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CISG CASE PRESENTATION

Austria 24 January 2001 Oberlandesgericht [Appellate Court] Graz (Ice cream robots case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/010124a3.html]

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

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Case identification

DATE OF DECISION: 20010124 (24 January 2001)

JURISDICTION: Austria

TRIBUNAL: OLG Graz [OLG = Oberlandesgericht = Provincial Court of Appeal]

JUDGE(S): Dr. Schemitsch (Vorsitz), Dr. Galli, Dr. Rothenpieler

CASE NUMBER/DOCKET NUMBER: 4 R 125/00k

CASE NAME: Austrian case citations do not generally identify parties to proceedings

CASE HISTORY: 1st instance LG Graz (21 Cg 250/97z-48) 28 April 2000

SELLER'S COUNTRY: Austria (plaintiff)

BUYER'S COUNTRY: Croatia (defendant)

GOODS INVOLVED: Ice cream robots


Classification of issues present

APPLICATION OF CISG: Yes [Article 1(1)(a)]

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Article 39 [Also cited: Articles 40 ; 45 ; 54 ]

Classification of issues using UNCITRAL classification code numbers:

39A [Requirement to notify seller of lack of conformity: buyer must notify seller within reasonable time]

Descriptors: 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): Go to CISG-online.ch website <http://www.cisg-online.ch/cisg/urteile/800.pdf> for link to pdf presentation of case text

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation)

Queen Mary Case Translation Programme

Appellate Court (Oberlandesgericht) Graz

24 January 2001 [4 R 125/00k]

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

Edited by Institut für ausländisches und Internationales
Privat- und Wirtshaftsrecht der Universität Heidelberg
Daniel Nagel, editor
[***]

JUDGMENT

The appeal is dismissed. The judgment of the Court of First Instance is confirmed but changed to:

  1. The [Seller] is entitled to claim 500,000 Austrian schillings.

  2. The [Buyer] is not entitled to set off its alleged claim against the [Seller]'s claim.

  3. The [Buyer] has to pay 500,000 Austrian schillings plus 4% interest since 12 August 1997 within fourteen days after execution and to reimburse the costs of the proceedings in an amount of 171,736.40 Austrian schillings (containing 23,379.40 Austrian schillings for value added tax and 31,460.- Austrian schillings for cash expenses) within the same period of time.

  4. The claim is dismissed in respect to the payment of further interest.

  5. The Buyer has to reimburse 29,679.- Austrian schillings (containing 4,946.50 Austrian schillings for value added tax) for the costs of the appellate proceedings within fourteen days after execution.

Further appeal is not allowed according to 502 I ZPO [*].

FACTS

By contract of 19 June 1997, Defendant [Buyer] acquired from Plaintiff [Seller] five ice cream robots at an agreed price of 500,000 Austrian schillings. It had been laid down in the written contract of 19 June 1997 that [Seller] would reserve title of the goods until [Buyer] had paid the total purchase price. In case of non-payment, [Buyer] was obliged to return the robots at its own costs and in their original condition to a warehouse in Vogau, Austria. With item no. 5 of the sales contract, [Buyer] confirmed to have received the goods in proper condition and to waive any claims for damages and actions for breach of warranty. The contract further contained a clause stipulating jurisdiction in Graz. [Buyer] received the ice cream robots on 4 August 1997; a corresponding bill of delivery was signed by [Buyer] and [Seller].

[Buyer] had already acquired coffee machines, French-fry robots and other devices for 480,000 Austrian schillings from an insolvency asset by way of a previous sales contract of 11 March 1997. About one month after this sales transaction, [Seller] promised to procure missing parts for [Buyer] concerning these machines from the insolvency case. [Seller] announced a price of 15,000 Austrian schillings. According to an agreement between the parties, [Seller] should delegate a mechanic to Croatia at the expenses of [Buyer] in order to determine which parts were missing. The Court of First Instance did not make findings whether or not this had actually occurred.

