CISG CASE PRESENTATION

Germany 14 August 1991 District Court Baden-Baden (Wall tiles case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/910814g1.html]

Primary source(s) for case presentation: Case text

Case Table of Contents

• Case identification
• UNCITRAL and Journal of Law and Commerce abstracts
• Classification of issues present
• Editorial remarks
• Citations to case abstracts, texts, and commentaries
• Case text (English translation)
• Guide to links contained in case presentations

* Passages excerpted from case translation prepared by Prof. Vivian Curran, University of Pittsburgh School of Law, assisted by Daniele Lichti, appearing in 12 J.L. & Com. 277, 278-281 (1993).

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Classification of issues present

APPLICATION OF CISG: Yes [Article 1(1)(b)]

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 19(2) ; 39 ; 51(1) [Also cited: Articles 25 ; 35(2)(a) ; 45(1)(b) and 45(2) ; 49(1)(a) ; 74 ] [Also relevant: Article 61 ]

Classification of key issues using UNCITRAL classification code numbers:

19B ["Acceptance" with immaterial modifications];

39C [Requirement to notify seller of lack of conformity: notice period as set by contract];

51A [Non-conformity of part of goods]

Descriptors: Acceptance of offer ; Battle of the forms ; Conformity of goods ; Lack of conformity notice, timeliness ; Avoidance ; Damages ; Cumulation or election of remedies

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English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=13&step=Abstract>

German: Die deutsche Rechtsprechung auf dem Gebiete des internationalen Privatrechts im Jahre (IPRspr) 1991 No. 39 [77]; Schweizerische Zeitschrift für Internationales und Europäisches Recht (SZIER)/Revue suisse de droit international et de droit europeén 1993, 273

Italian: Diritto del Commercio Internazionale (1993) 653-654 No. 12

Polish: Hermanowski/Jastrzebski, Konwencja Narodow Zjednoczonych o umowach miedzynarodowej sprzedazy towarow (Konwencja wiedenska) - Komentarz (1997) 244-245

CITATIONS TO TEXT OF DECISION

Original language (German): cisg-online.ch <http://www.cisg-online.ch/cisg/urteile/24.htm>; Recht der Internationalen Wirtschaft (RIW) 1992, 62-63; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=13&step=FullText>

Translations:

English: 12 Journal of Law & Commerce (1993) 277-281 [text presented below]

Italian: Diritto del Commercio Internazionale (1993) 657

CITATIONS TO COMMENTS ON DECISION

English: Mullis, Avoidance for Breach under the Vienna Convention: Critical Analysis of Some of the Early Cases (1998) nn.87, 100; Honnold, Uniform Law for International Sales (1999) 185 [Art. 19 (materiality of answer that deviates from offer)]; Gillette/Walt, Sales Law Domestic and International (Foundation Press 1999) 71-72 [Art. 19 issues]; Bonell/Liguori, Uniform Law Review (1996-1) 147 [163 n.74]; DiMatteo, 22 Yale J. Int'l L. (1997) 154-155; Ferrari, 15 Journal of Law and Commerce (1995) 99-116 [comments on notice issues, citing this and other cases]; Karollus, Cornell Review of the CISG (1995) 51 [61-62, 69-71, 72] [comments on issues under Articles 19, 39 and 51 in the context of German case law on the CISG]; Shen, Declaring the Contract Avoided, 10 New York International Law Review (1997) 7-57 [n.2]; Koch, Pace Review of Convention on Contracts for International Sale of Goods (1998) 256 n.264 [fundamental breach: offer to cure/possible cure]; Perales, 10 Pace International Law Review (1998) 97-155 at n.91 [materiality of alteration contained in reply to offer]; Winship in: Contemporary International Law Issues: Opportunities at a Time of Momentous Change (1994) 122 [125]; DiMatteo, The Law of International Contracting, Kluwer (2000) 228 [materiality issue]; for a survey of close to 100 judicial and arbitral rulings on Article 39(1), go to the 1998 Pace essay on this subject by Camilla Baasch Andersen; Bernstein & Lookofsky, Understanding the CISG in Europe, 2d ed., Kluwer (2003) § 3-8 n.84; § 4-9 n.148; § 7-2 n.21; Larry A. DiMatteo et al., 34 Northwestern Journal of International Law & Business (Winter 2004) 299-440 at nn.311-312, 628; CISG-AC advisory opinion on Examination of the Goods and Notice of Non-Conformity [7 June 2004] (this case and related cases cited in addendum to opinion); [2005] Schlechtriem & Schwenzer ed., Commentary on UN Convention on International Sale of Goods, 2d (English) ed., Oxford University Press, Art. 19 para. 13 Art. 39 para. 35; Schwenzer & Fountoulakis ed., International Sales Law, Routledge-Cavendish (2007) at p. 164; Spaic, Analysis of Fundamental Breach under the CISG (December 2006) nn.351-352

