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Reproducedwithpermissionof25JournalofLawandCommerce(200506)393403

Damages:TheNeedforUniformity
DjakhongirSaidov[*]
1. Introduction
2. Facts
3. ProblemsRelatingtheRemedyofDamagesIndertheCISG
3.1General
3.2DamagetoReputation
3.3StandardsofProvingLossandDeterminingtheAmountofDamages
3.4LossofaChance
4. Conclusion
1.INTRODUCTION

TheremedyofdamagesundertheConventionisanareawhichhasgivenrisetoanumberof
problemswhichareeitherunresolvedorhavebeendealtwithinanonuniformmannerbyjudgesand
arbitrators.Thepurposeofthispaperistohighlightsomeoftheseproblems,identifydifferenttypes
oftreatmentthattheyhavereceived,andputforwardrelevantargumentsandsuggestions.The
problemswillbediscussedinthecontextofthecasethathasbeendecidedbytheCommercialCourt
ofZurich(Switzerland)on10February1999[1]onthebasisoftheConvention.Thereasonfor
selectingthiscaseasthebasisforthediscussionisthatitisoneoftherelativelyfewcasesunderthe
Conventionwhichhasdealtwithseveralimportantaspectsofthelawofdamagesandhasmade
pronouncementsinrelationtoanumberofcontroversialissues.Theissuesraisedbythedecisionin
thiscaseincludetheproblemsofrecoverabilityoflossofordamagetoreputation,lossofachance,
andstandardsofprovingloss.Thisworkwillstartbystatingthefactsofthecase.Thenextsections
willdealwitheachofthementionedproblemsinturn.Finally,theconclusionwillprovideasummary
oftheissuesraisedbythecaseandsuggestionsputforwardbythiswork.
2.FACTS

ThecaseinvolvesadisputebetweenaSwissbuyerandanItalianseller.Thebuyerwasapublishing
houseforartbooks,andthesellerwasactiveinaprintingtrade.Thedisputearosefromthecontracts
onthebasisofwhichthesellerhadundertakentoprint,bind,andsupplythebuyerwithvariousart
cataloguesandbooks.Thesellerclaimedthepaymentofoutstandinginvoicesrelatingtotheseller's
performanceofthecontracts.Thebuyer,inturn,arguedthatitwasentitledtosetofftheseller's
claimswithcounterclaimsfor[page393]damagesandreductionoftheprice.Thedisputeinvolves
claimsarisingfromseveralcontracts.Sincethefocusofthispaperisontheremedyofdamages,only
thecourt'streatmentofthebuyer'sclaimsfordamagesisrelevantforthepresentpurposes.
First,thebuyerarguedthatthesellerhaddeliveredtheartbookswhichhadbeenprintedwiththeuse
ofadifferenttypeofpaperthanthatagreedtobytheparties.Asaresult,thebooksdeliveredbythe
sellerdidnotconformtothecontractandwereofinferiorquality.Thebuyerarguedthatithad
suffereddamagetoits"image."[2]Thecourtrejectedthisargumentonthegroundthatthebuyer's
claimforcompensationforthislosswasnotsufficientlysubstantiatedbystatingthat"[w]hilethe
goodwilldamage...cancertainlybecompensatedundertheCISG...italsoneedstobesubstantiated
andexplainedconcretely."[3]
Theremainingthreeclaimsarosefromtheallegedlatedelivery.Thebuyerarguedthatasaresultof
theseller'slatedeliveryofartbooksandcataloguestotwopresentations,anartexhibitionandapress
conference,ithadsufferedlossofprofitbecauseithadneveragainbeenconsideredbysponsorsof

theseeventsasapotentialsupplier[4]andbecauseithadfailedtosellitsproductsattheseevents.[5]
Alltheseclaimswererejectedbythecourteitheronthegroundthatthesellerhadcompliedwithits
obligationtodeliverthegoodsontimeandwas,therefore,notliableforlatedelivery[6]and/oronthe
groundthatthebuyerhadfailedtoproveitslossofprofit.[7]Theimportant[page394]
pronouncementofthecourtwasthatthe"CISGdoesnotdeterminewhichdegreeofcertaintyis
necessaryforajudgetoformhisorherprofithypothesis...However,thethwartingofapureprofit
chancegenerallydoesnotleadtoareimbursabledamage."[8]
3.PROBLEMSRELATINGTHEREMEDYOFDAMAGESUNDERTHECISG

3.1General
Fromthebriefdescriptionofthefactsofthecase,itisevidentthatthedecisionhastouchedupon
severalaspectsofthelawofdamagesundertheCISG.However,itisunfortunatethatthecourthas
neitherdealtwiththeissuesinsufficientdetailnorpresentedthereasonsforitsstatements.
