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CISG CASE PRESENTATION

Germany 13 September 2000 District Court Memmingen (Plastic filter plate case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/000913g1.html]

Primary source(s) of information for case presentation: Case text

Case Table of Contents


Case identification

DATE OF DECISION: 20000913 (13 September 2000)

JURISDICTION: Germany

TRIBUNAL: LG Memmingen [LG = Landgericht = District Court]

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: 2H O 382/99

CASE NAME: German case citations do not identify parties to proceedings

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Germany (plaintiff)

BUYER'S COUNTRY: Italy (defendant)

GOODS INVOLVED: Plastic filter plates


Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 3(1) ; 8 ; 39 [Also cited: Articles 6 ; 50 ; 53 ; 57(1)(a) ]

Classification of issues using UNCITRAL classification code numbers:

3A1 [Goods to be manufactured: buyer supplies substantial part of necessary materials];

8C [Interpretation of party's statements or other conduct: interpretation in light of surrounding circumstances];

39A1 ; 39A2 [Requirement to notify seller of lack of conformity: buyer must notify seller within reasonable time; Degree of specificity required]

Descriptors: Materials supplied by buyer ; Intent ; Standard term and conditions ; Language issues ; Lack of conformity notice, specificity ; Lack of conformity notice, timeliness

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Editorial remarks

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Citations to case abstracts, texts, and commentaries

CITATIONS TO ABSTRACTS OF DECISION

(a) UNCITRAL abstract: Unavailable

(b) Other abstracts

Unavailable

CITATIONS TO TEXT OF DECISION

Original language (German): CISG-online.ch website <http://www.cisg-online.ch/cisg/urteile/820.pdf>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

English: Piltz, 7 Vindobona Journal of International Commercial Law and Arbitration (2003) 218 [Case cited as standing for the following proposition: "When the buyer hands the goods over to the seller to have them repaired without mentioning their non-conformity with the contract of sale, the contract then concluded is to be considered as an independent contract of manufacture."]

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Case text (English translation)

Queen Mary Case Translation Programme

District Court (Landgericht) Memmingen

13 September 2000 [2H O 382/99]

Translation [*] by Jan Henning Berg [**]

Translation edited by Veit Konrad [***]

As partial final judgment in the action of Plaintiff [Seller] against Defendant [Buyer], the 2nd Court on Commercial Matters, District Court Memmingen, pronounces:

  I.   The [Buyer] is ordered to pay the [Seller] DM [*] 82,195.57 plus 5 % interest on DM 9,150 since 3 December 1997, on DM 69,095.57 since 24 October 1997, on DM 1,350 since 4 November 1997 and on another DM 2,600 since 1 December 1997.
 
  II. The claim is dismissed insofar as [Seller] had lodged its claim for additional interest, exceeding the capital, interest rates and the periods assigned under I.
 
  III. The decision on costs and fees will be subject to the closing judgment.
 
  IV.    The [Seller] may preliminarily enforce the judgment against a deposit of DM 100,000. The [Seller] may effect this deposit by an indefinite, unconditional, irrevocable and self-debt bail. It must be put by a commercial bank that is accredited as a guarantor for customs and taxes in the Federal Republic of Germany.

FACTS

The [Seller], a German producer of plastic filter plates, and the [Buyer], of Italy, a firm that uses such parts for its self-produced filter presses, are in dispute over the [Buyer]'s obligation to pay for certain open account purchases.

The parties have had a business relationship for quite a long time (since 1992). Their correspondence was conducted almost always in English.

At the outset of their relationship, the [Seller] attached to its order confirmation its "General Sales Conditions" in their English version. In the further course of business between the parties, [Seller] eventually attached its German version of its General Sales Conditions ("Allgemeine Verkaufsbedingungen") to order confirmations that were still in English. The versions of these conditions are fairly different; the English conditions have nineteen sections, whereas the German version has only sixteen sections.

There are also differences in the treatment of the same subjects, especially concerning choice of law (section XVIII, respectively, section XV): the English version expressly precludes the application of the uniform UN Sales Law (CISG) of 11 April 1980, whereas it is stipulated in the German version that "the provisions of the Uniform Law on the International Sale of Goods (ULIS) of 17 July 1973, and the Uniform Law on the Formation of Contracts for the International Sale of Goods (ULF) of 17 July 1973, would not be applicable".

The German version of [Seller]'s "General Sales Conditions" ("Allgemeine Verkaufsbedingungen") was received by the [Buyer] prior to 1997. Confirmations of the transactions here in dispute refer to them. There has been no objection to these conditions by the [Buyer].

