Pre-judgment Interest under Article 78, United Nations Convention on Contracts for the International Sale of Goods
Posted By fedpractice || 30-Jul-2012
In ECEM European Chemical Marketing B.V. v. The Purolite Company , 2010 WL 4069188, the United States District Court for the Eastern District of Pennsylvania examined Article 78 (interest damages) of the UN Convention on Contracts for the International Sale of Goods.
If a party fails to pay the price or any other sum that is in arrears, the other party is entitled to interest on it, without prejudice to any claim for damages recoverable under article 74.
This case arose when the Buyer/Defendant (Purolite – US based company) failed to make payments to the Seller/Plaintiff (ECEM – Netherlands based company) for the deliveries of styrene. ECEM asserted that it was entitled to the interest for late payments under the UN Convention on Contracts. However, Purolite argued, among other points, that the contract did not mention the convention, and thus, ECEM was not entitled to any interest. Purolite also argued that any communications between the parties regarding interest were not included in the contract and ECEM should be prohibited from introducing them.
The Court held that the UN Convention on Contracts governed this contract because the contract was made between two companies from two different countries, the United States and Netherlands. The Court established that under Article 8 the Convention, ECEM could introduce evidence showing prior communications with the Purolite to show that interest would be due.
(1) For the purposes of this Convention statements made by and other conduct of a party are to be interpreted according to his intent where the other party knew or could not have been unaware what that intent was.
Timely legal advice made to both sides could have avoided prolonged litigation by establishing what the UN Convention said all along. If you are about to enter into a contract with a company from another country, or start experiencing legal issues with a company from another country based on your current contract, it may be efficient to review the UN Convention for any legal issues. Based on the case above, the Convention requires timely payments, and allows for introduction of additional evidence. If you have questions about the United Nations Convention on Contracts for the International Sale of Goods contact The Federal Practice Group at firstname.lastname@example.org or 202-862-4360.