2. the excuse of commercial impracticability

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1
Background:
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.
2
Background:
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.
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1.APPLICATION OF THE CISG
------whether the case is governed by CISG




Article 1(1) of the CISG states:
This Convention applies to contracts of sale
of goods between parties whose places of
business are in different States:
a. when the States are Contracting States; or
b. when the rules of private international law
lead to the application of the law of a
Contracting State.
4
APPLICATION OF THE CISG
------whether the case is governed by CISG

The United Nations Convention came into
force in Italy on January 1,1988. This was
before the contract was concluded on
February 3,1988. However, the Convention did
not come into force in Sweden until January
1,1989[after the contract was concluded]
5
APPLICATION OF THE CISG
------whether the case is governed by CISG


To conclude, the “special law” (the
CISG) does not apply, the civil law is
not preempted, and it must be
applied as the parties directed that
it should.
The seller could invoke the excuse of
commercial impracticability.
6
2. THE EXCUSE OF COMMERCIAL
IMPRACTICABILITY



A party is not liable for a failure to perform any of his
obligations if he proves that the failure was due to an
impediment beyond his control and that he could not
reasonably be expected to have taken the impediment into
account an the time of the conclusion of the contract…
Indeed, the main remedy that the CISG grants to a nonbreaching party is the remedy of avoidance (or dissolution),
and this remedy can only be invoked after a contract has
been breached.
The excuse of commercial impracticability is unrelated to a
breach. [It is invoked by a seller before there has been a
breach to avoid a contract that the seller can perform, but
at great cost.]
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●
Dismiss the plaintiff’s case
Excuse: commercial impracticability
Such excuse is allowed only when
performance is so economically burdensome
that the seller would not have the resources
to perform.
8
Specific performance was
rescinded and the case
was remanded to the
examining magistrate for
further inquiry into the
defendant’s claim for
compensatory damages
●
9
Differences between CISG Article79(nonperformance
based on “an impediment beyond control”) and the
doctrine of “commercial impracticability”

CISG didn’t applied to the dispute
■
43% increase in price was not enough for the plaintiff
to use the theory as an excuse for non-performance
■
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