French: Neumayer/Ming, Commentaire, Lausanne 1993 Art. 19 n.20; Witz, Les premières applications jurisprudentielles du droit uniforme de la vente internationale (L.G.D.J., Paris: 1995) 59, 91 n.56, 99 n.85

German: Karollus, [österreichisches] Recht der Wirtschaft (öRdW) 1992, 168 [169]; Neumayer, Recht der Internationalen Wirtschaft (RIW) 1994, 99 [103 n.31]; Schlechtriem, Internationales UN-Kaufrecht (1996) 55 n.37

Italian: Liguori, Foro italiano (1996-IV) 145 [165 n.95]

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Landgericht Baden-Baden [1] 14 August 1991

Journal of Law & Commerce Headnote

Summary of Facts

An Italian [seller] sued a German [buyer] for payments due on two deliveries of wall tiles. The invoice limited the time for complaints to the period prior to installation of the tiles, or at a maximum, 30 days after date of invoice. The Plaintiff's agent had also referred to the time limitation in the confirmation of the orders. The [buyer] made one installment payment, then gave notice to the [seller] of the tiles' lack of conformity after the tiles were already installed. The [seller] and [buyer] then agreed on a replacement delivery without additional charge; however, the replacement tiles were not installed due to reported defects. The [buyer] denied further liability for the sales price. The [buyer] also claimed a set-off for damages due to the delivery of other defective tiles which had been sold to (and rejected by) her customers.

Holding

The contract was partially avoided, but the [buyer's] set-off claims for damages and right of retention were denied, because the [buyer] did not comply with the specified time period for the rejection of goods.

Reasoning of the Court

1. CISG Article 1(1)(b) -- CISG applies to this case, because under German rules for conflicts of law, Italian law would apply to the legal relations of these parties and Italy has been a Contracting State since 1988.

2. CISG Articles 25, 45 and 35(2) -- The defects of the tiles were established under expert opinion, and the second set of tiles were also deemed useless without the first set, as they were to be used in conjunction with each other. Thus, the [seller] breached her obligation under the contract to deliver goods fit for the purposes for which goods of the same kind would ordinarily be used.

3. CISG Articles 51(1) and 49(1)(a) -- Where the seller's breach amounts to a fundamental breach of contract, the buyer may partially avoid the contract with respect to the nonconforming goods; here, the buyer's refusal to pay the sales price could constitute partial avoidance.

4. CISG Article 45(2) -- A buyer's avoidance would not necessarily preclude an additional claim for damages by the buyer.

5. CISG Article 19(2) -- The statement on the invoices, limiting the time for rejection of goods to thirty days after the invoice date, constituted a modified acceptance of the contract. These terms of the modification were incorporated into the contract, as the changes were not fundamental and the buyer did not object to them.

Facts

The Italian [seller] brings a claim against the German [buyer] for the amount still owing for two deliveries of wall tiles.[3] The parties have been in an ongoing business relationship since 1982. The [buyer] ordered tiles from the [seller]. Under "Terms of Payment" in Order No. 1853 is written: "14 Days 3%-30 Days net."[4] And in Order No. 1856: "as in the past." These represent written confirmations sent to the [buyer] of orders which were previously communicated orally. Underneath, on the right side, is written: "We thank you for this order, which was accepted under reservation of confirmation according to our delivery and payment conditions; respectively, delivery and payment conditions of the shop for which this order is destined." The [seller] debited the [buyer's] account on February 22, 1990 in the amount of 8436.92 DM and, on June 7, 1990, in the amount of 8466.30 DM. The invoice of the [seller] contained the following printing: ". . . complaints will be acknowledged only before the installation of the goods; in any case the goods may be rejected only up to 30 days from the date of the invoice." The [buyer] paid only an installment payment. She gave notice of lack of conformity of the "Anna" tiles which were invoiced on February 22, 1990, and were already installed. Based on the foregoing, the [seller], the [buyer] and the layer of the tiles agreed that the delivery of replacement tiles be without charge and that the [buyer] be credited. The replacement delivery of tiles was never installed due to reported defects. The [buyer] maintains that the second shipment of tiles displayed an even higher number of defects than the original one. She therefore asserts a set-off claim for damages.

She additionally specifies a set-off claim of damages for further deliveries of defective tiles; in the alternative, she claims a right of retention arising out of a claim for the remedy of the nonconformity by repair of the tiles. At issue are tiles bought from the [seller], which were sold to the customers on October 25, 1988 and in the year of 1990, the latter from the delivery invoiced on June 7, 1990. The [buyer] refers to the rejections by her customers, which she immediately communicated to the [seller]. Finally, the [buyer] takes the position that the invoices were due only 90 days after they were issued. The complaint was in substantial part valid.

