Case number: 85
Article number: sales convention / 1(1)(a); 74; 75; 77; 78
Thessaurs issue:
Country of decision: United States of America
Year of decision: 1994
Type of decision: Judicial decision

Case 85: CISG 1(1)(a); 74; 75; 77; 78
United States of America: U.S. District Court for the Northern District of New York 9 September 1994
Delchi Carrier, SpA v. Rotorex Corp.
Published in English: 1994 U.S. Dist. LEXIS 12820; and in 1994 WESTLAW 495787

The defendant, a Maryland manufacturer of compressors for air conditioners, agreed to sell 10800 compressors to the
plaintiff, an Italian manufacturer of air conditioners. The sales contract provided for delivery in three shipments. The defendant
made the first shipment. While the second shipment was en route, the plaintiff discovered that the compressors contained in the
first shipment were nonconforming with contract specifications. The plaintiff rejected the second shipment, stored it at the port
of delivery and, after having tried unsuccessfully to cure the defects, sued demanding damages for breach of contract pursuant
to article 74 CISG.

The court held that the defendant breached the contract and granted the plaintiff damages to cover: (1) the plaintiff's expenses
incurred when attempting to remedy the nonconformity in the compressors; (2) the sums paid by the plaintiff to expedite
shipment of compressors from a third party in order to mitigate losses from orders that the plaintiff could not meet as a result of
the defendant's breach of contract (article 77 CISG; the shipment of substitute compressors was not found to be covered
under article 75 CISG - purchase of replacement goods by the buyer - because the compressors had been ordered prior to
the breach of contract and thus could not have replaced the nonconforming compressors); (3) the plaintiff's costs for handling
and storing the nonconforming compressors; and (4) the plaintiff's lost profits resulting from a diminished volume of sales, in
respect of which the plaintiff was able to provide, in conformity with common law and the law of New York, "sufficient
evidence [for the court] to estimate the amount of damages with reasonable certainty". The court rejected the plaintiff's claim
for damages to cover expenses relating to the anticipated cost of production of air conditioners, holding that those costs were

accounted for in the claim for lost profits. Pursuant to article 78 CISG, the court held that the plaintiff was entitled to
prejudgment interest; as the CISG does not specify an interest rate, the court applied the rate applicable for U.S. treasury bills.