Nevertheless,Ihopethatfocusingourattentiononthisdecisionwillstimulateadebateonthree
questions.First,isdamagetoreputationrecoverableundertheConvention?Second,cantheclaimant
claimcompensationforlossofachance?Finally,whataretheproperstandardsofprovinglossesand
determiningtheamountofdamagesundertheConvention?Inthefollowingsections,Iwillpresent
argumentsandconsiderationswhichare,inmyview,relevantforthepurposesofaddressingthese
questions.
3.2DamagetoReputation
Asnotedabove,thebuyerinthiscaseclaimedthatits"image"hadbeendamagedasaresultofthe
allegedbreachbytheseller.Althoughthesellerwasnotfoundtobeinbreach,thecourthasmadean
importantpronouncementbystatingthatthe"goodwilldamage"isrecoverableundertheConvention.
Thesefactsgiverisetotwoquestions.First,whatexactlywasmeantbysuchtermsasdamageto
"image"or"goodwill"?Second,did[page395]thebuyerandthecourtrefertothecompensationfor
damagetothebuyer's"image"/"goodwill"itselfordidtheyrefertothefinanciallossesflowingfrom
it?
Sofarasthefirstquestionisconcerned,althoughsuchvaguetermsas"image"and"reputation"are
sometimessaidtohavedifferentmeanings,itseemslikelythatwhatwasmeantinthiscasewas,what
weoftencall,damageto"reputation."However,evenifweagreethatthiswasprobablythecase,itis
notparticularlyhelpfulbecausewewillneedtoagreewhatwemeanbytheterm"reputation."Atthis
point,Iwouldliketostressthat,inmyview,itisnecessarytodevelopauniformdefinitionof
"reputation"forthepurposesofproperlydealingwiththequestionofrecoverability,measuring
damages,andcontributingtoachievinguniformity.Ifthereisnouniformdefinitionof"reputation,"
whatisitthatshouldorshouldnotberecoverableandwhatisitthatneedstobemeasured?Inthe
absenceofauniformdefinition,itisdifficulttoexpectjudgesandarbitratorstodealwiththeseissues
inauniformmannerbecausetheymayhavedifferentviewsonandunderstandingsofthenotionof
reputation.
