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Reproduced with permission of the author

50 Years of the Bundesgerichtshof [Federal Supreme Court of Germany]
A Celebration Anthology from the Academic Community

Uniform Sales Law in the Decisions of the Bundesgerichtshof

Peter Schlechtriem
Translation by Todd J. Fox

Preliminary Remarks
I. Application and Sphere of Application

1. Application requirements
2. Sphere of application
II. Contract Formation
III. Basic Structure of Remedies
1. Avoidance of the contract
2. Compensatory damages
3. Liability of the obligor
4. Anticipatory breach and actual breach of contract
IV. Warranty of Conformity of the Goods to the Contract
1. Conformity to the contract
2. Enforceability of the buyer's warranty claims
Final Remarks

Preliminary Remarks

As courts of last instance it is the task of the highest courts of the Federal Republic to preserve the uniform interpretation and application of the laws in their respective spheres of judicial authority.[1] Alongside the function of preserving "the uniform interpretation and application of the laws" has emerged the perhaps more important task of "creative lawfinding"; a task which the Bundesverfassungsgericht [Federal Constitutional Court] has legitimized.[2] The legislature itself expressly conferred the right to further develop the law to (at least) the highest chambers of the Bundesgerichtshof.[3] In carrying out these tasks, the position of the Bundesgerichtshof is characterized and distinguished by the fact that, despite occasional intervention by the Bundesverfassungsgericht, it has the last word. Apart from dialogue with the academic community, whose importance with the Court varies depending on the area of law, topic and person, the Court is free to autonomously decide, interpret and develop the law. Once the Court has spoken, the question is deemed decided and occasionally forms a new rule as long as the legislature does not intervene.[4]

The role and function of the Bundesgerichtshof are, however, quite different with respect to decisions concerning laws of European or international origin. For the interpretation of European law, i.e., legal proclamations of the European Community, the European Court of Justice is the last instance; "roma locuta, causa finita" applies only when Luxembourg has spoken. More difficult is the task of the Bundesgerichtshof with regard to international uniform law such as the former Hague Uniform Sales Laws [5] and, replacing these, the United Nations Convention on Contracts for the International Sale of Goods (CISG).[6] Due to German ratification of these laws, their interpretation, application and development are as much within the competence of the Bundesgerichtshof as "internal" German law, with, however, the peculiarity that the Bundesgerichtshof is not the exclusive court of last instance, but rather one last instance among many. In this respect, the Court cannot at all secure the unity of application and interpretation. Moreover, the Court is not only more restricted in its possibility for creative further development than in so-called internal German law, but is also bound by the international character of the uniform law and the necessity to especially give heed to uniform interpretation and application in its decisions. The rule in Art. 7(1) CISG [7] compels the discipline, so to speak, that members of an orchestra without a conductor must exercise: no easy task when one essentially gives the cadence himself, which the others must follow. Moreover, this task is especially difficult because one must constantly observe how other highest courts decide and one is more dependant on the receipt of information via the legal academic community than is the case with domestic law.

Finally, when dealing with material like the uniform sales law, which is of central importance for private law in general and the law of obligations in particular, the courts making decisions in international or European uniform law must consider another important consequence. They must recognize that international uniform law such as the CISG and other related, common, rule-summarizing attempts such as the Principles of International Commercial Contracts from the Institute for the Unification of Private Law in Rome,[8] which are comparable to the Restatements of the American Law Institute,[9] or the Principles of European Contract Law,[10] which aspire to outline the infrastructure for a European contract law, cannot remain without repercussions on the internal laws and on their understanding, interpretation, and further development. One must therefore also analyze the Bundesgerichtshof's uniform sales law decisions under the perspective of whether and where they hint at further developments in the sales law and law of performance impairments of the BGB [Bürgerlichesgesetzbuch, German Civil Code] and the HGB [Handelsgesetzbuch (German Commercial Code)].

There is now a large number of Bundesgerichtshof decisions on uniform sales law which provide an especially appealing opportunity to examine within the framework of this celebration anthology whether and how the Bundesgerichtshof has fulfilled these special tasks.

I. Application Requirements and Sphere of Application

1. Application Requirements

The first question with respect to international uniform law, in practice and particularly in the courts, is always whether that law is applicable in the given case; i.e., whether the application requirements of the law are satisfied. The uniform UN Sales Law, or CISG, is applicable according to its autonomous application requirements.[11] However, it also contains an alternative conflict of laws provision in Art. 1(1)(b) CISG: application of the Convention when the rules of private international law lead to the application of the law of a Contracting State.[12] Difficulties arise in this context in the use of choice of law clauses, especially when they refer to German law.

a) If the law of a Contracting State is chosen without other qualifying terms specifying which rules are meant, as for instance the mere reference to "German law," it is long established -- and such was already the case with respect to the Hague Convention on International Sales [ULIS] -- that such a reference includes the application of CISG as part of the chosen law.[13] Regard for the choice of law of a Contracting State as a selection of the CISG, to the extent the scope of the CISG fits the transaction, is also the prevailing international practice.[14] Of course, this is not so when the law of a State which has not ratified the Convention is chosen. If the parties chose English law [15] for example, it is then immaterial whether they wished to exclude the application of the Convention or did not even consider it.

b) The choice of internal applicable law will usually take place in conjunction with a choice of law clause, for instance with the words "German law with the exception of the CISG shall apply" or "German law (BGB/HGB) shall apply." However, it is also possible that parties with places of business in different Contracting States, for whom the Convention therefore applies by reason of Art. 1(1)(a) CISG or by reason of objective connection with the law of the State where the seller has its place of business when such State is a Contracting State,[16] could exclude the Convention by confining applicable law to internal sales law. Such an exclusion is admissible pursuant to Art. 6 CISG. The legal nature of an exclusion of the Convention in these cases is not yet sufficiently clarified, especially when such an exclusion occurs in conjunction with a choice of law clause or later in the legal proceedings. Such a restriction to the application of internal law is often considered to be the same, or is treated the same, as a choice of law in conflict of laws. In my opinion, this gives cause for concern for two reasons:

      aa) If the law of a Contracting State is applicable, and therefore also the CISG, then the exclusion of the Convention in favor of internal sales law is a utilization of party autonomy in a substantive law sense and not in a conflicts of law sense. The exclusion is therefore subject to the restraints on this party autonomy that exist in the respective applicable legal system. These restraints can be more prohibitive than those with regard to party autonomy in the area of conflict of laws.[17] Accordingly, a preclusion of the Convention or some of its provisions in standard term formulas would, if German law governs, be subject to control under the AGBG [Allgemeine Geschäftsbedingungengesetz (Standard Terms of Business Act)], whereas if foreign law governs, German law regulating standard terms would in this respect only be applicable under the narrower conditions found in Art. 12 AGBG.

With the application of German law by virtue of choice of law or by virtue of objective connection, a clause serving to exclude the Convention means nothing more than a clause in a commercial sales contract under internal law, which in excluding the provisions of the German Commercial Code (HGB), leaves only the German Civil Code (BGB) applicable. This is certainly possible, however, it raises a number of questions. First of all, this kind of modification of the contract that excludes the normally applicable legal provisions under the auspices of party autonomy can, when undertaken in a party's standard terms, lead to judicial control pursuant to the Standard Terms of Business Act (AGBG), be it due to a surprising clause or to an unreasonable disadvantage to the other contracting party pursuant to 9 AGBG. If a purchaser with superior market power imposes contract clauses that, for example, exclude application of 377, 378 HGB [examination of goods must be performed and notice of defect given without delay after delivery] then it is certainly debatable whether that is not an unreasonable disadvantage to the seller, who then loses the protection of the buyer's examination and notice obligation. Conversely, the same goes for a standard form exclusion of the CISG by a seller with a superior market power: If such a seller imposes an exclusion of the CISG in his standard form conditions, then the buyer loses the more commodious time limits for examination and notice [18] and the protection of Art. 44 CISG, i.e., the limitation on his loss of remedies when he has a reasonable excuse for his failure to give the required notice. In place of the more buyer-favorable beginning of the statute of limitations pursuant to Art. 3 of the so-called "Contract Act" [Vertragsgesetz][19] (statute of limitations begins to run with the giving of notice of defect), the harsh regulation, often viewed as inappropriate in terms of legal policy, of 477(1) BGB (statute of limitations begins to run upon delivery) would apply. In this respect, it is clear that the Standard Terms of Business Act (AGBG) controls more readily intervene here than in the case of a conflicts of law exclusion of the Convention, for example, by choosing the law of a non-Contracting State.

     bb) The in my view undeniable characterization of such clauses, which in using the law of a Contracting State exclude the application of the CISG in favor of internal sales law, as a substantive part of the sales contract drafted by the parties in deviation from the relevant legal norms must lead to a revision of the view of the Bundesgerichsthof (or at least the view claimed in obiter dicta of the Court) that the parties can still in the legal proceedings waive the application of the Convention by negotiating on the German Civil Code (BGB) and German Commercial Code (HGB).

Of course, the parties can also subsequently modify a contract and agree on the basis of Art. 6 CISG, 305 BGB that instead of the dispositive provisions of the CISG, the provisions of the German Civil Code (BGB) and German Commercial Code (HGB) should govern the contract. Such a subsequent modification to the contract is in principle still conceivable and possible during the legal proceedings. This is so even though an exclusion of the Convention can worsen the legal position for one party and better the legal position for the other party because of the differences between the Convention and the BGB/HGB. The parties' attorneys must therefore carefully examine the consequences that an acceptance of such a proposal to modify the contract from the other party would bring.[20] However, a contract modification requires corresponding declarations of intent with the necessary consciousness and intention of legal consequence, and therefore cannot result from mere negotiations on the BGB/HGB in ignorance of the Convention's applicability. If the parties in a particular case overlook the fact that the sale is a commercial sale and the seller therefore does not at first rely on the buyer's failure to give notice under 377, 378 of the German Commercial Code (HGB), then the Court cannot simply leave these provisions unnoticed and assume that the parties impliedly modified the contract so as to exclude the application of the commercial sale provisions. The same goes for when the parties or their counsel overlook the CISG and consequently only pleaded and negotiated in accordance with the BGB/HGB. Furthermore, negotiation under the false assumption that only the German Civil Code (BGB) and the German Commercial Code (HGB) are applicable to the case has nothing to do with Art. 27 I 2 EGBG [Einführungsgesetz zum Bürgerlichen Gesetzbuch (Introductory Act to the Civil Code)], that is, with a subsequent conflict of laws rejection of the CISG.

The Bundesgerichtshof had already in a decision on the ULIS in 1985 quite clearly expressed the relation supported here between conflict of laws agreement and substantive law agreement concerning the legal norms which should govern or be excluded from the contract of the parties: "If the prerequisites of Art. 1 ULIS [those for the applicability of the uniform law], are met, then the provisions of this law, similar to 343 et. seq. HGB [], constitute special rules with regard to the contract law of the German Civil Code."[21] With this language a decision in 1980,[22] which held that it was possible to exclude the ULIS by a choice of German law during the legal proceedings, must be outdated.[23] In that decision, the Bundesgerichtshof still proceeded from the assumption that it is "without importance whether the contract parties intended in their choice of law pursuant to Art. 3 ULIS to exclude the uniform sales law; decisive is rather merely the fact that they chose a law that necessarily excludes the application of the ULIS."[24] However, precisely this, namely a choice of law, did not occur with the use of German law. Nevertheless, the Bundesgerichtshof thereafter methodically reiterated that an exclusion of the uniform sales law - under application of German law! - can still occur during the legal proceedings, even when the parties had not intended to exclude it.[25] The Court has adhered to this adjudication; at least it has not objected to the conclusion of an appellate court that, with respect to the CISG, the parties had chosen German law pursuant to Art. 27 EGBGB and thereby simultaneously excluded the application of the Convention.[26] The lower courts have followed this view.[27]

     cc) Other application requirements. Besides the basic prerequisites in Art. 1 CISG that the parties have their applicable places of business in different States, respectively in Contracting States, the application of the Convention depends on whether there is a contract for the sale of goods. Whether or not the goods are to be delivered across borders is unimportant. This question, which required clarification by the high courts for the ULIS,[28] is clearly answered for the Convention in the wording of Art. 1 CISG. For the case of branch offices or establishments, it was already decided under the ULIS that, as to the parties' places of business in Contracting States, whether a branch office can be considered the party's place of business depends on whether the sales contract in question relates to the branch office.[29] This solution was codified in Art. 10 CISG.

