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| Abstract | ||||||||||||||||||
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| An Italian seller and a German buyer concluded a contract for the supply of shoes on a regular basis. A lot of boots delivered between March and September 2001 showed defects and, as from July 2001, the buyer started to receive complaints from its customers. The buyer gave specified notice thereof to the seller in respect to 36 pairs of boots. On 12 December 2001, the buyer sent a letter to the seller declaring the contract avoided and returned the goods to the seller. Since the buyer paid only for part of the goods, the seller brought an action against him and claimed payment of the outstanding price.
The Court of First Instance ruled in favor of the seller, finding that it was entitled to recover the outstanding purchase price. The Court also held that the buyer's declaration of avoidance was not justified according to Art. 49 CISG, as only 36 pairs of shoes of a total amount of 319 had shown a lack of conformity. The Court of Appeal reversed the decision of the Court of First Instance. In so doing, the Court found first of all that the contract was governed by CISG, as both parties had their place of business in Contracting States (Art. 1(1)(a) CISG). Moreover, the Court held that, by means of its letter dated 12 December 2001 (Art. 26 CISG), the buyer had rightfully declared the contract avoided according to Arts. 49(1)(a) and 51(2) CISG, as the defects, although regarding only part of the goods, amounted to a fundamental breach of contract within the meaning of Art. 25 of CISG. In fact, in the present case the goods were either of a such poor material or so badly manufactured to lead the buyer to believe that also the remaining pair of boots were defective. Furthermore, on account of the complaints already received by its customers, the buyer had reasonably expected a decrease in the sales and a consequent loss of reputation; all the more so, because the buyer run a small shoe shop. Therefore, the circumstance that the defects regarded only a small percentage of the total amount of the shoes delivered did not prevent the contract from being avoided in its entirety. Furthermore, the Court held that the buyer had not lost its right to rely on the lack of conformity of the goods, since it informed the seller about the lack of conformity, specifying its nature, within a reasonable time after discovery, that is upon receipt of the customers' complaints (Art. 39(2) CISG). Again, the buyer had not forfeited its right to declare the contract avoided, since it gave notice to the seller thereof without delay after having received the complaints by its customers, that is within a reasonable time after it had become aware of the seller's breach (Art. 49(2)(b) CISG). Finally, the Court rejected the seller's argument that the fixing of an additional period of time of reasonable lenght for performance by the seller was a requirement for contract termination (Art. 47 CISG). In fact, such an additional period is not necessary where a fundamental breach of contract has occurred. |