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| Abstract | ||||||||||||||||||
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| A Portuguese company (buyer) involved in public works projects entered into a contract with a Spanish company (seller) for the purchase of two models (namely Delta and Transit) of metallic covers for a sewage system’s network.
The buyer brought an action against the seller alleging that the Delta covers failed to meet the resistance standards indicated in the seller's catalogue and that there were defects in the polyethylene seals; also the Transit covers were highly unsuitable for the buyer’s purposes which had been known to the seller and, moreover, there were resistance deficiencies. Therefore, it claimed reimbursement of part of the price already paid plus damages for the loss incurred since it had to remove the covers already installed and entirely replace them with new ones. The seller filed a counter-claim for payment of the outstanding sum. In particular it denied breach of contract on its part as it had acknowledged the Delta model’s defects and had offered to replace the seals free of charge. The Court of first instance ruled in favour of the seller. The buyer appealed. As to the applicable law, the Court of Appeal found that the parties had agreed on the application of CISG. As to the merits, the Court confirmed that there was no breach of contract with reference to the Delta covers: indeed by having acknowledged the seals’ defects and offered to replace them free of charge, the seller had complied with the provisions of Art. 46(2) and (3) CISG. Also with respect to the Transit covers, the Court rejected the buyer's claim on the basis of Arts. 35(2)(b) and 8(2)(3) CISG: indeed, the seller had not been informed as to the specifications the covers had to meet and, moreover, in the Court’s opinion, the fact that the seller had a certified high quality standard did not imply that it ought have known the buyer’s specific needs; on the contrary, it was the buyer who, being a qualified public works contractor, should not have been misled by the specifications indicated in the seller’s catalogue and by the information received during negotiations, and therefore should have been aware that the Transit covers in question were not suitable for its purposes. However, according to the Court the resistance deficiencies in the Transit covers amounted to a fundamental breach (Art. 25 CISG) since, despite the fact that the resistance test carried out by the seller prior to delivery had shown lower resistance indices than those indicated in the seller’s catalogue to which the buyer had referred in its purchase orders, the seller delivered the covers to the buyer. However, since the buyer had in any even ordered the wrong products, the Court found that the conduct of each of the contracting parties had contributed to the final outcome and therefore partially revised the first instance decision by reducing to 50% the sum to be paid to the seller for the Transit covers. |