Ch.8 Calculation of Losses under Article 74

Subject(s):

Breach of contract — Calculation of damages — Loss of profit and damages — UN Sales Convention and damages

This chapter explains how losses pursuant to article 74 of the United Nations Convention on Contracts for the International Sale of Goods (CISG) are to be calculated. Article 74 clearly stipulates that the plaintiff can claim only losses that have been suffered as a consequence of the breach. Losses are divided or categorized into direct losses, incidental losses, consequential losses, and loss of profit. Article 74 does not specifically mention a concrete calculation and therefore does not directly disallow an abstract one either. However, the tone of the article certainly suggests that losses, in order to be proven, should be calculated on a concrete basis. Arguably, a hypothetical or abstract calculation can be accepted if both parties agree to it, but any unilateral suggestion of an abstract nature appears to be rejected by the courts.