SomeofthedefinitionsIhavecomeacrossinlegalliteraturedefine"reputation"asanopinionof
businesspersonsand/orcustomersonacommercialactor,whichhasbeenformedonthebasisofthe
latter'sprofessionalandbusinessqualities.[9]Inthecontextofbusinessliterature,Ihaveseen
"reputation"beingdefinedas"[j]udgementsmadeoftheorganizationovertimebasedonthe
organization'sbehaviour,performance,andthecollectiveexperiencesoftheorganization"[10]oras"a
collectivetermreferringtoallstakeholders'viewsofcorporatereputation,includingidentityand
image."[11]Thedifferencebetweenthesedefinitionsisnotenormous.Allthesedefinitionspoint
towards"reputation"primarilymeaningthewayothersviewandassessone'sbusinessactivity,
qualitiesandperformance.Theonlydifferenceisthatthelattertwodefinitionsseemtoreferto
"reputation"asalso[page396]meaningthewayanorganizationviewsitself.AlthoughImustadmit
thatIamnotcertainwhethermyearlierunderstandingoftheword"reputation"includedthislatter

meaning,Iamnowinclinedtobelievethatone'sviewofhim/herselfisnotcompletelyirrelevantto
thenotionof"reputation."Thesedifferencesindefinitionsoftheterm"reputation"demonstratethatit
isimportantthatwerealizethattobeabletoanswerthequestionwhetherlossofreputationis
recoverableundertheConvention,weneedtoagreewhatwemeanbythisterm.Itseemsthatthis
questionrequiresfurtherresearchintothenatureofthenotionofreputation.Nonetheless,Ibelieve
thatmostpeoplewillprobablyagreethatwhatweoftenmeanby"reputation"is,atleast,whatothers
thinkofone'sbusinessactivity,qualities,andperformance.Myfurtherdiscussionwillbebasedon
thisdefinition.
Thesecondquestioniswhetherthebuyerandthecourtinthiscasehaveonlyreferredtofinancial
lossesflowingfromdamagetoreputationorwhethertheywerealsoconcernedwithcompensationfor
damagetoreputationitself.Thequestionisimportantbecauseifthecourtwereconcernedwitha
possibilityofawardingdamagesforlossofreputationitself,itwouldmeanthatthecourtrecognised
that,sofarastheConventionisconcerned,acommercial"reputation"isan"asset"oravalueinitself.
Thestatementmadebythecourt(i.e.thatthe"'goodwilldamage'cancertainlybecompensatedunder
theCISG")seemstosupportthisinterpretationofthedecision.
Thenextquestioniswhetherthisistheapproachthatweneedtotakeininterpretingandapplyingthe
Convention.Itshouldbenotedthatthereareseveralcaseswherethecourtshavetakenadifferent
viewbyrulingthatlossofreputationisnotrecoverableundertheConvention.[12]Thisisnot
surprisingtakingintoaccountthefactthat,bycontrastwithotherinternationalinstruments,[13]the
Conventiondoesnotexpresslystatewhatcouldbe[page397]recognizedasa"loss."Thequestion
whetherlossofreputationisrecoverableseemstobelargelythequestionofpolicyanditissuggested
thattherearesufficientlyimportantconsiderationswhichjustifytherecoverabilityofthislossunder
theCISG.
Bycontrastwithothernonmaterialvalues,commercialreputationisanintegralpartof,andoftenan
importantprerequisitefor,asuccessfulbusinessactivity.Conversely,lossoforinjurytoreputationis
likelytoadverselyaffecttheinjuredparty'sbusiness.[14]Itcould,ofcourse,bearguedthatthe
ultimatepurposeofgoodcommercialreputationistogainprofit.Therefore,reputationshouldbeof
legalsignificanceonlywhenitleadstolossofprofit.Otherwise,itshouldbeofnoimportanceatall.
Itissubmittedthatthisviewshouldnotbeadopted.Abusinessmanmayhavespentalongperiodof
timeandevenforegonesomequickeconomicopportunitiesinordertobuildupsolidfoundationfor
goodreputation.Forsuchabusinessman,damagetoreputationmayrepresentaconsiderableloss,
evenifhecannotproveimmediateeconomicandfinanciallosses.Inmanycases,lossofreputation
willhave,soonerorlater,repercussionsonthebusinessaswell.Finally,ithasbeensuggestedthat
"goodwill...canexistevenwherethebusinessdoesnotmakeaprofit."[15]Ifthisistrue,viewingthe
issueoflossofreputationexclusivelythroughitsconnectionwithprofitabilityofbusinesswould
meanunderestimatingthevalueofthephenomenonofreputation.Onthisbasis,Isuggestthat
reputationshouldberegardedasanindependent"asset"ofacommercialactorwhichisavaluein
itself.[16]Sincedamagetoreputation[page398]wouldmeananinjurytothisvalue,itshouldbe
regardedasa"loss"withinthemeaningofArticle74CISG.
