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| Abstract | ||||||||||||||||||
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| A German and an Austrian company concluded a framework contract under which the latter was granted the right to distribute a specific kind of software within Austria. Pursuing to this agreement the Austrian company (the buyer) ordered software to be used by an Austrian Governmental Department from the German company (the seller). Since however the delivered CD did not contain all programs allegedly ordered, the buyer refused to pay its price. The seller brought an action in order to recover the purchase price, claiming that the buyer had not ordered the specific kind of software allegedly missing.
The first and second instance Courts rejected the seller’s claim. The Supreme Court applied CISG to the dispute at hand, being the Convention applicable to the single sales contracts concluded under the framework distribution agreement; it held moreover that the transfer of standard software contained in a material support such a CD against payment of a lump sum is to be qualified as a contract of sale under CISG. As to the merits, the Court held that the buyer would be entitled to avoid the entire contract in case of partial delivery (and to withhold the entire price) only when the partial delivery constituted fundamental breach of the contract (Arts. 51 (2) and 25 CISG). If, on the other hand, no fundamental breach were to be found, the buyer would only be entitled to refuse payment for the part of goods that had not been delivered (Art. 51(1) CISG). The Court, observing that a breach is fundamental if it substantially deprives the other party of what it was entitled to expect under the contract, held that this is to be determined first of all by looking at the parties’ agreement and at their evaluation on the importance of the performance. Therefore, the Court remanded the case to a lower instance in order to the determine whether, upon the facts of the case and the ascertained intent of the parties, Art. 51 (1) or Art. 51(2) had to be applied. |