THE DUTY TO PAY INTEREST ON ADVANCE PAYMENTS UNDER ART. 84 (1) CISG

Abstract

One of the primary effects of contract avoidance is the restitution of performances already made. In this regard, Art. 81.2 CISG authorizes either party to the contract who has performed in whole or in part to claim the return of whatever he has supplied or paid under the contract. Furthermore, the parties must return all benefits of possession – profits and advantages of use. The buyer is only bound to return the benefits he actually derived from using the goods, or part of them (Art. 84.2 CISG). Likewise, if the seller is bound to refund the price, it must also pay interest on it, from the date on which the price was paid (Art. 84.1 CISG). A closer look to the CISG reveals, however, that the Convention does not settle – at least not expressly – the applicable interest rate under Art. 84.1. This article attempts, accordingly, to determine the extent to which this issue is regulated in the CISG and how a possible gap is to be filled. Special attention is paid to the practice of national courts on this matter.