Switzerland 22 December 2000 Federal Supreme Court (Roland Schmidt GmbH v. Textil-Werke Blumenegg AG) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/001222s1.html]
DATE OF DECISION:
JURISDICTION:
TRIBUNAL:
JUDGE(S):
CASE NUMBER/DOCKET NUMBER: 4C.296/2000/rnd
CASE NAME:
CASE HISTORY: 1st instance Handelsgericht St. Gallen 21 August 2000 [affirmed]
SELLER'S COUNTRY: Switzerland (defendant)
BUYER'S COUNTRY: Germany (plaintiff)
GOODS INVOLVED: Used rotary printing textile machine
APPLICATION OF CISG: Yes
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
4B [Scope of Convention (issues excluded): mistake];
8B [Interpretation of party's statements or other conduct: interpretation based on objective standards];
35A [Conformity of goods to contract: quality, quantity and description required by contract]
Descriptors:
Excerpt from Larry A. DiMatteo et al., 34 Northwestern Journal of International Law & Business (Winter 2004) 299-440 at n.581
"[T]he Swiss Federal Supreme Court rejected 'homeward trend' attempts by the parties to impose concepts of local law in a dispute over whether a rotary printing machine met contract specifications. Under Swiss law, issues associated with the impressions of the buyer with respect to the quality of the goods would have been significant, or even dispositive. The Supreme Court overturned the Court of First Instance, applied CISG Article 35(1), and relied upon authoritative commentary for its application."
Go to Case Table of ContentsCITATIONS TO ABSTRACTS OF DECISION
(a) UNCITRAL abstract: Unavailable
(b) Other abstracts
English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=729&step=Abstract>
CITATIONS TO TEXT OF DECISION
Original language: Click here for the original German text of this case; see also CISG-online.ch website <http://www.cisg-online.ch/cisg/urteile/628.pdf>; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=729&step=FullText>
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
English: [2004] S.A. Kruisinga, (Non-)conformity in the 1980 UN Convention on Contracts for the International Sale of Goods: a uniform concept?, Intersentia at 29, 31, 197; [2005] Schlechtriem & Schwenzer ed., Commentary on UN Convention on International Sale of Goods, 2d (English) ed., Oxford University Press, Art. 8 paras. 26 Art. 35 paras. 4, 7; Henschel, The Conformity of Goods in International Sales, Forlaget Thomson (2005) 100 et seq., 136 et seq.; Schwenzer & Fountoulakis ed., International Sales Law, Routledge-Cavendish (2007) at p. 242
Go to Case Table of ContentsCase text (English translation) [second draft]
Queen Mary Case Translation Programme
22 December 2000 [4C.296/2000/rnd]
COURT COMPOSITION. Federal judges Walter (President), Corboz, Klett, Rottenberg Liatowitsch, Nyffeler and clerk of the Supreme Court Huguenin.
PARTIES: COUNSEL. In the matter of Plaintiff-Appellant Roland Schmidt GmbH, Kindberg 15, 87490
Haldenwang, Germany, [buyer], represented by attorney Dr. Jörg Schoch, Marktplatz 4, 9004 St. Gallen,
Switzerland, versus Defendant-Respondent Textil-Werke Blumenegg AG, Blumenegg, 9403 Goldach,
Switzerland, [seller], represented by attorney Dr. Hans Henzen, Eisenbahnstrasse 41, Postal Box 228, 9401
Rorschach, Switzerland, regarding a sales contract.
[Background information and facts of the case]
A. The [buyer], whose place of business is in Haldenwang [Germany], trades in textile
machinery. The [seller], with seat in Goldach [Canton St. Gallen, Switzerland] tried to sell its used textile machines in the year 1998. After the parties had made contact in December of
1998, the [seller] sent to the [buyer], in the beginning of January 1999, a list of the machinery
offered for sale including a "price offer". On 12 January 1999, the [buyer]'s manager viewed
various machines together with two prospective customers from Iran. On the following day,
[buyer]'s manager declared that it was interested in certain machines, but did not agree with
the offered prices.
