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Cases International Business Law

International Business Law (Universitat de Barcelona)

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CASES

Case 1
Which courts would be competent in order to solve the Irish Company claim?

It refers to the legal area of “Dispute Resolution Mechanisms”, because it refers to

jurisdiction (the courts). There are 3 different options in order to solve the Irish
Company claim:

- Sue the Spanish Company in Ireland before the Irish Courts. The Irish
Courts would need a legal rule in order to be competent to solve this case.
- Sue the Spanish Company in Spain before the Spanish Courts. The Spanish
Courts would need a legal rule in order to be competent to solve this case.
- Sue the Spanish Company in Morocco before the Moroccan Courts. The
Moroccan Courts would also need a legal rule in order to be competent.

As there are 3 different countries involved in this case, any of the 3 countries Courts
could be competent in order to solve the case. The problem is that each country in the
planet has its own rules and legal instruments and laws regarding the International
Business Law.

Which law would be competent in this case? Which law would govern the contract?

This question refers to the 2nd legal area called “Applicable law or Conflict of laws” and
here we also have 3 different possibilities, which are the 3 countries involved in the
case:

- The Irish legal rules or laws regarding the Irish International Business Law.
- The Spanish legal rules regarding the Spanish International Business Law.
- The Moroccan laws regarding the Moroccan International Business Law.

Each country or state has its own International Business Law legal rules or legal
instruments. This means the legal rules are usually different depending on the country.

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Case 2
In the practical case 2, both countries are contracting parties of the International
Convention (CMR: Convention on the contract for the international carriage of goods
by road, 1956, Geneva, Art. 1).

Which law would be competent or applicable in order to solve the case?

The legal instruments applicable in this case are 2: the EU Regulation 593/2008 and the
International Convention (CMR), because they talk about applicable law and the other
regulations or legal instruments only talk about jurisdiction so they are not useful here.

Now, we must check its scope of application:

Rome I Regulation EU scope of application:

1- Material scope of application: It regulates international contractual

obligations in civil and commercial matters. (Art. 1)
2- Temporal scope of application: It applies from the 17-12-2009 (Art. 29)
3- Territorial scope of application: It blinds on all the EU Member States
with the exception of Denmark and UK.
4- Personal scope of application: It applies universally (Art. 2). This means
that it should be applied by judges of the Member States of the EU (not
Denmark). Therefore, if the judge is from a member state, it can also be
applied, even none of the parties are from the EU.

And now, we must choose between the EU Regulation and the International
Convention. In theory, we must check first the EU Regulation, because first goes the EU
regulations as one of the rules says. And after, we must take a look at the Int.
Convention CMR.

Conclusion: In this particular case, we will choose the CMR International Convention,
because here it has preference and priority over the Rome I EU Regulation. This is
because the CMR Convention unifies substantive rules and the EU Regulation only

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unifies conflict of law rules. Also, because, in article 25, it says that International
Conventions like CMR have priority over EU Regulations like Rome I.

Case 3

Vienna Convention scope of application:

Material scope of application:

- The Vienna Convention applies only to the CISG. There are 2 types of
“goods”: the tangible goods (media, social…) and the movable goods (lands,
buildings…)
- The Vienna Convention only applies to “Business to Business” operations.
So, at the same time, this convention refuses all the “Business to Consumer”
contracts and operations.
- Formation, parties’ rights and obligations and remedies (reliefs).
********The Vienna Convention no s’encarrega d’aquests other two issues,
Rome I EU Regulation is the one that does it: prescription periods and
seller’s liability for death or personal injuries caused by the goods to
individuals.

Temporal scope of application: If the contract was signed before entering the Vienna
Convention, the Convention could not be applied to solve the problem or the case.

Territorial scope of application: It is currently in force in 89 States at the moment.

Personal scope of application (Art. 1): The Vienna Convention applies either directly or
indirectly.

- Direct way: Two required conditions:

1- The seller and the buyer must have their respective places of business
in different countries. (*This condition is always necessary, in the
direct way and in the indirect way*).
2- These countries must be Contracting States to the Vienna
Convention.