However, the Convention is not only applicable to sales contracts. Under Art. 3(1) CISG it can also apply to contracts for work and materials as well as, under Art. 3(2) CISG, contracts with mixed goods and service obligations as long as the goods component is preponderant. In a submission to the European Court of Justice regarding the question of legal venue of the place of performance pursuant to Art. 5 No. 1 EuGVÜ [Europäisches Gerichtsstands- und Vollstreckungsübereinkommen (European Convention on Jurisdiction and the Enforcement of Judgments)], the Bundesgerichtshof presupposed the application of the CISG for the compensation claim of an English purchaser arising out of a work and materials contract.[30] Thus, the Bundesgerichtshof unqualifiedly presumed that the CISG applied for compensation claims from work and materials contracts insofar as the Convention was to be considered for the determination of the place of performance under Art. 5 No. 1 EuGVÜ.[31] Notably, contracts requiring the delivery and installment of machinery can also be subject to the Convention under Art. 3 CISG. Already under the ULIS, the Bundesgerichtshof had no reservation in judging according to the uniform sales law the sale of a manufacturing plant consisting of two sections and for which the seller evidently undertook installment obligations.[32] Under the CISG, however, differing views exist concerning contracts for the sale of industrial machinery with their combined delivery of parts and installation obligations.[33]

2. Sphere of Application

a) The unification of sales law is limited in scope. Important questions that frequently or even regularly arise in connection with a sales transaction are left to internal law, determined through the rules of private international law. Accordingly, the assignment of rights, cessio legis, or the assertion of rights of third-party interests are excluded from the Convention.[34] In this respect, there are not "internal" gaps that would need to be filled on the basis of general principles embedded in the Convention, since on the one hand, such principles for these legal questions are apparently lacking, and on the other hand, documents and the developmental history of the Convention show that no treatment of these questions was intended.

b) Deliveries over national borders frequently occur within the bounds and on the basis of framework agreements such as distribution contracts, franchising contracts or agency contracts. The regulation particularities of such forms of distribution are quite familiar to the German lawyer [35] and since the uniform sales laws came into effect, the decisions of the Bundesgerichtshof have led to a clear distinction between framework agreements and sales contracts concluded in the performance of such agreements.[36] In one of the well-known Benetton cases,[37] the disputed claims concerning the purchase price were based on the CISG while the framework agreement on the cooperation of the parties was classified as a "franchising contract or at least similar to a franchising contract," which was to be treated separately. Due to a convenant not to compete, the invalidity of the framework agreement had to be considered pursuant to the GWB [Gesetz gegen Wettbewerbsbeschränkungen (Act against Restraints of Competition)] and Art. 85 EWGV a. F. [Vertrag zur Gründung der Europäischen Wirtschaftsgemeinschaft (EEC Treaty)] but this had no effect on the individual sales contracts. A first possible combination of the framework agreement, which is subject to domestic law, and the sales contracts made in the performance of this agreement, which are to be judged under the Convention, becomes clear here. The Court had to examine whether the eventual invalidity of the franchising contract pursuant to 139 BGB [partial nullity of a legal transaction] could extend to the sales contracts. Since 139 BGB belongs to the provisions on contract validity, which under application of the Convention are left to domestic law pursuant to Art. 4(a) CISG, such an extension of invalidity to the sales contracts would have been possible. However, the Bundesgerichshof did not find the prerequisites of 139 of the (BGB) to be satisfied since it determined that the matter concerned independent legal transactions and that the parties did not intend for them to constitute a unified legal transaction. The lower courts have also followed the Bundesgerichtshof concerning such framework agreements.[38]

Of course, the border between framework agreements together with the sales contracts concluded in their performance on the one hand, and requirement contracts, on the other hand, can be fluid. For instance, without going further into the question of the legal nature of the parties' relationship, an American federal district court confirmed an arbitration award in which the CISG was applied to the contract between an American distributor and an Italian supplier.[39] Decisive in this issue is the determination of what rights and duties besides the purchase of goods the distributor has undertaken. In order to avoid possible doubts, the parties are quite at liberty to agree to the application of the CISG for the framework agreement as well. However, in this case, as with any broadening of the Convention's sphere of influence, one must carefully consider whether the Convention's provisions envisaged for the delivery of goods are actually suitable for service-character obligations and their breach.

c) The limitation found in Art. 4 CISG on the sphere of application of the Convention to "the formation of the contract of sale and the rights and obligations of the seller and buyer," the express exclusion of validity questions as long as they are not questions of form and consent (Art. 4(a) CISG), as well as exclusion of questions as to the effect which the contract may have on the property in the goods sold (Art. 4(b) CISG), demonstrate not only the confines of the Convention but in individual cases can also lead to difficult questions broadly discussed in legal literature but which have not yet been decided upon by the Bundesgerichtshof. For instance, the question as to the relationship between avoidance of the contract due to mistake and warranty law under the CISG. Occasionally a combination between national (internal) law and the Convention arises, as with a sale under reservation of title. The substantive legal status formed by the reservation of title undoubtedly depends on internal property law, usually therefore on the lex rei sitae; however, the question of whether and under what circumstances the contract can be cancelled when the buyer is in default of payment is to be answered under the CISG and not, for instance, under 455 of the German Civil Code (BGB) if German law is the lex rei sitae. The "key press machine case"[40] is an example of such a combination problem and the difficulties in its solution. In this case, the work and materials contract called for the delivery of a key press machine under reservation of title. A first payment installment was made to the seller (plaintiff), however, a dispute then arose between the seller and the manufacturer. The manufacturer subsequently refused to deliver to the seller and instead delivered directly to the buyer. The question was whether the seller could demand the rest of the purchase price (see infra, sub. III. 4.). Also questionable was whether the seller could still transfer full ownership. Without further enlightenment over the property law relationships, the Bundesgerichtshof opined that proper delivery was achieved with the delivery of the machine by the manufacturer and the buyer could acquire title by paying the remaining purchase price to the seller. However, since the seller itself was never the owner, and the manufacturer was not willing to deliver for the seller, the property law questions of how delivery by the manufacturer could be attributed to the seller and how payment to the seller could transfer full ownership remain unclear. Furthermore, one can neither infer from the decision which rules of private international law were used, nor to which national property law they led. Only implicitly (and through analysis of the lower court's judgment) can one determine where the parties had their places of business (buyer in Switzerland, seller in Germany) and which property law was applied as the lex rei sitae (German law). For this first decision on the CISG, one must therefore concede a certain degree of inexperience on the part of the Bundesgerichtshof regarding the complex questions that can arise from the combination of international uniform law, private international law and internal substantive law.

II. Contract Formation

The provisions on contract formation - Part II, Arts. 14 to 24 CISG - are among the weaker sections of the Convention. In both the basic conception as well as in important details, they are regressive and influenced by national rules that were held to be indispensable by the drafters and delegations. First of all, the Convention provides for contract formation only through offer and acceptance, legal institutes of the 19th century,[41] and neglects other possibilities of binding party agreement which are provided for in the American UCC [42] and codification proposals, or in restatements such as the Principles of European Contract Law [43] or the UNIDROIT Principles of International Commercial Contracts. Contract formation by use of standard terms has remained overlooked, and questions regarding the operation of standard terms can only be answered with the help of the general rules of interpretation in Art. 8 CISG. Even more unfortunate is the fact that the problem of conflicting standard terms has remained unregulated, despite appropriate proposals, and can hardly be satisfactorily solved with Art. 19 CISG, especially since the Convention contains no provisions such as 154, 155 of the German Civil Code (BGB).[44] One cannot reproach the drafters of the Convention that modern means of communication such as e-mail and Internet communication were not considered; whether the provisions on the effectiveness of legally relevant statements - Arts. 24, 26, 27 CISG - are suitable for such electric communication remains to be seen.

The orientation towards conceptual and structural ideas of the 19th century is also evident in the compromise reached on the lengthy dispute over the revocability of an offer. It is characteristic that the question of revocability of an offer has, as far as can be seen, not as yet been relevant within the practical experience of the Convention. The rapprochement with one's own law has, however, influenced the requirements regarding the certainty of an offer, and therewith the formation of a contract on the basis of an offer. The insistence on the requirement of a pretium certum, which was especially promoted by the delegation within the tradition of the French Civil Code,[45] has naturally led to uncertainties for the Convention, which can noticeably reduce the foreseeability of solutions to this question. While the Austrian Supreme Court [Obergerichtshof] has been quite liberal in the event of an insufficient determination or determinability of the sales price [46] and the French Supreme Court [Cour de Cassation] has moved away from a too narrow view of the required certainty of the sales price,[47] Hungary's highest court, in a controversial decision [48] and contrary to the lower instance, presumed the uncertainty of the sales price for the jet-propulsion engines and accessories in the disputed contract and ruled out a determination of the price pursuant to Art. 55 CISG, since there is allegedly no ordinary price for such goods. In a ULIS case, the Bundesgerichtshof also rejected in obiter dictum ("is, however, without factual basis") the presumption of the appellate court that the price the seller charged for a packing machine represented the "generally charged" price within the meaning of Art. 57 ULIS.[49] After a detailed examination of the developmental history of Art. 57 ULIS, the Bundesgerichtshof declined to apply 316 of the German Civil Code (BGB) as an aid in the event that the price term could not be objectively determined under the ULIS provision. The cases in which the validity of a sales contract had to be decided because of insufficient determinability of the sales price show clear weaknesses in these provisions of the ULIS as well as in those of the CISG. The conscious refusal to employ a provision such as 316 BGB as a helping rule can lead to contracts failing or having their validity depend upon the results of the evidence. In view of the unambiguous decision of the Convention drafters, help cannot be found in the two methods set out in Art. 7(2) CISG.

A one-sided privilege to determine the price can neither be developed from general principles of the Convention, nor arrived at by recourse to internal law via the rules of private international law in order to apply a domestic right to determine the price. The question of a one-sided right to determine the price has, as the Bundesgerichtshof correctly explained concerning the ULIS (see above), been decided by the rejection of such a rule. This, however, is bound with the risk, which in my opinion should not be overlooked, that courts will use the unavoidable degree of leeway in the consideration of evidence to the benefit of the home party. It is not by chance that an American commentator on the Hungarian Malev decision spoke of "home town justice" in a case in which the American jet engine manufacturer's claim against the Hungarian airline (which summarily decided to use another supplier) was dismissed due to invalidity of the sales contract under Art. 14(1) CISG.[50] One will therefore hardly be able to draw guiding impulses from the CISG for a reform of the provisions on contract formation or for a unification of law beyond that of sales law. However, this is not the case for the substantive part, i.e., the rights and obligations of the parties and the remedies in the case of failures of performance. Here one finds just and progressive solutions as well as interesting decisions of the Bundesgerichtshof in this area.

