d. Abstract Calculation After Avoidance

Under Art. 76 the aggrieved party that has avoided the contract and has not conducted a cover transaction in terms of Art. 75 can calculate its damages according to the market price of the goods. Art. 76(1)(1) reads:

(1) If the contract is avoided and there is a current price for the goods, the party claiming damages may, if he has not made a purchase or resale under article 75, recover the difference between the price fixed by the contract and the current price at the time of avoidance as well as any further damages recoverable under article 74.

The purpose of this provision is again to make it easier for the aggrieved party to prove its loss. As regards the requirement of avoidance of the contract, the same standard as with regard to Art. 75 applies.

For starters, it is of course required that the good in question has a market price. In this regard, reference can be made to Art. 55 where the market price is defined as

[…] the price generally charged […] for such goods sold under comparable circumstances in the trade concerned.

The first sentences of Art. 76(1) defines the relevant time as the time of avoidance. Speculative behavior, i.e. purposefully delaying the declaration of avoidance, is prevented by a party’s duty to mitigate damages under Art. 77. The second sentence of Art. 76(1) makes an exception from the general rule in case the goods have been delivered prior to avoidance:

If, however, the party claiming damages has avoided the contract after taking over the goods, the current price at the time of such taking over shall be applied instead of the current price at the time of avoidance.

It is important to note, that although no cover transaction was conducted, the market price has to be determined taking into account the conditions of the original contract. Particularly, the point in time set out by Art. 76(1)(1) and (2) is only the point in time the market price is determined; the time of delivery a certain market price relates to has to be equivalent to the contractual time of delivery.

Art. 76(2) defines the relevant place the market price is to be determined at:

(2) For the purposes of the preceding paragraph, the current price is the price prevailing at the place where delivery of the goods should have been made or, if there is no current price at that place, the price at such other place as serves as a reasonable substitute, making due allowance for differences in the cost of transporting the goods.

Again, further damages are recoverable under Art. 74.

Last modified: Friday, 23 October 2015, 6:18 PM