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| Abstract | ||||||||||||||||||
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| An Austrian seller and a German buyer entered into a contract for the sale of an automobile with specific features that the buyer would use in its profession as known by the seller. According to the seller’s standard terms, accepted by the buyer and included in the sales contract, the seller would provide a warranty to any buyer acting as a consumer in terms of the Austrian Consumer Protection Act (ABGB), while for businessmen the Austrian Commercial Code (HGB) would apply. Soon after the delivery the automobile showed major defects. The buyer repeatedly took the automobile to get fixed, but the workshops were unable to resolve the problems. The buyer also asked the seller to have the car replaced, but the seller refused. The buyer then filed a suit against the seller, claiming termination of the contract and damages.
The First Instance Court found that CISG did not apply because the parties had impliedly excluded it (Art. 6 CISG) by selecting Austrian law (i.e., the HGB and the ABGB for businessmen and consumers, respectively) as the law applicable to contractual warranties. The Court ruled that the seller had to reimburse the buyer the purchase price of the vehicle in addition to damages. The seller appealed. Reversing the First Instance Court’s decision, the Court of Appeal held that CISG was applicable to the case at hand. In reaching such a conclusion, taking into account the rules on interpretation set forth in Art. 8 CISG, the Appellate Court pointed out, first of all, that the selection of Austrian law in seller’s standard terms could not be interpreted as an implied exclusion of CISG, given that those terms clearly aimed at regulating domestic and not international sales contracts. In addition, the buyer was not a businessman but an entrepreneur in terms of the HGB; as a result, the contract warranty clause could not be applied to it unless otherwise agreed upon by the parties. However, the Court found that there had not been a common intent by both parties to extend the scope of the warranty clause towards non-businessmen. Furthermore, the clear wording of the contract clause prevented any reasonable buyer from understanding it as being valid also to parties that were not businessmen. As to the merits, the Court held that the seller was liable only for those defects which were present at the time of the passing of risk (i.e., at the time the car had been handed over to the buyer), not for those which had developed while the car was in buyer’s use (CISG Arts. 36(1), 69). Additionally, the Court found the seller to be liable only for defects of which the buyer had informed the seller (39 (1) CISG). Nonetheless, depriving the buyer of what it was entitled to expect under the contract, in the Court’s opinion, the defects on the car constituted a fundamental breach of contract, which entitled the buyer to terminate the contract (Arts. 25 and 49 CISG). Notwithstanding the fundamental breach by the seller, the Court found that the buyer had lost his right to terminate the contract, since it was impossible for him to make restitution of the car substantially in the condition in which he had received it (Art. 82 CISG). Moreover, the buyer could not rely on the exception of Art. 82 (2)(c) CISG, since he had continued to use the vehicle also after the discovery of the defects. Nevertheless, the Court held the buyer was entitled to damages according to Art. 74 CISG in the amount of the difference between the value of the car in a condition that would conform to the contract and the actual value of the defective car, in addition to travel and telephone expenses sustained by the buyer in the several attempts to have the car repaired. |