Source: http://www.cisg.law.pace.edu/cisg/wais/db/cases2/060001gr.html
Timestamp: 2019-04-21 11:22:58+00:00

Document:
A Greek company [buyer] and a Bulgarian company [seller] concluded a contract for the sale of 3,000 tons of sunflower seeds which would be produced in Bulgaria. It was agreed that delivery would be performed at the end of September / beginning of October of 2001. The seller, via a facsimile transmission (19 September 2001), refused to perform the contract by the delivery of the agreed quantity, invoking changes in the market and certain other impediments. The buyer repeatedly notified the seller requesting the delivery of the agreed quantity of sunflower seeds, but the seller continued to refuse. In view of this situation, the buyer, in order to cover the needs of its oil-industry, proceeded to a cover contract and purchased a quantity of sunflower seeds from another supplier at a higher price than the one agreed upon between it and the seller. The relevant court action included a claim of the buyer for damages that corresponded to the difference between the price it had initially agreed with the buyer and the higher price it paid to a third supplier under a substitute (cover) transaction.
(b) the lowering of the level of the river Danube; thus the seller was unable to load the goods on a ship in a river port which was located in its premises and furthermore it was obliged to use a port located in the Black Sea; however, the necessity to load the goods in a sea port entailed increased transportation costs for the seller to that port, a fact that rendered the initially agreed price highly inexpedient for the seller.
Accordingly, the seller claimed that the above were impediments beyond the seller's control which it did not take into account during the conclusion of the contract neither it could avoid them and overcome their effect; therefore, pursuant to CISG art. 79(1), it was exempted from the liability to pay damages to the buyer (CISG art. 45(1)(b), and arts. 74-77).
The court applied CISG by virtue of CISG art. 1(1)(a) since the seller and buyer each had its place of business in a country (Greece and Bulgaria) that is a Contracting State.
The court rejected the arguments of the seller since: (a) it was proved that the seller was aware that the production and offer of sunflower seeds would be limited for the specific year due to dryness; and (b) the lowering of the level of the river Danube was an impediment within the control of the seller which should have been taken into account to avoid it, since the same event had occurred several years ago and, in view of this previous experience, the seller should have alternatively proposed an increased price for the goods, where due to the lowering of the level of the river Danube, the need for the transport of the goods from a port of the Black Sea would emerge (instead of the closest river port); otherwise, it should not have proceeded with the execution of the sale contract.
The court additionally supported its judgment for the non-exemption of the seller from its liability for failure to deliver, by accepting that CISG art. 79 does not entitle the promissor to be released from his contractual obligations due to change of the economic background on which the parties relied for the conclusion of the contract, since, in this case, the commencement of transportation by ship could be performed at a sea port (instead by a river port), although this would entail higher costs for the seller.
Furthermore, the court accepted that the buyer observed its obligation under CISG art. 77; in particular, in order to reduce its loss from the failure of delivery of the agreed quantity of sunflower seeds, the buyer acted promptly and adopted reasonable measures by concluding in due time a substitute (cover) contract, i.e., it purchased the quantity of sunflower seeds which was required for the needs of its oil-industry business from another supplier.
since, the court judged that this was the amount which the seller could have foreseen as a possible consequence of its breach at the time the contract was concluded (i.e., the additional average price, which the buyer should pay in order to purchase sunflower seeds from other suppliers).
From the text of the judgment it cannot be safely concluded whether the buyer avoided the contract and claimed damages or whether it claimed damages without having previously avoided the contract. However, by reason of the fact that the court did not calculate the amount of damages in accordance with CISG art. 75 (which presupposes avoidance of the contract), but in accordance with CISG art. 74 (which is of general application and governs any claim for damages under the CISG regardless of previous avoidance), it can be concluded that the court either accepted that the buyer claimed damages without having previously declare the contract avoided  or it did not examine at all the question of previous avoidance.
2.3	Criticism - Anticipatory breach?
The above solution (paragraph 2.2) is correct judging from its outcome, but from a methodological point of view it cannot be characterized as complete.
More specifically, it would have been preferable if the court had examined whether the buyer had avoided the contract and also claimed damages (see CISG art. 45(1)(a), 45(2) or whether the buyer claimed damages without having previously avoided the contract (see CISG art. 45(1)(b)).
In particular, the court should have examined whether the buyer avoided the contract in accordance with CISG art. 72(1) which provides that "If prior to the date for performance of the contract it is clear that one of the parties will commit a fundamental breach of contract, the other party may declare the contract avoided." Under the facts, CISG art. 72(1) appears to apply, since it become clear prior to the expiration of the deadline (end of September / beginning of October 2001) (via a facsimile sent by the seller on 19 September 2001), that the seller would commit a fundamental breach of contract (definite denial to deliver the goods sold). Indeed, due to the above declaration of the seller that it would not perform its obligation, the buyer, in accordance with CISG art. 72(3), was not required to proceed with a notice to the seller of its intention to avoid the contract in compliance with CISG art. 72(2). This conclusion is further enhanced by the fact that, in view of the definite denial "before expiration" of the seller to perform its obligation and the ineffective notices of the buyer, the latter proceeded with a substitute contract for the purchase from another supplier of the quantity of sunflower seeds that was necessary for its oil-industry customers, a behavior from which it can be concluded that the buyer believed that it was no longer bound by the contract.
If the court had according to the above accepted that the buyer avoided the contract of sale, then it could further accept that, in view of the existence of the substitute purchase contract, the buyer could at first claim as damages the difference between the price agreed upon in the contract and the price of the substitute purchase contract pursuant to CISG art. 75 (specific calculation for the amount of damages); however, even in this case, damages claimed by the buyer (which would be specifically calculated in accordance with CISG art. 75) could, in the end, be reduced by the court by virtue of CISG art. 77: in particular, damages claimed could be reduced since it is clear that the buyer's loss could have easily been mitigated by the purchase (by the buyer) of sunflower seeds from another supplier at a lower price, an action with which the buyer did not proceed (since it purchased the quantity of sunflower seeds necessary for its oil-industry from a specific supplier for a higher price).
1. The court clearly follows the view that the CISG does not release the promisor from his liability in case of change of the economic background on which the parties relied on, upon conclusion of the contract, neither does it grant him the right to renegotiate the terms of the contract in case of change of the actual facts or in case of economic inability. Similarly cf. D. Flambouras, The Doctrines of Impossibility of Performance and Clausula rebus sic stantibus in the 1980 Convention on Contracts for the international sale of goods and the Principles of European Contract Law - A Comparative Analysis, Pace International Law Review (13) 2001, 289-293.
2. That is, the court accepted that the buyer who was entitled to damages due to contractual breach by the seller, is obliged, pursuant to CISG art. 77, to conclude in due time a purchase agreement with another supplier for the immediate cover.
3. It is accepted in terms of interpretation that damages can be separately claimed, without previous avoidance: cf. P. Schlechtriem, Damages, avoidance of the contract and performance interest under the CISG, � 1(a) and (b) (electronically published in <http://www.cisg.law.pace.edu/cisg/biblio/schlechtriem21.html>).

References: art. 79
 art. 45
 art. 1
 art. 79
 art. 77
 art. 75
 art. 74
 art. 45
 art. 45
 art. 72
 art. 72
 art. 72
 art. 72
 art. 75
 art. 75
 art. 77
 art. 77