3.3StandardsofProvingLossandDeterminingtheAmountofDamages[17]
Bystatingthat"CISGdoesnotdeterminewhichdegreeofcertaintyisnecessaryforajudgetoform
hisorherprofithypothesis,"thecourthashighlightedtheissueofthestandardsofprovinglossesand
determiningtheamountofdamageswhichhasbeenasourceofnonuniformityintheapplicationof
theConvention.Theexaminationofcasesrevealsavarietyofwaysinwhichthisissuehasbeendealt
with.First,inseveralcasesthisissuehasbeenregardedasaproceduralissuewhichisoutsidethe
scopeoftheCISG.[18]Inthiscategory,Iwouldalsoincludecaseswherethejudgeshaveexercised
theirdiscretionindeterminingtheamountofdamageswhichhavederivedfromnationalprocedural
rules.[19]Itshouldalsobenotedthatevenifitistruethatallproceduralissuesareoutsidethescope
oftheConvention,oneauthorhasarguedthat"thereexistsnosystematicabstractcriterionthatwould
enableagivencasetobeclassifiedunequivocallyandrationallyasbeingeitherofaproceduralora

substantivenature"andthat"therulesofevidenceareclassified,[inmostlegalsystems,]as
substantive,notasprocedural...."[20]Ifthisistrue,thenitseemspossibletoarguethatstandardsof
provinglossesareamatterofsubstantivelawand,therefore,cannotbeexcludedfromthescopeofthe
CISGsimplyonthebasisofitsallegedlyproceduralnature.Second,somecasesseemtoregardthe
Conventionascontainingastandardofproofbystatingthatdamageswillhavetobedeterminedby
an"exact,"[21][page399]"precise"[22]calculation,"specificascertainment"[23]orbyproving"the
existenceandexactamountof...damage."[24]Unfortunately,thesedecisionsexplainneitherhow
judgesandarbitratorshavearrivedatthesestandardsnorthemeaningofthesestandards.Third,ina
fewcasestheamountofdamagesawardedwasdeterminedexaequoetbono.[25]Finally,itappears
that,inseveralcases,judgesandarbitratorshaveexercisedtheirdiscretionwhichwasnotbasedon
anylegalruletodeterminetheamountofdamages.Forexample,determinationoftheamountof
damageshasbeendiscussedintermsofbeingornotbeing"reasonable,"[26]"sufficientlyproved"
[27]orsupportedby"sufficientevidence."[28]
Inlightofthisnonuniformtreatment,theimmediatequestionishowtheissueofprovinglossesand
determiningtheamountofdamagesshouldbedealtwithundertheCISG.Iwouldliketoseethe
CISGbeingappliedinthesamewayastheUNIDROITPrincipleswouldbeapplied.TheUNIDROIT
Principlesexplicitlyprovidethatlossesneedtobeprovedwitha"reasonabledegreeofcertainty."[29]
Thisapproachrecognizesthattheissueofstandardsofprovinglossesisdirectlyconnectedwiththe
exerciseoftheinjuredparty'srighttodamages.Theremedyofdamagesitselfisgovernedbythe
Convention.Thefactthattheexerciseoftherighttodamagescanbetreatedinavarietyofdifferent
waysislikelytohaveanegativeimpactontheexerciseofthisrightaswellasonthepoliciesand
considerationsunderlyingthelawofdamagesundertheConvention.Acceptingtheunifiedstandardis
[page400]likelytoleadtogreateruniformityintheinjuredparties'exercisingtheirrighttodamages
undertheConvention.
