- I ACa 1041/15
- Poznan Court of Appeal
TERMINATION OF CONTRACT – NOTICE OF TERMINATION WITHIN A REASONABLE TIME AFTER THE BUYER KNEW OR OUGHT HAVE TO KNOW OF THE BREACH (ART. 49(2)(B)(I) CISG)
DELIVERY OF GOODS IN EXCESS (ART. 52 CISG) - DUTY TO PAY AT CONTRACT RATE FOR ACCEPTED EXCESS QUANTITY
[CLOUT Case no. 1677; abstract prepared by Natalia Otlinger and Maciej Zachariasiewicz, National Correspondent]
Since 2010, the Bulgarian buyer has purchased confectionery products from the Polish seller. The parties never concluded a written contract and their relation was based on the following scheme: the Bulgarian buyer would contact the seller via email or telephone and propose the quantity, kind and price of the goods it wished to order. The seller would then prepare the specified list of goods available with their actual prices. After receiving the list, the buyer would confirm or modify the order and arrange the delivery accordingly. Additionally, the parties were in agreement that each delivered product should have an expiration date not shorter than six months.
In June 2013, the seller delivered a batch of goods to the buyer, which took their delivery. In an email, a week later, the buyer gave the seller notice of the non-conformity of parts of those goods for the following reasons: first, some of the products had an expiration date shorter than six months; and second, some of the products delivered were not listed on the confirmed order (i.e. 1,500 bars of a cream-coffee flavour chocolates). After giving notice, however, the buyer did not return the goods to the seller and continued to offer them to its clients. The buyer refused to pay the price for the allegedly non-conforming goods and tried to negotiate a price reduction. Around November 2013 the negotiations ended unsuccessfully. The buyer, however, never returned any goods and initially declared its intention to pay the remaining part of the price requesting an extended payment deadline. At the end of 2013, the products’ expiration date passed and they were recycled in accordance with Bulgarian food laws. The Polish seller sued the buyer for the unpaid part of the price in a Polish court at which point (July 2014) the Bulgarian buyer declared the contract avoided in relation to the unpaid products.
The court of the first instance (District Court) established that according to Article 82(1) CISG the buyer lost its right to declare the contract avoided since the goods were consumed and the buyer could not make restitution of the goods substantially in the condition in which it had received them. Therefore, the buyer was ordered to pay for the remaining part of the goods.
The Court of Appeals disagreed. It found that the Court of first instance wrongly assumed that Article 82(1) CISG applied. The Court noted that the impossibility of restitution of the goods was not caused by any buyer’s act or omission. Rather,
consumption of the products was mandatory under Bulgarian food regulations. Therefore, in line with the exceptions provided for in Article 82(2) CISG, Article 82(1) CISG could not be applied in the case at hand.
In the Court of Appeals’s view, the key point of the case was lack of proper avoidance of the contract. The buyer complied with Article 39 CISG by sending notice of lack of conformity in its email of June 2013. However, this notice itself could not be considered as a declaration of avoidance since the buyer continued to negotiate a price reduction and to offer the products to its customers. The Court of Appeal found that under Article 49(1) and 49 (2)(b)(i) CISG the buyer should have declared the contract avoided without delay, which in the case at hand meant immediately after the failure of the negotiations between the parties especially considering the non-durable character of the confectionery products. The declaration of avoidance of the contract made over one year after the notice, in July 2014, cannot be considered as made within a reasonable time. The fact that the goods with an expiration date shorter than six months were not in conformity with the contract was of no significance, since the contract’s avoidance was in any event belated. The buyer was thus obliged to pay the full contract price under Article 53 CISG.
With regard to those goods that according to the buyer were not ordered (i.e. cream-coffee flavour chocolates), the Court of Appeals quoted the second sentence of Article 52(2) CISG. Accordingly, since the buyer had taken delivery of the excess quantity of the goods, it was obliged to pay for it at the contractual price. The Court further highlighted that the carrier arranged by the buyer received no instructions as to the specification of the ordered goods. The carrier was only informed of the number of the pallets that were supposed to be delivered. The buyer, being a professional trader, should have precisely described to the carrier the ordered goods.
The Court of Appeals thus dismissed the buyer’s appeal and ordered the buyer to pay for the additional goods delivered.
Abstract: CLOUT Case no. 1676, in A/CN.9/SER.C/ABSTRACTS/181}}