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

Zarento Ltd (Country A) sold machinery to Brivo SA (Country B) under the UN Convention on Contracts for the International Sale of Goods (CISG). Before delivery, a sudden government import ban made it impossible for Zarento to deliver. Zarento could not have reasonably foreseen or avoided the ban. Which statement is correct?

Zarento is exempt from paying damages because the import ban was an unforeseeable impediment beyond its control. However, the exemption covers damages only, so the buyer keeps other remedies, such as avoiding the contract if the breach is fundamental.

  1. AZarento is exempt from paying damages for the failure, but the buyer may still exercise other remedies such as avoiding the contractCorrect
  2. BZarento remains liable for full damages because exemption is never available under the CISG
  3. CZarento is exempt from all consequences, including the buyer's right to avoid the contract

Explanation

Under the CISG a party is exempt from damages where the failure is due to an impediment beyond its control that it could not reasonably have been expected to take into account or avoid. The exemption relates to damages only. The buyer can still exercise other rights, such as declaring the contract avoided, so the third option is wrong.

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