POSITION OF [SELLER]

[Seller] commenced proceedings on 7 October 1997 against [Buyer] with the allegation that on 19 June 1997 [Buyer] had purchased five ice cream robots for a price of 100,000 Austrian schillings each. [Seller] requested payment of 500,000 Austrian schillings plus 12% interest since 12 August 1997. According to [Seller]'s submissions, the claim for the purchase price had been due. Any defects of the coffee machines had not been in any way connected with the delivery of the ice cream robots, as these were two independent legal transactions. There had been no cases of misdirection or laesio enormis (right to avoid a contract following moral damnification) on account of [Buyer]. A notification of defects, which [Buyer] submitted only during the court proceedings, had been given too late. Furthermore, [Buyer] had already waived any claims for damages and from non-performance by contract of 19 June 1997.

POSITION OF [BUYER]

[Buyer] requested dismissal of the action and responded as follows: [Seller] had only left the ice cream robots to [Buyer] as goods on consignment for sale in Croatia. Both the sales contract of 19 June 1997 and the bill of delivery of 4 August 1997 were created pro forma, merely in order to allow for import of the goods to Croatia. The robots were unmarketable and at [Seller]'s disposal for pickup at any time. Moreover, in spring 1997 [Buyer] had already purchased several items from [Seller], among them coffee machines, at a price of 980,000 Austrian schillings. [Buyer] had paid a price which was lower than this sum. [Seller] had not fulfilled its promise to deliver additional, required parts for these goods. Thus, they were mainly useless. The damages that had accrued exceeded the amount of the [Seller]'s claim. In case there was any claim in favor of [Seller] following a sale of the ice cream robots, [Buyer] relied on a set-off in that amount. Additionally, [Buyer] argued that payment of any purchase price was not yet due following a lack of conformity. It further relied on mistake concerning the purpose of the contract since the ice cream and coffee machines had not met its expectations. [Buyer] finally raised the laesio enormis defense. Even though there had been an immediate notification, defects had not been removed by [Seller].

RULING IN FIRST INSTANCE

The Court of First Instance ordered [Buyer] to pay [Seller] the sum of 500,000 Austrian schillings plus 4 % interest since 12 August 1997 and to reimburse [Seller]'s legal costs and expenses in the amount of 171,736.40 Austrian schillings. A claim for higher interest rates was dismissed. Probably erroneously, the Court did not make a judgment concerning the alleged counterclaim.

In addition to the undisputed factual background set out above, the Court of First Instance declared that the invoice of the purchase price claim had been handed over matching with payment.

Following the ruling in the First Instance, [Buyer] was obliged to pay the agreed purchase price under the contract. The price was due for payment. Any possible counter-obligation of [Seller] to fix the coffee machines originating from the insolvency assets was of no relevance for determining maturity of claims for the purchase price of the ice cream robots. It followed that defense by way of mistake was thus irrelevant; any actions for breach of warranty were barred by contractual waiver of rights. [Buyer]'s reliance on laesio enormis was not sufficiently substantiated, the same applied to the counterclaim.

THE APPEAL OF THIS RULING

[Buyer] appeals against this judgment. It argues that proceedings were faultily conducted and that factual findings were incorrect following an incomplete and wrong taking of evidence. Finally, it appeals against the Court's legal reasoning concerning the amount of [Seller]'s claim. [Buyer] requests adjustment of the judgment to a complete dismissal of the action or, alternatively, repeal and remittal to the Court of First Instance.

In its response, [Seller] requests confirmation of the first judgment.

RULING OF THE APPELLATE COURT AND ITS REASONING

The [Buyer]'s appeal is not justified.

[Buyer] relies on a procedural mistake by arguing that the Court of First Instance did not follow [Buyer]'s request to call in an authorized expert for repairs of ice cream machines. The Court based its decision on legal reasoning (contractual waiver of non-conformity claims by [Buyer]). Moreover, it held that [Buyer]'s request in respect to the taking of evidence was an inadmissible evidence of discovery.

However, faulty proceedings, as asserted by [Buyer], would only be apparent if any act by the Court was able to result in an incorrect decision and if an omission of taking evidence had impeded an exhaustive, well-founded assessment of the dispute. As the following reasoning will show, this has not been the case. The omission of a taking of evidence was not able to produce an incorrect judgment or even have a disadvantageous effect on [Buyer]'s legal position.