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- Indirect way (Rome I EU Regulation): When there is a Conflict of law rules

or Conflict rules applicable by the competent court, this must lead to the
application of the “Law of a Contracting State to the Vienna Convention”,
which means that the law applicable in order to solve the case must be the
law of the Contracting state or country of the Vienna Convention.

Case 4

The seller is a Spanish Company and the buyer is a Thai Company. Thai Company
decides to sue the Spanish Company before the Spanish Courts, so should the Vienna
Convention be applied in this case?

The first thing that we must check is the Vienna Convention scope of application:

1- Personal scope of application: Thailand is not a Contracting State to

the Vienna Convention. This means that the Vienna Convention must
be applied in an indirect way, indirectly, because the VC cannot be
applied in a direct way. So, we will apply the Rome I EU Regulation,
because it is in an indirect way.
*Regulation 2008 / Art. 4.1. of the Rome I Regulation:
The law says that it is always the Seller’s habitual residence, so in
this particular case, we will apply the Spanish law. And, of course
that Spain is a Contracting State to the Vienna Convention.
2- Temporal scope of application: We just need to take a look at the date
in which Spain entered into the VC.
3- Material scope of application: The Vienna Convention has not
material scope of application on carriage of goods. The VC only
applies to the CISG and only applies to “Business to Business”
operations (No “Business to Consumer” contracts). So, we must
apply the Rome I EU Regulation.

Case 5

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The buyer is a Dutch Company and the seller is an Italian Company. In this case we are
talking about bacon as the main good, but there is a problem in the way of delivery (in
the packaging) of the good (bacon). Does an international contract exist here? If this is
the case, in which terms?

In the Art. 18 from the United Nations Convention on the CISG, they explain basically
if a problem in the way of delivery or packaging is a significant change or a
nonsignificant change or amendment. The packaging is usually considered a significant
change, because it affects directly the nature of the goods.

After this change, the Dutch buyer accepted the first 4 instalments and refused the
acceptance of the remaining instalments, so this means there is an implicit acceptance of
the counter-offer. Any unilateral change that happens in a contract after this one is
officially valued as a contract is considered a Breach of Contract.

Case 6

The Thai Seller (Third country) does not deliver conforming goods, so the Spanish
Buyer (EU Member State) has 2 different options:

Sue the Thai Seller in Spain, so Spanish Courts (the competent courts) would be applied
and Rome I Regulation would also be applied. Or sue the Thai Seller in Thailand, so the
Thai Courts would be applied, but Rome I Regulation would not be applied.

***In this particular case, the Vienna Convention cannot be applied because for the VC
to be applicable, both countries must be EU Member States. On the other hand, we are
able to apply the Rome I Regulation because for the R.I.R to be applicable, at least one
country must be an EU Member State (If the competent courts of the case (Spanish
Courts) are EU Member State courts, then the R.I.R can be applied, even though the
other country is not an EU Member State***

Case 7

1. Which law governs the international sale of goods contract CISG? Why?

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There are always two possible answers to this question: The Vienna Convention or the
Rome I EU Regulation. In this case, the seller is the Spanish Company and the buyer is
the Lithuanian Company.

The VC usually has preference over the R.I.R, because the VC regulates Substantive
rules, while the R.I.R regulates the Conflict of law rules, which are less important. So,
first we must check if we can apply the VC by taking a look at the VC’s whole scope of
application. In this particular case, the Vienna Convention can be applied, because its
scope of application and because both countries are EU Member States, for the VC to be
applicable.

2. Incoterm FOB (Commercial usages)

In the Art. 9.1 of the Vienna Convention, it is said that commercial usages like
incoterms have preference over the VC. So, incoterm FOB prevails over the Vienna
Convention.

3. The Irish law, the law of Ireland?

Ireland is not a Contracting State to the Vienna Convention, so in theory we cannot

apply the VC here. But in the case that both contracting parties choose the law of
Ireland and both of them agreed previously a “Choice of Law Agreement”, then it
would be possible. (Priority to Party Autonomy as a general and basic rule).

