The Legality of 'Disgorgement of Profits' in Case of A Breach Under CISG

Abstract

The situation where an aggrieved party wants to claim damages does not always benefit their position to ask for compensation. For instance, in some cases, the aggrieved party’s loss is hard – and even impossible to be calculated. When an aggrieved party wants to claim damages, CISG requires the damages to be equal to the sum of the loss. However, when the loss itself is hard to be calculated, how would the aggrieved party claim for their damages? This is where the disgorgement of profits comes into play. The disgorgement of profits is a method of calculating damages by allowing the aggrieved party to strip off the profits gained by the breaching party. Even though CISG has never mention anything about the calculation method, some scholars argue that disgorgement of profits cannot be applied due to its punitive nature. This paper will discuss about the legality of disgorgement of profits in theory and current practice to be applied under CISG in case of a breach.