AstandardsimilartothatcontainedintheUNIDROITPrinciplescanbedevelopedundertheCISG.It
iswellknownthatthestandardof"reasonablecertainty"isbasedontheacknowledgementofthefact
thatinmanycasesitmaybeimpossiblefortheinjuredpartiestoprovetheirlosseswithabsolute
certainty.Whatisrequiredisthattheyprovideevidencewhichcanonlybereasonablyexpectedfrom
themtakingintoaccounttheparticularcircumstancesoftheircase.Onnumerousoccasions,ithas
beenarguedthatmanyoftheprovisionsoftheCISGarebasedontheideaofreasonablenessandthat
reasonablenessisageneralprincipleunderlyingtheConvention.Bearinginmindtheexisting
divergenceofviewsastowhataretheConvention'sgeneralprinciples,Iwouldrefrainfrom
categoricallyassertingthatreasonablenessisageneralprincipleoftheCISG.Nevertheless,ifitisat
allpossibleforlawyerstoagreeonthelistofthesegeneralprinciples,itseemstomethat
"reasonableness"willbethe"firstcandidate"forthislist.Thus,ifthereisageneralprincipleof
reasonableness,itispossibletoarguethatsinceArticle74providesthatprovinglossisanecessary
preconditionfortherighttoclaimdamages,theclaimantshouldberequiredtoprovelosswithsucha
degreeofprecisionorcertaintywhichcanbereasonablyexpectedoftheclaimanttakinginto
considerationtheparticularcircumstancesofthecase.Thisessentiallymeansthatlosseswillhaveto
beprovedwitha"reasonabledegreeofcertainty."
3.4LossofaChance
ThemostinterestingaspectofthisdecisionisthatitistheonlydecisionIhavecomeacrosswhichhas
expresslydealtwiththeissueoflossofachance.Itwillberecalledthatthecourtstatedthat,underthe
CISG,"thethwartingofapureprofitchancegenerallydoesnotleadtoareimbursabledamage."Itis,
again,unfortunatethatthecourthasnotgiventhereasonsforthisruling.However,thisstatement
raisesthequestionwhethertheCISGshouldbeinterpretedasnotallowingaclaimforlossofa
chance.
Lossofachanceisapeculiarconcept.Itcaneitherbeconsideredfromthestandpointoftheproblem
ofrecoverabilityoflossesorberegardedasanotherstandardofprovinglosses.Itissuggestedthat
bothstandpointsneedtobeborneinmindindealingwiththequestionofwhetherlossofachancecan

beclaimedundertheCISG.Inaddition,Iwilltrytodemonstratethatthesetwosidesofthelossofa
chanceconceptareinterdependentandcannotbeseparated.[page401]
Ifwelookatlossofachancefromthestandpointoftheproblemofrecoverabilityoflosses,the
questioniswhether"achance"shouldberegardedasavalueor"anasset"recognizedbythe
Conventionasarecoverableloss.Oneargumentthatcouldbemadehereisthatinbusinesstakinga
chanceisindeedimportant.Commercialactivityofteninvolvesriskandspeculation.Takingrisksand
beinginvolvedinspeculativeventuresareoftentheprincipalwaysofgainingprofitwhich,inturn,is
theultimatepurposeofacommercialactivity.Onthisbasis,Iaminclinedtotaketheviewthatthe
Conventionshouldnotignoretheimportanceoftakingchancesinbusinessandshouldrecognizea
chanceasbeing"anasset"havingavalue.ThismaybeonereasonwhytheCISGshouldbe
interpretedasallowingclaimsforlossofachance.