With letter of 24 February 1999, the [buyer] again contacted the [seller] and - by referring to
the machinery list - expressed an interest in a rotary printing machine "Stork" RDIV Airflow A
640.000 including equipment. This letter, as well as a confirmation of order by the [seller]
dated 1 March 1999, reveals that the machine was supposed to be sold to the interested
persons from Iran. After the [seller] had confirmed its willingness to sell the machine in writing
on 26 February 1999, the [buyer] faxed to the seller, on 9 March 1999, a "purchase
confirmation" with a detailed description of the furnishings of the machine and the equipment.
It was furthermore noted that the machine contained a "rapport equipment 641 mm - 1018
mm" and that the machine was "complete and operating as viewed."
[The sales contract]
On 9 March 1999, the [seller] and the [buyer] signed a sales contract which read in part:
"The parties agree to the sale of
"The following conditions apply:
1. The price is ex works excluding dismantling, loading, transport, insurance etc. These
obligations are to be performed by the buyer or a company commissioned by buyer.
The costs accrued are born by the buyer in their entirety.
2. The collection has to occur - after a prior agreement on the date - by 30 June 1999
at the latest.
3. The purchase price is payable:
4. […]
5. The goods for sale are taken over by the buyer in the present conditions, any
guarantee or rights to remedy are waived."
After the [buyer] made the down payment in the amount of DM 69,900.00 on 11 March 1999,
the [buyer]'s manager viewed the machine again fourteen days later and realized that it was
only equipped for a rapport length of 641 mm. With letter of 12 April 1999, the [buyer]
complained to the [seller] that the stencil holders for a rapport length of 1018 mm were
missing. [Buyer] referred to the contract, in which a "rapport equipment 641 mm - 1018 mm"
had been assured. Because used stencil holders were not available and new holders would cost
DM 99,000.00-, the [buyer] gave the [seller] the following options:
"Alternative 1:
You accept that the sales contract does not correspond to the agreement and you
withdraw from the contract and reimburse the down payment in the amount of DM
69,900.00.
"Alternative 2:
You accept a reduction in price in the amount of DM 60,000.00, with which you
contribute to the purchase price of new stencil holders. This means that you bear
roughly 60% of the additional costs, while the [buyer] bears approx. 40%."
With letter of 13 April 1999, the [seller] turned down these proposals and held to the contract.
[Seller] noted that the [buyer] had declared on 9 March 1999 that [buyer] would buy the
machine "complete and operating as viewed." The remark regarding the rapport equipment in
the sales contract referred solely to the technical bounds, but did not allow any conclusions to
be drawn as to the measurements of the existing stencil holders.
On 26 April 1999, the [buyer] wrote to the [seller] that [buyer] would not take the machine
and, under OR [*] Art. 107, refused the belated performance unless the [seller] assured [buyer]
by 10 May 1999 that "a machine is sold conforming to the contract, which contains an
operating rapport equipment between 641 mm and 1018 mm." When the [seller] insisted on its
position, the [buyer], in accordance with OR Art. 107(2), on 4 June 1999 declared that it refused the belated performance. On 1 July 1999, the [seller] declared in writing that [seller]
terminated the contract of 9 March 1999 in reliance on contract clause 3 and that [seller]
would keep the down payment as the stipulated penalty.
[The Court of First Instance and the pleadings of the parties]
B. In September 1999, the [buyer] filed an action against the [seller] with the Commercial Court of the Canton St. Gallen [Court of First Instance]. The [buyer] requested
that the [seller] be ordered to pay [buyer] the amount of Sf [Swiss francs] 87,920.00 with
5% interest since 4 June 1999. In its decision of 21 August 2000, the Court of First Instance
dismissed the [buyer]'s claim.
C. With this appeal, the [buyer] requests the Supreme Court to reverse the decision of the
Court of First Instance and to order the [seller] to pay [buyer] the amount of Sf 87,920.00
with 5% interest since 4 June 1999; in the alternative to refer the matter back to the previous
instance for a new decision.
