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| Abstract | ||||||||||||||||||
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| A Dutch seller and a German buyer concluded several contracts for the sale of cobalt sulphate with specific technical qualities. The buyer declared the contracts avoided on the following grounds: the delivered cobalt was of a lower quality than that agreed to under the contracts; the cobalt was produced in South Africa and not in the UK as indicated in the contracts; the seller had delivered non conforming certificates of origin and quality. The seller denied the buyer's right to avoid and brought suit to recover the purchase price.
The Supreme Court held that the buyer had not validly avoided the contracts and awarded the seller the full price. As to the buyer's argument that it was entitled to avoid the contracts under Art. 49(1)(b) CISG, because the goods were of a kind different from that agreed upon in the contracts and therefore their delivery constituted a non- delivery, the Court stated that CISG, contrary to German domestic law, does not make any difference between delivery of goods of different kind (aliud) and delivery of non-conforming goods. The Court stressed that pursuant to Art. 7 CISG in the interpretation of the Convention recourse to domestic law is as a rule not admissible. Yet avoidance was impossible also under Art. 49(1)(a) CISG. According to the Court, in the system of the Convention the remedy of avoidance for non conformity of the goods represents the last resort in respect to the other remedies available to the buyer, such as price reduction or damages. In the case at hand the seller's delivery of non-conforming goods did not amount to a fundamental breach of contract. In determining whether the non conformity is fundamental, i.e. deprives the buyer substantially of what it is entitled to expect under the contract (Art. 25 CISG), it is decisive whether the buyer can still make use of the goods or resell them in the usual commercial relationships without incurring any unreasonable difficulties. The fact that the buyer might be forced to resell the goods at a lower price is not to be considered in itself an unreasonable difficulty. As to the alleged difficulties in exporting the goods due to the then existing embargo against goods produced in South Africa, the Court held that the buyer should at least have proved unreasonable difficulties in trading the goods in Germany. Likewise the fact that the defects of the goods cannot be repaired, as in the case at hand, is not in itself enough to determine that the breach is fundamental. The Court, though admitting that the delivery of non conforming documents could amount to a fundamental breach, denied that this was so in the case at hand, since the buyer could have easily obtained the right certificates of origin by itself and the right certificate of quality through expert examination. Moreover, the non conformity of the documents did not prevent the buyer from taking delivery of the goods and disposing of them. |