Published online by Cambridge University Press: 20 October 2009
INTRODUCTION
If the underlying principle of the United Nations Convention on the International Sale of Goods (CISG or Convention) is reasonableness, Art. 77 CISG could certainly require a plaintiff or respondent to rise to the challenge of being reasonable during what is likely a difficult situation – when he or she is already losing money (or is about to) because of the other party to the international sales contract.
This chapter examines the obligations imposed on parties pursuant to Art. 77 CISG by comparing this Article with Art. 7.4.8 UNIDROIT Principles (“Mitigation of Harm”).
Article 77, appearing in Section II of the Convention (“Damages”), applies only when a party is claiming damages for breach of contract and not in relation to any other remedy sought (such as specific performance). Article 77 states,
A party who relies on a breach of contract must take such measures as are reasonable in the circumstances to mitigate the loss, including loss of profit, resulting from the breach. If he fails to take such measures, the party in breach may claim a reduction in the damages in the amount by which the loss should have been mitigated.
Article 7.4.8 of the UNIDROIT Principles (UNIDROIT), entitled “Mitigation of Harm” and also appearing in a section entitled “Damages” provides,
(1) The non-performing party is not liable for harm suffered by the aggrieved party to the extent that the harm could have been reduced by the latter party's taking reasonable steps.
(2) The aggrieved party is entitled to recover any expenses reasonably incurred in attempting to reduce the harm.
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