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CISG CASE PRESENTATION

Germany 6 March 2003 Appellate Court Karlsruhe (Pullovers case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/030306g1.html]

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

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Case identification

DATE OF DECISION: 20030306 (6 March 2003)

JURISDICTION: Germany

TRIBUNAL: OLG Karlsruhe [OLG = Oberlandesgericht = Appellate Court]

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: 12 U 179/02

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

CASE HISTORY: 1st instance LG Mannheim (2 O 46/02) 13 June 2002 [reversed]

SELLER'S COUNTRY: [-] (plaintiff)

BUYER'S COUNTRY: [-] (defendant)

GOODS INVOLVED: Pullovers


Case abstract

GERMANY: Oberlandesgericht Karlsruhe 6 March 2003

Case law on UNCITRAL texts (CLOUT) abstract no. 593

Reproduced with permission of UNCITRAL

Abstract prepared by Klaus Bitterich

The plaintiff sued for the payment of pullovers it manufactured and delivered in September 2001 to the defendant under a contract governed by the CISG. The defendant set up as a defence that the pullovers did not conform with the contract because of deviations in size and because about 25-30 per cent of the pullovers were not knitted properly, and raised a counterclaim for damages suffered because of the alleged defects of the pullovers.

The Regional Court rejected the counterclaim due to its late allegation in trial and ordered the defendant to pay the price. The Regional Court of Appeal reversed the judgement because the court of first instance ignored factual submissions of the defendant concerning the cause of the action and, moreover, failed to consider the defendant's counterclaim. Therefore, the Regional Court of Appeal did not decide on the merits of the claim but remanded the case to the court of first instance.

On remand, the Court made some remarks on the merits of the plaintiff's claim concerning the buyer's obligation under article 39 CISG to give notice of a lack of conformity. The Court referred to the defendant's pleading that, as a result of its complaint in a letter of October 2001, two representatives of the plaintiff visited the defendant's premises and that in the course of that visit it complained about the wrong size and the bad knitting. The Court held that the buyer is obliged to specify the non-conformity as specific as necessary for the seller to decide which remedy has to be taken. By showing the defective goods to the seller, the buyer gives the seller the opportunity to check the goods. It is therefore the most effective way to provide the information necessary for the seller. As article 39 CISG does not require a certain form, the requirements of article 39 CISG were met by the oral description of the defects in the course of the meeting on 9 October 2001. Finally, the Court had to determine whether the notice was given within due time. The meeting with the plaintiff's representatives took place 11 days after delivery. Mentioning legal literature indicating a period of one month or 14 days respectively as reasonable, the Court held that the reasonable time-period within the meaning of article 39 CISG has to be determined according to the circumstances of the case. As the goods were non-perishable and there were no other reasons for an especially urgent notice, the defendant's notice was considered as given within a reasonable time period.

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Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Article 39(1) [Also cited: Article 50]

Classification of issues using UNCITRAL classification code numbers:

39A11 ; 39A2 [Requirement to notify seller of lack of conformity: buyer must notify seller within reasonable time ; Degree of specificity required]

Descriptors: Lack of conformity notice, timeliness ; Lack of conformity notice, specificity

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Editorial remarks

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Citations to other abstracts, case texts and commentaries

CITATIONS TO OTHER ABSTRACTS OF DECISION

Unavailable

CITATIONS TO TEXT OF DECISION

Original language (German): [2003/5] Internationales Handelsrecht 226-228; cisg-online.ch website <http://www.cisg-online.ch/cisg/overview.cfm?test=812>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation) [second draft]

Queen Mary Case Translation Programme

Court of Appeals (Oberlandesgericht) Karlsruhe

6 March 2003 [2 U 179/02]

Translation [*] by Veit Konrad [**]

FACTS OF THE CASE

Plaintiff [Seller] claims for payment of the purchase price of about 3,000 pullovers that have been produced and delivered to Defendant [Buyer], minus an already paid deposit. [Buyer] replied that the purchase price was to be reduced due to lack of conformity of the delivered goods with the contract. [Buyer] submits that the pullovers did not have the contractually agreed measurements, and that 25 to 30 % of the goods were deficient due to knitting bugs.

The District Court (judgment of the Landgericht Mannheim, 13 June 2002 - 2046/02) tried the case in written proceedings (schriftliches Verfahren) and set 30 May 2002 as the deadline for submission of pleadings. In a brief that reached the District Court on 31 May 2002, [Buyer] submitted facts in reply to [Seller]'s claim and brought a cross-action for 14,000 Euro as damages due to deficient delivery. The District Court granted [Seller]'s claim in the amount of 30,437.65 Euro plus interest for late payment. [Buyer]'s cross-action was not admitted by the Court.

In its appeal (Berufung), [Buyer] upholds its claim for damages against [Seller] and petitions for dismissal of [Seller]'s claim. [Buyer] further pleads that the District Court's judgment has to be quashed and that the case should be remanded to the District Court. [Buyer] argues that the District Court was obliged to consider its submissions in the brief of 31 May 2002 because, as 30 May 2002 was an official holiday (Corpus Christi, Fronleichnam), the deadline for written pleadings had to be extended to 31 May 2002.

According to [Buyer]: The District Court failed to take account of its notification of [Seller] about the lack of conformity of the deficient goods; [Buyer]'s notice met all legal requirements and thus would have had to be considered in the judgment.

