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Place:Italy,Civil Court of Monza,1993

Plaintiff: NUOVA FUCINATI,SPA of Monza Italy (seller)

Defendant: FONDMETALL INTERNATIONAL,AB of Goteberg,Sweden (buyer)

it is an international sale of goods contract.

Background:

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On february 3,1988,the plaintiff,Nuova Fucinati,SPA,of Italy, agreed to deliver 1000 metric tons of chromite(铬铁矿 ) to the defendant, Fondmetall International, AB of Sweden,between march 20,1988 and April 10,1998.When the plaintiff failed to make delivery, the defendant petition the Civil Court in Italy, for a decree of specific performance.

On September 29,1988,the plaintiff inittated this proceeding to have the original contract set aside on grounds of commercial impracticability. According to the plaintiff, the price of chromite had risen 43% between the time of the contract and delivery, it was too costly for the plaintiff to perform without adjustment, which the defendant refused to accept.

The defendant argued that the CISG governed contractual relationship and it didn’t provide for the excuse of commercial impracticability.

Background:

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Article 1(1) of the CISG states:Article 1(1) of the CISG states: This Convention applies to contracts of This Convention applies to contracts of

sale of goods between parties whose sale of goods between parties whose places of business are in different States:places of business are in different States:

a. when the States are Contracting States; a. when the States are Contracting States; oror

b. when the rules of private international b. when the rules of private international law lead to the application of the law of a law lead to the application of the law of a Contracting State. Contracting State.

1.APPLICATION OF THE 1.APPLICATION OF THE CISGCISG

------whether the case is governed by CISG------whether the case is governed by CISG

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APPLICATION OF THE CISGAPPLICATION OF THE CISG ------whether the case is governed by CISG------whether the case is governed by CISG

The United Nations Convention came into The United Nations Convention came into force in Italy on January 1,1988. This was force in Italy on January 1,1988. This was before the contract was concluded on before the contract was concluded on February 3,1988. However, the Convention February 3,1988. However, the Convention did not come into force in Sweden until did not come into force in Sweden until January 1,1989[after the contract was January 1,1989[after the contract was concluded]concluded]

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APPLICATION OF THE CISGAPPLICATION OF THE CISG ------whether the case is governed by CISG------whether the case is governed by CISG

To conclude, the To conclude, the ““ special lawspecial law”” (the CISG) does not apply, the civil (the CISG) does not apply, the civil law is not preempted, and it must law is not preempted, and it must be applied as the parties directed be applied as the parties directed that it should.that it should.

The seller could invoke the excuse The seller could invoke the excuse of commercial impracticability.of commercial impracticability.

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2. THE EXCUSE OF 2. THE EXCUSE OF COMMERCIAL COMMERCIAL

IMPRACTICABILITYIMPRACTICABILITY A party is not liable for a failure to perform any of his A party is not liable for a failure to perform any of his

obligations if he proves that the failure was due to an obligations if he proves that the failure was due to an impediment beyond his control and that he could not impediment beyond his control and that he could not reasonably be expected to have taken the impediment into reasonably be expected to have taken the impediment into account an the time of the conclusion of the contract…account an the time of the conclusion of the contract…

Indeed, the main remedy that the CISG grants to a non-Indeed, the main remedy that the CISG grants to a non-breaching party is the remedy of avoidance (or dissolution), breaching party is the remedy of avoidance (or dissolution), and this remedy can only be invoked after a contract has and this remedy can only be invoked after a contract has been breached.been breached.

The excuse of The excuse of commercial impracticability is unrelated to a commercial impracticability is unrelated to a breach. [It is invoked by a seller before there has been a breach. [It is invoked by a seller before there has been a breach breach to avoid a contract that the seller can perform, but at to avoid a contract that the seller can perform, but at great costgreat cost.].]

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Excuse: commercial impracticability

Such excuse is allowed only when performance is so economically burdensome that the seller would not have the resources to perform.

●Dismiss the plaintiff’ s case

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●Specific performance was rescinded and the case was remanded to the examining magistrate for further inquiry into the defendant’s claim for compensatory damages

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Differences between CISG Differences between CISG Article79(nonperformance based on Article79(nonperformance based on ““an an impediment beyond controlimpediment beyond control””) and the doctrine of ) and the doctrine of ““commercial impracticabilitycommercial impracticability””

■■ 43% increase in price was not enough for 43% increase in price was not enough for the plaintiff to use the theory as an excuse the plaintiff to use the theory as an excuse for non-performancefor non-performance

■■CISG didnCISG didn’’t applied to the disputet applied to the dispute

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