III. Basic Structure of the Remedies

The remedies given to a party in the event of a breach of obligation by the other party are more clearly structured in the Convention than in the German Civil Code (BGB). Their conception has therefore also been employed in the UNIDROIT Principles of International Commercial Contracts and the Principles of European Contract Law. This is especially the case for the two most significant remedies, "damages" and "avoidance of the contract," but also for the extension of the right to require performance in the case of non-conformity of the goods, as "supplemental performance" [Nacherfüllung] by cure or delivery of substitute goods. Particularly the remedy of avoidance of the contract is in its prerequisites, application and legal consequences superior to the BGB, where these factors are found in different, and sometimes badly coordinated rule combinations.[51]

1. Avoidance of the Contract

The uniform sales laws have reduced the possibility of contract avoidance to two basic cases: The obligee can avoid the contract if the obligor's breach is a fundamental breach of contract. Furthermore, the obligee can avoid the contract for certain types of breaches when the obligor does not perform before the end of an additional period of time set by the obligee. The "Nachfristmodell", taken from German and Swiss law - see Art. 107, 108 OR [Obligationenrecht (Swiss Law of Obligations)] - and therefore occasionally called "le Nachfrist allemand" during the preparations of the Hague Convention on Sales, can under the CISG only be used to avoid the contract in cases of non-delivery by the seller and non-payment or refusal to take possession by the buyer. Differently than under the Hague Convention, in particular for non-conformity of the goods, the buyer cannot avoid the contract by setting a time period for the seller to remedy a defect.[52] The reasons for this limitation on the right to avoid the contract, as well as for the corresponding limitation on the buyer's right to require delivery of substitute goods under Art. 46(2) CISG, have often been mentioned and are quite obvious: Avoidance of the contract, but also the buyer's demand for substitute goods with the necessary return shipment of the complained of goods, regularly entail storage and transport costs in addition to the associated risks for the goods. Even if one only sees a limited broadening of legal argument for certain liability rules through consideration of costs and benefits under the economic analysis of law, it is clear that it makes economic sense in such cases [53] that the buyer either reduce the price or utilize the non-conforming goods as well as possible and liquidate the resulting damages.

The Bundesgerichtshof has respected this basic conception of restricted avoidability of the contract due to a lack of conformity of the goods and - differently than some foreign courts [54] -- has correctly set high demands to meet the avoidance threshold. In the well-known "cobalt sulfate case,"[55] after careful consideration of the partially differing authorities in this respect, the Court did not allow an irreparable defect alone to be sufficient for the presumption of a fundamental breach of contract.[56] Furthermore, the Court emphasized, once again quite correctly in my opinion, that it is primarily the responsibility of the parties to clearly specify in the contract the importance of certain qualities of the goods so that the absence of such qualities would amount to a fundamental breach of contract by the seller.[57] Therefore, it remains possible for the parties to give or demand "guarantees" - or functionally equivalent - to make the existence of certain qualities or characteristics a "condition," in order to secure the possibility of avoiding the contract for non-conforming goods.

Just as important for understanding warranty law under the CISG, but especially important for the (internal) German sales law, are the Bundesgerichtshof's remarks on peius [delivery of defective goods] and aliud [delivery of the wrong goods]:[58] according to the Court, an aliud is the same as a defective delivery.[59] Although the Bundesgerichtshof wants to leave the question open for the case of an especially blatant deviation of the goods from the qualities required by the contract, it is nevertheless clear that the equal treatment of aliud and peius has generally been accepted and viewed as an alleviation for the application of the law. Even for cases of blatant deviation, there is no need to qualify them as "non-delivery" with the resulting possibility of contract avoidance after the expiration of a set additional period of time, the dispensation from giving notice, and the longer statute of limitations compared to 477 of the German Civil Code (BGB) and Art. 3 of the Contract Act. The more extreme the deviation, the easier it will be to classify it as a fundamental breach of contract, since it will be that much less expected of the buyer that he attempt to use the unsuitable goods. A claim for delivery of substitute goods pursuant to Art. 46(2) CISG is then also available to him. Only in the cases brought as an example for 378 of the German Commercial Code (HGB), where there is an obvious mix-up or a substitute offer because the seller cannot at all deliver or obtain the promised goods and therefore offers unordered goods, can one presume that no delivery has taken place.[60]

2. Compensatory Damages

The Convention does not differ much from the sales law of the German Commercial Code (BGB) in prerequisites and scope of a claim for damages. Under the CISG, every breach of obligation produces a claim for damages as long as the obligor cannot exempt himself from liability under Art. 79 CISG. Differently than in the BGB, the seller is therefore also liable in damages for the harm caused by the defect. More important, however, is the introduction of the so-called foreseeability rule in the second sentence of Art. 74 CISG in order to limit the scope of damages. This rule was originally rejected by the drafters of the BGB and only found a place in the first alternative of 254(2) BGB.[61] It is based on the Anglo-Saxon "contemplation rule" which is founded upon the basic idea of the obligor's assumption of risk in agreeing to a contract. In the event that one party should breach the contract and cannot exempt itself from liability, each contractual party assumes the risk of damages which ordinarily arise in such a breach or which were foreseeable; should the party not wish to assume this discernable risk, then it must either forsake entering into the contract or contractually limit its liability.[62]

Even before a direct application of this rule for limiting damages, contained in Arts. 82, 86 ULIS, the Bundesgerichtshof had taken it into consideration and applied it in delimiting admissible liability limitations in contracts based on standard terms and general conditions forms: A clause in boilerplate standard terms that excludes liability for non-foreseeable damages is permissible.[63]

It is therefore a question of the extent of a contractual assumption of risk and its limits; foreseeability should therefore not be taken literally. "Foreseeability" is quite amenable to a normative characterization, as Detlev König proved in 1973.[64] In a 1979 ULIS case,[65] a German cheese importer claimed damages for alleged defects in cheese delivered by a Dutch seller. Three percent of the total delivery was affected. Damage suffered included not only the general damages because of the goods, but also the loss of large customers who rescinded their contracts with the importer on account of the defect, and the indemnification of a purchaser. The Bundesgerichtshof held to be decisive whether, in view of the saturated cheese market in Germany, it was foreseeable that minor deficiencies in performance could lead to a loss of customers. The Court sanctioned the fact that the appellate court had obtained written information from chambers of commerce and industry concerning the question of foreseeability in this case in which non-foreseeability was presumed.[66] The decision was criticized because it considered factual foreseeability rather than foreseeability as an element in the assessment of the degree of the seller's risk assumption at the time of the conclusion of the contract.[67] In my opinion, the decision was nevertheless correct in its core: Whether the Dutch supplier assumed the risk that a lack of conformity which only affected a comparatively small portion of his delivery could cause a diminution of the buyer's good will and therefore induce a considerable loss through the abandonment of important customers, was indeed a question of foreseeability for this supplier.[68] Liability with regard to customers (indemnification), however, should at least have been "foreseeable" within the normative meaning of this criterion since it is to be expected in the usual course of delivery of defective goods to a middleman. These types of damages are ("quite simply") considered "foreseeable" not only for goods delivered to a middleman for resale but also for products for further processing, whose defects create replacement obligations for the buyer/manufacturer with respect to its customers.[69] On the other hand, whether unnecessary and excessive costs (in relation to the value of the goods) incurred in attempts to cure are recoverable damages is not a question of foreseeability, but rather one of the duty of the buyer entitled to avoidance and damages in the particular case to mitigate losses.[70]

3. Liability of the Obligor

The obligor is liable for damages under the Convention irrespective of fault in his breach of an obligation. He can exempt himself only in conjunction with an impediment that was both beyond his control and unforeseeable.[71] It has often been said that this provision corresponds closer to the non-fault based liability for breach of warranty in Anglo-American law than the principle of fault-based liability in the German Civil Code (BGB), which has clearly been greatly restricted through far-reaching exceptions and an objective conception of negligence. Because of the German commission's insistence during the preparation of the ULIS on an exemption possibility for the seller unable to discover defects despite careful inspection, Anglo-American lawyers suspect still today that the German fault principle might have crept into Art. 79 CISG.[72] The core of the dispute of whether a remnant of the fault principle should be retained in the form of an exemption possibility for the obligor through the exercise of due care in the inspection of the goods, revolved around situations during the preparation of the ULIS in which a seller obtained goods or components from third parties, i.e., suppliers or their suppliers, and defects were not discoverable despite careful inspection. This question was also disputed in Vienna and influenced the often misunderstood rule in Art. 79(2) CISG.[73] The decision of the Bundesgerichtshof in the "vine-wax case"[74] brought needed clarity in this respect and is furthermore a "liberation," in that it shows our Anglo-Saxon colleagues that in Germany an exemption for the seller in the case of non-conforming goods is not taken into consideration just because the seller obtained the goods or individual components from third parties. Suppliers, and in turn, their suppliers, are within the seller's sphere of influence. As the Bundesgerichtshof correctly pointed out, the seller's liability for them is the same as if he had manufactured the goods himself.[75] In its treatment of the legal issue as well as in its reasoning, the decision is not only a welcome movement towards the point of view of other legal systems regarding seller's liability, which is extremely important for the preservation of a uniform interpretation of the Convention, but is also in two ways guiding for the future legal developments in internal German sales law and the Convention: Control, meaning foreseeability, avoidability, and ability to overcome impediments within the meaning of Art. 79(1) CISG, has always been understood as physical control. The decision demonstrates, however, that it is also a matter of economic risk control. In other words, as long as the risk is within his economic sphere, the seller is in a better position than the buyer to carry the risk of damages due to a delivery of defective goods. "Under the Convention the reason for the seller's liability is that he has committed himself to procure the buyer with conforming goods." This corresponds to the usual meaning of such a contract and it makes no difference from the buyer's point of view whether the seller manufactures the goods himself, "with the consequence that the non-performance in principle lies within his sphere of influence, so that an exemption pursuant to Art. 79(1) CISG will usually be ruled out, or whether he procured the goods from suppliers," the cause of the defect being therefore no longer within the seller's physical sphere of control. It is a question of an allocation of the risk of damages based on economic reasons and not only on the basis of control over the sphere in which damages could arise. This is not only an expansion of the risk allocation under Art. 79 CISG but also an important idea for German law, which in my opinion should have as consequence the exclusion of a possibility of exemption for the seller in the case of an undiscoverable defect caused by suppliers or their suppliers, despite even the most careful inspection. Also in German law there should be, in the case of such a broad seller's liability, a limitation on recoverable damages corresponding to the foreseeability rule and, as in the "vine wax case,"[76] the obligee's comparative liability for breach of its duty to mitigate damages under Art. 77 CISG, 254(2) of the German Civil Code (BGB) should be closely examined.

4. Anticipatory Breach and Actual Breach of Contract

In the "key press machine case"[77] mentioned above in I. 2. c), the seller sued for the price even though it could not expect delivery of the purchased machine from its supplier (manufacturer), and the manufacturer, by an assumed "entry" into the contract between the seller and the buyer, delivered directly to the buyer. The buyer claimed, among other things, avoidance of the contract in its defense. The Bundesgerichtshof held avoidance of the contract under Art. 72 CISG to be unavailable because the provision "uniquely serves to protect against a future breach of contract and therefore applies chronologically before delivery and its various forms of defective performance;" here, however, delivery had already occurred. Avoidance of the contract under Art. 49 CISG based on possible non-fulfillment of the obligation to transfer the property in the goods (the prerequisites of which were not individually examined) is also not possible because the buyer did not exercise the right to avoid the contract within a reasonable time and therefore that right was lost.[78] The decision provoked various concerns, since it unquestioningly attributed delivery by the manufacturer -- who wanted to deliver to the buyer on the basis of its own presumed contract -- to the seller, and therefore held the buyer obliged to pay the seller the remaining sales price. Furthermore, it seemed to assume that ownership was transferred from the manufacturer to the buyer, so that the fulfillment of the buyer's entitlements to delivery and transfer of ownership under Art. 30 CISG was apparently allocated to different contracts.[79]

The decision hardly brings clarity to the various individual problems brought up in this case.[80] Nevertheless, the rejection of the right to avoid the contract was correct and the judgment at least deserves credit for having made clear the Convention's aversion to avoidance in the further point that avoidance for breaches of contract other than non-delivery is only permitted within a reasonable time period.[81]

IV. Warranty of Conformity of the Goods to the Contract

The provisions concerning the seller's warranty of conformity to the contract belong both in practice and in theory to the most important provisions of the Convention. Although the requirements and legal consequences of these provisions were worked out on the basis of a comprehensive comparative analysis, some uncertainties and gaps still remain, as well as a need to define concepts open to interpretation. Therefore, a proper and appropriate completion of the law requires academic and judicial guidance. The Bundesgerichtshof has impressively accepted this challenge.

