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| Abstract | ||||||||||||||||||
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| Claimant and Defendant concluded a contract whereby the former undertook to print and supply books for resale in supermarkets. Claimant delivered the books on four installments. Some thirty-three days after receiving the last installment, Defendant informed Claimant that it would not pay the price because the books delivered in the first three installments were fewer than what had been agreed upon. Claimant commenced legal action to obtain payment. Defendant argued that Claimant's claim should be set-off against its claim for damages that it was entitled to make under the penalty clause included in the contract.
The Arbitral Tribunal held CISG applicable as part of the substantive law of a Contracting State (Austrian law) which the parties had chosen as the law governing the contract (Art. 1(1)(b) CISG). The contract at hand was considered to be a sales contract, since Claimant manufactured the books providing itself the necessary means (Art. 3 CISG). As to the merits, the Arbitral Tribunal held that Defendant could not avail itself of the remedies laid down in Art. 45 CISG nor of the penalty clause provided for in the contract. In fact, Defendant had lost its right to rely on the lack of conformity, because it had failed to give Claimant notice thereof within reasonable time in accordance with Art. 39 CISG. The Arbitral Tribunal admitted that a reasonable time was certainly longer than the time limit under Austrian domestic law (immediately: cf. § 377 of the Austrian Commercial Code). Referring to a decision of the Austrian Supreme Court (Oberster Gerichtshof 15 October 1998, see Abstract and Fulltext in UNILEX) it concluded that the overall time limit for the examination of the goods and notice of the defects is fourteen days, unless special circumstances suggest a reduction or extention of that period. The Arbitral Tribunal also rejected Defendant's argument that Claimant had not disclosed to it the fact that the books delivered were less than what was agreed upon (Art. 40 CISG). In fact, with respect to the first two installments the invoices clearly indicated the exact number of books delivered, while only with respect to the third installment was the number indicated in the invoice higher than the number of books actually delivered. Yet, according to the Arbitral Tribunal, in the trade sector concerned discrepancies up to 5% (…) are to be tolerated by the contractual partner. Moreover Defendant's silence led Claimant reasonably to believe that the small discrepancies were irrelevant. In any case, the overall number of books to be delivered as agreed upon in the contract had been made up in the last installment within the contractual time for delivery. |