The method of calculating price reductions in contracts for the international sale of goods

Abstract

The buyer's right to a price reduction represents an institution of Roman law that has, over time, become widely accepted in legal systems with a continental legal tradition. In the context of international sales of goods, Article 50 of the United Nations Convention on Contracts for the International Sale of Goods, which regulates this right, is of particular importance. This paper analyzes the method of calculating price reductions as one of the contentious issues regarding exercising the right to a price reduction, in terms of Article 50 of the Convention. For a comprehensive understanding of the problem, the paper presents the history of the emergence, the sources of the right to a price reduction in contracts for the international sale of goods, as well as the conditions for its application. The central part of the paper is the issue of the method of calculating price reduction, with special reference to the time and place of determining the value of conforming and non-conforming goods for the purpose of their comparison and the application of the calculation formula. These issues were controversial even at the time of the adoption of the Convention itself, and today they are still the subject of discussions in legal theory, while case law is not sufficiently harmonized. The aim of the paper is to draw a conclusion about the method of calculating price reduction, through the analysis of the Convention's provisions, and solutions given in theory, as well as in case law.

Keywords

• price reduction
• contract for the international sale of goods
• article 50, united nations convention on contracts for the international sale of goods
• method of calculation
• time of calculation
• place of calculation