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| An Italian seller and a German buyer entered into a contract for the sale of goods. The buyer refused to pay the purchase price and set off its obligation against a counter-claim for lack of conformity of the goods. The seller objected to the counter-claim and commenced an action for full recovery of the purchase price.
The Court awarded the seller the purchase price, but dismissed the claim for interest. The Court found that the obligation to pay the price had not been discharged by the buyer´s attempt to set it off against the counter-claim, and this for two reasons. First, because in the case at hand set-off is contrary to the principle of good faith set out in Art. 7(1) CISG, as the buyer had previously asked for payment in instalments and actually offered to make a partial payment without reserving the right to set-off. Moreover, even if the buyer’s conduct were not to be considered as a violation of its duty to act in good faith, the result would not have been different: indeed the Court held that according to Art. 7 (2) CISG set-off has to be decided on the basis of the applicable domestic law as it is not a matter governed by CISG. In the case at hand the applicable law was Italian law and the Court found that the requirements for set-off under Italian law had not been met because the counter-claim was neither ascertained nor enforceable. |