Pacta Sunt Servanda: Contrasting Disgorgement Damages with Efficient Breaches under Article 74 CISG
| Author | Florence Eicher |
| Position | LLM candidate, specialising in Competition, Innovation and Trade Law |
| Pages | 29-43 |
2018
LSE LAW REVIEW
29
Pacta Sunt Servanda: Contrasting Disgorgement Damages
with Efficient Breaches under Article 74 CISG
Florence Eicher*
ABSTRACT
The contractual remedy of disgorgement damages has increasingly gained acceptance in
international legal practice. Disgorgement of profits can result from a situation in which
contractual breach is incentivised due to its financial superi ority, ie profitability, over the prop er
fulfilment of the initial contract. In this situation, the aggrieved party can raise a claim for
disgorgement damages, meaning it can claim the profits that the breaching party has made as a
result of the breach. This differs from compensatory damages focusing solely on the loss of the
aggrieved party. The calls for acceptance of disgorgement damages as an acceptable remedy under
specifically do not on ly stem from emerging internation al case law, but disgorgement as an
Ingeborg Schwenzer and Pascal Hachem. This paper analyses the recoverability of disgorgement
damages under Article 74 CISG, including an assessment of possible additional requirements a
prima facie case needs to fulfil for the remedy to apply. The affirmative view to the applicability
of disgorgement damages will be contrasted with the opposing concept of efficient breach.
INTRODUCTION
The contractual remedy of disgorgement damages has increasingly gained
acceptance in international legal practice.
1
Disgorgement of profits can result
from a situation in which a contractual breach is incentivised due to its financial
superiority, ie profitability, over the proper fulfilment of the initial contrac t. In
* LLM candidate at the London School of Economics (f.eicher@lse.ac.uk), specialising in
Competition, Innovation and Trade Law.
1
See ‘International Legal Practice via Article 7(1) CISG’ below.
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