The [seller] requests the Supreme Court to dismiss the [buyer]'s appeal.
The Supreme Court considers:
1. The Court of First Instance held that while the parties had a different understanding of the
wording of the contract "rapport equipment 641 mm - 1018 mm", a normative consensus had
been formed. In view of the [buyer]'s purchase confirmation of 9 March 1999, in which
[buyer] had declared that it would take over the machine "complete and operating as
viewed", the [seller] was entitled to believe that the [buyer] also supposed that the machine
was not equipped for a rapport length of 1018 mm. Based on the provisions of the United
Nations Convention on Contracts for the International Sale of Goods (CISG), in particular
CISG Art. 8(2), which governs the sales contract, the contract had to be viewed as normatively
formed with this meaning. (The Convention entered into force in Switzerland on 1 March 1991
and in Germany on 1 January 1991).
The Court of First Instance then takes into account that the [buyer]'s manager possibly did not
inspect the machine closely enough during the first visit on 12 January 1999 and that,
therefore, its perception was not in accord with the reality. The Court of First Instance leaves
open the question whether the [buyer] was in mistake in the meaning of OR [*] Art. 24(1) no.
3 when [buyer] declared its intent, because the [buyer] never declared that it would not hold
on to the contract, as was required under OR Art. 31(1). Furthermore, the [buyer] failed to
show that the [seller] knew or should have been aware of the fact that the [buyer] was under a
wrong impression. Thus, it had to be assumed that the [seller] could not have realized the
[buyer]'s mistake. Consequently, the contract was validly concluded in the version submitted
by the [seller].
2. [The Supreme Court dismisses the [buyer's] claim that the Court of First Instance did not
correctly ascertain the relevant facts.]
3. The [buyer] further appeals the finding of the Court of First Instance that [buyer] never
declared that it did not wish to be bound by the contract because of mistake. [Buyer] submits
that the Court of First Instance violated OR Art. 31 by disregarding that [buyer]'s request
for reimbursement of performances rendered constituted an implicit contestation, respectively
refraining from an approval of the contract. In the [buyer]'s opinion, the Court of First
Instance should have realized that [buyer] repeatedly demanded the reimbursement of the
down payment within the period of one year. From this, the Court of First Instance should
have concluded that the contract was invalid due to the [buyer]'s mistake and the implicit
contestation of [buyer]'s declaration of intent.
a) Based on Art. 3 of the Hague Convention on the Law Applicable to International Sale
of Goods (1955), the Court of First Instance held that Swiss domestic law was superseded by
the rules of the CISG. According to CISG Art. 4(a), the Convention is not concerned with the
validity of the contract nor of any of its provisions, which is why the provisions of the Swiss
Civil Code apply. The Court of First Instance left open whether the [buyer] was in mistake
regarding the declaration of its intent in the meaning of OR Art. 23(1) no. 3. As the
following considerations show, the Court of First Instance correctly held that this question
need not be decided.
b) [The Supreme Court explains that the [buyer] implicitly approved the contract by
setting a time limit for the performance of the contract on 26 April 1999, by declaring the
contract avoided in accordance with OR Art. 107(2) on 4 June 1999 and by announcing a
claim for damages for non-performance.]
4. The [buyer] further submits that the Court of First Instance failed to understand the matter
in regard to the remedy for breach of contract, in particular the fact that the [seller] assured a
"rapport equipment 641 mm - 1018 mm" and, therefore, [seller] was liable under OR Art. 197.
[Buyer] asserts that the Court of First Instance erred in failing to clarify how things stood with
the assured characteristics of the machine. The Court of First Instance did not allow the
[buyer] to prove under expert opinion that the description of the rapport length of a "Stork"
machine conformed to the [buyer]'s comprehension of that term.
However, as the Court of First Instance correctly held, the prerequisites and the remedies for
breach of contract result not from OR Art. 197, but from CISG Art. 35 (cf.
