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

Under a CISG contract, Kestrel Co delivered goods and Dunmore Co failed to pay the price of 80,000 on the due date of 1 March. Dunmore paid on 1 May. The contract is silent on interest. Which statement is correct?

Kestrel can claim interest on the late payment from the due date, even without proving loss and without a contractual interest clause. The CISG gives the right to interest but does not set the rate, which is left to applicable law.

  1. AKestrel is entitled to interest on the unpaid sum from 1 March, but the CISG does not fix the rateCorrect
  2. BKestrel is entitled to interest at a fixed 5% per year set by the CISG
  3. CKestrel is entitled to interest only if it proves it suffered actual loss
  4. DKestrel is not entitled to interest unless the contract expressly provides for it

Explanation

Article 78 CISG gives a right to interest on any sum in arrears, without needing to prove loss, but it does not specify a rate. The rate is left to the applicable domestic law or the parties' agreement. The fixed 5% option is wrong because the Convention sets no rate.

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