 shows his actual intention to accept the purchase order, not as what he said in telex on July 15 that his acknowledgement was to refuse the offer;
B3: The telex made on July 15 was to withdraw its counter-offer before Abart make the acceptance;
A4: Although the acceptance reached Abart two days late compared to the normal course, Abart neither fixed a period time for acceptance (Art.20(1)), nor informed Ingmar to refuse it due to the late acceptance(art.21(1)), we can still say the acceptance to Abart’s offer is effective. Furthermore, the delay is not caused by the fault of Ingmar.
B4: Even step back to say that the acknowledgement is an acceptance, the acceptance is not given in a reasonable time due to the two days late, so the acceptance is not effective (art.18(2)).
A5: Ingmar fail to withdraw its acceptance. He has supposed the acceptance in his acknowledgement would reach Abart on July 14, so he could not withdraw it after July 14. (art.22)
B5: Imagining the acknowledgement is an acceptance, it only become effective on July 16, the day it reached Abart (art.18(2)). But before that day, on July 15, they sent the telex to revoke the acceptance (art.22), so no contract has been concluded herein.
C. My judgment as to the final outcome is:
My final judgment is at large degree for the Ingmar.
a. CISG requires follow the real intent of the parties to form the contract (art.8), so we could argue according to the long-time cooperation in last three years, the acknowledgement mailed on July 10 by Ingmar really shows both parties agree to continue the sale as usual;
b. We could also argue the different terms to the offer did not materially alter the terms of the offer, so there is an acceptance (art. 8);
c. If Abart could prove some circumstances that after sent the purchase order, there are some oral evidence or trade usage between them these years showing that they agree to perform this contract, so we can say there is a contract without further arguing the effect of the revoking the acceptance (art. 11). (USA and France did not reserve art.11 of CISG). Such as if Abart did not receive the acceptance on July 14, but they make a payment to Ingmar and Ingmar accept it, so the contract is formed by act.
d. The real controversial matter in this case is whether Ingmar effectively revoke its acceptance. Based on the facts given, I would say Ingmar use telex which is more expedite than mail to notice Abart that they revoke the acceptance. The contract here is not effectively formed.
2. Under UCC:
A. Abart could argue in different ways.
A1: 2-204, If Abart could prove any manner sufficient to show the agreement between them, then there is a contract. No writing agreement is needed. Even the way of delivery is not determined when the purchase order was sent, we could still argue on July 10, when Ingmar send the mail, there is an agreement formed immediately between the two parties who both realized the continuous purchase of drug every 6 month in these years.
A2: 2-207(1), we could argue there is an acceptance even though the acceptance deviates from the original terms. The approach held by a majority of courts regard to the “different terms” is known as the “Knockout rule”. Due to comment 6, the conflicting terms do not become a part of the contract, so the way of delivery is the default rule of the UCC. That is 2-309(1), as long as reasonable time is given to ship the drug.
B: The favorable way for Ingmar to argue is the same as above that no binding contract has been concluded, but would be more difficult on proving the effect of revoking acceptance under UCC because no clear answer to the effect of the delayed acceptance is given here.
B. I would give a contrary final judgment under UCC compared to CISG.
In terms of the UCC policy that it presumes the merchants are frequently willing to proceed with a transaction even though all terms have not been assented to, I would more easily to argue there is an agreement already before July 15. So I would be relieved the pressure to argue the effectiveness of Ingmar’s revoking the acceptance and conclude there is a binding contract between Abart and Ingmar.
1. There is an ambiguity: CISG 4(b), the effect which the contract may have on the property in the goods sold is not covered in CISG. So the issue when the title of the goods is transferred to the buyer leaves to domestic law which would be applied in the individual case. Here, the title of the goods is not mentioned in the contract between RZK and BI to the facts given here, we could analyze as follow:
a. If in the contract, RZK retained the title of the goods before BI make a payment, then we could say the conclusion and reason here are right due to this situation;
b. When there is no explicitly agreement, we could refer to the UCC 2-401(2) to solve the problem if we imagine the case resolved in US court (but maybe different under Chinese jurisdiction). Title passes to the buyer at the time and place at which the seller completes his performance with reference to the physical delivery of the goods, even though a document of title is to be delivered at a different time or place. Under 2-319(1), F.O.B. the place of shipment, RZK completed his performance after he bear the expense and risk of putting the goods to the possession of Grand Voyage on December 26. So we say BI did own the trees at the time they were destroyed on January 15.