Asnoted,itisalsopossibletoregardlossofachanceasastandardofprovinglosses.Itiswellknown
thatitisoftendifficulttoprovelossofprofitwithabsolutecertaintybecausethiswouldinvolve
inquiryintoahypotheticalfutureorpast.Somecasesprovideexampleswheretheclaimanthasfailed
toprovetheamountoftheallegedlossofprofitwiththerequireddegreeofcertainty,butwherethe
tribunalwassatisfiedthatthelosshadinfactoccurred.Forexample,inonecasewherethe
UNIDROITPrincipleshavebeenreliedupon,thetribunalstatedthat"[i]nmanyoftheClaimsthe
Claimants'documentaryorotherevidenceestablishedthatanallegedlosshad,infact,occurred.But
theevidencewasinsufficientinthoseClaimstodemonstratewithareasonabledegreeofcertaintythe
amountoftheloss."[30]Thequestioninthesetypeofcasesiswhethertheclaimantshouldbeleft
withno,ratherthansome,compensation.Itcouldbearguedthatwhileitwouldbeunfairtothe
breachingpartytobeorderedtopayfullcompensationforlossofprofitwhichcannotbeprovedwith
therequireddegreeofcertainty,itis,inthistypeofcase,equallyunfairtotheinjuredpartytobeleft
withnocompensation.[31]Ifweagreetha[t]suchanoutcomewouldindeedbeunfairtotheinjured
party,lossofachancecanbeusedasatoolofimplementingournotionoffairnessbyallowingthe
injuredpartytogoawaywithsomethingratherthannothing.Onthisview,theconceptoflossofa
chancecanbesaidtobebasedontheideaofdisfavoringthe"allornothing"resultintheaward
[page402]ofdamagesand,arguably,balancingtheinterestsofbothpartieswithaviewtoachievea
fairresult.
Finally,itshouldbestressedthatthetwosidesofthelossofachanceconceptareinterlinked.Itcould
bearguedthatlossofachanceshouldbearecoverabletypeoflosspreciselyforthereasonthatthe
lawshoulddisfavorthe"allornothing"resultintheawardofdamagesandbalancetheinterestsof
bothparties.Inotherwords,thesecondaspectcanbeusedasareasonwhylossofachanceshouldbe
arecoverabletypeoflossundertheConvention.
Thus,Iwillventuretodisagreewiththeopinionofthecourt.IbelievethatthereasonsIhavesetout
aresufficientlystrongtojustifytherecoverabilityoflossofachanceundertheCISG.Arguably,the
formulaprovidedforintheUNIDROITPrinciples[32]couldbeusedtohelpformananalogous
approachundertheConventionandcontributetotheuniformityintheapplicationoftheConvention
inthisrespect.
4.CONCLUSION

IhopethatthroughthisbriefdiscussionIhavemanagedtodemonstratetheexistingnonuniformity
withrespecttothetreatmentofseveralaspectsofthelawofdamagestoucheduponbythiscaseand
identifysomeoftheareaswhichareinneedoffurtherexamination.Ihaveputforwardseveral
suggestionsrelatingtothequestionofhow,inmyview,theproblemsraisedbythiscaseshouldbe
dealtwith.Myfinal,andmoregeneral,pointisthattoanswerthequestionsofwhetherandhowa
particularissuerelatingtothelawofdamagesshouldbedealtwithundertheConvention,itis
necessarytoexaminethenatureoftheissueinquestionandtoagreeonpoliciesandprincipleswhich
canbesaidtounderlietheConvention.Otherwise,itdoesnotseemrealistictoexpectuniformityin
theapplicationoftheConvention.[page403]

FOOTNOTES
*Lecturer,UniversityofBirmingham(UnitedKingdom).
1.CLOUTCaseNo.331[HandelsgerichtZurich,Switzerland,10Feb.1999],availableat
<http://cisgw3.law.pace.edu/cases/990210s1.html>.
2.Seeid.2.1,3.1(a).Thebuyer'sclaimwasnotentirelyclearsinceitmainlyreliedon"thebook's
lowervalue"which(anditisnotclearwhy)hasbeencalculatedonthebasisofthebindingcosts
incurredbythebuyer.Thisclaimhasbeeninterpretedbythecourtaseitherreferringtotheremedyof
thereductionofthepriceunderArticle50ortotheremedyofdamages.Evenifthebuyer'sclaimwas
onefordamagesitisalsobynomeansclearwhetherthebuyerclaimedcompensationforlosses
flowingfromdamagetoitsimageorwhetheritalsowantedcompensationfordamagetoitsimage
itself.
