6.1 GENERAL CONSIDERATIONS

Where the goods do not conform to the contract, Art. 50 CISG, like ULIS Art. 46, grants the buyer the right to reduce the price. Art. 50 reads: "If the goods do not conform with the contract and whether or not the price has already been paid, the buyer may reduce the price in the same proportion as the value that the goods actually delivered had at the time of the delivery bears to the value that conforming goods would have had at that time. However, if the seller remedies any failure to perform his obligations in accordance with article 37 or article 48 or if the buyer refuses to accept performance by the seller in accordance with those articles, the buyer may not reduce the price."

The remedy of price reduction reflects the CISG's focus on preserving the contract even though a breach may have occurred. In nature, price reduction is a remedy. The drafters of the CISG have consistently referred to price reduction as a remedy. The organization of the CISG also supports characterizing price reduction as a buyer's remedy, since it is found in the section entitled "Obligations of the Seller", which spans from CISG Arts. 45 to 52. While ambivalence surrounds the debate over whether to classify price reduction as a claim or defense, the prevailing view among most scholars that price reduction is a remedy provides a solid starting point.  ²⁸⁹  However, price reduction under CISG Art. 50 is by no means an easy concept to master. To date, for instance, English-language commentaries on Art. 50 have focused on the provision's Civil Law origins; methods for calculating the amount of the price reduction; the distinction between damages governed by CISG Art.s 74-77 and proportional price reduction under Art. 50; and the tendency of common law lawyers to misperceive the price reduction remedy as a mere setoff provision. One of the more striking observations on Art. 50, made by several commentators, is that in some circumstances the provision yields results inconsistent with a fundamental principle of common law remedies: protection of the expectation interest.  ²⁹⁰ 

This chapter strives to advance the uniform application of the CISG by engaging in a thorough analysis of CISG Art. 50 and the problems that have arisen with respect to interpreting and applying price reduction. Clearly, both civil and common legal communities can benefit from a detailed exploration of the CISG remedy of price reduction. Also, this Chapter explores the manner in which the PECL counterpart, i.e. Art. 9:401(Right to Reduce Price), could be used to help interpret CISG Art. 50. However, before taking such a detailed exploration, a full understanding of Art. 50 CISG requires a brief review of its background and ratio legis. It is said the remedy of price reduction is a traditional civil law remedy, which has been recognised since Roman times under the remedy of actio quanti minoris in Roman law.  ²⁹¹ 

Briefly, the actio quanti minoris is an action for the reduction of the price in a sales transaction. In Roman Law, and in countries following the Roman Law tradition, it is also known as the actio æstimatoria (estimatory action): "The actio quanti minoris can be found in Roman Law through the Justinianean Compilations. It arose out of the edicts of the ædiles curules, a type of judge with jurisdiction over certain commercial matters; hence it is an actio ædilitia."  ²⁹²  As reviewed by Bergsten and Miller: "The remedy of reduction of price for the purchaser of defective goods derives from the actio quanti minoris in Roman Law. At the risk of considerable over-simplification, this action originated from an Edict of the Aediles which sought to 'repress the sharp practices of sellers of slaves and cattle in the City markets.' If a buyer became aware, after delivery, of certain specified defects which the vendor did not declare and which, had the buyer been aware of them at the time of sale would have led him to pay a lesser price, he could bring an action for reduction of price or for recission of contract. Defects which were evident at the time of conclusion of the contract were excluded from this remedy since the buyer should have taken them into account when calculating the price he was willing to pay."  ²⁹³ 

The Roman law origins of the remedy, which provides monetary relief to buyers who have received non-conforming goods, has since been carried forward into several of the main civil law codes.  ²⁹⁴  Under these codes, the remedy is particularly useful, since, an advantage of price reduction as opposed to contractual damages is that the buyer can obtain the remedy without having to prove that the seller is at fault.  ²⁹⁵  By contrast, while the CISG incorporates many elements of the traditional Roman law remedy, the CISG Art. 50 price reduction does vary significantly from civil forms of price reduction. Therefore, we will focus first on the features of CISG Art. 50.