8 Remedies for breach
With some notable exceptions, the remedies which the CISG provides are consistent with the expectation interest of the aggrieved party. That is, the remedies seek to place the aggrieved party in the same position it would have occupied had the breaching party performed. The remedies provisions, therefore, do not simply attempt to return the aggrieved party to the position it occupied prior to the conclusion of the contract, either by providing restitution of what the aggrieved party supplied or paid under the contract (although that remedy may be available), or by calculating damages by reference to expenditures made in reliance on the contract.
Expectation remedies are typically justified as a means of protecting investments. A party who concludes a contract is more likely to be willing to make investments required to implement the agreement if it knows that breach by the other party will not cause it to lose the benefit of the original bargain. Assume a contract for the sale of goods at a price of $10,000 in which the terms of the agreement require a $5,000 deposit at signing and delivery in six months. If at the time of delivery the market price of the goods is $12,000, a seller whose only obligation on breach is to provide restitution would have an incentive to breach. The seller would have to return the $5,000 deposit, but then would be able to resell the same goods for $12,000. The buyer, on the other...
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