|A Swiss seller and a German buyer concluded a contract for the sale of New Zealand mussels. The buyer refused to pay the price after the mussels were declared 'not completely safe' because of the quantity of cadmium they contained, which was significantly greater than the advised cadmium levels published by the German Federal Health Department. The buyer gave the seller notice of the non conformity and asked the seller to take back the goods. The lower court decided in favour of the seller and the buyer appealed.
The court held that the buyer's notice was an unmistakable declaration of its intention to avoid the contract (Art. 26 CISG).
The court held, however, that the buyer was not entitled to avoid the contract under Arts. 25 and 49(1)(a) CISG, because the seller did not fundamentally breach the contract. First of all, in the opinion of the court, the mussels were conforming to the contract, since they were 'fit for the purposes for which goods of the same description would ordinarily be used' (Art. 35(2)(a) CISG). The court observed that the directives issued by the Federal Health Department on fish products are non binding recommendations, and that the quantity of cadmium which makes food dangerous to the health varies according to the type of food (as a rule, mussels are eaten occasionally and in smaller quantities than other types of good). Moreover, the parties had not explicitly or implicitly agreed to the advised cadmium levels in the contract (Art. 35(2)(b) CISG).
In addition, the court held that the goods would be 'fit for the purposes for which goods of the same description would ordinarily be used' even if the directives issued by the Federal Health Department were binding public authority rules. According to the court, the goods can be conforming even if the seller does not comply with the public law provisions concerning the merchantability of the goods in force in each of the countries where the goods might be exported. After all, only by disregarding these provisions can Art. 35 CISG be interpreted and applied uniformly in accordance with Art. 7(1) CISG.
The court further held that, in the case at hand, there was no need to resolve the question whether the requirements of Art. 35(2)(a) CISG are met where the goods are of average quality (prevailing continental law rule), or where the goods are just merchantable (prevailing common law rule). Nevertheless, the court observed that the latter seems correct, because during the negotiation of CISG a Canadian proposal concerning average quality was withdrawn.
According to the court, the buyer was not entitled to avoid the contract because of non conformity of the packaging (Art. 35(2)(c) CISG). Under CISG the buyer must declare its intention to avoid the contract within a 'reasonable time' after the discovery of the unsuitable packaging (Art. 49(2) CISG). Here, the buyer's declaration occurred over two months after the delivery, which the court held was not within a reasonable time.
The seller was awarded payment of the price (Art. 53 CISG). As CISG does not determine the currency of payment, the court enforced the parties' agreement concerning the currency.
The seller was granted interest on the price (Art. 78 CISG). As CISG does not determine the rate of interest, the court applied German private international law rules. The court left open the question whether Swiss law or German law applied, as the legal interest rate is the same in both countries.