Damages under the CISG – Old and new challenges

Abstract

The United Nations Convention on Contracts for the International Sale of Goods (CISG) is the first sales law treaty to win acceptance on a worldwide scale. In fact, with its current 84 contracting States, all major industrial nations among them (except the United Kingdom), the CISG applies to more than two-thirds of all world trade and the official CISG case law database includes more than 3,000 cases.

This paper deals with one of the most important provisions under the CISG: The recovery of damages after breach of contract, dealt with in art 74. The uniform interpretation and application of this rather short and easy sounding provision is subject to continuous debate among scholars and due to its practical relevance is a challenging task for judges.

This paper examines three specific issues. Firstly, in light of current trends in national jurisdictions, this paper will discuss whether the CISG is able to and ought to provide for damages consisting of the profit the other party made as a result of the breach (disgorgement of profit). The second issue is the question whether art 74 can be interpreted to include the recovery of attorneys’ fees occurred during litigation. Lastly this paper addresses the contentious question whether agreed sums payable upon breach – in Common Law countries referred to as penalty clauses or liquidated damages clauses – can be dealt within the uniform rules of the CISG.