2. I disagree with the conclusion and the reason.
BI is responsible for the lost trees because the risk of the trees has passed to BI. According to the Article 67(1) of CISG and the INCOTERMS regard to CFR, the risk passed to BI when RZK arranged the 12,000 apple trees loaded onto the vessel Grand Voyage on December 26 as stated in the contract between RZK and BI. Given the facts here, I conclude that these apple trees are identified to sell to BI by RZK. So art.67(2) is not applied.
3. I disagree with the conclusion. Titan Orchards had no title to all 12,000 trees at the time that the trees were destroyed.
UCC is applied to the contract between RZK and Titan. Due to possibility 2 of answer one, BI owned 12,000 apple trees on December 26, so RZK could not execute the contract with Titan made on January 2, because the entire annual production of Meiers is 12,000. Under 2-312(1)(a), seller is required to make a “rightful” transfer of “good’ title to the buyer. Although UCC doesn’t refer to the warranty of title as “implied” warranty, they automatically attach to sales of goods unless they have been disclaimed. Titan may sue for damages due to the breach of “warranty of title” by RZK in this case, but has no right to the title of the specified goods.
4. I agree with the conclusion here.
Under the UCC 2-716(1), since that Meiers has no more trees, I could argue that the goods here are unique. Or under 2-716(3), I could argue the buyer Titan who has not received delivery may have a right of replevin for identified goods if “after reasonable efforts” he is unable to effect cover for the goods, or an attempt to cover would be “unavailing” in the circumstances. So specific performance is required by Titan. Titan can require RZK to get the trees back from BI and BI could sue RZK for damage.
A. the applicable rules of these two agreements:
1. According to CISG art.1(1)(a)and art.10(a), the agreement between Menina and Yorks with farm located in Canada is governed by CISG since one of the places of business of Yorks is Canada, another Contracting States other than USA. Also, the farm located in Canada is the place of business which has the closest relationship to the contract and its performance. Furthermore, both Menina and Yorks knew this when they conclude the contracts.
2. The agreement between Menina and Yorks with farm located in Montana, USA is governed by UCC.
B. Contract governed by UCC:
1. Buyer----Yorks’ (the farm located in Montana)’s arguments:
a. Under 2-601, Yorks wrongfully rejected the pigs effectively tendered by Menina on August 1. You could hardly argue the “substandard pigs” are non-conforming goods according to the contract. But under 2-602(1), Yorks could argue their rejection is effective because they seasonably notified Menina of their rejection;
b. Due to the contract, Yorks is entitled to choose either reject the “substandard pigs” or reduce their price, so 15% “substandard pigs” did not constitute the seller’s breach and make the delivery essentially useless to them. Yorks could hardly argue Menina breach the contract and the delivery is out of their expectation when they made the contract. Also, hardly for Yorks to prove the trade usage regarding the percentage of substandard pigs;
c. Yorks accepted the delivery on July 1 already, so Menina could ask for price based on 2-709 regard to the seller’s requirement for specific performance. Yorks breached the contract because of nonpayment 30days after delivery. Furthermore, Yorks can not reject them after acceptance (2-607(2)).
d. Due to Yorks’ non-payment and wrongful rejection, under 2-703, Menina is entitled to resale the goods for remedy. Under 2-706, as long as the resale made by Menina is in good faith and in a commercially reasonable manner, he could recover the difference between the resale price and contract price.
e. Damages limited to $3.00 per pig is not including incidental damages Menina might suffer;
f. Yorks could argue the “market price” should be determined at the time of performance in 2-723 so damage formulation should base on different market price each month.
2. Seller----Menina’s arguments:
a. Menina is entitled to claim payment for the delivery on July 2002. Yorks lose the claim to deduct the price to “substandard pigs” because no notice about the inspection has been given (2-709);
b. Menina could ask for compensation (difference between $32 and $18) due to Yorks’ non-acceptance on August (2-708). But whether the amount should base on 400 or 14,600 is left controversial and open. If “market price” in 2-723 is translated to be determined at the time learned the repudiation, damage formulation (difference between $32 and $18) could be used;
c. Menina is entitled to claim lost profits----$3.00 per unaccepted pig if 2-708(1) is satisfied and any incidental damages suffered.