There was no case of faulty proceedings as alleged by [Buyer].

In their appellate submissions, both parties contest the findings of the Court of First Instance that the invoice was handed over matching with payment of the purchase price.

For the sake of clarification, the Appellate Court undertook a partial reiteration of evidence by reading of all documents. Under the documents exhibit A (sales contract of 19 June 1997) and exhibit B (bill of delivery of 4 August 1997), it has been established:

   -    Item no. 4 of the sales contract of 19 June 1997, signed by both parties, contains the following wording:

"The buyer has ordered the said goods on 18 June 1997 and accepted the purchase price of 500,000 Austrian schillings. The handing over of the invoice to the buyer will be effected matching with payment. This is supposed to be done in Graz between 11 and 12 August 1997."
 

   -    It was stipulated in the bill of delivery, dated 4 August 1997, by both parties that [Buyer] will pay the purchase price for the ice cream robots on 11 or 12 August 1997 (exhibit B) and that the bill of delivery was part of the contractual agreement. The contract contains a waiver by the [Buyer] of any claims for damages or actions for breach of warranty. [Buyer] confirmed to have purchased the used ice cream robots as examined, in proper condition and without contractual guarantee (exhibits A and B)

These findings are based on the content of the cited exhibits and supersede the findings of the Court of First Instance in respect to the handing over of the invoice matching with payment, which have been contested by both parties in their appellate submissions. It is therefore clarified that these findings were only based on the wording of the sales contract. The Court of First Instance has additionally not assumed that any payment of the purchase price had been effected.

There was no need to make any further findings as requested by [Buyer] because its argument does not correspond to the testimony of witness E.K. His statements clearly identify that the transactions he had described are solely relating to the purchase of the coffee machines which [Buyer] acquired from insolvency assets. The statements do not at all relate to the ice cream robots, which constitute the subject matter in the present proceedings. Furthermore, it has to be taken into account that the findings of the Court of First Instance in respect to the promise of [Seller] to procure the missing parts only related to the coffee machines originating from the insolvency assets. A closer scrutiny of exhibit D clarifies that the purchase (from the insolvency case) did not include the purchase of the ice cream robots. In any event, the Court of First Instance did not hold that [Seller] had intended to fix or refurbish them, so there is no need to make an assessment to the contrary. Whether or not [Buyer] is obliged to pay the purchase price -- as well as the extent of such an obligation -- is a question of law and not of the factual basis.

For the rest, the Court of First Instance properly assessed the evidence; it also demonstrated comprehensibly why it did not consider [Buyer]'s statements in a way that they could have rebutted [Seller]'s submissions and the factual findings from the documents. Consequently, there has been no reason to deviate from the ruling of the Court of First Instance.

Based on the findings of the Court of First Instance, which have been adopted by the Appellate Court under 498 ZPO [*] except for the revision mentioned above, and assuming that the purchase price has not yet been paid, [Buyer]'s appeal is not justified.

First, [Buyer] contests the Court of First Instance holding that it had purchased the ice cream robots at a certain price. [Buyer]'s reference to missing evidence for any conclusion of contract is going astray: Both the contract (exhibit A) and the bill of delivery (exhibit B) sufficiently indicate the parties' intent to conclude a sales contract. The Court of First Instance rightfully assumed an effective conclusion of contract, since the documents mentioned do not in any way hint at a commission business. Moreover, there is no factual basis to consider them as pro forma documents.

In order to determine the law applicable to this sales contract, it is decisive that the Austrian [Seller] sold movable objects to [Buyer] from Croatia, which apparently were not intended for personal use. The present contract is an international sale of goods to which the CISG applies under certain circumstances. The CISG entered into force for Austria on 1 January 1989 and for Croatia on 8 October 1991 (cf. Schwimann, ABGB [*], vor Art. 1 CISG para. 11; BGBl [*] 1996/1988 and BGBl III No. 84/1998). At the time of conclusion of contract, both parties had their places of business in different Contracting States; neither party argued that a choice of law had been made or that application of the CISG had been excluded. Therefore, this Convention's provisions are applicable in the present case.

