How to avoid the dispute
between Socovini and Henri Ramel
Our client: Sacovini.
Case problem: The wine became chaptalized.
The seller, Sacovini, a company with its place of business in Italy, concluded several contracts for the sale of wine with French buyers. The wine delivered by Sacovini became chaptalized (it turned to vinegar). The buyer, Henri Ramel, a French wine merchant, then sought to avoid the contract claiming the wine it received was not of fair merchantable quality.
According to the Article 35 of CISG, the seller, by supplying chaptalized wine, had not performed its obligation to supply goods in conformity with the contract. The wine ordered by the French merchant was obviously intended for sale as drinking wine, and thus, the goods delivered were “non-conforming.” Therefore, the buyer’s right to avoidance of the contract was supported. The buyer need not take delivery nor pay for the chaptalized wine. The seller had suffered a great loss.
Alternatives. As the consultant of the seller, Sacovini, our team suggests the following four alternative courses of action to help it avoid the problem discussed above.
Alternative I: Sacovini shall do its best to improve the quality of the wine so that the wine can be stored for a longer time.
Alternative II: To minimize the seller’s payment risk, Sacovini shall consider a payment under a documentary letter of credit in the contract.
Alternative III: To reduce the risk of shipment, Sacovini shall incorporate a CPT term into the contract.
Alternative IV: A force majeure clause shall be included in the contract. It might specify such events beyond control of the parties as war, fire, acts of government, failure of transportation, quarantine restrictions, and strikes. ...