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| An Italian seller and a Swiss buyer concluded orally a contract for the sale of a second hand Caterpillar bulldozer. The parties agreed that, before delivery, the seller would substitute three defective parts of the bulldozer, which the buyer had tested at the seller's premises before the contract was concluded. The parties also agreed that an advance partial payment would be made upon the seller's issuing an invoice, and that the remainder of the price would be paid in two installments at certain dates after delivery. The buyer paid the advance partial payment two weeks after the issue of the invoice by the seller. The bulldozer was delivered with the new parts, but the buyer refused to pay the remainder of the price and brought an action against the seller claiming damages for late delivery and lack of conformity.
As to the buyer's claim of damages for late delivery, the Court found that the parties had not fixed a date for delivery in their oral contract. In the case at hand the seller had handed over the goods to the carrier indicated by the buyer for transmission two weeks after the advance partial payment by the buyer. Therefore the seller had performed its obligation of delivery within the shortest period of time. Moreover, the contract involving carriage of the goods, the risk had passed to the buyer when the bulldozer had been handed over to the carrier (Art. 67 CISG). On these grounds the Court concluded that the requirements of Art. 33(a) CISG had been satisfied and that the seller was not responsible for any subsequent delay in delivery. As to the buyer's claim of damages for non-conformity, the Court held that the CISG has abandoned the notion of guarantee is some domestic laws, in favor of a new, common notion of non-conformity (Art. 35 CISG). The Court further noted that Art. 35(3) CISG provides that the seller is not liable for any lack of conformity if at the time of concluding the contract the buyer knew or could not have been unaware of the lack of conformity. In the case at hand the seller had expressly informed the buyer about the current state of the second hand bulldozer, which the buyer had even tested before making its purchase order. Except for the replacement of three specific parts, the parties had not agreed on repair of further defects before delivery. On this ground the Court concluded that the goods delivered conformed to contract specifications (Art. 35(1) CISG). The Court further held that, in any event, the buyer had lost its right to rely on a lack of conformity of the goods under Arts. 38 and 39 CISG, since it had not given notice of the defects. The seller was entitled to payment of the full purchase price, plus interest (Art. 78 CISG) accruing from the due date of payment fixed by the contract. With regard to the interest rate, the Court considered this to be a matter governed but not expressly settled by CISG (Art. 7(2) CISG) and applied the statutory rate of the State whose law would have been the governing law of the contract in the absence of CISG (Italy). However, the Court awarded interest at the rate expressly referred to in the seller's counterclaim (5%) which was lower than the Italian statutory rate (10%). |