3.Seeid.3.1(b).Theotherreasonforthisdecisionwasthatthebuyerhadfailedtodemonstratethe
connectionbetween"goodwilldamage"andbindingcosts.
4.Seeid.2.2,2.4.
5.Seeid.2.3.
6.SeeCLOUTCaseNo.331,supranote1,3.2(d)(cc).
Art.31CISG...distinguishesbetweencontractsthatinvolvethecarriageofgoodsand
suchcontractswherecarriageisnotnecessary....Theseller'sdeliveryobligation...
consistsininitiatingthetransportofthegoods:Hemusthandoverthegoodstothefirst
carrierfortransmissiontothebuyer....Byhandingoverthegoodstothefirstcarrierfor
transmissiontothebuyer,thesellerfulfilshisdeliveryobligation.Forthisreason,the
buyermaynolongerholdthesellerliablefornonperformanceunderArt.45(1)(b)CISG,
if...thehandingovertothebuyerisdelayed.
Id.3.2(d)(cc)(citationomitted).
7.Thecourt'srulingthatthesellerwasnotliableforlatedeliverieswastheprimarybasisforrejecting
onlythetwoofthebuyer'sclaims.Id.3.2(d)(cc),3.3(b).Nonetheless,thecourthasalsoaddedthat
evenifthesellerhadbeenresponsibleforthelatedelivery,thebuyerwouldhavefailedtoprovethe
allegedlossofprofit.Id.3.2(h).Failuretoprovelossofprofitwashoweverthegroundfor
dismissingthethirdclaimofthebuyer.Id.3.4.
[T]he[buyer]doesnotevencomeclosetosubstantiatinghersupposedsetoffclaim.
Neitherdoesthe[buyer]submitwhen,whereandhowmuchtoolatedeliverywas
effected,nordoessheprovideanygroundstoconcludethatthe[sponsor]gaveherthe
prospectoffurthercommissionsandthatthiswouldhaveledtoaprofit(inwhat
amount?).The[buyer]doesnotevenstatethatthe[sponsor]haseversincebecomeactive
asanartssponsorinanyform.ItisnottheCourt'stasktocalculatelikeabookkeeperthe
[buyer]'spossibleprofitchances.
Id.3.4.
8.Id.3.2(h).
9.See,e.g.,CIVILLAW(GRAZHDANSKOYEPRAVO)317(A.P.Sergeyev&Y.K.Tolstoyeds.,
1998)LyndaJ.Oswald,GoodwillandGoingConcernValue:EmergingFactorsintheJust
CompensationEquation,32B.C.L.REV.287(1991)(defining"goodwill"asthe"valuewhich

inheresinthefixedandfavourableconsiderationofcustomersarisingfromanestablishedandwell
knownandwellconductedbusiness").
10.JOHNM.T.BALMER&STEPHENA.GREYSER,REVEALINGTHECORPORATION:
PERSPECTIVESONIDENTITY,IMAGE,REPUTATION,CORPORATEBRANDING,AND
CORPORATELEVELMARKETING174(2003).
11.GARYDAVIESETAL.,CORPORATEREPUTATIONANDCOMPETITIVENESS63(2002).
"Image"hasbeenheredefinedas"theviewofthecompanyheldbyexternalstakeholdersespecially
thatheldbycustomers"and"identity"as"theinternal,thatisemployee's,viewofthecompany."Id.
at61.
12.CLOUTCaseNo.343[LandgerichtDarmstadt,Germany,9May2000],availableat
<http://cisgw3.law.pace.edu/cases/000509g1.html>.