1. Conformity to the Contract

The treatment of conformity to the contract within the meaning of Art. 35 CISG is clearly based on the subjective understanding of a defect [subjektiver Fehlerbegriff]. Art. 35(1) CISG defers to the agreement of the parties and Art. 35(2) CISG supplies helping rules for when the parties' agreements are incomplete.[82]

The question whether deviations in the goods from public law regulations are to be considered a lack of conformity, and especially, which public law regulations are controlling, e.g., those of the seller's place of business or those of the buyer's place of business, is not expressly settled. The so-called "mussel case"[83] brought some clarity to both these questions, or at least induced some clarity. This case concerned the sale of New Zealand mussels by a Swiss company to a German importer. The German buyer claimed that a certain level of cadmium in the mussels violated German food regulations. This cadmium level was, however, acceptable under Swiss regulations. The buyer declared the contract avoided due to lack of conformity of the goods while the seller sued for the sales price. The Court found that the goods conformed to the contract. The starting point of the decision was that food regulations, to the extent that they should even have been applicable here, could be decisive for the determination of the quality of the goods required by the contract, and that their violation is a defect in quality and not a defect in title. It is true that public law regulations, just as technical standards, cultural traditions or religious convictions, are circumstances that influence the ability to use goods. As this author has elsewhere explained in greater detail,[84] these circumstances interact with each other; for instance, ideological and other convictions are often converted into governmental rules and prohibitions. On the other hand, the violation of government regulations concerning the use of goods must not necessarily represent a defect in quality because the relevant commercial sphere can perhaps disregard such governmental regulations -- for instance, in environmental law -- and still readily consume and trade goods that violate a prohibition. Since such regulations, whether they stem from public law, ideological convictions, or traditional rules of conduct, can differ from country to country (and often greatly differ), the principle point to be decided was whether the public law regulations of the seller's place of business or the buyer's place of business controlled. The Bundesgerichtshof decided for the seller's place of business and brought to bear an impressive list of authorities for its position. In the Court's reasoning, public law regulations in the importing country are only important when they correspond to those of the exporting country, or when the buyer refers the seller to them. Certainly, the Bundesgerichtshof's decision is important not only for the application and interpretation of the CISG, but also for cases to be decided under the BGB/HGB, and soon, under the provisions for consumer sales.[85] However, as explained elsewhere,[86] one must nonetheless hope that this decision is not yet the final word on this question. Arbitration tribunals and courts of other jurisdictions have decided otherwise and applied the regulations of the buyer's place of business as a matter of course.[87] It is, of course, first of all up to the parties to consider such factors that influence the use of the goods at the time of fixing the quality required by the contract under Art. 35(1) CISG. Thereby, they should clearly allocate the risk associated with the observance of public law regulations in the contract. According to the experience of the author, this is done in many export-import contracts. The view espoused here, that public law regulations, ideological, and cultural or traditional conditions upon the use of goods are to be treated equally, makes it in my opinion clear that the just solution for these cases, where no clear party agreement can be discerned, should be developed from Art. 35(2)(b) CISG. Decisive is the particular purpose for the goods; thus, first of all whether the goods are to be used or resold in the importing country or whether they are to be further exported to a third country. If the seller knows where the goods are intended to be used, then he will usually be expected to have taken the factors that influence the possibility of their use in that country into consideration. If one exports foodstuffs containing pork or beef to countries in which, due to religious reasons, the consumption or resale for consumption of pork or beef violates legal or religious ordinances, he cannot claim that in Germany other rules and customs prevail. Such regulations in the broadest sense do not differ from technical or economic framework conditions for using goods in a certain country: Electric appliances delivered to the USA must be suitable for the voltage tension there [88] regardless of whether this tension is ordained by law or eventually became the standard during the electrification process.

Of course, one must consider that exporters, especially smaller enterprises, cannot know all such regulations for the use of goods in the intended country. They can, however, be expected in such cases to define and qualify in the contract the quality and characteristics of the goods they are to deliver. Finally, the exceptions in Art. 35(2)(b) CISG should particularly help smaller companies if the buyer did not rely, or if it was unreasonable for him to rely, on his supplier's skill and judgment regarding the regulations that influence the use of the goods in the intended country. In an uncertain legal situation in his own country -- such as that in the "mussel case" regarding the applicability of the regulations for the mussels -- the buyer can also not trust that the seller has clear knowledge of the public law regulations (how should he considering the uncertain legal situation!) and that he is respecting them. In such a situation, the buyer must insist on a clear and unambiguous delimitation of the agreement. The blurred borderline between Art. 35(2)(a) and (b) CISG, noted in this context by the Bundesgerichtshof,[89] is for the question treated here perhaps easier to distinguish than feared: (only) where the same regulations exist in the seller's and buyer's country is Art. 35(2)(a) CISG the starting point for the determination of the quality required by the contract. Unlike under subparagraph (b), the seller cannot in these cases claim that the buyer could not rely on his (the seller's) skill and judgment.

The decision of the Bundesgerichtshof, which deviates from the understanding of arbitration tribunals and foreign courts,[90] is nevertheless of considerable importance. Notable is first of all its consideration of a broad spectrum of German and foreign authorities. Particularly, however, a question is brought to the fore that, as mentioned above,[91] can also be decisive in international cases in which the German Civil Code (BGB) or the EU directive on consumer sales is applied and the Bundesgerichtshof deserves credit for having provoked this important discussion. Moreover, the decision seems to have been correctly decided in its treatment of the legal issue: In view of the uncertain legal situation in Germany, the buyer could not assume the seller to have clear knowledge and corresponding competence in this respect.

2. Enforceability of the Buyer's Warranty Claims

The buyer's duties to examine the goods and give notice of lack of conformity are, both in legal policy and in practical considerations, among the most difficult details of a buyer's warranty claim. During the preparation of the uniform sales laws these obligations and the consequences of their breach, known to German lawyers under 377 of the German Commercial Code (HGB), became a large obstacle for the delegations of some countries in which these instruments for the prompt resolution of potential disputes due to defects in the goods were unknown. For the CISG, this obstacle should at least have been made smaller through Art. 44 CISG. The change from the short time period of Art. 39 ULIS [notice must be promptly given] to the "reasonable" time period of Art. 39(1) CISG is also an expression of this anxiety. The abundance of cases in which German courts have had to decide on questions of timely and sufficiently substantiated notice on the part of German buyers shows, however, that German merchants could have difficulties with these provisions as well.

In the difficult weighing of the seller's interests in a swift execution of the sales contract and the buyer's interests in the delivery of conforming goods and the preservation of corresponding rights, there can be no abstract, easily categorized, and in each individual case for both sides, equally satisfactory solution. Rather, the lawmakers must leave the courts a margin of discretion in deciding the particular case through the use of terms open to interpretation such as " within as short a period as is practicable in the circumstances" (examination of the goods), " within a reasonable time " (notice of non-conformity), or, after discovery or discoverability of a lack of conformity, "when (the buyer failing to give notice) has a reasonable excuse for his failure to give the required notice". Of course, the courts must not then attempt, for whatever reason, to narrow this margin of discretion through the use of precedent, especially since the peculiarity of last instance decisions on an international uniform law, as emphasized at the outset of this article, exposes such attempts to condemnation as a violation of Art. 7(1) CISG.

a) The margin of discretion left to the courts through the use of terms open to interpretation can nevertheless be insufficient to attain that which is felt to be the just, and therefore desirable, result in a particular case. Understandably, the court will then seek solutions that allow the circumvention of the legal rules and their perceived as harsh consequences. In cases dealing with the failure to give proper notice, it was therefore often claimed under ULIS that the seller could not rely on that failure because he either knew of the lack of conformity or could not have been unaware of it.[92] What was conceived as an extreme exception became practically a regular corrective measure in practice.[93] The Bundesgerichtshof also had to repeatedly deal with this phenomenon. In a case decided in 1989,[94] the German buyer bought machines for the processing of wood from an Italian supplier. The machines were to be partially resold in the USA but evidently were not suitable for the voltage tension there. The issue was whether timely and substantiated notice was given. The appellate court rejected the application of Art. 40 ULIS. The Bundesgerichtshof reversed because the seller's grossly negligent unawareness would already be enough to exclude a claim of failure to give notice. That was most likely the case and the action was sent back for further facts. The period of notice for lack of conformity of the goods, which runs from the time of delivery -- under Art. 49(1) ULIS one year, under Art. 39(2) CISG two years -- can, like the time period for giving notice, also be perceived as being too harsh in a particular case. In such a case the determination of whether the seller knew or could not have been unaware provides a means of extrication.[95]

b) Unfortunately, the Convention does not give any answers to the question, whether and when negotiations, etc. between the parties have an influence on the statutory time periods, particularly the time period for giving notice and the statute of limitations.[96] Should one desire to not let party negotiations over the buyer's claim of non-conformity go completely without influence on these time periods, then various solutions come into consideration. In my opinion, recourse to national law is unavailable because this question concerns a matter clearly governed by the Convention and therefore one must first attempt to close internal gaps in conformity with the general principles of the Convention. One principle suitable for gap-filling could be that of estoppel due to conflicting conduct, a principle that has found expression in Art. 16(2)(b) CISG and Art. 29(2) CISG. However, this approach, which was applied by the Arbitration Tribunal of the Federal Chamber of Commerce in Austria,[97] would not only considerably increase the uncertainties associated with the application of the examination and notice provisions, but would also have the unwanted side-effect of preventing negotiations.[98] Preferable is therefore the solution favored by the Bundesgerichtshof: to examine whether the seller made an acknowledgement of proper notice or legally waived the right to claim lack of notice.[99] A basic principle of the Convention that allows a corresponding rule for gap-filling is the principle of party autonomy found in Art. 6 CISG and in numerous other provisions. The seller's statement that it will "answer for and properly deal with" legitimate complaints can therefore be interpreted as the seller's offer to waive its right to claim untimely or improper notice, or as its acceptance of a corresponding offer by the buyer.[100] Interpreting such a reaction by the seller to a buyer's complaint about the goods as a waiver also releases the court from the need to examine whether the buyer's objection fulfilled the requirements of giving proper and timely notice. Naturally, the threshold for such a waiver must not be set too low. Although primarily a question of interpretation, and therefore a task for the trier of fact, the Bundesgerichtshof confirmed in a 1998 decision [101] the possibility of an implied waiver by the seller (while leaving open the question of forfeiture) but insisted on clear substantiation. In the Court's view, the mere entering into negotiations is not enough, since that might only express the seller's wish to first attempt an amicable settlement of the dispute over the lack of conformity. Moreover, the assumption of an implied waiver is also ruled out when it concerns rights unknown to the other party and with whose existence that party did not reckon. In this particular case, the long duration of the negotiations (15 months) and the fact that the seller had legal counsel, was interpreted (from the buyer's point of view) to show an implied intention to waive by the seller. If the seller wished to avoid such a consequence, then it could have reserved its right, "expressly or at least discernibly for the buyer," to still object to the delay despite the negotiations. With this reasoning, the Bundesgerichtshof took into consideration the concern, also noted by the appellate court, that too generous an assumption of waiver in negotiations could hinder the public policy goal of keeping sellers willing to negotiate.[102] This decision deserves unreserved approval, and the appropriation of corresponding solutions and formulas from internal German law is inoffensive since they ultimately are founded on the principle of broad party autonomy common to the BGB/HGB and the CISG.