Reasoning

1. ... a) The legal relation between the parties is subject to the Vienna UN-Convention on Contracts for the International Sale of Goods of April 11, 1990 (hereinafter "CISG"). It has been in force in Italy since January 1, 1988. The case depends on this law, because, pursuant to Article 28, Section 1, Section 2 of the EGBGB,[5] the Italian law applies to the relations of the parties.

        b) The [seller] breached her obligation under the contract to deliver goods fit for the purposes for which goods of the same kind would ordinarily be used. (Article 45, in connection with Article 35(2)(a) CISG). This is established by virtue of expert opinion. This defect of the tiles is substantial, contrary to the position taken by the [seller]. It is without significance that the [seller] subsequently delivered a greater number of tiles than had been ordered, so that, probably, enough tiles of one of the two kinds would have been present, such that the room for which they were intended could have been decorated. It cannot be expected or required of the buyer to open all packages, to sort out the tiles, to test to see if enough of one sort were delivered and then to pack them again . . .

       c) The [buyer] has not lost her grounds for appeal over these defects because of the fact that the [seller] was prepared to make subsequent delivery without acknowledging any legal obligation to do so . . . That means no waiver of liability for potential defects.

       d) Insofar as the [buyer] refuses to pay the sales price for the orders ("Anna" and twice "Anna Decor"), she does not demand damages, but has, rather, partially avoided the contract. (Article 51(1); Article 49(1)(a) CISG). The sales price is reduced. Contrary to the position taken, the right to avoid encompasses also that portion of the contract which relates to the decorative tiles. As the similar designation demonstrates, they too concerned the "Anna" tiles. Without the floor tiles, the decorative tiles would have been of no interest to the [buyer].

       e) Moreover, the [buyer] claims damages (Article 45(1)(b); Article 74 CISG). Such a claim is not precluded by the partial avoidance of the contract (Article 45(2) CISG).

2. The set-off claim, set off against the sales price, pursuant to the invoice of February 22, 1990 and of June 7, 1990, with further claims for damages for the delivery of defective tiles, which were sold to customers, is invalid. The [buyer] cannot recover damages because she did not complain in a timely fashion to the [seller] about the defects. The [seller] made the acknowledgment of rejections depend on their being declared before the installation of the goods, but in any case no later than 30 days after the invoice date. This statement, which appeared on the invoices of the [seller], became a part of the contract. The [seller's] agent [6] referred to this statement in his confirmations of the orders. Pursuant to Article 19(2), CISG, a modified acceptance,[7] modified by comparison with the original order of the [seller], would be effective, because such a modification would not fundamentally change the terms of the offer and the [buyer] did not object to it.

This restriction to a given time-period of the right to reject is in any case harmless with regard to the 30-day period. The [buyer] did not comply with it. The customer was supplied in October 1988, while rejection was announced for the first time in April of 1989. The customer protested in writing on October 12, 1990; at that point, the period for the delivery invoiced previously on June 7, 1990 had expired as well.

The same reasons also render void a right of retention with respect to a claim for replacement delivery.

FOOTNOTES

1. The Landgericht is the German general Court of First Instance. See Timothy Kearly & Wolfram Fischer, Charles Szladits' Guide to Foreign Legal Materials: German 17-18 (2d ed. 1990) [hereinafter Szladits].

2. This Journal of Law & Commerce case translation was prepared by Vivian Curran, Legal Writing Instructor, University of Pittsburgh School of Law (B.A. University of Pennsylvania; Ph.D., J.D., Columbia University), with the assistance of Daniela Lichti, M.B.A. candidate 1993, Katz Graduate School of Business, University of Pittsburgh (Rechtsreferendarin, Graduate of the University of Augsburg, Germany, Law School, 1992). Any reader who intends to rely on this case must consult the original text, a copy of which can be obtained from the Journal of Law & Commerce. [For Internet access to this text, see: "http://www.jura.uni-freiburg.de/ipr1/cisg/urteile/text/24.htm"]

3. The designations "Italian" and "German" indicate the parties' place of business rather than their nationality.

4. If payment is made within 14 days from the delivery date of the purchase price is discounted by three percent. The full purchase price is due in no later than thirty days.

5. "EGBGB" is an abbreviation for Einführungsgesetz zum Bürgerlichen Gesetzbuch or Introductory Law to the Civil Code. The EGBGB is the most important supplementary law to the German Civil Code. However, the Civil Code does not contain all of the law even on those materials which it regulates. See Szladits, supra note 1, at 65-66.

6. The [seller's] agent was the company representative who handled the invoices and confirmations.

7. It should be noted that Article 19 of CISG resolves the "Battle of the Forms" problem in a manner dramatically different from § 2-207 of the United States' Uniform Commercial Code.