|A French seller and a buyer from the United Arab Emirates entered into a contract for the sale of 128 decorated glass panels, which were to be delivered in Montpellier, at the place of business of the manufacturer, and subsequently shipped to the port of destination (Dubai). The seller entrusted the manufacturing and the packaging to other French companies.
Two weeks after arrival of the goods in Dubai (about two months after delivery), the buyer gave notice of their lack of conformity. Several months later the buyer commenced an action against the seller, claiming avoidance of the contract, restitution of price and damages.
The Court of First Instance (Tribunal de commerce de Paris 10-05-2000), holding that the buyer had not proved the origins of the defects, decided in favor of the seller. The buyer appealed.
The Court of Appeal(Cour d'Appel de Paris 14-06-2001, UNILEX, D.2001-9) held that the contract was a sales contract governed by CISG and not a work contract, as the supply of labor did not amount to a preponderant part of the obligation of the party furnishing the goods (Art. 3(2) CISG). The Court pointed out that even if the manufacturing process exceeded the value of the raw material used, it could not be considered as a service rendered under Art. 3 CISG.
As to the merits, the Court held that the buyer had lost its right to declare the contract avoided, according to Art. 49(2)CISG. The Court observed that the buyer should have made the declaration of avoidance within a reasonable time after it knew or ought to have known of the breach. The Court pointed out that though the origin of the defects could have been ascertained only after an expertise, the buyer should not have waited for the results of such an expertise before asking for avoidance of the contract, since the defects were apparent.
Furthermore, the buyer had declared the avoidance of the contract 8 months after the latest expertise, and this delay was not deemed reasonable.
Moreover, the Court held that it was no more possible to ascertain whether the lack of conformity depended on manufacturing or packaging defects or it had rather been caused during the carriage by sea and therefore after the passing of risk to the buyer.
Therefore the Court dismissed the buyer's appeal,confirming first instance decision. The buyer brougth the case before the Court of Cassation alleging the violation of artt.35.2-36 CISG, on the ground that the burden of proof of goods lack of conformity before passing of risk was placed on the buyer.
The supreme Court confirmed the appeal Court decision. The Court held that no improper reversal of burden of proof occurred since it resulted technically impossible to determine if goods defects were present before passing of risk or rather had been caused by transport conditions. In placing the burden of proof on buyer the Court did not motivate as to whether the Court intended to apply CISG general principles or national law.