|
||||||||||||||||||
| Abstract | ||||||||||||||||||
| ||||||||||||||||||
| A Hungarian seller concluded a master agreement with an Austrian buyer for the supply of waste containers to be produced by the seller. The parties agreed that the buyer would supply part of the materials necessary for such production to the seller. A dispute arose between the parties as the buyer did not pay the invoices issued by the seller for the delivery of several containers. The seller commenced arbitration proceedings claiming payment of the price. The buyer counterclaimed for reduction of price and damages.
The sole arbitrator found that the contract was an international sales contract governed by CISG as the materials supplied by the buyer did not amount to a substantial part of the materials necessary for the production of the goods (Art. 3(1) CISG). In the case at hand, the value of the materials supplied by the buyer amounted to approximately 10% of the total value of the containers to be produced. As to the delivery of two containers, the buyer requested damages for defects concerning the painting. The sole arbitrator found that as the buyer had failed to give notice of the painting defects it had lost its right to rely on the lack of conformity of the goods (Art. 39 CISG). With respect to the delivery of another two containers, which were not watertight, the seller declared its readiness to repair upon payment of the contract price. The buyer refused to pay before the seller repaired the goods and appointed another firm for the repair. The sole arbitrator found that the seller had to repair the goods but, under Art. 71(1)(b) CISG, was entitled to suspend performance of its obligation as the buyer had refused to pay the price. The buyer had nevertheless the right to reduce the price (Art. 50 CISG) in proportion to the expenses it had suffered in having the goods repaired. In regard to the delivery of an additional two defective containers, the sole arbitrator held that the buyer is not obliged to exercise its right to request repair (Art. 46 CISG). If the buyer does not require repair, it is not deprived of the right to exercise other remedies such as reduction of price and/or damages. The sole arbitrator held that the buyer was entitled to reduce the price under Art. 50 CISG. In order to quantify the price reduction, regard should be given to the price level at the place of destination of the goods known by the seller, or at the place of business of the seller. With respect to another container, the buyer alleged to have discovered some defects after the time of delivery. According to the sole arbitrator, taking into consideration the speed in which the parties were used to carry on their relationship under the contract, the buyer had lost its right to rely on the lack of conformity of the goods as the seller received notice of their non-conformity 32 days after discovery of the defects. Finally, the sole arbitrator found that the seller was entitled to interest on the unpaid price. As CISG does not determine the interest rate, the sole arbitrator held that it would be improper to determine the interest rate according to the law of a State other than that of the currency of payment, in particular when this other State has a weak currency and a high inflation figure. |