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| Abstract | ||||||||||||||||||
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| An American manufacturer of fabrics (seller) and a German company (buyer) concluded a contract for the sale of a drapery fabric called Trevira. During the negotiations the seller affirmed that the fabric was particularly suitable for transfer printing, a process for imprinting the base fabric with colors and patterns. As a result the buyer asked to examine the fabric. Another German company, entrusted with the transfer printing by the buyer, carried out the test. After examination the buyer informed the seller that, although there were some problems with the material, it was in general satisfied with it and, therefore, placed an initial order for the fabric. During the transfer printing some additional problems were discovered but the seller urged the buyer to continue and to print the lower quality fabric with patterns instead of colors. Subsequently, the buyer placed another order for fabric but when about 20% of it was found to be of low quality, the buyer declared its intention to return the material. A dispute arose between the parties.
The first instance decision was in favor of the buyer. The appellate Court confirmed the lower Court's decision. As to the applicable law, after confirming that the case at hand was governed by CISG (Art. 1(1)(a) CISG), the Court stressed the importance of interpreting CISG taking into account its international character and the need to promote uniformity in its application and the observance of good faith in international trade (Art. 7(1)CISG). Moreover, the Court pointed out that domestic law (i.e. the law of Maryland) would be applicable only if CISG does not provide for the solution of the issue, having regard to the general principles on which it is based (Art. 7(2) CISG). Finally, the Court observed that case law on the Uniform Commercial Code can be helpful in interpreting CISG as long as referring to provisions similar to those contained in CISG. As to the merits of the dispute, the Court of Appeal held the seller liable for breach of warranty under Art.35(2)(b) CISG. In the opinion of the Court, the seller had failed to deliver goods suitable for the use it had expressly warranted and the buyer had reasonably relied on the seller's statement that the fabric was particularly fit to be transfer printed. In fact, the seller urged the buyer to go on with transfert printing even after the discovery of further problems in the fabric. As to the issue of the burden of proof, the Court, after stating that CISG is silent on that point, applied domestic law and found irrelevant that the buyer did not prove the exact nature of the defects of the fabric. Regarding the exchange rate to convert the damages awarded into German currency, the Court held domestic law applicable (Art. 7(2) CISG), but since it could not find any Maryland precedent on the matter at issue, it found reasonable to confirm the first instance decision that had applied the exchange rate at the date when the buyer became aware of the defects of the fabric. |