VII. Claimant is under no obligation to restitute full damages under article 74 cisg on the strength of dispositive construction of this article.

76. Article 74 maintains prescriptions under authority of which Claimant is entitled to vindicate damages such as general damages, incidental and consequential losses. Despite this contain there is no riot duty of Respondent to make a full compensation of losses. [UNCITRAL DIGEST ON PRECEDENT LAW, Commentaries to the article 74] . The party who fails to perform a contract owing to an impediment that meets all the requirements set forth in paragraph is not liable for damages.

77. The term «damages» must be interpreted widely. It designates all damages, regardless of their proper denomination: dommages-intérêts compensatoires (damages), dommages-intérêts moratoires (damages for over-due performance, interests on damages), direct or consequential damages, etc. The granting of damages to one party presupposes the liability of the other party. The question as to whether the failure to perform exempts the defaulting party from paying a sum stipulated in the contract (either in the form of liquidated damages or penalties) is a matter of domestic law [Secretariat's Commentary, Official Records, I, 55].

78. Furthermore, the exemption of a party does not prevent the other party from claiming remedies (including damages) as a result of the non-performance of any other obligation. This solution follows from the requirement of a cause-effect relationship described above (the non-performance must be due to the impediment). Thus, if non-conforming goods are delivered with delay on account of some impediment, the buyer will be able to claim every remedy normally available in cases of non-conformity.[Comments on Article 79 by Denis Tallon (France) in 1987 Bianca-Bonell, Commentary on the International Sales Law].

79. Moreover under 74 article damages are depend on anticipation of losses’ proportion [Rosental]. Additionally, Claimant only has an opportunity to get a compensation not for all damages: if general and incidental damages lend themselves to be compensated, consequential damages are not come under repayment.[Eric Goldman Notes on Contract Remedies 2003]

80. UNIDROIT Principles is inapplicabile by this relationships. According to PREAMBLE of the Principles, there are such grounds to apply UNIDROIT Principles as: the parties’ express choice, as lex mercatoria, when the parties have not chosen any law to govern their contract, as an international uniform law instruments, to interpret or supplement domestic law, as a model for national and international legislators.

81. According to the contract there is no grounds to strengthen that it is pending to apply UNIDROIT Principles in this case. Moreover, application of the Principles to international commercial contracts is possible in the cases where the parties expressly or impliedly define the law governing their contract as ‘principles of law’, ‘custom of trade’, ‘equity’ or the like which is not presented in the contract too.

82. In addition, it is necessary to emphasize that the substantial argument against the application of the UNIDROIT Principles: notwithstanding their possible significance for international commercial contracts, they are viewed as an external instrument with no relevance to the determination of the “general principles underlying the Convention” mentioned in Article 7(2) CISG.9 [UNIDROIT Principles and CISG : Change of Circumstances and Duty to Renegotiate according to the Belgian Supreme Court, Anna Veneziano]

A. General damages USD 448 000 are not come under repayment as normal compensatory damage.

83. General damages are those damages that every non-breaching party would suffer from a breach of the contract. The Hadley case [Hadley v. Baxendale] describes them as damages arising naturally (i.e., according to the usual course of things from a contract breach). These are always awardable (i.e., they are always foreseeable)[ Eric Goldman Notes on Contract Remedies 2003]. Respondent could not foresee the circumstances which were served for breach of contract with Claimant. Fire in the warehouse was not be under control of Respondent.[see argument on liability]. Under article 25 CISG there was no fundamental breach of contract between Claimant and Respondent.

84. A breach of contract committed by one of the parties is fundamental if it results in such detriment to the other party as substantially to deprive him of what he is entitled to expect under the contract, unless the party in breach did not foresee and a reasonable person of the same kind in the same circumstances would not have foreseen such a result.[article 25 CISG]

85. Although none of the damage formulas in article 74 expressly allocates the burden of proof, one court has concluded that the Convention recognizes the general principle that the party who invokes a right bears the burden of establishing that right and that this principle excludes application of domestic law with respect to burden of proof. Thus, the aggrieved party claiming damages under articles 74 as well as the breaching party claiming a reduction in damages under article 77 will bear the burden of establishing his entitlement or amount of damages or the reduction in damages. [UNCITRAL Digest of case law on the United Nations Convention on the International Sale of Goods* Chapter V Provisions Common to the Obligations of the Seller and of the Buyer].

