The Natural Gas Case
In the Natural Gas case, a German company and a Dutch gas reseller (the plaintiffs) is suing an Austrian partnership company (the defendant) for a breach of contract. The plaintiffs negotiated and agreed to purchase 3000 metric tons of propane gas for $381 per metric ton from the defendant. Because of the two companies never conducting business with one another, the plaintiffs agreed to secure a letter of credit with its purchase. To secure the letter of credit with the purchase, the plaintiff’s bank requested information from the defendant as to what state the gas would be loaded aboard. The defendant then told the plaintiff that they would obtain the necessary information to them. The plaintiff requested several times to the defendant about the location, but the defendant never replied. The defendant’s U.S. supplier later told the defendant that it would not export the gas to the plaintiff’s place of destination, which was Belgium. The plaintiff then notified the defendant of that because of their breach of contract, the Dutch reseller made a substitute purchase at a higher price that the defendant had promised. The plaintiff then forwarded the claim of the increased costs of $15,000 to the defendant, in which the defendant rejected the claim. Risks
Because of the rejected claim from the defendant, the defendant is at risk for breach of contract, and could pay for the loss of profits of the plaintiff, which was $15,000 or pay the entire replacement purchase of $141,131. The plaintiff also could be at risk. The plaintiff never told or indicated to the defendant that they wanted avoidance from the contract. The defendant is entitled to be notified of some sort of avoidance of contract, and must be made clear of the avoidance. If the contract is not avoided, the loss of damages cannot be resolved in agreement with CISG Articles 75 and 76. Articles 75 and 76 summarizes to that if a contract was avoided under a breach of contract, and the...
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