Reza Beheshti, ‘Price reduction versus damages: a battle without a winner’

Abstract:
Damages are considered the primary remedy in English sales law. This remedy has also been adopted in the Convention on Contracts for the International Sale of Goods. However, price reduction seems to be of a higher importance than damages in the latter legal regime, while the Sale of Goods Act (SGA) has excluded the remedy of price reduction. It remains unanswered whether it is time for English law to introduce price reduction in the SGA so that it can add significantly practical advantage to the current remedies available to a commercial buyer. This article seeks to explore the appropriateness of price reduction in comparison with its leading competitor – that is, damages. To do this, the article examines the distinctions between damages and price reduction against a novel evaluative framework that provides an appropriate mechanism for analysing the relationship of doctrine to commercial utility necessary for the buyer. This framework consists of four norms: certainty, performance interest, efficiency, and relational theory of contract. However, it proves difficult to determine which remedy could most effectively address and satisfy the particular needs of a commercial buyer. Damages are likely to provide very similar practical solutions to price reduction once a sales contract is breached, and this may constitute the reason why the SGA excluded price reduction in business-to-business transactions and why no serious attempt has been carried out to include this remedy within this particular legal regime.

Reza Beheshti, Price reduction versus damages: a battle without a winner. Uniform Law Review (2016), doi: 10.1093/ulr/unw021. First published online: July 28, 2016.

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