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| A Swiss buyer and a German seller concluded a contract for the sale of sporting clothes. As the seller did not deliver the goods within the time agreed in the contract, the buyer fixed an additional period of time for performance. After delivery the buyer complained that a number of items ordered were missing, that others were the wrong colour and that the clothes shrank excessively after washing. The buyer therefore declared the contract avoided and asked the seller to refund the price paid and to take back the goods. When the seller failed to comply, the buyer commenced legal action.
The Court held that the contract was governed by CISG according to Art. 1(1)(a), and noted that the express reference to provisions of the German civil code made by the parties in the course of proceedings, while amounting to a valid choice of law according to German private international law rules, was not sufficient to exclude the application of CISG, since such an exclusion has to be made expressly (Art. 6 CISG). The Court held that the buyer was entitled to declare the contract avoided, because the seller had not delivered goods of the quantity, quality and description required by the contract (Art. 49 CISG). Particularly 'by delivering clothes that shrank about 10-15 %', the seller had fundamentally breached the contract, as the buyer had been deprived of what it was entitled to expect under that contract (Art. 25 CISG). The Court held that the seller had lost its right to rely on Arts. 38 and 39 CISG, as it had admitted that it was aware of the lack of conformity of the goods before they were delivered to the buyer (Art. 40 CISG). Furthermore the Court noted that the buyer had actually given notice to the seller of the fact that the clothes shrank excessively after washing, within a reasonable time after discovery (Art. 39 CISG). The Court held that the contract had been validly avoided and that both parties were bound to make restitution concurrently (Art. 81(2) CISG). The buyer had placed the goods at the seller's disposal for restitution, whereas the seller had failed to take delivery of the goods and to refund the price. The Court noted that CISG only covers some of the matters related to restitution. Particularly CISG does not cover the seller's failure to take back the goods. Since Art. 31 ff. CISG, which deals only with the delivery of goods by the seller, are not applicable by analogy, nor could this matter be settled on the basis of the general principles of the Convention (Art. 7(2) CISG), the Court referred to the law applicable by virtue of the rules of private international law. By applying German domestic law, the Court found the seller to be bound to take back the goods. The Court held that the buyer was entitled to recover damages for loss of profit in connection with the fact that the clothes shrank excessively after washing (Art. 74 CISG). The buyer, on the other hand, was not entitled to recover damages in connection with the delivery of boxes containing less items than the quantity required by the contract. Art. 40 CISG was not applicable in this respect, because the buyer had not provided evidence of the fact that the seller was aware at the time of delivery that some items were missing. The buyer had not examined the goods as soon as is practicable in the circumstances, as required by Art. 38 CISG; usually the place of examination is the place of performance of the obligation to deliver (Art. 31 CISG); if the contract involves carriage of the goods, the examination, according to Art. 38(2), may be deferred until the goods have arrived at their destination. The duty to examine the quantity must be immediately complied with also in respect of non perishable goods. Therefore the buyer should have examined the goods or caused them to be examined as soon as they arrived at the agreed destinations. Based on a witness declaration, the Court found that examination of the quantity of the items delivered would have taken no more than a week, whereas the buyer examined the goods at a much later date. Furthermore, the buyer, according to Art. 39(1), should have given notice of lack of quantity within a reasonable time: in fact the delivery of a lesser quantity of items does not amount to a hidden defect, so that notice must be given in a few days. The Court granted the buyer interest on the price from the date of payment (Art. 84(1) CISG). As neither Art. 84 nor Art. 78 CISG determine the interest rate, the Court referred to the law applicable by virtue of German private international law rules. Likewise the interest rate on the amount awarded as damages (Art. 78 CISG) was determined in accordance with the law applicable by virtue of German private international law. |