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| Abstract | ||||||||||||||||||
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| A Swiss company (seller) and a German company (buyer) concluded a contract for the sale and installation of a fitness device (an isolation tank containing water with high salt concentration). The device was delivered and installed, and the buyer paid two installments of the price. Four weeks after delivery the buyer discovered that water leaked out of the tank. Another four weeks after discovery of the defect the buyer gave notice of lack of conformity, and declared the contract avoided. It also asked for recovery of damages to its premises allegedly caused by the leak of salt water and by the installation process itself. The seller commenced action to recover the balance of the price.
The Court held that the contract was a sales contract governed by CISG, as the supply of labor (installation) did not amount to a preponderant part of the obligation of the party furnishing the goods (Art. 3(2) CISG). The Court further held that the contract had not been validly avoided as the buyer should have made the declaration within a reasonable time after it knew or ought to have known of the breach (Art. 49(2)(b)(ii) CISG). The Court observed that if the buyer wishes to declare the contract avoided, it must do so within the same time requested to give due notice of the lack of conformity under 39(1) CISG. The Court left open whether the goods had been examined within as short a period as practicable, as requested by Art. 38 CISG, since the buyer had admitted that it had discovered the defect about four weeks before declaring the contract avoided, and because the declaration of avoidance and the notice of lack of conformity were not timely. In addition, the buyer could not prove that it had given notice before that time. Observing that CISG does not expressly govern the question of the burden of proof, the Court held that as a general principle the buyer has to provide evidence of the defect and of notice thereof. Furthermore, the Court held that the buyer was not entitled to request repair of the good, since it had lost the right to rely on the lack of conformity of the goods according to Art. 39(1) CISG. Moreover, the Court held that it was not necessary to establish whether the defect alleged by the buyer amounted to a fundamental breach of contract or not, but obiter noted that the leak of water did not amount to a fundamental breach as it could easily be repaired. The Court further held that while damages such as death or personal injury caused by the defective goods are excluded from the scope of CISG (Art. 5 CISG), damages caused by the leak of salted water to the buyer's premises is a question governed by CISG. Finally, the Court addressed the buyer's claim to damages caused by transportation and installation of the tank. The Court noted that CISG contains a unified notion of breach, so that damages are recoverable also for breach of a secondary obligation such as the seller's obligation to transport and install the good, provided that notice of the damage is given within a reasonable time and that the requirements set forth in Arts. 74 to 77 are met. In particular, no fault on the part of the seller is necessary. |