CISG 1

The Spanish fishery A (the seller) and the Chinese supermarket chain B (the buyer)
enter into a sale of goods contract whereby the seller agrees to deliver to the buyer about
500 kg of anchovies in brine.

According to the above-mentioned contract, the goods must be delivered pursuant to the
“FOB, Barcelona, INCOTERMS 2020” clause with destination to Tianjin, China. In
addition, the contract contains a choice of law agreement whereby the contracting
parties subject the contract to Spanish Law.

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Unfortunately, once the goods arrive at their destination in China, the buyer alleges that
about 25% of the anchovies are not ready for consumption because during transport one
of the refrigerated containers (“reefer”) did not work as expected. Besides, another 25%
of the anchovies do not conform with the size agreed by the contracting parties. In the
Chinese buyer’s view, the lack of conformity of the anchovies allows it to reject the
merchandise and terminate the agreement.

The seller alleges, though, that the buyer must accept the anchovies because the buyer
only informed the seller of the problems some 35 days after the merchandise arrived in
Tianjin.

1. Which law governs the controversial contractual obligations? Why?

The contracting parties (the seller and the buyer) subject the contract to the Spanish Law
(Internal or Domestic Legislation), because the contract contains a choice of law
agreement between the Spanish fishery A and the Chinese supermarket chain B. So, the
law that governs the controversial contractual obligations is the Spanish Law because
both contracting parties have agreed.

Also, the Vienna Convention can be applied in this case. The VC usually has preference
over the Rome I Regulation, because the VC regulates substantive rules, while the
Rome I Regulation regulates the conflict of law rules. In addition, the Vienna
Convention applies only to the Contracts for the International Sales of Goods (CISG).
And regarding the personal scope of application of the VC, the VC applies to this case
in a direct way, because our case meets the two required conditions: the seller (from
Spain) and the buyer (from China) have their respective places of business in two
different countries and these countries (Spain and China) must be Contracting States to
the Vienna Convention.

2. Which obligations does the buyer have in an international purchase and sale
agreement? Which of them are specially connected to the controversial
situation?

In an international purchase and sale agreement between two different companies, the
buyer has the 4 following obligations:
-Pay the price for the goods.
-Take delivery of the goods in accordance to the contract.

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-Examine the goods.

-Notify the seller of any defect or flaw when the goods arrive at their destination
(within a reasonable period of time that depends on the nature of the goods).

Of these 4 points mentioned above, the buyer meets all of them, except the last one: the
obligation to notify the seller of any defect when the goods arrive at their destination.

The last obligation is the one specially connected to this controversial situation. In this
particular case, when the goods arrived at their destination in China, the buyer started to
examine them and realised that about 25% of the anchovies were not ready for
consumption because during transport one of the refrigerated containers did not work as
expected and another 25% of the anchovies did not conform with the size contractually
agreed by the contracting parties. So, there is a clear lack of conformity of the goods
from the buyer. But the main error was that the buyer informed the seller of the defects
35 days after the goods arrived at Tianjin and now the seller alleges that the buyer must
accept all the anchovies, because depending on the nature of the anchovies, 35 days is
not a reasonable period of time.

3. Has the seller’s argument concerning the late notice of the problems by the
buyer any merit?

Yes, we believe that the seller’s argument concerning the late notice of the problems by
the buyer has merit, because the buyer’s obligation is to notify the seller of any defect or
flaw when the goods arrive at their destination within a reasonable period of time that
depends on the nature of the goods. In this case, the buyer notified the seller of the
defects 35 days after the goods arrived at their destination and the seller now alleges
that the buyer must accept all the anchovies anyway, because 35 days is not a reasonable
period of time regarding the nature of the anchovies.

4. Which relevance does the Incoterm FOB have in this case? Is this Incoterm
binding on the contracting parties? Why?

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The relevance that the Incoterm FOB has in this case is that the delivery takes place in
origin and that the buyer assumes the cost of the main transportation in relation with the
exports.

We know that the transport of the anchovies was maritime because the Incoterm FOB
can only be used via maritime transport. This Incoterm also states that the seller gives
the risk to the buyer at the moment the goods are onboard. Until that moment, all the
risks are assumed by the seller, but when they are on board they are assumed by the
buyer.

