Correctly interpret the United Nations Convention on Contracts for the International Sale of Goods

Maintain the stability of international trade contracts

EC signed an international goods sales contract with Manette as supplier, which agreed that EC would purchase bleached gauze from Manette and export it to EC’s customers in Algeria. After the goods arrived in Algeria, EC Company applied to a third-party agency for inspection and found that the goods involved had quality problems, mainly due to the density of 15 branches/cm2 of longitude and latitude, slightly less than the 17 branches/cm2 agreed in the contract. EC’s end customers raised quality objections and demanded compensation for losses. EC sued and claimed that supplier constituted a fundamental breach of contract, and requested that the contract for the sale of international goods involved be rescinded. The supplier returned the payment for goods and compensated for the loss of expected profits.

[Judgment result]
The Nantong Intermediate People’s Court held that the parties to the contract for the international sale of goods involved in the case had their places of business in China and Spain, both of which were parties to the United Nations Convention on Contracts for the International Sale of Goods, and that the Convention should apply to the case. According to the provisions of the Convention, the goods delivered by the supplier are not in conformity with the contract, which constitutes a breach of contract. However, the main quality problem of the goods involved is not a major quality defect, and the end user has not proposed that the product cannot be used for return. Therefore, the supplier does not constitute a fundamental breach of contract, and the international goods sales contract involved should not be terminated. Taking into account the fault degree of the parties, the available value of the goods involved and other factors, the supplier was judged to compensate EC for the loss. After the judgment, neither party appealed.

Typical significance
International trade market risks are high, there are many unstable factors in the process of contract performance, and contract performance disputes are common, which is one of the characteristics of international goods sales. If the observant party is given too many rights to terminate the contract, it will easily lead to a waste of social resources. In order to encourage international trade in goods and maintain the stability and security of the transaction, the “fundamental breach” stipulated in the United Nations Convention on Contracts for the International