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Date:   5 May 2010
Court:   The Court of Tukums District
Local case reference:   C- 37 0645 09 58/10
CISG Nordic ID:   100505LV
Country of decision:   Latvia
Buyer's country:   Lithuania
Seller's country:   Latvia
Goods involved:   Winter rapeseed
Case history:   n/a
Original language:   Latvian
Provisions cited:   CISG articles 4, 61, 74
Original court document:   n/a
Rapporteur:   Aleksandra Vasiljeva
Case citations:   n/a



by Aleksandra Vasiljeva

The Latvian seller (plaintiff) and the Lithuanian buyer concluded a contract for the delivery of winter rapeseed on EXW terms (Incoterms 2000).
The contract was concluded on 17 March 2008. According to the Contract, the Seller was obliged to deliver rapeseeds from November until December 2008. The parties agreed to trade 800 - 1000 tons of rapeseeds for the price of € 460 per ton. The Seller was obliged to deliver rapeseeds every week (1 – 2 trucks). The Seller claimed that its obligations were performed until 25 November 2008 and requested the Buyer to pay for the delivered seeds. On 10 December, the Seller received an e-mail from the Buyer, where it was stated that the Buyer will not be able to perform its obligations on the agreed terms and asked to renegotiate the terms of the contract. After some time, the Buyer admitted that it would not be able to perform its obligations because it was not possible to obtain a bank loan.
The Seller sued the Buyer in the Court of Tukums district (Latvia). The Seller demanded avoidance of the contract, damages in the amount of LVL 118,161.33 and default interest in the amount of LVL 4,927.04.
The Court stated that both Latvia and Lithuania ratified the Convention on the law applicable to the contractual obligations (opened for signature in Rome on 19 June 1980). According to Article 4 of the Rome Convention, ‘to the extent that the law applicable to the contract has not been chosen in accordance with Article 3, the contract shall be governed by the law of the country with which it is most closely connected’.
The Court further noted that Latvia and Lithuania had ratified the UN Convention on the International Sale of Goods (CISG) and for this reason the CISG should be applied to this case.
The Court held that the Seller’s claim is founded and should be partly satisfied. The Court applied Article 4 of the CISG, according to which, the Convention governs the formation of the contract of sale and the rights and obligations of the seller and the buyer arising from such a contract. The Court applied Article 61 (1) (b) and Article 74 of the CISG. The Court also applied analogical provisions of Latvian law.
The Court found that the Seller did not perform its obligations. The Seller delivered the rapeseeds and notified the Buyer about it by email and asked the Buyer to pay for the goods. However, the Buyer refused to pay, referring to the financial difficulties that the company is facing. The Court held that the Buyer’s non-performance was not justified. According to Article 1587 CL, ‘a legally concluded contract obliges the party to perform it. The party cannot rely on the hardship that appeared later, or on the exceptional financial burden in order to be excused from the performance of its obligations’.

The Court satisfied the Seller’s claim for damages (difference between contract price and a price for which Seller resold the seeds to another buyer; transport expenses for the delivery of goods to the new buyer) and for default interest. However, the Court did not satisfy the Seller’s claim for the recovery of the expenses for the storage of the goods, since it was not prescribed by the contract.



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