c) Specificity (Substantiierung) and timeliness. At the center of the problems treated here are the requirements for proper notice, i.e., substantiation (the nature of the lack of conformity must be "specified") and timeliness ("within a reasonable time" after discovery or discoverability). Along with the issue of timeliness, the timely discovery due to examination of the goods ("within as short a period as is practicable in the circumstances") must also be borne in mind.

      aa) Specificity (Substantiierung). Art. 39(2) ULIS contained with the notice requirements the additional condition that the buyer invite the seller to examine the goods or cause them to be examined. This is an added burden for the buyer, which the CISG rightfully discarded. The language "shall specify its nature" had led to a number of decisions under the ULIS, from which it is clear that the German trial courts set an especially strict standard.[103] The Bundesgerichtshof, on the other hand, had in a 1982 decision already warned against making the requirements for substantiating a lack of conformity overly strict, because otherwise the risk of defective contract performance would be largely assigned to the buyer.[104] This is also the position of the authorities in the legal literature on the Convention.[105] Nevertheless, some of the lower courts have continued to set the same strict requirements under the Convention that were adhered to under the ULIS.[106] Also decisions of the Bundesgerichtshof on the CISG seemed at first to require a strict duty of substantiation, such as when the complaint "printer documentation" was considered insufficient because the buyer "was held to specify the defect of the documentation so precisely that misunderstandings were impossible and so that the seller could clearly discern what was meant;" the alleged ambiguity of the term "printer" prevented the defect from being clearly specified.[107] The decision seems therefore to be rather in line with those of the more severe requirements.[108] Lately, however, the Bundesgerichtshof seems to have relaxed the substantiation requirements. In a most recent decision,[109] the case concerned defects in supplied machine parts ("set of grinding parts") which at first destroyed existing parts in the machine in which they were installed, and then led to a total loss of the entire machine. The buyer had forwarded to the seller customer complaints, instances in which the buyer's purchasers complained of certain symptoms indicating defects in semi-finished products manufactured with the machine parts. The Bundesgerichtshof found the complaints sufficient to specify the nature of the lack of conformity and to give the seller an idea thereof so that the seller might then take the necessary steps: It was therefore enough that the buyer name the symptoms and not the actual cause.[110] With this decision the Bundesgerichtshof has established a sensible alleviation of the notice requirements that also accords with the line of cases from the 7th Senate on defective performance in service contracts.[111]

     bb) The real importance of the decision of November 3, 1999 lies in the Bundesgerichtshof's statements on the time period for the giving of notice and on the interaction between the period of time for examination and that for the giving of notice.

Concerning the time period for notice, the Bundesgerichtshof has established a "regular" time period of one month.[112] In view of the risk that German trial courts might perceive that as being set precedent, the decision gives cause for concern. The reasonableness of the time period for giving notice depends on various circumstances such as the type of goods involved, the commercial branch, the level of knowledge concerning the cause of the lack of conformity within the time for examination, etc.[113] It is therefore a question of the circumstances of the particular case. The lower courts have accordingly applied quite diverse time periods,[114] and the French Supreme Court has recently left measurement of the time period completely within the discretion of the trial judge, which in my opinion is sensible.[115] As previously mentioned and explained in more detail elsewhere,[116] establishing fixed standards, which risk to be misunderstood as precedent, is especially dangerous because they contradict the precept found in Art. 7(1) CISG that regard is to be had to the need to promote uniformity in the application of the Convention and the need to therefore to preserve the utmost harmony in the international interpretation and application of the Convention. When, however, the Austrian Supreme Court allows only fourteen days for examination and notice together, as long as no special circumstances speak for the shortening or lengthening of this period,[117] then a perhaps reasonable notice period of four weeks for the concrete situation of a particular case should not be established as a "regular" or "general" time period.

The decision is for yet another reason worthy of attention: First of all, for the examination period under Art. 38(1) CISG, the Bundesgerichtshof granted the buyer a deliberation period of one week for the clarification of certain characteristics indicative of defects, and then -- correctly -- lengthened this period by the amount of time required by an expert for the explanation of the cause of the defect (for a total of up to three weeks).[118] Evidently, the Court then simply added this time period for examination together with the four-week period set for notice and thus granted the buyer a total time period of seven weeks for the notice of lack of conformity. Certainly, it is correct that the examination period and the notice period are to a certain degree interdependent. However, simply adding them together and thereby allowing the buyer to expand its time for examination greatly beyond that required under the circumstances, in order to then still be able to react due to waiver of the "regular" notice period, seems to me not to correspond to the reason and aim of the two time periods.[119] Moreover, it seems to neglect the seller's interest in prompt clarification. In my opinion, in the case of a generous time period for examination permitted by the circumstances, it must be presumed that the buyer already devises its reasonable reaction to possible examination results during this period and therefore does not require a further time period of four weeks to give notice. In other words, where the intervening expert, coming in after one week, clearly and distinctly exposes the causes of the suspected defects after a further two weeks, then the buyer is expected to react quickly. In this actual case, the buyer gave notice within three days after a total of six and a half weeks of "examination." Conversely, it would also be unreasonable and incompatible with the statutory provisions if the buyer, who despite requiring examination by an expert and the related added time period of two weeks, attained knowledge of the causes of the defect symptoms earlier and then added the examination period theoretically possible to the "regular" notice period in order to thus arrive at a longer period of time. This manner of adding together the time periods from Art. 38(1) CISG and Art. 39(1) CISG as a matter of course can hardly correspond to the intention of the drafters of the Convention, even though it often occurs in CISG decisions.[120]

Finally, the Bundesgerichtshof has also left undecided whether the duty to examine continues (or is revived) when, some time after delivery of the goods, characteristics indicating a non-conformity arise. The Convention assumes, as is evident from Art. 38(2) and (3) CISG, that the duty to examine arises with delivery to the buyer.[121] However, this duty does not cease to exist at the accomplishment of delivery, but rather continues latently and becomes activated upon the manifestation of characteristics indicating a non-conformity. The buyer must then once again examine the goods or cause them to be examined within as short a period as is practicable under the circumstances. Non-conformities discoverable within this examination period then trigger the duty to give proper notice and comply with the "reasonable" time period of Art. 39(1) CISG.

Final Remarks

This analysis of the decisions of the Bundesgerichtshof cannot claim to be complete. Alone for lack of space many interesting considerations and remarks on other detailed problems, as well as a few arguments, had to remain untreated. Nevertheless, I hope that this selection could show that the Bundesgerichtshof has received and applied the uniform sales law knowledgeably and sensibly, doing justice to its particularities. Precisely an article in an anniversary publication, however, would not do justice to the Court to be honored if, in the valuation of the Court's decisions, it expressed only unconditional approval and suppressed critical remarks already made elsewhere. It is part of the dialogue led between the judiciary and the academic community that opposing and contrary views be expressed; a divergent position can be the expression of admiring respect as well. In this respect, the author hopes that his remarks here be so understood.


FOOTNOTES

1. See MünchKomm-ZPO/Wolf, Münchner Kommentar zur Zivilprozeßordnung, 2. ed., 1999, Vor 123 GVG para. 5; Baumbach/Hartmann/Albers, Zivilprozeßordnung, 57 ed., 2000, Vor GVG para. 1 (The primary task of the Bundesgerichtshof in its appellate function is to maintain unity and foreseeability in the application of the law).

2. See Bundesverfassungsgericht of 14 February 1973, BVerfG 34, 269 ff. = NJW 1973, 1221ff. (Soraya) ("The more time that has passed between legal proclamation and the judge's decision in the individual case, the freer is the judge to exercise a creative furthering of the law.") Id. at 1225.

3. See 132 IV GVG.

4. Naturally, this is not in the sense of binding legal precedent as in the Anglo-American legal system, de facto, however, it is for the most part considered as practically obligatory.

5. Uniform Law on the International Sale of Goods [ULIS], 17 July 1973 (BGB1. I 856; BGB1. III 186-1); Uniform Law on the Formation of Contracts for the International Sale of Goods, 17 July 1973 (BGB1. I 868; BGB1. III 187-1).

6. United Nations Convention on Contracts for the International Sale of Goods; ratified in Germany as "Übereinkommen der Vereinten Nationen über Verträge über den internationalen Warenkauf" (BGB1. 1989 II 588). Hereinafter: "CISG" or "the Convention".

7. "In the interpretation of this Convention, regard is to be had to its international character and to the need to promote uniformity in its application and the observance of good faith in international trade."

8. Principles of International Commercial Contracts, International Institute for the Unification of Private Law, Rome, 1994.

9. See Michael Joachim Bonell, An International Restatement of Contract Law, 7 ff. (2 ed. 1997).

10. The Principles of European Contract Law: Parts I and II, prepared by the Commission on European Contract Law, (Lando/Beale eds., 2000).

11. See Bernasconi, The Personal and Territorial Scope of the Vienna Convention on Contracts for the International Sale of Goods (Art. 1), Netherlands International Law Review 1999, 137 sub 3.2; Pelichet, La vente internationale de marchandises et le conflit de lois, 201 Recueil des Cours (1987), 9 ff., 34, 37.

12. The theoretical question of whether the autonomous application requirements in Art. 1(1)(a) CISG can also be qualified as conflict of law rules may remain untreated here. For a discussion on this question see Herber/Czerwenka, Internationales Kaufrecht, 1991, Art. 1 para. 16; Schlechtriem/Ferrari, Kommentar zum Einheitlichen Kaufrecht - CISG, 3 ed., 2000, Art. 1 para. 63; Staudinger/Magnus, Kommentar zum Bürgerlichen Gesetzbuch mit Einführungsgesetz und Nebengesetzen, 13 ed., 1994, Art. 1 CISG, para. 84-85.

13. For decisions concerning the Hague Convention on Sales (ULIS) see BGH of 4 December 1985, BGHZ 96, 313, 323, BGH of 13 May 1992, NJW 1992, 2428, 2429-30. sub II. 3. b. aa. But cf. OLG München [Regional Court of Appeals] of 12 August 1977, NJW 1978, 499-500 ("application of the ULIS doubtful"); OLG Koblenz [Regional Court of Appeals] of 9 January 1981, RIW 1982, 354 (The consent of the parties to be governed by German law excludes the application of the uniform law). For cases on the CISG see, BGH of 23 July 1997, NJW 1997 3309 ff.; further citations in Pilz, Neue Entwicklungen im UN-Kaufrecht, NJW 2000, 553-556, Fn. 30-32. For a perspective in the legal literature, see Staudinger/Magnus, supra note 12, at Art. 1 para. 104.

14. See the extensive references cited in Schlechtriem/Ferrari, supra note 12, at Art. 1 para. 69 ff. See also Will, UN-Kaufrecht und Internationale Schiedsgerichtsbarkeit, in Rudolf Meyer zum Abschied, Schriftenreihe deutscher Jura-Studenten in Genf, Bd. 19, 1999. Decisions such as that of the Tribunale Civile di Monza of 29 March 1993, Dir. com. int. 1993, 657 = CISG-online 102 [case presentation also at <http://cisgw3.law.pace.edu/cases/930114i3.html> (cited as 14 January 1993)], which viewed the choice of a national law (here Italian law) as an exclusion of the CISG, have remained exceptions internationally.

[For each CISG court or arbitral proceeding identified in this and succeeding footnotes, a "case presentation" citation has been added to enable researchers to access in one document:
-   A link that enables one to jump to the original text of the case, in most instances the text published on the CISG online website of the University of Freiburg;
-   The UNCITRAL abstract of the case, in all instances in which UNCITRAL has published a CLOUT abstract of the case;
-   An English translation of the text of the case, in many instances; and
-   Citations to available commentaries on the case and, in a number of instances, links to the texts of such commentaries, e.g., expanded case commentaries authored by Prof. Schlechtriem.]