The[buyer]cannotclaimalossofturnover,ontheonehandwhichcouldbe
reimbursedintheformoflostprofitsandthen,ontheotherhand,trytogetadditional
compensationforalossinreputation.Adamagedreputationiscompletelyinsignificant
aslongasitdoesnotleadtoalossofturnoverandconsequentlylostprofits.A
businesspersonrunshisbusinessfromacommercialpointofview.Aslongashehasthe
necessaryturnover,hecanbecompletelyindifferenttowardshisimage.[Buyer]doesnot
provethatherallegedlydamagedreputationharmedhersalesquotas.
Id.SeealsoCLOUTCaseNo.313[Courd'appelGrenoble,France,21Oct.1999],availableat
<http://cisgw3.law.pace.edu/cases/991021f1.html>("deteriorationofcommercialimage[reputation]
isnotcompensabledamagesinitself,ifitdidnotentailprovedpecuniarydamages").
13.SeeUNIDROITPrinciplesofInternationalCommercialContractsart.7.4.2(2)(2004)[hereinafter
UNIDROITPRINCIPLES]PrinciplesofEuropeanContractLawPartsI&IICombinedandRevised
art.9:501(2)(a)(1998)(expresslyprovidingforrecoverabilityofnonpecuniarylosses).
14.SeeSergeyev&Tolstoy,supranote9,at325,statingthat"impairmentofbusinessreputationcan
bringaboutlossofcustomers,makingheaviertheconditionsofobtainingthecredit.Ontheother
hand,businessreputation,whichhasbeenformed,canserveasaguaranteethatabusinessmanwill
remain'afloat,'evenwhenhisbusinesswentdown"(translationoftheauthor)ThomasW.Waelde,
ContractandEnforceabilityinInternationalBusiness:WhatWorks?,at
<http://www.dundee.ac.uk/cepmlp/journal/html/vol5/article58.html>,stating,withrespectto
multinationalenterprises,thattheimpactofthelossofreputationcanbedramatic:"Alarge
multinationalcompanywillinmostcasesratherpayoutdamagesthansufferthemuchgreater
damagetoitsreputationwithrepercussionsonitsactivitiesaroundtheworld."
15.SeeOswald,supranote9,at287,withreferencetoanAmericancaseEngstromv.Larson,77
N.D.541,560n.18,44N.W.2d97,108(1950),wherethecourtstatedthat:
[N]eitherthefactthatthebusinessisveryprofitableorsuccessful,northatitisnotavery
profitableandevenalosingbusiness,istheonlytestofgoodwill...inviewofthefact
thatgoodwillmaybesaidtobeadesireofoldclientstoresortorreturnandcontinue
businessrelationswheretheclientshavebeenaccustomedtodobusiness(quoting
McFaddenv.Jenkins,169N.W.151,156(N.D.1918)).
16.SeeDAVIESETAL.,supranote11,at65("[C]orporatereputationisasignificant,albeit
intangible,asset...[R]eputationhasvalue,and[it]issubstantialformostorganizations")JOHN
SMYTHE,COLETTEDORWARD&JEROMEREBACK,CORPORATEREPUTATION:
MANAGINGTHENEWSTRATEGICASSET7(1992)("Everyorganizationmusttreatits
reputationasanasset.").

17.IhavedealtwiththeseissuesingreaterdetailinDjakhongirSaidov,StandardsofProvingLoss
andDeterminingtheAmountofDamages,21J.CONT.L.(forthcoming2005).
18.BezirksgerichtSissach,Switzerland,5Nov.1998,availableat
<http://cisgw3.law.pace.edu/cases/981105s1.html>HandelsgerichtSt.Gallen,Switzerland,3Dec.
2002,availableat<http://cisgw3.law.pace.edu/cases/021203s1.html>.
19.CLOUTCaseNo.5[LandgerichtHamburg,Germany,26Sept.1990],availableat
<http://cisgw3.law.pace.edu/cases/900926g1.html>CLOUTCaseNo.166[Schiedsgerichtder
HandelskammerHamburg,Germany,21Mar.1996],availableat
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PaceLawSchoolInstituteofInternationalCommercialLawLastupdatedOctober19,2006
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