It could not be established that the [Buyer] ever received the English version of the General Sales Conditions.

After [Seller] confirmed a frame order by letter to [Buyer] dated 3 December 1996, the latter communicated more specific needs by facsimile of 23 December 1996. Except for an identical cover and the technical drawing "Filmac 01.10.05.53" of 20 December 1996, it is in dispute, which drawings were actually attached to this facsimile. The parties submitted to the court different drawings that were allegedly attached.

As had been the common usage between the parties, [Seller] communicated the so-called "manufacture drawings" that it had prepared by facsimile of 7 January 1997. [Buyer] sent them back on the same day with the comment "all right". In this letter, there is also a handwritten comment by the [Buyer] concerning a certain drawing.

Under Account No. 2654, [Seller] billed in total DM 145,164.00 this order, which was delivered to the [Buyer] on 2 February 1997. In accordance with a common usage between the parties. However, the [Seller] later credited the [Buyer] a sum of DM 18,934.43 for assembly and installation of the facility.

The [Buyer] used the plates that it had purchased through this order for [a particular project]. Part of this project was the operation of a gravel works in [a certain town], in Thuringia, Germany.

After a defect had been fixed (for which [Seller] was undisputedly responsible) it turned out that the plates' inlet chink was too narrow to permit them to be applied in the context of this project as intended.

Although the [Seller] refused to take any responsibility for the defect, the [Seller] finally adapted the plates by the end of June 1997. In account no. 5010 of 3 November 1997, [Seller] charged the [Buyer] DM 9,150.00 for this job. This invoice has not been paid. [Buyer] does not contest the amount of this invoice.

At the beginning of November 1997, the [Buyer] paid for account no. 2654 including the aforementioned sum that was later credited.

In the course of 1997, the parties further concluded the sales contracts illustrated below. The [Seller]'s claims resulting from these transactions have not been paid. In detail:

Account
No.
Date Due since Scope of delivery Sum (DM) Over-invoicing / assembly / installation Net sum (DM)
4140 07/24/97 10/22/97 Plates 101,234.50 13,204.50 88,030
4237 08/04/97 11/02/97 Replacement membrane / parts 1,350   1,350
4467 09/01/97 11/30/97 Plates 2,600   2,600
4471 09/01/97 11/30/97 Replacement plates 36,121.50 4,711.50 31,410

By adding the claim from account no. 5010 (adapting the plates) and by subtracting all sums that had been over-invoiced for assembly and installation (see above and account no. 2654), a total claim of DM 113,605.57 results in favor of [Seller].

[Seller] holds the view that its German General Sales Conditions ("Allgemeine Verkaufsbedingungen) were effectively agreed upon for those orders contested here. [Seller] alleges that these conditions are effective with regard to their content. Therefore, the parties not only agreed upon the jurisdiction of the District Court Memmingen, but especially that German law is to be applied to the sales contracts to be applied. [Seller] alleged that:

   -    Particularly in view of the language of the English version of the Sales Conditions, section XVI, para. 2, of the German version was to be interpreted to mean that the uniform UN Sales Law (CISG) is also barred, it being the law succeeding the Uniform Law on the International Sale of Goods (ULIS).
 
   -    The parties' choice of German law meant that the provisions on sales contracts laid down in the German BGB [*] and HGB [*] must be applied without any restrictions.

[Seller] further submits that following the effective stipulation of its General Sales Conditions, all counterclaims asserted by [Buyer] were effectively excluded. In any case, any notifications of defects were submitted too late by [Buyer], both under German law and, in the alternative, UN Sales Law (hereinafter: CISG). In this respect, [Seller] expressly relies on limitation of any claims from non-conformity and raises the appropriate defense, as well.

The [Seller] requests that the [Buyer] be ordered to compensate [Seller] with DM 113,605.57 plus 7 % interest on DM 9,150 since 23 June 1997, on DM 88,030 since 24 October 1997, on DM 1,350 since 4 November 1997 and on DM 34,010 since 1 December 1997.

The [Buyer] seeks dismissal of the [Seller]'s claim.

[Buyer]'s position

With respect to the costs for adapting the plates for the project in June 1997 (account no. 5010; DM 9,150), [Buyer] alleges that the [Seller] is responsible for having manufactured the inlet chink too narrow. [Buyer] submits that it communicated all necessary drawings on 23 December 1996.

[Buyer] alleges that when [Seller] created its manufacturing drawings, [Seller] made minor adjustments without giving notice to [Buyer] and that, being a specialist company, [Seller] was obliged to do so. [Buyer] alleges that if a corresponding notice had been given, a too narrow construction of the inlet chink would have been prevented. Consequently, no damages would have accrued.