Staudinger/Magnus, Kommentar zum Bürgerlichen Gesetzbuch, Wiener UN-Kaufrecht, Berlin
1999, Art. 35 n. 2). According to CISG Art. 35, the seller must deliver goods which are of the
quantity, quality and description required by the contract and which are contained or packaged
in the manner required by the contract. Which characteristics of the goods were agreed upon
and are part of the contract needs to be established - if necessary - by interpretation of the
parties' statements under CISG Art. 8. In contrast to OR [*] Art. 197, CISG Art. 35 does not
contain a specific rule for warranted characteristics. Instead, the seller generally vouches for all
qualities which the buyer is entitled to expect from the goods under the contract (cf. Schwenzer
in v.Caemmerer/Schlechtriem, Kommentar zum einheitlichen UN-Kaufrecht, 2d ed., Munich
1995, Art. 35 n. 37; Staudinger/Magnus, op. cit., Art. 35 n. 16; Conrad, Die Lieferung
mangelhafter Ware als Grund für eine Vertragsaufhebung im einheitlichen UN-Kaufrecht
(CISG) unter Berücksichtigung des öffentlichrechtlich bedingten Sachmangels [Delivery of
Defective Goods as a Condition for Contract Avoidance under the CISG with Special Regard
to Defects Caused by Administrative Law], [Thesis] Zürich 1999, p. 17). The Court of First
Instance adopted this - objective - interpretation in deciding that the [buyer] was not entitled
to expect that it would be able to print rapport length of 1018 mm on the acquired machine
without installing additional holders. The Court of First Instance held that the [seller] was
entitled to assume that the [buyer] realized that the remark regarding the rapport equipment
was meant to refer to the bounds of possible rapport length, which could be printed if the
necessary equipment existed. The [buyer] does not submit, nor is it apparent, how the Court of
First Instance violated the provisions of the CISG, in particular CISG Art. 8(2), according to
which statements made by a party are to be interpreted according to the understanding that a
reasonable person of the same kind as the other party would have had in the same
circumstances. The [buyer] is an expert and knew that it was not offered a new machine, but
one which was built fourteen years ago and consequently did not conform to the latest
technical expectations. It was therefore up to [buyer] to inform itself about the operation and
equipment of the machinery, an act that the [buyer] apparently embarked on only after the
contract had been concluded. In view of these facts, it is without doubt compatible with CISG
Art. 8(2) if the Court of First Instance finds that the [seller] was entitled to expect that the
[buyer] concluded the contract in full knowledge of the technical possibilities of the machinery
and its equipment. For these reasons, the Supreme Court concurs with the Court of First
Instance that the sold machine was offered to the [buyer] in conformity with the specifications
of the contract. The [buyer]'s claim for remedy for breach of contract is, therefore, unfounded.
5. [The Supreme Court upholds the finding of the Court of First Instance that [buyer's]
refusal to collect the machine by 30 June 1999 entitled the [seller] to rescind the contract
under contract clause 3(2). The [seller] was entitled to keep the down payment as the
stipulated penalty.]
[The Supreme Court's order]
6. For these reasons, the [buyer]'s appeal is dismissed and the appealed decision is affirmed.
The [buyer] bears the cost of the proceedings and is to reimburse the [seller] for its costs.
[…]
FOOTNOTES
* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Plaintiff-Appellant of Germany is referred to as [buyer]; the Defendant-Respondent of Switzerland is referred to as [seller]. Also, monetary amounts in Deutsche Mark are indicated by [DM]; amounts in Swiss francs are indicated by [Sf]. The abbreviation OR refers to Das Obligationenrecht [Swiss Civil Code].
** Ruth M. Janal, LL.M. (UNSW) is a Ph.D. candidate at Albert-Ludwigs-Universität Freiburg. The second-iteration redaction of this translation was by Dr. John Felemegas.
Swiss Federal Supreme Court (Schweizerisches Bundesgericht)
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Institute of International Commercial Law - Last updated April 8, 2008