INTRODUCTION

Article 75 of the Convention is part of the set of rules and principles that provide the law of damages in the CISG. CISG Article 75 regulates the operation of a substitute transaction, which is adopted in most legal systems as well as in basic multilateral instruments, such as the CISG and the PECL. Pursuant to CISG Art. 75, as a result of a breach of contract the aggrieved party may carry out a substitute transaction in a reasonable manner and within a reasonable time after avoidance and may recover the difference between the contract price and the price of the substitute transaction.

The same issue is regulated in substantively identical terms in PECL Art. 9:506. However, the drafters of the PECL go further and in other provisions of the European Principles define terms that may help the interpretation and application of PECL Art. 9:506 and its counterpart CISG provision.

CISG Article 75 provides a method for measuring damages when a party avoids a contract, usually because of a fundamental breach by the other party. This provision represents a specific application of CISG Art. 74, which states the general rule for the measurement of damages.

Both CISG Art. 75 and PECL Art. 9:506 stipulate the same basic premises that have to exist before the substitute transaction takes place.

• First, one of the contracting parties must breach the contract, and in consequence the innocent party must undertake action to terminate the contract. As far as concerns this premise, a problem may arise in determining the moment when the contract is declared avoided.

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