It is undisputed that while having operated [a particular facility], which [Buyer]'s client has not yet even approved, there have been constant damages: The filter cloth tears at certain spots soon after installation, and long before reaching its regular life-span.

[Buyer] holds the view that at first it was impossible to determine the cause for this so-called "cannelure effect". Only by May 1998 it could finally determine that this effect was caused by faulty "design" of the type KMZ 1500 RDR plates, produced by [Seller]: Partly, the pitch between the neps was too large; moreover, constructional flaws gradually caused the edges of the plates to sharpen.

A first replacement of the filter cloth because of early tearing was carried out in November 1997. This is not in dispute. [Buyer] gave notice of the phenomenon set out above with reference to project "Untschen" in writing and during a briefing with [Seller] in the first half of June 1998. This is also not disputed.

[Buyer] further submits that in the course of correspondence, respectively, during the briefing in June 1998, it also gave general notice of non-conformity as regards the type KMZ 1500 RDR plates. These were employed in other facilities, too.

[Buyer] holds the view that the CISG is applicable to the sales contracts concluded between the parties and that, because the [Seller]'s General Sales Conditions were not effectively made a part of the contract, application of the CISG was not precluded.

According to the provisions of the CISG [Article 50], the [Buyer] reduces [Seller]'s claim for the purchase price to zero, as regards the plates for project "SVEDALA", which have been already paid as well as Accounts No. 4140, 4237, 4471 which are still unpaid. [Buyer] alleges that the plates, in their current state, are useless for [Buyer] and therefore do not constitute performance of [Seller]'s obligation.

Furthermore, [Buyer] submits that it is entitled to a number of counterclaims for traveling and shipping costs concerning the [project], for procurement of substitute filter cloth and for further positions, especially detention of payment by the customer of [project]. [Buyer] sets off these claims for damages against the [Seller]'s claim.

[Seller]'s response

In regard to the manufacturing drawings (dispute over account no. 5010), [Buyer]'s facsimile of 23 December 1996, contained other drawings than those which [Buyer] alleges that it transmitted. From the drawings attached to exhibit K3, one can clearly determine what [Seller] had actually received.

In addition, [Seller] holds the view that it is [Buyer]'s responsibility to check whether or not the [Seller]'s manufacturing drawings conform to the specifications. Any deviation, if there had been any, was clearly perceptible to the [Buyer], being a specialist. For this reason, there was no obligation on the [Seller] to give any special notice. Finally, it can be concluded that the [Buyer]'s inspection was apparently insufficient since it approved the manufacture drawings on the very day of receipt, 7 January 1997.

With reference to the rejected plates for [the project], [Seller] argues that these were not defective, but state-of-the-art. [Seller] alleges that the cause for the damages (tearing of filter cloth) was rather the fact that the [facility] -- contrary to contractual agreement -- was operated with excessive pressure so that the cloth was overstrained. Moreover, part of the filter cloth that was used was badly manufactured.

[Seller] also puts forth that in June 1998 [Buyer] had merely hinted at difficulties in operating the [facility]. A general notice of non-conformity of the type KMZ 1500 RDR plates was not asserted until December 1998.

[Buyer] is therefore not entitled to any price reductions or claims for damages. Besides that, [Seller] submits that it does not know of any of the damages alleged by [Buyer].

On 2 August 2000, the Court took evidence, hearing [Witness 1] and [Witness 2]. For the contents of their testimony, see the protocol of the Court's hearing.

In addition, and to complement the parties' arguments, reference is made to the exchanged written submissions as well as to the parties' statements at the hearings of 26 January 2000, 31 May 2000 and 2 August 2000.

RULING OF THE COURT

A. [Admissibility and jurisdiction]

The action is admissible. The District Court Memmingen takes international, territorial and subject matter jurisdiction in this case.

As far as claims for DM 9,150 from account no. 5010 are in dispute, the parties expressly made a corresponding stipulation during the oral hearing of 26 January 2000. This establishes the jurisdiction of the District Court Memmingen on that account.

As to the other claims, the jurisdiction of the District Court Memmingen is established, as well. According to the [Seller]'s view, it follows from the 1968 Brussels Convention in conjunction with section XV of [Seller]'s General Sales Conditions; according to the [Buyer]'s position, German law is to be applied by way of Art. 28 paras. 1 and 2 EGBGB [*], which means that the CISG is applicable to this dispute:

The substantive scope of application of the Brussels Convention is established by its Art. 1 para. 1. Art. 17 para. 1(b) Brussels Convention allows for a choice of forum through Standard Business Conditions (cf. Geimer/Schütze, Europäisches Zivilverfahrensrecht, 1st ed. 1997, Art. 17, paras. 85 et seq.). Consequently, if the [Seller]'s General Business Conditions effectively became part of the contract, then the [particular forum] was agreed upon.