15. As of the writing of this article, England is still not a Contracting State.

16. Art. 28 I, II EGBGB, Art. 1(1)(b) CISG.

17. As to the difference between simple, internal compulsory norms and international compulsory norms that also apply with regard to a choice of foreign law, see MünchKomm/Martiny, Münchner Kommentar zum Bürgerlichen Gesetzbuch, Bd. 10, 3 ed. 1998, Art. 27 para. 81, 34 para. 6, 7 IPR.

18. See infra, paragraph IV.2.

19. Gesetz zu dem Übereinkommen der Vereinten Nationen vom 11. April 1980 über Verträge über den internationalen Warenkauf sowie zur Änderung des Gesetzes zu dem Übereinkommen vom 19. Mai 1956 über den Beförderungsvertrag im internationalen Straßengüterverkehr (CMR) vom 5. Juli 1989, BGB1. II, S. 586 [Act on the Convention of the United Nations of 11 April 1980 on Contracts for the International Sale of Goods and on the Amendment of the Act on the Convention of 19 May 1956 for the Contract of Carriage in International Road Transport (CMR) of 5 July 1989, BGB1. 1989 II 586].

20. Should, for instance, the buyer in asserting its warranty claims under the CISG lose the advantages mentioned in the text above or lose the advantage of having a non-fault based seller's liability for damages due to its lawyer's consent to a subsequent exemption of the CISG, then the resulting disadvantages for the buyer should present a clear case of attorney malpractice liability. Conversely, the seller's lawyer who accepts a proposed exclusion of the Convention would probably be subject to damages in the event that the buyer does not take possession of the goods and the seller loses the possibility of a self-help sale pursuant to Art. 88(1) CISG (sale by any appropriate means), which is more generous than the rule in the BGB and HGB - 372 ff., 383 BGB, 373(2) HGB (public auction), if the seller thereby suffers a loss in the form of less profitable sale proceeds. The obvious liability risk for the parties' counsel associated with the rejection of the Convention in the case of a trial already in process also exists with regard to the unfortunately still common recommendation to generally exclude the Convention, for instance in the buyer's order-form conditions. See Koch, Wider den formularmäßigen Ausschluß des UN-Kaufrechts, NJW 2000, 910 ff., who describes the advantages and disadvantages of individual rules for the seller and buyer in comparison with German law and proposes corresponding clauses.

21. BGH of 4 December 1985, BGHZ 96, 313, 323.

22. BGH of 26 November 1980, NJW 1981, 1156.

23. The ULIS was at that time already in force and applied to the German-Italian sales contract. The Bundesgerichthof noted that, pursuant to Art. 3 ULIS, the parties of a sales contract can partially or fully exclude the application of the uniform sales law, and that the primarily authoritative actual choice of law can still occur during the legal proceedings - at least in the pre-appellate instances. If need be, the contract parties could therefore subsequently agree to the application of a certain law. "For the exclusion of the uniform sales laws by agreement the same applies." Id. at 1157.

24. BGH of 26 November 1980, NJW 1981, 1157.

25. BGH of 26 October 1983, RIW 1984, 151.

26. BGH of 23 July 1997 (Benetton I), NJW 1997, 3304, 3306. Of course, the parties expressly stated in the legal proceedings that German law excluding the CISG should apply and they did not object to the application of the BGB in the appellate instance. But see BGH of 23 July 1997 (Benetton II), NJW 1997, 3309, 3310 [case presentation also at <http://cisgw3.law.pace.edu/cases/970723g1.html>]. Here there was a choice of German law without exclusion of the CISG: "The agreed upon reference to certain national sales law provisions does not allow the assumption of an implied intent to exclude the Convention (BGH of 4 December 1985, BGHZ 96, 321), since the appellate court ascertained that the defendant had expressly adhered to application of the CISG during the oral court hearing in the second instance of the proceedings." BGH of 23 July 1997, NJW 1997 at 3310.

27. See OLG Hamm of 6 May 1998, TranspR-IHR 1999, 40-41[case presentation also at <http://cisgw3.law.pace.edu/cases/980506g1.html>]. (The Convention can also be excluded subsequently, namely during the legal proceedings). "A typical case for an implied exclusion is when the parties declare that a deviating sales law should apply."

28. See BGH of 28 March 1979, BGHZ 74, 193, 196 sub I. 1.

29. BGH of 2 June 1982, NJW 1982, 2730-31 sub I. 1. b).

30. BGH of 26 March 1992, WM 1992, 1715 ff. [case presentation also at <http://cisgw3.law.pace.edu/cases/920326g1.html>].

31. Id. The European Court of Justice [ECJ] approved the application of the Convention for the determination of the place of performance, which is decisive for the determination of the legal venue. See ECJ of 29 June 1994, NJW 1995, 183-184.

32. See BGH of 27 June 1990, NJW 1990, 3077 ff.

33. Often a mixed contract is assumed for which the CISG is generally only applicable if the parties agreed to its application or if, according to the basic idea of Art. 3 CISG, the supply of goods is the preponderant part of the undertaken obligations. See Bianca/Bonell/Khoo, Commentary on the International Sales Law, Art. 3 para. 3.1. (1987); Herber/Czerwernka, supra note 12, at Art. 3, para. 3 ; Honnold, Uniform Law for International Sales, Art. 3, para. 60.1 (2d. ed. 1991); Loewe, Internationales Kaufrecht, Art. 3 (1989); Neumayer/Ming, Convention de Vienne sur les contrats de vente internationale de marchandises - Commentaire, Art. 3, para. 4 (1993); Schlechtriem/Herber, Kommentar zum Einheitlichen UN-Kaufrecht - CISG, Art. 3 para. 3 (2d ed. 1995).

34. BGH of 12 February 1998, NJW 1998, 3205, 3206 [case presentation also at <http://cisgw3.law.pace.edu/cases/980212g1.html>].

35. This familiarity is certainly not to be found in all legal systems, as shown in the difficulties during the preparation of the distribution directive. See Rittner, Die EG-Kommission und das Handelsvertreterrecht - Zum geplanten EG-Recht über Vertikalverträge, DB 1999, 2097 sub I. 1. b).

36. See BGH of 4 April 1979, BGHZ 74, 136, 139 f. (application of the ULIS on individual sales contracts made within the framework of a distribution contract concluded before the ULIS went into force); BGH of 26 November 1980, NJW 1981, 1156-57.

37. BGH of 23 July 1997, NJW 1998, 3309 (Benetton II) [case presentation also at <http://cisgw3.law.pace.edu/cases/970723g2.html>].

38. See OLG Hamburg of 5 October 1998, TranspR-IHR 1999, 37 [case presentation also at <http://cisgw3.law.pace.edu/cases/981005g1.html>] (exclusive sales agreement between a German company and a Chinese supplier; choice of German (European) law for the framework agreement led to application of the CISG for the individual sales contracts). Accord Obergericht des Kantons Luzern [High Court of the Canton of Lucerne] (Switzerland) of 8 January 1997, TranspR-IHR 1999, 53 [case presentation also at <http://cisgw3.law.pace.edu/cases/970108s1.html>].

39. See Medical Marketing Int'l Inc. v. Internazionale Medico Scientifica, S.r.l., 1999 WL 311945 (E.D.La. 17 May 1999) [case presentation also at <http://cisgw3.law.pace.edu/cases/990517u1.html>]; Schlechtriem, Vertragsmäßigkeit der Ware und öffentlich-rechtliche Vorschriften, IPRax 1999, 388. But see Helen Kaminski Pty. Ltd. v. Marketing Australien Products Inc., 1997 WL 414137 (S.D.N.Y. 1997) [case presentation also at <http://cisgw3.law.pace.edu/cases/970721u1.html>] (the CISG not applicable to distribution contracts).

40. BGH of 15 February 1995, NJW 1995, 2101 [case presentation also at <http://cisgw3.law.pace.edu/cases/950215g1.html>].

41. See Bucher, Preisvereinbarung als Voraussetzung der Vertragsgültigkeit beim Kauf. Zum angeblichen Widerspruch zwischen Art. 14 und Art. 55 des Wiener Kaufrechts, in Mélanges Paul Piotet, Recueil de traveaux offerts à M. Paul Piotet, 371 ff., 387 ff. (Sturm ed., 1990).

42. Concerning reform and the increasingly clearer distinction in certain reform measures between contract formation by offer and acceptance and formation by other means, see Schlechtriem, Kollidierende Geschäftsbedingungen im internationalen Vertragsrecht, in Transport- und Vertriebsrecht: Festgabe für Rolf Herber, 36 ff. sub IV (Thume ed., 2000).

43. See supra note 10, at Art. 2:101: "A contract is concluded if: (a) the parties intend to be legally bound, and (b) they reach a sufficient agreement." Here the formation of contract by offer and acceptance is merely one possibility for forming a binding agreement. The UNIDROIT Principles of International Commercial Contracts state in Art. 2.1: "A contract may be concluded either by the acceptance of an offer or by conduct of the parties that is sufficient to show agreement." See supra note 8, at Art. 2.1. Here offer and acceptance is likewise treated as merely one possible way to form a contract.

44. In this respect, the works cited supra in note 43 are also more progressive in that they seek solutions that avoid a finding that no contract was formed or that the last word controls; see Schlechtriem, supra note 42.

45. Regarding the negotiations, see my "eye witness" report in Einheitliches UN-Kaufrecht 37 ff. (1981).

46. OGH [Austrian Supreme Court] from 10 November 1994, ZfRV 1995, 79, 80 = JB1 1995, 253, 254 with comment by Karollus [case presentation also at <http://cisgw3.law.pace.edu/cases/941110a3.html>].

47. See Witz & Wolter, Die ersten Entscheidungen französischer Gerichte zum Einheitlichen UN-Kaufrecht, RIW 1995, 810, 812 sub III. 2. b) zu Fauba France v. Fujitsu, 16 J. L. & Com. 345, 346 = CISG-online 138 [case presentation also at <http://cisgw3.law.pace.edu/cases/950104f1.html>].

48. Legflsobb Biróság of 25 September 1992, United Technologies Int'l Inc. Pratt & Whitney Commercial Engine Bus. v . Magyar Légi Közlekedési Vállat (Málev Hungarian Airlines) [case presentation at <http://cisgw3.law.pace.edu/cases/920925h1.html>]; criticizing this case see Amato, CISG. UN-Convention on Contracts for the International Sale of Goods - The open price term and uniform application: an early interpretation by the Hungarian Courts, 13 L.J. & Com. 1, 16 ff. (1993).

49. BGH of 27 June 1990, NJW 1990, 3077, 3078 f. (the appellate court was ordered to examine whether the parties had not in fact agreed upon the plaintiff seller's demanded price).

50. See Amato, supra note 48.

51. One must recall that invalidity of the contract pursuant to 306 BGB can trigger a renouncement of the contract pursuant to 323(1) BGB, rejection of further performance of the contract pursuant to 286(2) BGB (similar also 325(1) BGB), and cancellation and rescission of the contract, 325(1), 326(1) & (2), 462 et seq. BGB (each in combination with 346 et. seq. BGB). The variety becomes even greater when other contract types are added, such as service contracts, 634(1) BGB or travel contracts, 651 e BGB and 651 j BGB. On the necessity of a simplification of this great variety, see Abschlußbericht der Kommission zur Überarbeitung des Schuldrechts, hrsg. Bundesminister der Justiz, Bonn, 1992, 163 ff. with further examples of statutory or judge-developed contract avoidance possibilities and comments regarding the adherence of 323 of the Commission Draft to the regulatory structure of the CISG.

