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ACCA Applied Skills · Corporate and Business Law (Global) · Obligations of the seller and buyer, and provisions common to both

Esme Ltd, a seller under the CISG, failed to deliver goods. Fenwick Inc, the buyer, avoided the contract and bought substitute goods in a reasonable manner and within a reasonable time at a higher price. Which statement about Fenwick's damages claim is correct?

Fenwick may recover the difference between the contract price and the substitute transaction price, plus any further foreseeable damages. The CISG imposes liability for breach without requiring dishonesty or fault, and the buyer need not be limited to a refund of the price.

  1. AFenwick may recover the difference between the contract price and the substitute purchase price, plus any further damagesCorrect
  2. BFenwick may recover only the contract price already paid, with no damages
  3. CFenwick may recover damages only if Esme acted dishonestly

Explanation

Where the contract is avoided and the buyer makes a reasonable substitute purchase, the buyer may recover the price difference plus any further damages, such as foreseeable consequential loss. Damages do not depend on dishonesty; the CISG imposes liability for breach regardless of fault.

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