Mitigation of Damages for Breach of Contract for the International Sale of Goods
| Autor | Jorge Oviedo-Albán |
| Cargo | Universidad de La Sabana, Colombia |
| Páginas | 142-160 |
Artículos
Mitigation of Damages for Breach of Contract for the International Sale of Goods*
Mitigación de daños por incumplimiento del contrato de compraventa internacional de mercaderías
Jorge Oviedo-Albán a
Universidad de La Sabana, Colombia
jorgeoa@unisabana.edu.co
ORCID: http://orcid.org/0000-0003-2174-4765
DOI: https://doi.org/10.11144/Javeriana.vj137.mdbc
Redalyc: http://www.redalyc.org/articulo.oa?id=82556549009
Date received: 14 August 2017
Date accepted: 10 September 2017
Date published: 30 November 2018
Abstract:
is article addresses the duty to mitigate damag es in activities relating to the international sale of goods that are govern by the
1980 United Nations Convention on Contracts for the International Sale of Goods (CISG), which is performed by the creditor
in the event that the debtor breaches the contract. It is based on a dogmatic understanding of Article 77 of the CISG. e paper
examines legal theory in order to establish the concept and legal character of mitigation of damages, and, through this, the scope.
Court decisions and arbitration awards have also been studied, which, when implemented, have established what type of mitigating
behavior should be undertaken by the creditor if the debtor breaches the contract.
Keywords: Mitigation of damages, Breach of contract, International Sale of Goods.
Resumen:
Este artículo se reere al deber de mitigar los daños en operaciones de compraventa internacional de mercaderías regidas por la
Convención de las Naciones Unidas sobre los Contratos de Compraventa Internacional de Mercaderías, asumido por el acreedor
ante el incumplimiento del contrato por el deudor. Para su elaboración se han tenido en cuenta la interpretación dogmática del
artículo 77 de la Convención, apoyada en una indagación de tipo doctrinal con el n de establecer el concepto y la naturaleza
jurídica y a partir de ello su alcance, para lo cual igualmente se han estudiado fallos y laudos arbitrales que en su aplicación han
establecido qué tipo de conductas mitigadoras deben ser asumidas por el acreedor frente el incumplimiento del deudor.
Palabras clave: Mitigación de daños, incumplimiento contractual, compraventa internacional de mercaderías.
Introduction
is article addresses the duty to mitigate damages in activities relating to the international sale of goods that
are governed by the 1980 United Nations Convention, hereinaer the Convention on the International Sale
or CISG (United Nations Convention on Contracts for the International Sale of Goods), which is performed
by the creditor in the event that the debtor breaches the contract. It is based on a dogmatic understanding
of Article 77 of the United Nations Convention on Contracts for the International Sale of Goods, which, to
date, has been implemented by 89 countries, including several in Latin America. e paper examines legal
theory in order to establish the concept and legal character of mitigation of damages, and , through this,
the scope. Court decisions and arbitration awards have also been studie d, which, when implemented, have
established what type of mitigating behavior should be undertaken by the creditor if the debtor breaches the
contract.
e aim of the article is to demonstrate that there is a duty to mitigate damage, and also to avoid it. is
is included in some of the Convention's rules, especially in Article 72, which allows the creditor to terminate
the contract in the event of a future fundamental breach. If such action is not undertaken, Article 77 will
Author notes
a Corresponding author. E-mail: jorgeoa@unisabana.edu.co
Vniversitas, 2018, no. 137, ISSN: 0041-9060 / 2011-1711
apply, and, as such, the other party can request that compensation is reduced. is article, thus, suggests that
for activities relating to the international sale of goods there is a duty not only to mitigate but also to avoid
damage.
is article is organized into the following sections: First, the concept and le gal recognition of the
mitigation of damages in legal traditions are addressed. Subsequently, reference is made to the regulation
of mitigation of damag es in international contract instruments that have seemingly drawn on the rule
contained in Article 77 of the Convention on the International Sale. irdly, the legal nature and scope of the
mitigation of damages are discussed, then several representative mitigating behaviors are identied, including
termination for fundamental foreseeable breach of contract in accordance with the regulations stated in the
CISG. e nal section contains the conclusions and bibliography.
Concept and recognition in the legal traditions
e fo llowing se ction explains the concept of mitigation of damages that is included in the Convention
on the International Sale, and reference is also g iven to how it is recognized in other international contract
instruments and in several harmonization proposals. Additionally, the way in which it has been adopted by
countries that follow the Anglo-Saxon tradition as well as some that use continental European law will be
referred to in order to provide an insight into the context on its inclusion into foreign laws.
e duty to mitigate damages can be considered to be a set of reasonable measures that the party who
suffers the breach of contract should adopt in order to avoid being damaged to any further extent. As such,
it cannot be claimed that the other party compensates them for those damages that are not a consequence of
the breach, but instead for their own lack of adopting such measures. 1
e duty to mitig ate damages, at least with respect to contemporary law, has Anglo-Sa xon origins. 2 In
England, it has been recogn ized that this includes the duty for the creditor to adopt reasonable measures to
protect his interests when the debtor breaches the contract. is should be undertaken in such a way that
the loss resulting from the breach should be minimized and any increase in damages should be avoided. e
debtor will only be eligible for compensation of losses aer having taken these measures. 3 Sections 50 and
51 of the Sales of Goods Act establishes that the buyer or seller has the duty to minimize damages if the other
party breaches contract by signing an alternate contract, and, if this duty is breached, the compensation for
breach can be reduced. 4
In the United States, the duty to mitigate damages can be found in §350 of the Restatement (2nd) of
Contracts; damages cannot be recovered if they could have been avoided by the aggrieved party. is does not
prevent the affected party claiming compensation if they made reasonable efforts to avoid the loss, which,
of course, depends on the circumstances. 5 Also, the Uniform Commercial Code contains applications
regarding the duty to mitigate damages such as those written in § 2-712, which establishes the possibility for
the buyer to purchase replacement goods in place of the goods that the seller should have delivered, thus being
able to reclaim the costs incurred. Sections § 2-708, § 2-713, and § 2-715 include the right to deduct the costs
from the respective compensation that the seller or buyer breaching contract could have avoided as well a s
the indirect damages stemming from the seller's breach. is includes the loss that comes from the overall or
specic needs that the seller had reason to be aware of when contracting and could not have reasonably been
avoided through a replacement purchase or other method. 6
In some codes that are based on the continental European tradition, mitigation of damages has been
expressly included, for example in Articles 1227-1 of the Italian Civil Code, 1479 of the Civil Code of
Québec, 6:101 of the Dutch Civil Code, 44 of the Swiss Code of Obligations, and §254-2 of the German
Civil Code. 7
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