The Court interprets this clause in a way that it should only provide for municipal designation of the circuit but not for a designation of subject matter jurisdiction. Since the amount involved in this case exceeds DM 10,000, the appropriate District Court responsible for the area of Neu-Ulm takes jurisdiction.

On the other hand, according to the [Buyer]'s position, the CISG must be considered as part of German law. According to CISG provisions -- assuming the General Sales Conditions were ineffective and failing any agreement by the parties -- the purchase price is to be paid at the [Seller]'s place of business, thus in Senden [Germany] (Art. 57(1)(a) CISG). This again establishes jurisdiction of the District Court Memmingen by way of Art. 5 No. 1 Brussels Convention.

B. [Seller's claims from account no. 5010]

For having adapted the plates' inlet chink (plates from account no. 2654) [Seller] is entitled to DM 9,150 which it claimed by account no. 5010 according to 631 para. 1,632 para. 2 BGB [*].

      I. [German law applicable to the service contract]

      This claim is to be judged under German law: Since the [Seller] had to perform a certain repairing job, the contract in question is to be classified as a contract for services. As regards the applicable law for service contracts, there are no provisions similar to the CISG. Because the parties had not made a choice of law (Art. 27 EGBGB [*]), the applicable law is to be determined by the centre-of-gravity principle laid down in Art. 28 para. 1 EGBGB. Undisputedly, the [Seller] performed its obligations at its works in Senden. Therefore, the assumption of Art. 28 para. 2 EGBGB is applicable, leading to German law on service contracts.

      II. [No breach of contractual warranty or duty to notify in respect of account no. 2654]

      It is not in dispute that the [Seller] actually performed the services under the contract in respect of account no. 2654. Since neither party argued on a certain salary, it had to be determined under 632 para. 2 BGB. The [Seller] did not bring forth any objections against the amount of the salary sought by [Buyer]. Thus, the Court treated this salary as undisputed in its amount.

The [Buyer] cannot object to the [Seller]'s claim by arguing that the services had to be performed without any charge as restitution for damages, either from contractual warranty or from having violated a duty of notification. According to the conviction of the Court, the [Buyer] failed to establish proof that [Seller] had manufactured non-conforming goods and [Buyer] further failed to demonstrate that [Seller] had previously violated any duty to give notice of construction changes:

The [Seller] substantiated in its submission of 13 January 2000, on p. 15 that four drawings dated 9 June 1993, respectively, 30 September 1993 (drawings 01.10.05.00, 01.10.05.01, 01.10.05.12 and 01.10.05.00) were not the subject matter of the order of 23 December 1996 / 7 January 1997. The [Buyer] refrained from further objections. The Court considers the [Seller]'s demonstration as evident, not only because the [Buyer] failed to provide a procedural response, but also in light of the accompanying letter: In the assignment of the order there is no reference to the drawing numbers. Furthermore, there is no hint from account no. 2654, which had been put for this order, that such orders had been placed.

The [Buyer] submitted drawings dated 2 January 1997 and 9 January 1997 (nos. 01.10.05.50, 01.10.05.51 and 01.10.05.52). Due to these date specifications, the Court is not convinced that the drawings (as submitted) had actually been transmitted by 23 December 1996. It may be concluded that the drawing as a whole was created only after 23 December 1996. What is more, it may even be concluded that the drawings were once again modified after 23 December 1996, together with an update of the time stamp. This also explains why the [Seller] submitted its exhibit K3 drawings with identical numbers but a date of 20 December 1996.

When comparing these three drafts in [Seller]'s exhibit K3 with those in [Buyer]'s exhibit B2, one can immediately recognize some major modifications, especially in regard to some missing or new smaller drawings.

The Court rules out the possibility that the drawings in question were once again modified at the [Buyer]'s works after 23 December 1996. Therefore, the [Buyer] is not able to furnish proof through the drawings it submitted that there had been any more modifications to the drawings other than those made by [Seller] while creating the manufacturing drawings.

With respect to that modification, the [Seller] has substantiated in its written submission of 13 January 2000, on pp. 15 to 17 that it had already given notice to the [Buyer] about a modified surface by facsimile dated 18 October 1996. The Court holds that this was sufficient to fulfill any duty of notification. It can be assumed for [Buyer]'s business that these documents are deposited for easy access and that anyone in charge can consult them again if needed.

