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| Abstract | ||||||||||||||||||
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| In 1989 a Yugoslav seller and an Italian buyer concluded a contract for the sale of cow hides. The contract provided that the buyer would give the seller notice of the lack of conformity of the goods within one month of their arrival, together with an expert statement. Upon their arrival in Italy the goods were examined by the expert, who apparently found them defective. The buyer failed to give notice thereof to the seller. Subsequently the parties held a meeting in Moscow, also attended by the Russian supplier of the seller. The parties agreed that the buyer would immediately pay part of the price due, while the remaining amount would be paid 30 days later. In the meantime the Russian supplier should inspect the goods in Italy and possibly pay the buyer's debt. The Russian supplier failed to proceed with the agreed examination. The buyer then informed the seller that, due to the Russian supplier's omission, it was released from the obligation to pay the remaining part of the price: in its opinion the Moscow agreement amounted to a true novation of the original obligation to pay, by virtue of which the Russian supplier assumed the debt, releasing the buyer. Finally the buyer sold the allegedly non-conforming goods.
The Arbitral Tribunal, pursuant to Art. 13(3) ICC Rules, held that the contract was governed by general principles of international commercial practice and accepted trade usages, and as such, by CISG, which reflects those principles and usages. Moreover CISG was applicable as the parties had their places of business in Contracting States (Art. 1(1)(a) CISG). The Tribunal noted that as CISG is silent with regards to novation, this question is to be solved in compliance with the relevant principles and rules common to the domestic laws related to the dispute. A novation, in fact, differs from a mere modification of the contract, dealt with in Art. 29 CISG: while Art. 29 CISG, in stating that a contract may be modified by mere agreement of the parties, replaces the common law rule requiring new consideration for a modification agreement to be binding, the doctrine of novation demands proof of the 'animus novandi' of the parties. In order to ascertain whether the parties actually had an 'animus novandi', the Tribunal applied Art. 8 CISG, noting that it reflects rules of interpretation generally accepted. In the Tribunal's opinion, notwithstanding its literal wording, Art. 8 CISG can be applied to cases when negotiations result in the simultaneous signature of a writing by the parties. The Tribunal, taking into consideration the wording of the Moscow ageement and all relevant surrounding circumstances as required by Art. 8(3) CISG, held that the parties did not intend to novate their relationship releasing the buyer from its obligations under the original contract. As to the matter of lack of conformity of the goods, the Arbitral Tribunal stated that the buyer had lost its right to rely on a lack of conformity, since it had not given notice of the defects within the contractual period (Art. 39 CISG); moreover, since the defective nature of the goods was easy to discover, the contractual notice period was reasonable. The buyer could not either rely on Art. 44 CISG, since it had not provided evidence of having a reasonable excuse for its failure to give timely notice. The Tribunal thus decided in favor of the seller, who was also awarded interest. As CISG does not determine the rate of interest, the Tribunal applied the interest effective for commercial matters in the creditor's country. |