According to what has been mentioned in the last paragraph, there are 2 different
situations: If the problem with the refrigerated containers was onboard, then the liability
is assumed by the buyer. However, if the problem with the refrigerated containers was
before the anchovies were onboard, then the liability for the damages must be assumed
by the seller. In this case, as the damage of the merchandise was caused during the
transport, the liability must be assumed by the buyer.

Commercial usages, like Incoterm FOB, have preference over the Vienna Convention,
so we assume that this Incoterm is binding on the contracting parties. (Art. 9.1. of the
VC).

5. Could the contracting parties have chosen the law of China as the law governing
their contract? Why? Which elements should be taken into count by contracting
parties when negotiating a choice of law agreement?

Yes, the contracting parties could have chosen the law of China as the law governing
their contract instead of the Spanish Law, but only if both contracting parties (the seller
and the buyer) agreed previously a choice of law agreement. (Party Autonomy of the
contracting parties).

The main elements which should be taken into count by contracting parties when
negotiating a choice of law agreement are that both contracting parties agree with the
law chosen. The law chosen does not need to have any type of connection with the
location of the contracting parties or with the subject matter of the contract. The choice

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may often be straightforward, based on market practice or on the law that the seller and
the buyer are more familiar with.

CISG 2

The seller, an Italian company domiciled in Genoa, received from the buyer, a Spanish
company domiciled in Barcelona, a purchase order by email on November 2nd, 2020, at
09.18 a.m., saying:

“Good morning Sir/Madam, please find attached our Purchase Order number 0374. The
team of BCN Q-Shoes”.

The Purchase Order sent by the buyer contained the following information:

Unit
Quantity Description
Price

32 Model Bella Boots – Leather – 100% cowhide 120 €

70 Model Fellini Sneakers – 100 % polyester 60 €

Shipment: within 10 days after receipt of your invoice.

Incoterm: FAS Genoa.

Offer Duration: Effective until December 5th, 2020.

Applicable Law: Italian Law.

Competent Courts: Spanish Courts.

On November 4th, 2020, 08.10 a.m., the seller sent an email to the buyer attaching its
invoice. However, the seller did not ship the shoes until November 17th at Genoa Port,

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and the goods arrived the next day at Barcelona Port. The buyer accepted the delivery
but refused to pay the invoice on the grounds that the seller delivered the goods late and
that the shoes were not conforming.

Based on the above situation, answer the following questions, providing reasoning for
your views:

1 - Which law governs the contract? Why?

The competent courts are the Spanish ones, the Spanish judge will have to look at the
legal instruments in the Spanish International Business Law in order to solve the case.

In Spain we find 2 main legal instruments when it comes to regulating the contracts on
the international sale of goods, which are the Vienna Convention and the Rome I
Regulation. We know that the Vienna Convention takes priority over the Rome I
Regulation because it unifies substantive rules that give direct solutions, while the
Rome I Regulation is considered the default rule.

First, we have to determine if the Vienna Convention applies to our case or not.
Therefore, we have to analize its scope of application:

The material scope can be found in articles 1 and 2 of the Vienna Convention. As it is
said in these articles, the Vienna Convention only applies to contracts for the
international sale of goods. So, the material scope is fulfilled, as the contract in our case
is international and the boots are goods because they are movable and tangible (2).

From a personal scope perspective, also found in article 1, the seller and the buyer
should be established in different countries which must be contracting states to the
Vienna Convention. As both conditions are fulfilled, the personal scope is also met.

The temporal and territorial scope are also met, because the two states, which are Italy
and Spain, are contracting states of the Vienna Convention. And also because the Vienna
Convention came into force in Spain and Italy a long time before the contract was
established.

So we can conclude that the Vienna Convention applies to this contract.

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The Vienna Convention regulates 3 main aspects: the formation of the contract,
obligations of the different parties involved in the contract and the remedies that
contracting parties can claim for. The aspects that are not covered by the Vienna
Convention are regulated by the default legal rule, which is the Rome I Regulation,
which has a wider scope of application. We have also checked the 4 scopes of
application and the Rome I Regulation also applies to this contract, because the 4 scopes
of application are also fulfilled.