Adding a nib at the inlet chink (spot R6) is, in the Court's opinion, such an evident modification that any customer with technical expertise, like the [Buyer], should have been able to detect it, even without having been given express notification.

Therefore, the Court does not find any duty to notify violated here.

Finally, it must also be pointed out that the [Buyer], as a customer with expertise, would have had a duty to inspect the manufacturing drawings that were provided. By virtue of the reasoning set out above, there is no need for the Court to determine whether or not [Buyer] violated this duty when it cleared the drawings still on the same day.

C. [Seller's claims from accounts nos. 4140, 4237 & 4467]

The [Seller] is further entitled to DM 73,045.57 from accounts nos. 4140, 4237 and 4467 according to Art. 53 CISG (by subtracting over-invoicing and setting-off over-invoicing of DM 18,934.43 from account no. 2654).

      I. [The CISG is the substantive law applicable to the contracts for these accounts]

      The abovementioned contracts are subject to the CISG and not governed by provisions of the German BGB [*] or HGB [*]. It is the conviction of the Court that the [Seller]'s General Sales Conditions did not become part of the contracts.

            1. It may be left unresolved whether the contracts were pure sales contracts or possibly contracts for work and materials on movables. In both cases, the CISG would govern the contract (Art. 1(1)(a), respectively, Art. 3(1) CISG). As required by these provisions, both parties to the contract have their places of business in different States and both Germany and Italy are signatories of the CISG (cf. Palandt-Heinrich, BGB, 59th ed., Art. 28 EGBGB para. 7).

            2. [Seller] did not succeed in preventing the CISG from governing the contracts.

                        a) [CISG provisions govern incorporation of Standard Business Conditions]

       It is generally possible to exclude the application of the CISG (Art. 6 CISG), which may even be effected by means of Standard Business Conditions (cf. von Caemmerer/Schlechtriem, Kommentar zum einheitlichen UN-Kaufrecht (CISG), 2nd ed. 1977, Art. 6 para. 8).

The question whether or not Standard Business Conditions become part of a contract is to be determined according to CISG provisions on contract formation (cf. von Caemmerer/Schlechtriem, Vor Art. 14 bis 24 para. 9 and Art. 14 para. 16; Piltz, Internationales Kaufrecht, 1st ed. 1993, 3 para. 75).

                        b) Standard terms are only incorporated if, according to commercial usage, the other contracting party is given sufficient opportunity to take note of them, either in the language of negotiations or in its native language. This notion -- which the Court follows -- is widely held for the CISG as well as for similar situations of forum-choice in international sales contracts by means of Standard Business Conditions and for the question of how they may be incorporated if German law is applicable (cf. Geimer/Schütze, Europäisches Zivilverfahrensrecht, 1st ed. 1997, Art. 17 para. 93; von Caemmerer/Schlechtriem, Art. 14 para. 16; Geimer, Internationales Zivilprozeßrecht, 3rd ed. 1977, para. 1696 (Teil 4: Internationale Zuständigkeit - Geschäfts- und Vertragssprache); Piltz, 3 para. 79; Ulmer/Brandner/Hensen, AGBG, 8th ed., Anhang 2 para. 20; Teklote, Die einheitlichen Kaufgesetze und das deutsche AGB-Gesetz, p. 119 at the end).

                        c) [No stipulation of the English version of the Standard Business Conditions]

       It has already been established above that the parties conducted their business dealings mostly in English. In the course of proceedings, however, it was not substantially established that the English version of [Seller]'s General Sales Conditions had ever been received by [Buyer]. Incorporating them through an order confirmation would have been possible under the principles mentioned before.

Therefore, it must be held that [Seller]'s standard terms in their English version were not stipulated.

                        d) [No stipulation of the German version of the Standard Business Conditions]

       To the Court's conviction, the German version of [Seller]'s General Sales Conditions also did not become an effective part of contract.

First, business dealings between the parties were conducted mostly in English. That means that German was not the language of negotiations even when [Buyer]'s CEO should sufficiently understand it. Also, it would not help if short written messages were only sometimes composed in German.

The native language of the [Buyer]'s CEO is Italian. Also in this context, incorporation of the German sales conditions does not come into consideration.

The Court holds that linguistic prerequisites have not been met in order to effectively incorporate the German sales conditions. Still, even if they had been met, an effective incorporation in this case would have been hindered for the following reason:

As is indicated by their different numbers of sections, the German and the English version of [Seller]'s General Sales Conditions are not completely identical. For the possible case that the parties already incorporated the English text, a change to the German version would have needed express stipulation by the parties. It is not sufficient for the [Seller] to just suddenly transmit the German version instead of the English version. [Seller] would have had to give express notice to this circumstance and in the case at hand it has not been submitted that such express notice was given.

