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Delchi Carrier Spa v. Rotorex Corp. - 71 F.3d 1024 (2d Cir. 1995)

Rule:

The United Nations Convention on Contracts for the International Sale of Goods (CISG) governs sales contracts between parties from different signatory countries. However, the Convention makes clear that the parties may by contract choose to be bound by a source of law other than the CISG, such as the Uniform Commercial Code. CISG art. 6.

Facts:

Defendant seller agreed to sell compressors to plaintiff buyer in three shipments. Plaintiff received the first shipment and discovered that the compressors were defective. Plaintiff asked defendant to supply new compressors, but defendant refused. Plaintiff then cancelled the contract and filed an action for breach of contract and failure to deliver conforming goods in the United States District Court for the Northern District of New York, which found that defendant breached its contract with plaintiff buyer and awarded plaintiff lost profits and other damages (however, not the full amount that plaintiff had pleaded) under the United Nations Convention on Contracts for the International Sale of Goods. Defendant seller sought appellate review.

Issue:

Was the buyer entitled to damages because of the seller’s breach of contract?

Answer:

Yes

Conclusion:

The court found that because of defendant's breach, plaintiff had to shut down its manufacturing operation, and the date on which plaintiff's produce was available for sale was substantially delayed. The court also found that plaintiff was entitled to various consequential and incidental damages because plaintiff's expenses for shipping, customs, and related matters for the two returned shipments of compressors were clearly foreseeable and recoverable incidental expenses. Therefore, the court reversed in part the denial of damages and remanded for further proceedings.

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