Material: It regulates international contractual obligations in civil and commercial

matters (Art. 1).

Temporal: It applies from 17h December 2009 (Art. 29) onwards.

Territorial: It binds on all the EU Member States with the exception of Denmark and the
UK.

Personal: It applies universally (Art. 2)

As in our case there is a choice of law agreement made by the two contracting parties,
we need to check if it is valid by looking at the two legal instruments.

Article 3 of the Rome I Regulation talks about party autonomy. According to this article,
the 2 contracting parties can choose the law governing the contract through a choice of
law agreement. In this case, as said in the Purchase Order, the law that has been chosen
is the Italian law. Therefore, the choice of law agreement is valid. So, as Italy is a
contracting state to the Vienna Convention, this convention will still apply and the
Italian Domestic law will only govern the aspects that are excluded from the Vienna
Convention’s scope of application.

Furthermore, we find a private rule governing the contract, because the two contracting
parties have agreed to include it. However, the validity of this Incoterm (the private
rule) is subject to the law governing the contract. As in our case the law governing the
contract recognizes them as valid, they are binding.

In accordance with article 6 VC of the Vienna Convention, as Incoterms are commercial

usages they take priority over the Vienna Convention. This incoterm establishes that

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delivery takes place at the origin. The buyer assumes the transportation costs, and
transportation is by sea. Since delivery takes place at the origin from this moment
onward the risk will be assumed by the buyer.

In conclusion, this contract will be simultaneously governed by three legal instruments:

the Vienna Convention, the Italian law and the incoterm FAS. The juxtaposition of these
legal instruments will be solved as follows: the incoterm will prevail over the Vienna
Convention and the Vienna Convention will prevail over the Italian law (Domestic or
Internal Law).

2 - Does a valid contract exist? Why?

There are different options when it comes to concluding a contract on the international
sale of goods. These are through an exchange of commercial declarations or through a
single document. A single document is when both parties insert their particular
agreements into a single document, which embraces all the agreements reached by the
two contracting parties, and all the different aspects concerning this contract.

However, in this case, the contract is concluded through an exchange of commercial

declarations.

So, the Spanish company sends a purchase order to the seller (Italian company), and the
Italian company can either accept it or reject it. As the Italian company accepted the
Spanish purchase order, we have a valid contract.

In this case, the contract is a result of an exchange of declarations / statements, so we

don’t have a single document, we would have different ones: the purchase order issued
by the buyer, and the invoice issued by the seller (the Italian company).

According to the Vienna Convention, there are two kinds of declarations for a contract
to be considered valid: an offer and an acceptance of that offer. For the Vienna
Convention, a contract is considered to be valid when the offer is accepted, and that
acceptance reaches the offeror. In other words, when the acceptance of an offer is
known by the offeror.

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First of all, it requires a valid offer issued by the offeror, in this case, the Spanish
company. The Vienna Convention regulates how the offer has to be made. Articles 14 to
17 VC include the conditions that must be observed in order for an offer to be valid.

The offer must include: definite goods (nature of the goods; quantity; price) and
intention to be bound if the offer is accepted.

The offeror sends the offer to the addressee or recipient, which is the Italian company.
The recipient may answer in different ways. In order to determine whether an
international sale of goods contract has been validly concluded we look at from article
18 to article 22 of the VC.

1. The first situation is the one where the addressee accepts the offer without including
any amendments or changes in any clauses or commercial terms. In that case, we have
the acceptance which is the second declaration required by the Vienna Convention in
order to have a valid contract.

However, the Vienna Convention allows the addressee to accept the offer either in an
express or an implicit way.

 Express way is where the addressee issues an express declaration, such as the
email or an ordinary letter accepting the contract.
 In addition, the Vienna Convention also allows the addressee to accept the offer
in an implicit way. This happens when the addressee, rather than writing an
email or an ordinary letter, performs any of its contractual obligations such as
transferring the price of the goods to the Spanish company (just a transfer of
money from the addressee to the offeror). This is an implicit way to accept a
contract (implicit acceptance).