86. Respondent gave notice about impossibility of performance of contract with Claimant in proper time – 13 September [Claimant exhibit 2]. That being said that Claimant had a good time to find alternative variant for Corporate Executive conference to make obligations timely on the proper substitute yacht. Searching alternative proper yacht was only intention of Claimant because there were another ways to perform the obligations to Corporate Executive’s contract such as abeyance contract with Respondent. This position is based on article 71 CISG. [CLOUT case No. 51 (GERMANY Amtsgericht (Lower Court) Frankfurt 31 January 1991] according to which the buyer is entitled to damages because seller failed to give immediate notice that it was suspending delivery.

87. Article 71 authorizes a seller or a buyer to suspend performance of its obligations under the sales contract if it is unlikely to receive the substantial benefit of the counter-performance promised by the other party.

88. Unlike the avoidance of a contract, which terminates the obligations of the parties, the suspension of contractual obligations recognizes that the contract continues but encourages mutual reassurance that both parties will perform. The preconditions for exercise of the right to suspend and the right to avoid differ, as do the obligations with respect to communications between the two parties. Claimant had all opportunities according preconditions of suspension [DIGEST OF ARTICLE 71 CASE LAW UNICITRAL]

89. Having all this possibilities Claimant had not have to pay 44 000$ for Corporate Executives in order to avoid breaching the contract on chartering M/s Vis.

90. Contract between Corporate Executives and Claimant is third party obligation for Respondent so that there is no responsibility for Respondent for its proper performance.

B. Respondent does not have to cover damages caused by standard yacht broker commission of 15% for rental cost of M/S Pasifica Star, and USD 50 000 for yacht broker success fee which Claimant paid on top of the commission because they are unreasonable incidental damages.

91. Incidental damages are available under several UCC provisions, for both buyers and sellers. Incidental damages suffered by a seller due to a buyer's breach include any commercially reasonable charges, expenses or commissions incurred by:

• the stoppage of delivery

• the transportation, care and custody of goods after the buyer's breach

• the return or resale of the goods

• actions otherwise resulting from the buyer's breach. [UCC § 2-710]

92. Incidental damages suffered by a buyer as a result of a seller's breach include expenses reasonably incurred in:

• inspection, receipt, transportation and care and custody of goods rightfully rejected

• any commercially reasonably changes, expenses, or commissions in connection with effecting cover

• any other reasonable expense incident to the delay or other seller's breach. [UCC § 2-715(1)]

93. Effecting cover of obligations between Corporate Executives and Claimant such as searching for substitute yacht did not have to be extremely with a time limit set. There was about half of a year to find substitute yacht to complete third party obligations to Corporate Executives and broker service was not emergent and extremely necessary in a short period of time. Therefore extra payment for yacht broker-success fee USD 50 000 and yacht broker commission 15% as incidental damages is unreasonable and it is not usually recoverable in court practice. [Steven Emanuel “Contracts” p.314-315]

94. It is essential for annex that “success fee” is a kind of trade custom but not legally fixed imperative law. This payment is only willing of Claimant. Nobody could compel Claimant to pay success fee. Hereby success fee USD 50 000 is unreasonable payment of Claimant which could not be recovered as incidental damage. Including this damages in claim is not expedient.

(signed)

/s/Roman Ishmukhametov

/s/Ksenya Poplevina

/s/Mariam Islamova

/s/Yuri Ustinov

/s/Vlada Ovchinnikova

/s/Irina Maimust

/s/Marin Nikita

MEMORANDUM for RESPONDENT ii