The [Seller] bears the burden to proof on incorporation of those Standard Business Conditions which it considers favorable. It is for [Seller]'s account if uncertainty to the question whether or not the English version was ever transmitted leads to uncertainty in the question whether or not transmission of the German version would constitute an alteration of the contract.

                        e) [No waiver of CISG even in case of stipulation of German version]

       Still, even if [Seller] had effectively incorporated its German sales conditions to the contracts in dispute, these provisions would not have waived applicability of the CISG:

As the Federal Republic of Germany is signatory to the uniform UN sales law, the CISG must be considered part of the German legal system. When section XVI para. 1 of the General Sales Conditions prescribes that "German law" should govern the contract, this in itself does not waive applicability of the CISG.

In section XVI, para. 2, of these sales conditions, the [Seller] has barred the application of the Uniform Law on the International Sale of Goods (ULIS) of 1973, being predecessor of the CISG. However, both ULIS and CISG are fairly different in terms of subject matter and content. Therefore, the mere intention to bar the application of ULIS does not constitute the intention to preclude the CISG. Instead, the Court rules in accordance with literature (cf. von Cammerer/Schlechtriem, Art. 6 para. 17) that in any such case of doubt the CISG as the modern and advanced body of law remains applicable, although ULIS is expressly precluded. In the Court's view, this is even more adequate for the CISG expressly allows its own preclusion.

      II. [No valid counterclaim in favor of Buyer]

      [Buyer] does not have a valid counterclaim from accounts nos. 4140, 4237 and 4467 against the [Seller]'s pecuniary claim under Art. 53 CISG:

            1. [Buyer failed to provide an adequate notice of non-conformity under Art. 39(1) CISG]

       First, the [Buyer] cannot rely on the type KMZ 1500 RDR plates being badly manufactured in general. This would have meant that not only the plates for the [project] (account no. 2654) had been defective, but all other plates of the same type which had been delivered to perform the contracts in question, as well. According to the Court's opinion, [Buyer] did not substantiate having given adequate notice of non-conformity in due time (Art. 39(1) CISG):

                        a) The obligation under Art. 39 CISG to give notice refers to non-conformity of the goods and claims arising out of it (cf. Magnus in Staudinger, BGB, Teilband CISG-Neubearbeitung 1999, Art. 39 CISG para. 12). In this particular case, a sharpening of the plates' edges and bad allocation of neps would constitute an alleged non-conformity.

                        b) The [Buyer], being the purchaser of the plates in question, bears the burden to prove that proper notice of non-conformity has been given in due time (Magnus in Staudinger, Art. 39 CISG para. 72).

                        c) In accordance with literature, the Court holds that a notice under Art. 39(1) CISG must clearly indicate the non-conformity and the goods affected by it. It is especially necessary to specify to which extent a delivery, or -- for this case -- several deliveries, is (are) affected (cf. Magnus in Staudinger, Art. 30 CISG para. 21).

                        d) The Court holds that [Buyer] did not sufficiently demonstrate that it had given [Seller] proper and timely notice of non-conformity as regards those plates that were not delivered for the [project]. This follows from an evaluation of both the testimony of witnesses and the relevant correspondence between the parties.

According to what [Buyer] submitted, it can be assumed that it discovered the defects by May 1998 at the latest. In the view of the Court, it would have been in due time had proper notice of non-conformity been given by letter within the first half of June 1998 and in the context of meetings which would follow the written notice until July 1998. As will be shown, [Buyer] failed to provide proof of this:

[Witness 1] declared at the hearing of 2 August 2000, that there had been notice of the plates being badly manufactured during the meeting of 14 July 1998, following accordant correspondence. As far as he remembers, talks also referred to [a particular delivery]. According to the Court, the witness was credible. However, the witness expressly emphasized that the facts he indicated were from his memory, following a written note. Therefore, his statements cannot be of outstanding value in this dispute.

However, there is counter-testimony by [Witness 2] who was heard as well on 2 August 2000: He is equally credible in the Court's opinion. He clearly pointed out that his statements were reconstructed from his memory and that he had to look into the former correspondence once again before being heard. [Witness 2] testified that a general notice of the plates' non-conformity was made. Still, the [Buyer] did not argue that there had been any problems with the plates concerning other projects than the [particular project].

