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| Abstract | ||||||||||||||||||
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| An Italian seller and a German buyer had been in commercial relationships for several years for the sale of cashmere textiles. The parties agreed upon the application of the standard terms of the German textile and clothing industry, which, inter alia, included a time for notice of lack of conformity to be made in writing within 14 days from receipt of the goods. The seller delivered the goods in several subsequent instalments. About four monthS after the first instalment, the buyer gave notice of lack of conformity alleging defects in the goods, mainly related to the textiles delivered in the first instalment, and refused to pay the purchase price. The seller brought an action to recover the contract price. The buyer counter-claimed reduction of the price, damages and set off.
The Court of first instance decided in favor of the seller. The appellate Court confirmed the first instance decision. In the opinion of the appellate Court, the buyer had lost its right to rely on lack of conformity of the goods since it had not examined the goods within as short a period as practicable in the circumstances (Art. 38 CISG) and failed to give timely notice according to Art. 39 CISG. In the opinion of the Court, as the buyer was an expert merchant, who usually sold high value clothes, it could have become aware of the lack of conformity by spot check examination and could have given notice of lack of conformity much earlier. The court held that, under the circumstances of the case, according to Art. 39 CISG one month after delivery of the goods would have been a reasonable time to discover and give notice of lack of conformity. The Court held that the notice of non conformity given by the buyer was all the more untimely, as the parties had validly agreed upon a time of notice of lack of conformity of 14 days after delivery. The Court held that the 14 days notice of non conformity was validly agreed upon as it was still reasonable under Art. 39 CISG. With respect to the set-off claim, the Court observed that the matter is excluded from the scope of the CISG according to Art. 4(a) CISG and referred to the applicable domestic law (German law). According by, the Court dismissed all the buyer's counter-claims. The Court held that the seller could rely on Art. 38 and 39 CISG as the buyer had given no evidence of the seller's gross negligent lack of knowledge of the goods' defects (Art. 40 CISG). In the opinion of the court, in the case of a seller who did not produce the goods on its own behalf, a lack of knowledge would have been grossly negligent if the seller had not discovered meaningful and evident defects which it could have discovered by taking the simplest care. Finally, the Court granted the seller the purchase price (Art.53 CISG) plus interest (Art. 78 CISG). As to the applicable interest rate, in the absence of CISG the court held that the interest rate had to be determined according to the domestic law otherwise applicable to the contract and applied the German statutory rate of 5%. |