What losses may be recoverable? Is CLAIMANT entitled to damages amounting to USD 670,600.
The loss incurred by CLAIMANT can be recovered if it is a consequence of RESPONDENT's breach of the Contract; these losses must also be reasonably foreseeable to RESPONDENT at the time of contracting. Pursuant to Articles 45(1)(b) and 74 CISG, is entitled to recover the full extent of its loss.
The CLAIMANT will have to show thatthe RESPONDENT should have been aware that the breach would result in the CLAIMANT's liability to third parties. It should further argue thatthe CLAIMANT's loss was foreseeable at the time of conclusion of the agreement. The CISG operates on the basis of full compensation. CISG identifies the type of damages to which an injured party is entitled and sets forth a standard limiting their recovery. It follows that any type of damages, if it results from a breach of contract would be covered. The damage from which a party can recover is limited to the damage which the party in breach could or should have foreseen. The principle of full compensation allows for the recovery of consequential as well as incidental loss, as long as the loss is foreseeable and caused by the breach of contract.
Under Article 77 CISG, a party relying on a breach of contract must take such measures as are reasonable in the circumstances to mitigate the loss, including loss of profit and such expenses reasonably incurred in attempting to reduce the harm. Hence the CLAIMANT must establish that the expenses it incurred for the purpose of avoiding or reducing harm, fall within the range of damages covered by Article 74 to which the CLAIMANT is entitled.
The RESPONDENT should have known that the CLAIMANT would expose itself to third party liability if it did not perform its obligations as agreed. The RESPONDENT should also have known the fact that the M/S Vis, when fully refurbished, would be used for the CLAIMANT's business. In the case of the sale of commercial goods to a merchant, it can always be assumed without any further indications that these goods would be used for commercial purposes. .
Non-performance on the part of the CLAIMANT would have caused the CLAIMANT to damage its future relationship with one of its most important clients. The CLAIMANT's business reputation would have suffered a certain damage since it is a company known for its top of the line service for demanding clients, resulting from a long successful relationship with its customers founded on its demonstrated ability to provide the customers with venues appropriate to its clients. A breach of contract would have evidenced the CLAIMANT's inability to perform the services with the quality it claims to be able to provide. A breach of contract with Corporate Executives would have led to a certain damage do the CLAIMANT's reputation which would have resulted in pecuniary loss. Such loss would have to be calculated as the difference between the value of present and former reputation / goodwill.
CLAIMANT will have to establish that the expense related to the lease of the substitute vessel is reasonable because this was the only real (or at least a good) option for CLAIMANT to perform its contractual obligations with third parties. A difficult task for the CLAIMANT is to establish whether the ex-gratia payment was a necessary measure to mitigate further losses and a measure which was taken in a reasonable fashion.