In its appellate submissions, [Buyer] reiterated its opinion that it was not obliged to pay the purchase price because the goods did not conform to the contract. [Seller] had already argued, during the proceedings before the Court of First Instance, that there had been no timely notice of non-conformity; thus, guarantee claims were barred. In any case, [Buyer] had waived any such claims. According to Art. 39(1) CISG, the buyer loses the right to rely on a lack of conformity of the goods if he does not give notice to the seller specifying the nature of the lack of conformity within a reasonable time after he has discovered it or ought to have discovered it. Art. 39(2) CISG provides for a two-year foreclosure to give notice. The period starts to run when the goods are handed over to the buyer; its expiration leads to the preclusion of all claims.

These provisions are crucial in the present dispute; especially, [Buyer] did not rely on gross negligence or bad faith on the side of [Seller] under Art. 40 CISG.

[Seller] handed over the ice cream robots to [Buyer] on 4 August 1997. The existence of defects of these machines was first argued on 29 October 1998, about fourteen months after the handing over. The submissions of 17 June 1998 exclusively refer to the items that [Buyer] acquired from the insolvency assets and are not concerned with the ice cream robots. The Court can, arguably, refrain from in-depth elaboration in order to demonstrate that the requirements of Art. 39(1) CISG -- giving notice of lack of conformity within a reasonable time -- are not met here. [Buyer] not only loses its special rights under Art. 45 CISG, it suffers from a total loss of rights following non-conformity (cf. Resch, ÖJZ [*] 1992, 474).

[Buyer] is hence unable to raise objection following non-conformity of the goods against [Seller]'s claim for contractual performance which aims at payment of the purchase price. Therefore, [Buyer] is obliged under Art. 54 CISG to pay the agreed price in the amount of 500,000 Austrian schillings.

Even a possible retention of title would not relieve [Buyer] from its obligation: It merely provides that [Seller] will keep title of the ice cream robots until payment of the purchase price is effected in total. This does not affect [Seller]'s right to claim payment of the purchase price (cf. Schwimann/Binder, ABGB [*], 1063 para. 114). [Buyer]'s reliance on laesio enormis does not alter the legal result as the CISG does not provide for this remedy. In any case, [Buyer] being entrepreneur and having even named itself as a trader, would be unable to exercise such remedy in accordance with 351a HGB [*].

As can be inferred from the reasoning of the Court of First Instance, it did not consider any counterclaim in favor of [Buyer]. As the Court of First Instance -- probably by mistake -- omitted to award the non-existence of such claim, this had to be made up for by the Appellate Court. [Buyer]'s alleged counterclaim refers to defects in respect to goods which [Buyer] had not purchased from [Seller], but from insolvency assets. Consequently, there was no possibility for [Buyer] to rely on counterclaims arising from this other sales transaction. It could not be deduced from the established factual basis that [Seller] violated any promises of legal significance with regard to those machines.

Following the above reasoning, the judgment of the Court of First Instance is confirmed.

The decision on costs and expenses is based on 41 and 50 ZPO [*]. Further appeal was not admissible because the Court was not concerned with considerable legal issues in terms of 502(1), 500(2)(3) ZPO.

Graz, 24 January 2001


FOOTNOTES

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

Translator's note on abbreviations: ABGB = Allgemeines Bürgerliches Gesetzbuch [Austrian Civil Code]; BGBl = Bundesgesetzblatt [Austrian Federal Law Gazette]; HGB = Handelsgesetzbuch [Austrian Commercial Code]; ÖJZ = Österreichische Juristenzeitung [Austrian Law Journal]; ZPO = Zivilprozessordnung [Austrian Code of 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.

*** Daniel Nagel has been a law student at Heidelberg University since October 2002 and an exchange student at Leeds University in 2004/2005.

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Pace Law School Institute of International Commercial Law - Last updated July 25, 2007
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