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Date:   27 September 2010
Court:   The Arbitration Court of Latvian Chamber of Commerce and Industry
Local case reference:   2010/135
CISG Nordic ID:   100927LV
Country of decision:   Latvia
Buyer's country:   Lithuania
Seller's country:   Latvia
Goods involved:   Wheat flour
Case history:   n/a
Original language:   Russian
Provisions cited:   CISG articles 25, 30, 53, 59, 61, 62, 78
Original court document:   n/a
Rapporteur:   Aleksandra Vasiljeva
Case citations:   n/a

 

Abstract

by Aleksandra Vasiljeva

The Latvian seller (plaintiff) and the Lithuanian buyer concluded a contract for the delivery of wheat flour on terms EXW Riga and DDU Panevezys (Incoterms 2000). The cargo was delivered by road using a CMR waybill.
The Contract was concluded on 10 February 2009. According to the Contract, the Seller delivered wheat flour starting 17 February 2009 and continued delivering until 7 April 2009. The Seller issued invoices totaling: € 3,996.00; € 4,038.00; € 4,109.40; € 4,716.00; € 4,200.00; € 4,182.30; € 4,200.00. The Seller delivered goods with a total value of € 29,441.70.
According to provision 5.1 of the Sales Contract, it was compulsory for the Buyer to pay the purchase price no later than 30 days after delivery took place. Moreover, if the payment is delayed, the Buyer is obliged to pay penalties equaling 0.3% of the owed sum for every day of delay.
The Seller claimed that the Buyer did not pay the purchase price for all deliveries and calculated penalties in the amount of € 22,114.19 EUR. The Seller relied on Articles 53, 59, 78 and 25 of the UN Convention on the International Sale of Goods (CISG) in order to support its claims.
The case was referred to the Arbitration Court of Latvian Chamber of Commerce and Industry pursuant to the arbitration clause included in the sales contract.
The Arbitration Court stated that the Seller delivered the goods according to the requirements of the Contract and Article 30 of the CISG. The Buyer confirmed the delivery of the goods by signing the CMR waybills.
According to Article 53 of the CISG, the Buyer must pay the price for the goods and take delivery of them as required by the contract and the Convention. According to Article 59 of the CISG, the buyer must pay the price on the date fixed by or determinable from the contract and the Convention without the need for any request or compliance with any formality on the part of the seller.
The Arbitration Court noted that the terms of the payment were determined by the Contract. According to the Contract, the Buyer had to pay within the period of 30 days after the delivery. However, the Buyer was regularly delaying the payment and did not pay at all for some of the invoices.
The Arbitration Court held that one of the main obligations of the buyer is to pay the purchase price. For this reason, the Buyer breached the provisions of the CISG and the Contract. The Arbitration Court allowed the Seller to use the remedies provided in Article 61 of the CISG. The Arbitration Court stated that the Buyer is obliged to pay the purchase price in the amount of € 13,348.46 according to the Contract and Article 62 of the CISG.
The Arbitration Court stated that the question of application of contractual penalties is not regulated in the CISG. Parties can include contractual penalties according to party autonomy principle. For this reason, the Seller rightfully calculated penalties for the Buyer’s failure to perform his obligations in accordance with the Contract.

The Arbitration Court stated the amount of penalties should be considered reasonable and not excessive because the Buyer was not performing his obligations on a regular basis.

 

 

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