NATIONAL LAW INSTITUTE UNIVERSITY,

BHOPAL

International Trade Law

(9TH TRIMESTER)

Rule of Damages in Commercial Law: A Comparative Analysis of

CISG and UNIDROIT Principles

SUBMITTED TO: SUBMITTED BY:

Ms. Saubhagya Bhadkaria Yash Raj

ASSISTANT PROFESSOR
2017 BALLB 102
 INTRODUCTION
In contract disputes between transnational contracting parties, damages are often awarded to
compensate a claimant for loss, injury or detriment resulting from a respondent's failure to perform
the agreement. In fact, damages may be the principal means of substituting for performance or they
may complement other remedies, such as rescission or specific performance. The primary goal of
damages in most jurisdictions is to fulfill a claimant's performance interest by giving the claimant
the substitute remedy of the benefit of the bargain monetarily. This typically includes
compensation for actual loss incurred as a result of the breach and for net gains, including lost
profits that the claimant was precluded from because of the respondent's actions.

STATEMENT OF PROBLEM

The purpose of a damages award under the CISG is clearly stated by Article 74 to be
compensatory. The obligee is entitled to a sum equal to the loss caused by the breach of contract.
The obligee is entitled to be put in the economic position as if the contract had been fully and
correctly performed.

HYPOTHESIS

Before starting the project it was assumed by the researcher that there exist no major difference
between the CISG and UNIDROIT Principles with regard to the Rule of Damages.

RESEARCH OBJECTIVE AND SCOPE

The main objectives of this project on “RULE OF DAMAGES IN COMMERCIAL LAW: A

COMPARATIVE ANALYSIS OF CISG AND UNIDROIT PRINCIPLES” are three-fold:

1. To understand what are the provisions under CISG with regard to the Rule of Damages.

2. To study the Rule of Damages with regard to the UNIDROIT Principles.

3. To analyze and compare the Rule of Damages under CISG and UNIDROIT Principles.
 RESEARCH QUESTIONS

• What are the factors in contracting practices that discourage the usage of the
CISG?

• Does the CISG Need a General Contract Law?

TENTATIVE CHAPTERISATION

CHAPTER I

The first chapter deals with in great depth the articles of the CISG in relation to Damages which are
awarded under CISG. It describes the types of losses which are compensated and also deals with
the right to damages under the convention.

CHAPTER II

The second chapter focuses on the articles relating to damages under the UNIDROIT Principles.
Here, three articles have been studied in detail, namely Article 3.2.16, Article 7.4.1 and Article
7.4.2.

CHAPTER III

The final chapter carries out a comparison between the CISG and the Principles with regard to their
provisions for damages. Both differences and similarities between the articles have been discussed.

REVIEW OF LITERATURE

From Rom Michael J Dennis’s “THE GUIDING ROLE OF THE CISG AND THE UNIDROIT
PRINCIPLES IN HARMONISING INTERNATIONAL CONTRACT LAW” , it could be seen that
that there are more practical, positive, and forward-looking alternatives that build on the existing
platform of the CISG and the UNIDROIT Contract Principles, and that UNCITRAL should focus
on these alternatives.
In 2011, UNIDROIT approved the third edition of the UNIDROIT Principles, after more than three
decades of work, including the earlier approval of the first edition of the principles in 1994 and a
second edition in 2004.

The new edition of An International Restatement of Contract Law is the first comprehensive
introduction to the UNIDROIT Principles 2004. In addition, it provides an extensive survey and
analysis of the actual use of the UNIDROIT Principles in practice with special emphasis on the
different ways in which they have been interpreted and applied by the courts and arbitral tribunals
in the hundred or so cases reported worldwide. The book also contains the full text of the Preamble
and the 180 articles of the UNIDROIT Principles 2004 in Chinese, English, French, German,
Italian and Russian as well as the 1994 edition in Spanish.