3. More arguments which could be made:
On buyer’s aspect:
a. 2-706, seller’s resale on public or private should be made in good faith. When the resale is at private, seller must give the buyer reasonable notification. But Menina may argue since no notification of resale has been given to Yorks, he could only use 2-708 to ask for compensation.
b. 2-703, Menina could cancel the contract soon after August, 2002 and should not wait until 2006 to claim for damages. But Menina may argue he reasonably believe Yorks would perform its obligations under the contract.
c. Menina should not calculate damages based on 14,600 pigs. But Menina may argue if the contract had been performed, his damage should be calculated on that amount in order for full compensation under 1-106(1).
d. 2-706(1), the claim for damages should less expenses saved in consequence of Yorks’ breach. But Menina may ask Yorks to show what is the expenses could be saved which is hard to calculate.
On seller’s aspect::
a. 2-605, seller could argue that Yorks failure to state in connection with rejection a particular defect which Yorks could easily ascertain by reasonable inspection precluded him from relying on the unstated defect to justify rejection or to establish breach.
b. 2-513, there is no inspection in a reasonable time after Menina delivered the pigs on July, so the 15% “substandard pigs” alleged by Yorks is unbelievable.
c. 2-708(2), measure of damages provide in 2-708(1) is inadequate to put Menina in as good a position as performance would have done, so the lost profits could be asked for. But Yorks may argue Menina should take the burden of proof that the damages in 2-708(1) is inadequate, which is hard.
d. The market price could be argued as ($18+$27)/2=$22.5 for 14,600 pigs if $18 for market price could not stand. But Yorks may argue this measure is unfair because the market price once has reached $40 during these years.
e. 2-710, seller can claim incidental damages for expenses incurred in stopping delivery or care and custody of goods etc. But Yorks may argue Menina stopped tender of delivery since August, 2002.
C. Contract governed by CISG:
The analysis to seller and buyer’s arguments are almost as similar as stated above. I would say buyer----Yorks breached the contract because of non-payment due on July 31,2002 and wrongful rejection, non acceptance to conforming goods after that etc. Menina is an aggrieved seller in this case. I only talk about the differences existed in CISG that are not mentioned in UCC:
1. Buyer Yorks’ (the farm located in Canada) arguments:
a. Under art.35, Menina delivered conforming pigs on July and August which fit for the purposes when both parties conclude the contract;
b. Under art.53 and 59, Yorks must pay the price on July 31 fixed in the contract;
c. Under art. 60, Yorks breached his obligation to take delivery on August 2002;
d. Under art.39, Yorks loses the right to rely on the excuse of lack of conformity of the goods delivered because he did not give notice to Menina, specifying the nature of the lack of conformity within a reasonable time after he has discovered it or ought to have discovered it;
e. Since the contract is not avoided, Yorks could not use art.75 to argue the damage measure which should be used by Menina.
2. Seller----Menina’s arguments:
a. Menina did not avoid the contract, so he could not rely on art.76 to claim damages;
b. Under art.74, Menina could claim for loss of profit suffered by the other party as a consequence of the breach, but such damages may not exceed the loss which Yorks foresaw or ought to have foreseen at the time of concluding the contract. The argument for damage made by Menina (difference between $32 and $18) is out of Yorks’ expectation.
3. More arguments which could be made:
On buyer’s aspect:
a. According to the art.25 and art.73, when Yorks fail to pay the delivery which was due on July 31,2002, there is a fundamental breach. Menina could avoid the contract in order to mitigate the loss, including loss of profit under art.77. Menina wait for nearly four years to claim damages, which shows that he is not in good faith. Yorks may claim a reduction in the damages in the amount by which the loss should have been mitigated. But Menina may argue he owns the right to avoid the contract or not. Art.77 is not applied here because he wanted actually performance of the contract.
b. In order to recover damages measured by a substitute transaction under CISG Article 75, or damages measured by the current (market) price under Article 76, aggrieved seller must first avoid the contract. Since Menina did not avoid the contract, damages should not be calculated. But Menina may ask for specific performance by Yorks under art.62, asking Yorks to take the delivery and pay the contract price.
On seller’s aspect:
- Menina did not avoid the contract on August 2002 only because he wanted to fix an additional period of time of reasonable length for performance by the buyer as to art.63. He could avoid the contract before asking for damages in 2006. But Yorks may argue that under art.63(2), they had noticed Menina they would not accept pigs delivered, so Menina should not expect that they would perform the contract.
- Menina insist the market price is $18. But Yorks may argue Menina failed to avoid the contract on August 1 and notice them, so formula ($32-$18) can not be used.