52. This seems only slightly different than Huber's view in Schlechtriem/Huber, supra note 12, at Art. 45, para. 25, Art. 46 para. 55, 68. See also, id. at Art. 49, para. 55, 56 (The obvious prerequisite for avoidance of the contract (based on expiration of an additional time-period or "Nachfrist") is "that the breach of contract (such as the delivery of defective goods) objectively corresponds in its seriousness to the requirements set for a fundamental breach"); the setting of an additional period of time therefore only has the limiting effect of Art. 47(2) CISG.

53. Of course, this does not apply for a local sale nor for a consumer sale. That is why the conception upon which is based the EU directive on sales of consumer goods (Richtlinie 1999/44/EG des Europäischen Parlaments und des Rates vom 25. Mai 1999 zu bestimmten Aspekten des Verbrauchsgüterkaufs und der Garantien für Verbrauchsgüter, AblEG L 171/12, Directive of the Parliament and Council of the European Union on the Sale of Consumer Goods and Associated Guaranties of 25 May 1999) and the corresponding easing of the requirements for the buyer's right to require delivery of substitute goods, and for rescission of the contract compared to the CISG, have a different policy basis.

54. On the delivery of non-conforming red wine, see Cour de Cassation of 23 January 1996, IPRax 1996, 126 [case presentation also at <http://cisgw3.law.pace.edu/cases/960123f1.html>] and on this case, Witz, D. 1996, 334 ff. sub II. A., and Witz/Wolter, RIW 1998, 278 ff., 280: The Cour de Cassation did not worry itself with questions of detail, and with a simple substitution de motifs, it saved the appellate court's judgment from reversal.

55. BGH of 3 April 1996, BGHZ 132, 298 f. [case presentation also at <http://cisgw3.law.pace.edu/cases/960403g1.html>].

56. Id. at sub II. 2. c) dd).

57. Id. at sub II. 2. c) bb).

58. Id. at sub II. 2. b).

59. The same in Austria: OGH [Austrian Supreme Court] of 29 June 1999, TranspR-IHR 1999, 48, 49 sub b) [case presentation also at <http://cisgw3.law.pace.edu/cases/990629a3.html>].

60. Still considered fundamental on 378 HGB in this respect is: von Caemmerer, Falschlieferung, in Festschrift für Martin Wolff zum 80. Geburtstag. Beiträge zum Zivilrecht und internationalen Privatrecht, (von Caemmerer ed., 1952) 3, 8 f.

61. Recovery of unusually high damages is excluded if the obligee failed to bring attention to the risk of such damages and the obligor neither knew nor should have known the risk. For discussions on the foreseeability rule and the "remains" of its consideration in 254(2) BGB, see König, Voraussehbarkeit des Schadens als Grenze vertraglicher Haftung - zu Art. 82, 86, 87 EKG - in Das Haager Einheitliche Kaufgesetz und das Deutsche Schuldrecht. Kolloquium zum 65. Geburtstag von Ernst v. Caemmerer, Karlsruhe (1973) 75 ff., 110 ff.; Schlechtriem, Voraussehbarkeit und Schutzzweck einer verletzten Pflicht, in Recht in Ost und West, Festschrift zum 30 jährigen Jubiläum des Instituts für Rechtsvergleichung der Waseda-Universität, (1988) 505 ff., 510 f.; see also Rabel, Das Recht des Warenkaufs Bd. 1 (1936) 493.

62. Still a basic authority, see Rabel, supra note 61, at 494 ff.

63. See BGH of 23 February 1984, NJW 1985, 3016; BGH of 29 November 1988, NJW-RR 1989, 953, 956 sub II. B.; BGH of 11 November 1992, NJW 1993, 335, 336. On the adherence to the Convention's foreseeability rule, see Wolf/Horn/Lindacher, AGB-Gesetz. Gesetz zur Regelung des Rechts der Allgemeinen Geschäftsbedingungen (AGBG) - Kommentar, 11 para. 55 (4 ed. 1999).

64. See König, supra note 61.

65. BGH of 24 October 1979, RIW 1980, 143 ff. [case presentation also at <http://cisgw3.law.pace.edu/cases/791024g1.html>].

66. Id. at sub II. 2. c). The fact that one of the statements in an advisory opinion was based on a survey whose basis was not disclosed was, however, reproached as a procedural mistake.

67. See Weitnauer, Nichtvoraussehbarkeit eines Schadens nach Art. 82 S. 1 des Einheitlichen Gesetzes über den internationalen Kauf beweglicher Sachen. Comment to BGH of 24 October 1979, IPRax 1981, 83, 84 sub IV. 1.

68. In as much as consequences should not have been foreseeable, the importer could have assigned the risk to the seller if at the time of the conclusion of the contract the importer had made him aware of the risk of unusually high damages. Here the status of 254(2) BGB as part of this "contemplation rule," correctly understood as a risk allocation rule, becomes clear.

69. See BGH of 25 November 1998, NJW 1999, 1259, 1261 [case presentation also at <http://cisgw3.law.pace.edu/cases/981125g1.html>] (consequential damages, which the plaintiff manufacturer suffered through its substitute performance on behalf of its customer due to the lack of conformity of delivered foil).

70. Unconvincing is therefore in this respect BGH of 23 July 1997, 3309, 3311 sub III. 2 [case presentation also at <http://cisgw3.law.pace.edu/cases/970723g2.html>] ("These costs for remedying the defect were no longer reasonable in view of their amount in proportion to the claim for the sales price still outstanding. The seller is therefore not accountable for them under Art. 74 CISG. Recoverable damages are only reasonable expenditures for the ascertainment of the harm and for a settlement or reduction of the price ").

71. Art. 79(1) CISG.

72. See Schlechtriem, Comment on BGH of 24 March 1999, JZ 1999, 794, 795 sub 1. d) [case presentation also at <http://cisgw3.law.pace.edu/cases/990324g1.html>] with further citations.

73. For details on this point, see Schlechtriem, supra note 72.

74. BGH of 24 March 1999, BGHZ 141, 129 ff. = NJW 1999, 2440 ff. [case presentation also at <http://cisgw3.law.pace.edu/cases/990324g1.html>].

75. Id. at sub II. 1. a). It should also be pointed out that the Bundesgerichtshof has herewith distanced itself a bit from an earlier ULIS decision in which the question of liability of a contract party for third parties was not taken from the ULIS liability norms but rather from 278 BGB. BGH of 14 March 1984, BGHZ 90, 302, 308 f. sub II. 5. = NJW 1984, 2034, 2034 sub II. 5 (failure by the lessee of the purchaser to take delivery of a machine).

76. See BGH of 24 March 1999, supra note 74, at sub II. 4. a) [case presentation also at <http://cisgw3.law.pace.edu/cases/990324g1.html>].

77. BGH of 15 February 1995, supra note 40, at sub II. 1. a) [case presentation also at <http://cisgw3.law.pace.edu/cases/950215g1.html>].

78. Art. 49(2)(b) CISG.

79. See Schlechtriem, Kurzkommentar zu BGH v. 15. February 1995, EwiR 1995, 451 f. See also the detailed analysis in Schmidt-Kessel, Zur zeitlichen Begrenzung eines Aufhebungsrechts wegen künftiger wesentlicher Vertragsverletzung, RIW 1996, 60 ff. with further points treated such as the taking-over of a contract and applicable law (id. at 61), avoidance of the contract due to anticipatory breach (id. at 61-62), avoidance due to non-delivery (id. at 63), and failure to transfer ownership (id. at 64).

80. On this point, see Schmidt-Kessel, supra note 79.

81. Concerning the possible background, left open by the Bundesgerichtshof, of the buyer's possibility to set off the judicially confirmed sales price with the manufacturer's claims against the seller, which were assigned from the manufacturer to the buyer, see Schmidt-Kessel, supra note 79, at 65: (maneuver for bringing in the claims of the manufacturer against the seller).

82. Dogmatically more precise is Art. 2(2) of the EU directive on the sale of consumer goods (see supra note 53). Art 2(2) of the directive closely follows the CISG in this respect, in that its corresponding helping rules are presumptions of that upon which the parties would have agreed had they thought it necessary to make agreements concerning the conformity of the goods. On this point, see Faber, Zur Richtlinie bezüglich Verbrauchgüterkauf und Garantien für Verbrauchsgüter, öst. JB1 1999, 413; Schmidt-Räntsch, Zum Stand der Kaufrechtsrichtlinie, ZIP 1998, 849, 850 f. sub II. 2.; Staudenmayer, Die EG-Richtlinie über den Verbrauchsgüterkauf, NJW 1999, 2393, 2394 sub III.

83. BGH of 8 March 1995, BGHZ 129, 75 ff. [case presentation also at <http://cisgw3.law.pace.edu/cases/950308g3.html>].

84. See Schlechtriem, Vertragsgemäßigkeit der Ware als Frage der Beschaffenheitsvereinbarung, IPRax 1996, 12, 13 sub II.

85. For the determination of the quality required by the contract pursuant to 459(1) BGB in an export contract under German law, one must examine whether such regulations "abrogate or diminish the use envisaged by the contract" in the buyer's land or place where he intends to use them. As mentioned above (supra note 82), Art. 2 of the directive on consumer sales closely follows the corresponding provisions of Art. 35(2) CISG.

86. See Schlechtriem, supra note 84.

87. See Medical Marketing Int'l, Inc. v. Internazionale Medico Scientifica, S.r.l., supra note 39, where an arbitration tribunal and an American district court unquestioningly presupposed the applicability of the importing country's (USA) safety regulations; Cour d'Appel Grenoble, CLOUT 15/1998, case 202 = TranspR-IHR 1999, 7 [case presentation also at <http://cisgw3.law.pace.edu/cases/950913f1.html>]. For the importation of red wine into France, the French Supreme Court, as well as the former instance, naturally used the provisions concerning the authorized sweetening of red wine in the importing country (France) as the legal standard. See also on this case, Witz, supra note 54; Witz/Wolter, supra note 54, at 281, who point out, however, that the over-sweetening was also not permitted under the law of the exporting country (Italy). See also the Argentine decision of the Cámera Nacional de Apelaciones en lo Comercial Sala C of 31 October 1995, Bedial, S. A. v. Paul Müggenburg & Co. GmbH, UNILEX = CLOUT No. 191 [case presentation also at <http://cisgw3.law.pace.edu/cases/951031a1.html>].

88. See BGH of 5 July 1989, NJW 1989, 3097 f., concerning Art. 40 ULIS.

89. BGH of 8 March 1995, supra note 83, at sub bb) para. 3 [case presentation also at <http://cisgw3.law.pace.edu/cases/950308g3.html>] (Uncertainty in judging whether the question is one concerning the examination of the ordinary purposes for which such goods are used, or rather that the goods are fit for a particular purpose, is also caused by the blurred distinction between subparagraph (a) and (b)).

90. See cases cited supra note 87.

91. See supra note 82.

92. Art. 40 ULIS.

93. See the numerous cases on Art 40 ULIS cited in Schlechtriem/Magnus, Internationale Rechtsprechung zu EKG und EAG, 1987.

94. BGH of 5 July 1989, supra note 88.

95. Concerning the ULIS, see BGH of 27 June 1990, NJW 1990, 3077, 3080 f.

96. The UNCITRAL Convention on the Limitation Period in the International Sale of Goods of June 14, 1974 in the protocol version of April 11, 1980 recognizes the interruption of the statute of limitations through acknowledgement of the claim, but not the tolling of the statue due to negotiations. See Art. 20 Convention on the Limitation Period. With the subsidiary application of German law, 639(2) BGB would presumably apply with respect to negotiations for the statute of limitations period in 477 BGB, which, in accordance with Art. 3 of the Contract Act, does not begin to run until notice is given. See Schlechtriem/Schlechtriem, supra note 12, at Art. 3 VertragsG, para. 11.