2. The second situation is that the offeror sends the offer to the addressee and the
addressee introduces some changes, which may be either significant or non-significant.
If the alterations are considered to be significant, then we have a rejection of the initial
offer, and in addition, we have a counter-offer that should be accepted by the initial
offeror. On the other hand, if the changes are non-significant, we may have an
acceptance as long as the offeror does not object to these non-significant changes. Some

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examples of significant alterations can be found on article 19: price, payment, quality,
quantity, place and time of delivery.

In this case, we are in front of the first situation, because the Italian buyer accepts the
purchase order of the Spanish seller without objecting to any of the points and without
making any amendments. The way of acceptance is implicit because what the seller
does is send an invoice, and does not send an express declaration such as an email
accepting the contract. So, in other words, the fact that he sends an invoice amounts to
an implicit acceptance of the contract.

3 - Let’s imagine the hypothesis in which the Vienna Convention was applied, could the
contracting parties exclude the application of this convention? Why? If positive, give
examples of ways of exclusion of the Vienna Convention.

One of the main characteristics of the Vienna Convention is Party Autonomy, which can
be found in Art 6 VC. The Vienna Convention allows the two contracting parties to a
Contract on the International Sale of Goods to exclude the application of the Vienna
convention when it would be otherwise applicable. The two contracting parties may opt-
out of the Vienna Convention if they want to. An agreement between the two
contracting parties is always required.

Let’s imagine a situation where the Vienna Convention applied directly. In this case, the
two parties could reach an agreement and exclude the Vienna Convention, so the
contract would no longer be governed by it.

For example, the two contracting parties could include a clause in the contract such as
“The parties hereby agree that the Vienna Convention ... will not apply to this contract.”

If we have a clause of this type in a contract, it is called express exclusion. But there are
also implicit exclusions. This happens when the two contracting parties do not exclude
the Vienna Convention expressly. There is no clause in the contract stating that they
want to exclude it. What there is, is an implicit exclusion which happens when the two
contracting parties instead of reaching an agreement to exclude it, what they do is to
include in the contract a choice of law agreement. In other words, they include a clause

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whereby the two parties choose the law applicable to their contract. For instance, they
add a clause where it says that the law of Japan will apply to their contract. If they
choose the law of a country that is not a contracting state of a Vienna Convention, they
will be excluding the application of the Vienna Convention implicitly.

Companies would want to exclude this convention in cases in which they would prefer
to have another law applicable that could be more favourable to their situation.

The Vienna Convention only regulates the exclusion. It does not regulate how to
exercise that right; it does not regulate how to exclude the Vienna Convention. Because
choice-of-law agreements are conflict-of-law rules, they only regulate the law
governing the contract, they don’t regulate the contract. Then, the Rome I Regulation,
which is the instrument that unifies conflict-of-law rules would also govern the contract.

*Implicit exclusions are governed by the Vienna Convention and, at the same time, by
the Rome I Regulation, because it is the legal instrument allowing the two contracting
parties to make a choice of law agreement.

4 - Which remedies are available to the buyer in the case at hand? Why?

The non-defaulting party has to prove that the other party has breached the contract. In
this case, the Italian company (the seller) has breached the contract because the goods
were delivered late and they were not conforming. The seller breached the contract
because he did not fulfil the conditions expressed by the buyer on the purchase order.
These conditions were that the seller had to send the goods within 10 days of the
invoice. As the invoice was made on November 4th, the goods should have been
shipped no later than November 14th. However, goods were shipped on November 17th,
so 3 days later than required. Therefore, as there has been a breach of contract, the
buyer can apply for remedies. In this case, the breach of the contract is fundamental
because the buyer did not receive what he expected.

So, the remedies for the buyer are the following:

Buyer’s right to repair and delivery of substitute goods: If the seller does not deliver
conforming goods, the buyer can ask for the seller to resend those goods. If the breach

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of contract of the seller is a fundamental breach, the buyer is also entitled to request to
replace the goods previously supplied.

This remedy could be applied to this case because the goods delivered by the seller are
non-conforming goods. The buyer could ask for substitute goods because the breach is
fundamental, or for the seller to repair the shoes already delivered.

