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Incoterm clauses and delivery obligations in international sale of goods

Incoterm clauses and delivery obligations in international sale of goods

In a recent judgment of the Darmstadt Regional Court (No. 14 O 27/22 dated 20.12.2022), the Third Commercial Chamber confirmed the principle that the non-delivery of transport documents and goods certifications may entitle the buyer to declare avoided the international sales contract.

In the case at hand, an Italian buyer company and a German seller company had concluded a contract for the sale of sunflower oil, in which the Incoterm clause FCA had been agreed for the delivery of the goods, specifying a place of delivery in Italy. The use of the FCA (Free Carrier) clause entails the seller's obligation to deliver the goods, at the designated place, to a carrier appointed by the buyer. Furthermore, the seller must provide the buyer with all documents proving delivery. In addition, in the present case, the parties had agreed that the seller had to send to the buyer, before loading the sunflower oil, all all commodity documents (certificates of origin, certificates of analysis, certificates of quality).

Because the seller had failed to deliver to the purchasing company, despite the latter's repeated requests, the required delivery and quality documentation, the Regional Court of Darmstadt found that the buyer was entitled to declare the contract avoided and demand repayment of the purchase price from the seller. Indeed, the failure to hand over the documents constituted both a direct breach of the delivery obligation defined by the use of the FCA clause and a breach of the further contractual obligation to document the quality of the goods. The seller was therefore ordered to repay the purchase price.