Given the fact that two witnesses credibly gave controversial testimony on the question whether or not [Buyer] had mentioned any defects of the plates with regard to other projects than the [particular project], this matter must remain undetermined for the time being.

Even with consideration to the written documents submitted by [Buyer], the [Buyer has not succeeded in proving that it gave sufficient notice of non-conformity concerning the plates in question:

                              aa) First, it cannot be inferred from [Seller]'s letter dated 16 February 1998 that any notice of non-conformity had already been given at that early stage:

The wording of this letter, on which [Buyer] seeks to rely, provides that [Buyer] would waive any further claims against the [Seller]. By interpretation, this might even refer to other claims apart from [the project] which had not accrued by that time. This is, in the Court's view, supported by the phrasing "in connection with the discussed order" which is put in singular.

A further point against such a broad interpretation of the letter is that the [Buyer] discovered the faulty construction only by May 1998. Therefore, it could have hardly been a subject of the parties' negotiations during February 1998.

                              bb) Indeed, the letter of [Buyer]'s attorney of 9 June 1998 in the last paragraph on page 1 does portray the discovered defect precisely. On the other hand, in the said paragraph of the letter there is express reference to "the facility's problems", which are specified in the following.

The Court holds that, from the point of view of an objective addressee, [Buyer] argued in its letter that a particular type of plates would malfunction only under the circumstances of a particular facility.

                              cc) Even the letter of 8 June 1998 sent by [Buyer] to the [Seller] bears the caption "defects at [project]", which is the very [facility].

                              dd) [Buyer]'s exhibits B12 and B13 do not serve as evidence to the Court as they were not part of the parties' correspondence.

                              ee) The letter by [Buyer]'s attorneys dated 8 January 1998 mentions [the project] but does not refer to any constructional flaws.

                              ff) According to the Court, it is only the letter by the [Buyer]'s attorneys of 23 December 1998 that embodies a specific and general notice of non-conformity. However, this notice was given too late after discovery of the plates' defects and thus does not constitute timely notice under Art. 39(1) CISG.

All other relevant pieces of the parties' correspondence cannot convincingly lead to the conclusion that the [Buyer] had given timely notice of the defect as a general non-conformity.

            2. [No valid counterclaims for Buyer from accounts nos. 4140, 4237, 4467 & 5010]

      With regard to account no. 2654, it can remain undecided whether or not the defect claimed by [Buyer] actually existed. The [Buyer] has no legal grounds to claim any damages from this shipment against the [Seller]'s claims from accounts nos. 4140, 4237, 4467 or 5010:

                        a) As can be concluded from the above reasoning, [Buyer] had given proper and timely notice of faulty construction regarding type KMZ 1500 RDR plate with reference to the [project]. It also complied with the two-year-term according to Art. 39(2) CISG.

                        b) However, there is no provision within the CISG that would allow for a set-off of claims through counterclaims.

Instead, any such rights of a buyer need to be determined by the national law applicable according to the rules of private international law (cf. Magnus in Staudinger, Art. 4 CISG para. 46).

In cases of contracts for sales or both for sales and services, the presumed center of gravity is at the seller's place of business, Art. 28 para. 2 EGBGB [*]. That provides for German law to be applied.

                        c) In the opinion of the Court, the applicable provisions of 479, 478 para. 1, first sentence and 390, second sentence BGB [*] do not allow the [Buyer] to set-off its alleged price reduction under Art. 50 CISG against the [Seller]'s claims from the said accounts:

                              aa) The claim for a price reduction was brought within the time-frame of Art. 39(2) CISG. Therefore, the claim is not time-barred as long as it can be held against the [Seller]'s claim under 478 para. 1, first sentence BGB. The question of limitation is not embodied in the CISG and must be settled by means of the applicable national law (cf. Magnus in Staudinger, Art. 4 CISG para. 38).

                              bb) Contrary to the [Buyer]'s argument, the Court follows the prevailing opinion when determining the scope of the right to set off according to 479 BGB. It provides that any such set-off is possible only if both claims originate from the same sales transaction (cf. Palandt-Putzo, 479 para. 3; BGH [*], ZIP [*] 1988, 36)

However, in the present case it is undisputed that there are different contracts for sales or sales and services from accounts nos. 2654, 4140, 4237 and 4467. This is particularly valid for account no. 4237 since the [Buyer] did not order plates of the type in dispute but replacement and accessory parts, see exhibit K10. It is of no legal relevance that these parts were finally used for the [project].

The restriction of the right to set-off ( 479 BGB) a fortiori holds true for the [Seller]'s claim from account no. 5010. This account is based on a pure service contract.