Parties’ right to an extra time for performance: Either party may confer the other party
an additional or extra term for performance. The Vienna convention entitles parties to
give extra time for performance to the other party. We can find this remedy regulated in
articles 47 (party’s right for extra time if the seller breaches the contract) and 53 (if the
buyer breaches the contract).

In this case, this remedy does not apply because the buyer does not need extra time for
performing any activity.

Buyer’s right to price reduction: In case that the goods were not conforming, the buyer
is entitled to ask the seller for a price reduction of the goods. It does not matter if the
breach is fundamental or not. This is regulated in art. 50 of the Vienna Convention.

Therefore, the buyer can ask for a price reduction of the goods.

Parties’ right to avoid the contract: Avoidance means termination, to put an end to the
contract. Avoidance releases all parties from their respective obligations. For this
remedy to be applied, the breach must be fundamental. Avoidance is regulated in art. 49
(when the seller breaches the contract) and art. 64 (when the buyer breaches the
contract).

As in our case the breach is fundamental, the buyer has the right to ask for avoidance of
the contract. Therefore, the company would not have to pay for the goods and both
parties would be released from their contractual obligations.

From the remedies that we have now discussed, the right to repair of goods, the right to
a price reduction, and the right to avoidance of the contract are the ones that apply.
However, the buyer can only choose one of them. In other words, these remedies cannot

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be used simultaneously. But there is another remedy, which is the right to damages
remedy, that can be simultaneously applied with any of them.

Parties’ right to damages: It means to request an amount of money equal to the loss
suffered. Damages correspond to a sum of money, but always that amount of money
must be equal to the loss suffered by the non-defaulting party, which is the buyer in this
case. The breach of contract does not need to be fundamental. This remedy can be
exercised simultaneously with any other remedies (Art. 74 VC)

In any case, for the non-defaulting party to use any of the remedies, the non-defaulting
party will have to prove that the contract has been breached. Any remedies of the
Vienna Convention are subject to the fact that the non-defaulting party must prove that
the other party breached the contract.

In this case, the buyer (the Spanish company) would have to prove that the Italian
company has breached the contract to be able to apply any of the remedies.

5 - Could the seller have any legal relief against being held accountable? Why?

According to the VC the seller has 2 main obligations:

1. The delivery of the goods under the established conditions. In other words, to deliver
conforming goods.

2. The delivery of the documents concerning the goods.

In relation to the first obligation the seller is bound to deliver conforming goods, the
goods as established in the contract. At the time of passing of risks (the risks that the
goods may suffer during its transportation), this can provoke 2 different situations:

1. Seller’s liability for delivering non-conforming goods at the time of passing of

risk. The seller incurs breach of contract as the seller has not delivered
conforming goods in accordance to the established conditions in the contract.
2. The risks over the goods, the different risks that the goods may suffer during the
transportation. These events are external to the seller’s liability because all of

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them are external factors. However, they must be assumed by either of the 2
contracting parties. The person bearing the risk will be determined either by the
VC or incoterms.

In this particular case we are in the first situation, the seller has delivered non-
conforming goods. Hence, the seller has not fulfilled one of its obligations, he has
breached the contract. Since the seller has breached the contract he is the one who has to
be responsible.

However, there could be a situation where the buyer would lose his right to remedies.

One of the obligations of buyers is to examine the goods and notify the seller of any
defects or flaws. If the buyer does not examine the goods and notify of the defects in a
reasonable period of time (Art. 39), it will lose all the remedies available to claim for
compensations. This reasonable period depends on the nature of the goods.

So, if a situation happened where the Spanish Company received the goods and did not
notify the non-conformity of them to the seller in a reasonable period of time, the buyer
would lose all rights to remedies and would have to pay for the goods to the seller
(Italian company) even if they were non-conforming.

However, even the buyer did not notify the non-conformity of the goods to the seller in
a reasonable period of time, the buyer will not lose its remedies if he can prove that the
seller was aware or could not have been unaware of the non-conformity of the goods.
(Art. 40 of the VC)

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