97. Arbitration award SCH-4318 of 15 June 1994, RIW 1995, 591, 592 sub 5.5 [case presentation also at <http://cisgw3.law.pace.edu/cases/940615a4.html>].

98. Schlechtriem, Commentary to Arbitration Awards SCH-4366 and SCH-4318 of 15 June 1994, RIW 1995, 592, 594 sub IV [case presentations also at <http://cisgw3.law.pace.edu/cases/940615a3.html> and http://cisgw3.law.pace.edu/cases/940615a4.html>].

99. On ULIS see BGH of 2 June 1982, NJW 1982, 2730-2732 sub II. 3 (on the seller's acknowledgement of the buyer's claim to a substitute delivery).

100. BGH of 23 July 1997, NJW 1997, 3309, 3312 sub II. 1. b) [case presentation also at <http://cisgw3.law.pace.edu/cases/970723g2.html>].

101. BGH of 25 November 1998, NJW 1999, 1259, 1260 f. sub III. 2. a) and b) [case presentation also at <http://cisgw3.law.pace.edu/cases/981125g1.html>].

102. BGH of 23 July 1997, supra note 100, at sub III. 1. c).

103. See the decisions numbered 3, 6, 8, 11, 12, 14, 15, 21, 22, 37, 38, 46 in the collection of decisions on Art. 39 ULIS in Schlechtriem/Magnus, supra note 93.

104. BGH of 2 June 1982, supra note 99, at sub II. 1. a) bb).

105. See Schlechtriem/Schwenzer, supra note 12, at Art. 39 para. 6.

106. Compare the decisions in id. at Art. 39 para. 6 n.22a. See also Magnus, Die Rügeobliegenheit des Käufers nach UN-Kaufrecht, TranspR-IHR 1999, 29 ff., 31 f.; Pilz, supra note 13, at 559. It should remain open here whether, due to the failure to give proper or timely notice, the resulting ability to dispense with the taking of evidence on the conformity of the goods influenced the strictness of the lower instances.

107. BGH of 4 December 1996, NJW-RR 1997, 690, 691 sub II. 2. b) bb) [case presentation also at <http://cisgw3.law.pace.edu/cases/961204g1.html>] (yet, this decision also contains the observation "the specificity requirements should not become too strict").

108. See the short analysis in Schlechtriem/Schmidt-Kessel, Rüge der Vertragswidrigkeit der Ware nach UNWaVtrÜbk. Art. 39 Abs. 1, EwiR 1997, 653 f.

109. BGH of 3 November 1999, ZIP 2000, 234 ff. [case presentation also at <http://cisgw3.law.pace.edu/cases/991103g1.html>].

110. Id. at sub II. 3.

111. See BGH of 28 October 1999, ZfBR 2000, 118 (requirements for demand to cure equate those for a preliminary showing at trial) if the phenomenon stemming from the lack of conformity is sufficiently described. [The plaintiff] is not required to describe the individual causes of the defect); see also BGH of 14 January 1999, BauR 1999, 899.

112. See BGH of 3 November 1999, supra note 109, at sub II. 2. b) bb); cf. Obergericht Kanton Luzern [High Court of the Canton of Lucerne] of 8 January 1997, TranspRIHR 1999, 53 [case presentation also at <http://cisgw3.law.pace.edu/cases/970108s1.html>]. This Swiss decision is similar and represents a midpoint between the strict requirements of the German courts and the more generous decisions of the American and Dutch courts. See also Witz, Recueil Dalloz, 35ème Cahier, Sommaires commentés, 315 (1998).

113. See öst. OGH [Austrian Supreme Court] of 15 October 1998, öst. ZfRV 1999, 63. f., LS 12 [case presentation also at <http://cisgw3.law.pace.edu/cases/981015a3.html>] ("In examining whether the time period was reasonable within the meaning of Art. 39(1) CISG, the objective and subjective circumstances of the particular case are to be considered. These include the business and personal circumstances of the buyer, the type of the goods, the scope of the delivery or the type of the chosen remedy;" see also Magnus, supra note 106, at 32-33.

114. See AG Kehl [Local Court] of 6 October 1995, CISG-online 162 [case presentation also at <http://cisgw3.law.pace.edu/cases/951006g1.html>] (six weeks for a defective sweater no longer reasonable); OLG Köln [Regional Court of Appeals] of 22 February 1994, CISG-online 127 [case presentation also at <http://cisgw3.law.pace.edu/cases/940222g1.html>] (tropical wood, four to seven days reasonable); LG Bielefeld [Regional Court] of 18 January 1991, CISG-online 174 [case presentation also at <http://cisgw3.law.pace.edu/cases/910118g1.html>] (bacon, three days reasonable); AG Nordhorn [Local Court] of 14 June 1994, CISG-online 259 [case presentation also at <http://cisgw3.law.pace.edu/cases/940614g1.html>] (shoes, ten days reasonable); LG Heidelberg [Regional Court] of 2 October 1996, CISG-online 264 [case presentation also at <http://cisgw3.law.pace.edu/cases/961002g1.html>] (protective foil, twenty-one days (for examination and notice) reasonable); OLG Karlsruhe [Regional Court of Appeals] of 25 June 1997, CISG-online 263 [case presentation also at <http://cisgw3.law.pace.edu/cases/970625g1.html>] (protective foil, thirteen days not reasonable (!)); LG Stuttgart of 31 August 1989, CISG-online 11 [case presentation also at <http://cisgw3.law.pace.edu/cases/890831g1.html>] (shoes, two weeks not reasonable); LG Aachen of 3 April 1990, CISG-online 12 [case presentation also at <http://cisgw3.law.pace.edu/cases/900403g1.html>] (shoes, one day reasonable); LG Berlin of 16 September 1992, CISG-online 49 [case presentation also at <http://cisgw3.law.pace.edu/cases/920916g1.html>] (children's shoes, three and a half months not reasonable); LG Mönchengladbach of 22 May 1992, CISG-online 56 [case presentation also at <http://cisgw3.law.pace.edu/cases/920522g1.html>] (fabric, eighteen days not reasonable); OLG Düsseldorf of 12 March 1993, CISG-online 82 [case presentation also at <http://cisgw3.law.pace.edu/cases/930312g1.html>] (fabric, eighteen days not reasonable); OLG Saarbrücken of 13 January 1993, CISG-online 83 [case presentation also at <http://cisgw3.law.pace.edu/cases/930113g1.html>] (doors, two and a half months not reasonable); OLG Düsseldorf of 10 February 1994, CISG-online 115 [case presentation also at <http://cisgw3.law.pace.edu/cases/940210g2.html>] (clothing, two months not reasonable); OLG Stuttgart of 21 August 1995, CISG-online 150 [case presentation also at <http://cisgw3.law.pace.edu/cases/950821g1.html>] (machine, more than one month not reasonable); OLG Düsseldorf of 8 January 1993, CISG-online 76 [case presentation also at <http://cisgw3.law.pace.edu/cases/930108g1.html>] (pickles, seven days not reasonable); ICC Paris, No. 5713/89, UNILEX [case presentation also at <http://cisgw3.law.pace.edu/cases/895713i1.html>] (eight days reasonable [sic]); ICC Paris, No. 7331/94, UNILEX [case presentation also at <http://cisgw3.law.pace.edu/cases/947331i1.html>] (cow hides, one month (for examination and notice) reasonable); OGH [Austrian Supreme Court] of 15 October 1998, CISG-online 380 [case presentation also at <http://cisgw3.law.pace.edu/cases/981015a3.html>] (wood, more than fourteen days (for examination and notice) not reasonable); Cour d'Appel de Grenoble of 13 September 1995, CISG-online 157 [case presentation also at <http://cisgw3.law.pace.edu/cases/950913f1.html>] (cheese, one month (for examination and notice) reasonable); Tribunale Civile di Cuneo (Italy) of 31 January 1996, CISG-online 268 [case presentation also at <http://cisgw3.law.pace.edu/cases/960131i3.html>] (sport clothing, twenty-three days (for examination and notice) not reasonable); Hoge Raad [Netherlands Supreme Court] of 20 February 1998, CISG-online 313 [case presentation also at <http://cisgw3.law.pace.edu/cases/980220n1.html>] (tiles, four months not reasonable); Obergericht Kanton Luzern [High Court of the Canton of Lucerne] of 8 January 1997, CISG-online 228 [case presentation also at <http://cisgw3.law.pace.edu/cases/970108s1.html>] (medical appliances, one month (for examination and notice -- ten days for examination alone) reasonable); Handelsgericht des Kantons Zürich [Commercial Court of the Canton of Zurich] of 30 November 1998, CISG-online 415 [case presentation also at <http://cisgw3.law.pace.edu/cases/981130s1.html>] (lamb fleece jackets, more than fourteen days not reasonable); OLG Saarbrücken of 3 June 1998, NJW-RR 1999, 780 [case presentation also at <http://cisgw3.law.pace.edu/cases/980603g1.html>] (flowers, notice on same day required); OLG Düsseldorf of 8 January 1993, IPRax 1993, 412 [case presentation also at <http://cisgw3.law.pace.edu/cases/930108g1.html>] (pickles, seven days no longer reasonable). Decisions under the ULIS are stricter than these, but Art. 39 ULIS required notice to be given "promptly" after discovery or discoverability. Accordingly, those decisions are of only limited relevance here and therefore not cited.

115. Decision of 26 May 1999, I.C.P. Edition Entreprise et Affaires 2000, 214 [case presentation also at <http://cisgw3.law.pace.edu/cases/990526f1.html>].

116. Schlechtriem, Beginn und Dauer der Untersufhungs- und Rügefrist beim grenzüberschreitenden Kauf, EwiR 2000, 125 f.

117. öst. OGH [Austrian Supreme Court] supra, note 113, headnote 13 ("In as much as none of the named special circumstances speak for a shorter or longer period of time, a total period of fourteen days for examination and notice is to be presumed"; see also öst. OGH of 27 August 1999, ZfRV 2000, 31, No. 10 [case presentation also at <http://cisgw3.law.pace.edu/cases/990827a3.html>] (fourteen days for examination and notice).

118. But see Pilz, supra note 13, at 558 ("For the short examination period the German courts have worked out a middle point of three to four work days or one week." (citations omitted)).

119. Also against this decision of the Bundesgerichtshof, see Piltz, supra note 13, at 558 ("Supplementary, further time periods (beyond those of the actual time period for notice) for the buyer's decision on how to proceed and for the examination of the goods by experts are not compatible with this concept.").

120. See supra note 114: LG Heidelberg of 2 October 1996, CISG-online 264 [case presentation also at <http://cisgw3.law.pace.edu/cases/961002g1.html>]; ICC Paris, No. 7331/94, UNILEX [case presentation also at <http://cisgw3.law.pace.edu/cases/947331i1.html>]; OGH (Austria) of 15 October 1998, CISG-online 380 [case presentation also at <http://cisgw3.law.pace.edu/cases/981015a3.html>]; Cour d'Appel de Grenoble of 13 September 1995, CISG-online 157 [case presentation also at <http://cisgw3.law.pace.edu/cases/950913f1.html>]; Tribunale Civile di Cuneo of 31 January 1996, CISG-online 268 [case presentation also at <http://cisgw3.law.pace.edu/cases/960131i3.html>]; Obergericht Kanton Luzern [High Court of the Canton of Lucerne, Switzerland] of 8 January 1997, CISG-online 228 [case presentation also at <http://cisgw3.law.pace.edu/cases/970108s1.html>]. See also öst. OGH (Austria) of 15 October 1998, supra note 113.

121. See Herber/Czerwenka, supra note 12, at Art. 38 para. 7; Schlechtriem/Schwenzer, supra note 12, at Art. 38 para. 19.


Pace Law School Institute of International Commercial Law - Last updated April 15, 2002
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