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| Abstract | ||||||||||||||||||
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| Two French companies (hereafter "seller" and "buyer") concluded a contract for the sale of forty automatic machines to be installed in a number of subway stations in Lion. After installation of the first ten machines, two of them turned out to be defective. Shortly upon notice of non-conformity by the buyer, another company, appointed by the German software company which had produced the software installed in the machines, tried to repair the defects, though without success. Since also the seller’s attempts to repair the machines failed, it was finally decided to send one of the machines back to the German software company, so that the problem could be solved. Meanwhile, all the machines delivered to the buyer ceased to work and the latter brought an action against the seller claiming termination of contract and restitution of the purchase price. The seller declined liability for non-conformity, objecting that the defectiveness of the goods was exclusively due to the breach of contract by the German software company and by the German company which had supplied the machines (hereafter, "German supplier"). The buyer in its turn counterclaimed against both the German software company and the German supplier.
The Court of first instance declared the contract terminated on the grounds of breach of contract by the seller. Yet, all claims against the German software company and the German supplier were rejected, as the Court found that they had been brought after the expiration of the six-month limitation period provided for by the applicable German law. The appellate Court confirmed the first instance decision only in part. While finding that the contract had correctly been declared terminated on the basis of the breach by the seller, as the machines did not meet the specifications required by the buyer and they were totally unfit for their use, the Court of Appeal held that the claims against the German software company and the German supplier were not time-barred and considered the claim brought by the buyer against them as founded. In order to reach this conclusion, the Court first of all stated that the contracts concluded by the French seller with the German software company and the German supplier were both governed by CISG (Art. 1(1)(a)). The Court rejected the argument that the contract between the seller and the German supplier was not a contract for the sale of goods, since it held that the German supplier was not required to provide machines to be manufactured in accordance with the buyer’s specifications, but merely to adapt pre-existing models to the buyer’s requirements (Art. 3 CISG). Furthermore, the Court denied that the two contracts at hand were governed by German law under the 1955 Hague Convention, since CISG prevails over that Convention and, in any case, CISG is part of the substantive law of Germany. As to the direct claim ('action directe') brought by the buyer against the German software company and the German supplier, being an action of contractual nature, according to the Court it was governed by CISG as the law applicable to the contract of sale. As to the merits, the Court held that both the German software company and the German supplier were liable for breach of contract towards the buyer. The machines were not fit for the particular use expressly made known to them at the time of the conclusion of contract (Art. 35(2) CISG) and the buyer had not lost its right to rely on the non-conformity, as the two-year period set out in Art. 39(2) starts running only after the additional period granted under Art. 47 CISG has expired (in the case at hand, the period in question was the one given by the buyer to the German software company so as to make it possible for the latter to repair the defects). |