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

Marlow Ltd (State A) sold machinery to Tindal SA (State B) under a contract governed by the CISG. Before delivery, a government in State A suddenly banned all exports of the machinery, which neither party could have foreseen or avoided. Marlow failed to deliver on time. Which statement is correct under the CISG?

Marlow is exempt from damages because an unforeseeable export ban is an impediment beyond its control. However, the exemption only affects damages, so Tindal can still use other remedies such as avoiding the contract.

  1. AMarlow is exempt from paying damages for non-performance because the failure was due to an impediment beyond its control, though Tindal may still exercise other remedies such as avoidanceCorrect
  2. BMarlow is exempt from all consequences of the failure, including Tindal's right to avoid the contract
  3. CMarlow remains liable for damages because export bans are never an impediment under the CISG
  4. DMarlow is exempt only if Tindal agrees in writing to waive damages

Explanation

Article 79 CISG exempts a party from damages where the failure was due to an impediment beyond its control that it could not reasonably have been expected to foresee or avoid. The exemption covers damages only; the other party can still avoid the contract or reduce the price. Option 2 is wrong because exemption does not remove other remedies.

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