Consequential Damages in the International Sale of Goods: Analysis of Two Decisions

Abstract

Two courts have applied consequential damage provisions found in international conventions. A court in the United States recently applied provisions of the United Nations Convention on Contracts for the International Sale of Goods ("CISG" or "Convention"). In 1980, the German Supreme Court applied a substantively similar consequential damage provision of the earlier Hague Convention on the International Sale of Goods ("TLIS")' in a decision that has predictive value for future applications of the CISG.

This Article will analyze whether these two courts approached consequential damages in a manner that is more consistent with prior national law than with the development of a unified international approach to international sales disputes.

Section 2 of this Article explores a U.S. district court's approach to damages under the CISG in the case of Delchi Carrier, SpA v. Rotorex Corp. After analyzing the rationale behind the damage award in Delchi, Section 3 discusses a German Supreme Court decision applying a provision analogous to the CISG. Finally, Section 4 concludes that the U.S. court applied the international CISG provisions in a manner consistent with its national law, while the German Court elevated international principles over national law. Because of the U.S. court's inability to set aside its own national thinking, this case represents an unfortunate first decision on the subject of consequential damages under the CISG.

Keywords: CISG, court decisions, consequential damages, United Nations, contracts, international sale of goods, international sales disputes, Delchi Carrier, SpA v. Rotorex Corp., German Supreme Court, U.S. district court

JEL Classification: K12, K19, K29, K33, K39