                              cc) Finally, would not be a possibility for the [Buyer] to set-off even under the less-restricted concept developed by Westermann (cf. Westermann in Münchener Kommentar zum BGB, 3rd ed., 479 para. 3). It follows from this concept that a set-off is possible when it becomes obvious from a notice of non-conformity that also further claims from the same economic background will be challenged. On the one hand, such economic context would not imply all transactions with plates of the same type as the goods involved. Instead, the economic context would need to be interpreted according to particular projects. In the present case, this context could be established with account no. 4237 at best (replacement and accessory parts for [the project]). In the Court's view, however, any possibility to set off is excluded since the [Buyer] failed to exercise those counterclaims in due time after having given notice of non-conformity.

                              dd) By way of exception on a case-by-case basis, courts have indeed allowed a set-off against other claims. However, the Court holds that this is not possible for the case at hand. The factual background is neither similar to the case decided by the BGH on 22 February 1961 (BGH NJW [*] 1961, 1254) nor to the case decided by District Court Bielefeld on 1 March 1988 (BB [*] Beilage 5/89, p. 6):

The transaction from which the [Seller]'s claim arises can in no way be assigned to the purchase of plates for [the project], neither under aspects of economy nor under those of good faith. Rather, it must be held that the parties entertained considerable business relations and that the [Buyer] purchased plates for a variety of reasons and for a number of different projects. Therefore, there is not any intrinsic economic context with the transactions in dispute.

D. [No decision on claims from account no. 4471]

This dispute cannot yet be settled insofar as the [Seller] relies on claims from account no. 4471:

This delivers of plates is related to the [project]. Consequently, any defects in the type of plates in question can be held against [Seller]'s claim for the purchase price. This may be done up to the full amount of the claim (cf. BGH ZIP [*] 1988, 36).

A decision in this matter depends on the question whether or not the constructional flaw, as argued by [Buyer], actually existed. Probably, this matter can be resolved only by means of expert opinion. Consequently, it was in the [Seller]'s interest to decide on the other parts of its claim by way of this partial final judgment.

E. [Adjudication of interest]

Auxiliary claims (interest) are adjudged as follows:

      I. The [Buyer] has contested the interest rate of 7 % as submitted by the [Seller]. The [Seller] has not yet, as it announced, presented the supporting confirmation by its bank, so that it failed to prove this rate being appropriate. Therefore, the [Seller]'s claims for interest are limited to the commercial interest rate of 5 % per annum ( 352 para. 2 HGB [*]).

      II. Failing maturity, interest due from the merits of DM 9,150 was not to be adjudicated by 23 June 1997:

The claim in question was only due for the [Buyer] after having issued the invoice, its receipt and expiration of an appropriate time for verification. According to the documents, the invoice was issued on 3 November 1997; its receipt was not contested by the [Buyer]. Given a rather slow-going postal service to Italy and an additional appropriate time for verification, payment was due by 3 December 1997 at the earliest.

      III. As regards the claim for interest, the [Seller] further overlooked the fact that, according to its own submissions, a sum of DM 18,934.43 from payment of account no. 2654 by November 1997 would need to be subtracted. The Court sets this sum off against the [Seller]'s initial claim for payment of DM 88,030. The interest-bearing capital was appropriately reduced.

F. [Costs and fees]

An adjudication of costs and fees will be subject to the closing judgment.

G. [Enforcement of the claim]

The decision on preliminary enforcement follows from 709, first sentence ZPO [*].


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff of German is referred to as [Seller] and Defendant of Italy is referred to as [Buyer].

Translator's note on abbreviations: BB = Betriebs-Berater [a German journal on commercial and company law]; BGB = Bürgerliches Gesetzbuch [German Civil Code]; BGH = Bundesgerichtshof [German Federal Supreme Court]; DM = Deutsche Mark [former German currency]; EGBGB = Einführungsgesetz zum Bürgerlichen Gesetzbuche [German Code on Private International Law]; HGB = Handelsgesetzbuch [German Code on Commerce & Trade]; NJW = Neue Juristische Wochenschrift [a German law journal]; ZIP = Zeitschrift für Wirtschaftsrecht [a German journal on commercial law]; ZPO = Zivilprozessordnung [German Code on Civil Procedure].

** Jan Henning Berg is a law student at the University of Osnabrück, Germany and participated in the 13th Willem C. Vis Moot with the team of the University of Osnabrück.

*** Veit Konrad has studied law at Humboldt University, Berlin since 1999. During 2001-2002 he spent a year at Queen Mary College, University of London, as an Erasmus student.

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Pace Law School Institute of International Commercial Law - Last updated September 20, 2007
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