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| A German seller and a Dutch buyer concluded a contract for the sale of 400 sheep to be delivered to a slaughterhouse in Denmark. After delivery the buyer refused to pay the price alleging non conformity of the cattle (in particular, it was too thin and could not therefore be slaughtered immediately). The seller commenced an action to recover the price.
As to the buyer's claim of non-conformity of the sheep and its claim for a price reduction as well as damages covering its expenditures for fattening the sheep, the court noted that although the buyer might be entitled both to a price reduction according to Art. 50 CISG and damages according to Art.74 CISG remedies were mutually exclusive insofar as any non-conformity had already been remedied by one of them. Regarding the claim that the sheep were too thin, the court held that the buyer had failed to prove the non-conformity of the sheep according to Art. 35(1) CISG. This would have required proof that the buyer had made known to the seller the use for which the sheep were intended (i.e. sheep ready for slaughter). Additionally, the court held that the buyer had failed to examine the sheep and to give notice of any lack of conformity to the seller within a reasonable time thereafter (Arts. 38 (1), 39 (1) CISG). The court held that while with durable goods under regular circumstances the examination has to be done within 3 - 4 days, this is a too long time period for living cattle as the condition of cattle can deteriorate quickly in the absence of feed and water. In such a case examination has to be done immediately on delivery or on the very next day and that the notice has to be given shortly thereafter. As the buyer failed to prove that it has given notice within this timeframe the court held that it had lost the right to rely on any non-conformity of the sheep (Art. 39(1) CISG). As for Art. 40 CISG, the court found it to be inapplicable, as it has not been shown that the seller knew of the intended use of the sheep. Regarding the alleged transport related bad condition of the sheep, the court held the seller not to be responsible because the risk of loss had already passed on to the buyer when the seller had the sheep handed over to the first carrier (Art. 67(1) CISG). Only where the seller had ordered the carrier to overload the transport would it have been responsible for the bad condition of the sheep. Finally the court awarded the seller interest according to Art. 78 CISG at the rate determined by German law. |