JUDGMENT

The appeal is admissible. The appeal is justified because the District Court's proceedings suffer from several gross irregularities which might have affected the material judgment of the Court. In this case, 538(2) No. 1 of the German Code of Civil Procedure (Zivilprozeßordnung; ZPO) requires that, on [Buyer]'s request, the judgment must be set aside and that the case has to be retried by the District Court.

I. The District Court's judgment suffers from irregular proceedings.

The question whether the proceedings suffer from a substantial error must be decided from the point of view of the District Court Judge: It does not amount to a substantial error, if the District Court Judge holds a party's submission to be irrelevant underlying a wrong view on the material law to be applied. However, it does constitute a substantial error under 538 of the German Code of Civil Procedure (Zivilprozeßordnung; ZPO), if the District Court Judge does not take account of the essential point of a party's submission at all, so that an essential aspect of the case is ignored and the party's right to be heard in court is infringed (see: Judgments of the German Federal Supreme Court (Bundesgerichtshof) in NJW 1993, p. 538; and in NJW 1998, p. 2053).

      1. The District Court ruled that [Buyer] was not entitled to reduce the purchase price by Art. 50 CISG, because [Buyer] failed to give notice to [Seller] within a reasonable time and failed to sufficiently specify the lack of conformity of the delivered pullovers.

As far as [Buyer]'s note of complaint concerns the delivery of an insufficient number of pullovers, the District Court correctly held that [Buyer] was not able to sustain that it had provided a notice of complaint within a reasonable time.

However, the District Court's judgment cannot be upheld as far as it denies that [Buyer]'s complaint as regards the knitting bugs had been brought within a reasonable time. The District Court wrongly supposed that [Buyer] first complained about the knitting bugs in [Buyer]'s written pleading dated 31 May 2002, when [Buyer] also brought its counterclaim against [Seller]. The District Court acknowledged that, on [Buyer]'s initiative - documented in several phone calls and in a letter dated 5 October 2001 - [Seller]'s manager and several representatives of [Seller] were sent to visit [Buyer]'s customer, Company PH (Gesellschaft mit beschränkter Haftung; GmbH), in Germany on 9 October 2001. However, the District Court failed to take account of the verified fact that, during their visit, the representatives of [Seller] were notified of the lack of conformity of the delivered goods: They were shown the knitting bugs and the deviant sizes of the delivered pullovers. Entirely ignoring this submission of [Buyer] constitutes a gross procedural irregularity which may result in the quashing of the District Court's decision.

The District Court's further assumption that in [Buyer]'s letter dated 5 October, [Buyer] did not clearly specify the claimed deviances concerning the size of the pullovers, also relates to the Court's insufficient evaluation of the facts of the case and of the submission of the parties: Again, the District Court did not take notice of [Buyer]'s approved submission that during their visit to Company PH in Germany, the representatives of [Seller] had actually been shown the knitting bugs as well as the deviant sizes of the pullovers.

The District Court wrongly supposed that the measurement requirements for the goods to be delivered were only copied later on the documents of the orders for delivery. [Buyer] sustained that tables documenting the required measurements had been added to its orders and thus had become part of the contractual agreement between [Buyer] and [Seller]. It was only the drafts for the different cuts of the pullovers that it added as copies after the contract had already been concluded. Indeed, [Seller] did not dispute that it had received an order that included the exact measurements, and that thus these measurements had become part of the agreement. The District Court's assumption that [Buyer]'s order for delivery did not include the required measurements stands in contradiction to the submissions of the parties and cannot be upheld.

      2. The District Court incorrectly assumed that [Buyer]'s submissions made in the brief that arrived on 31 May 2002 were not brought within the time limit for pleadings, and thus were not to be considered for the judgment.

The 30th of May 2002 was an official holiday acknowledged by 1 of the Act for Official Holidays in the State of Baden-Würtemberg (Feiertagsgesetz von Baden-Würtemberg). 222(2) of the German Code of Civil Procedure (Zivilprozeßordnung; ZPO) demands that in this case the expiration date for the set time limit for pleadings had to be extended to 31 May 2002 (see Judgment of the Federal Supreme Court (Bundesgerichtshof) LM 765 BGB Nr. 1). As regards the definition of an official holiday, the law of the state of Baden-Würtemberg applies, because the Court that tried the case was seated in this state (Judgment of the Federal Labor Court (Bundesarbeitsgericht), NJW 1989, p. 1181). Consequently, the District Court would have been obliged to take into consideration [Buyer]'s statement of a set-off against a claim for damages, given in the brief dated 31 May 2002.

      3. The District Court incorrectly ruled that [Buyer]'s cross action was not admissible for being brought too late. Again, the Court wrongly assumed the deadline for pleadings to be 30 May 2002 and not 31 May 2002.

[Buyer]'s appeal against these procedural irregularities has been brought in accordance with 520(3) of the German Code of Civil Procedure (Zivilprozeßordnung; ZPO).

II. The District Court's judgment depends on these formal irregularities. The decision would have been different if the Court had taken full account of [Buyer]'s submissions.

      1. A notice of the claimed lack of conformity of the delivered goods as given on 9 October 2001 would have met the requirements of Art. 39(1) CISG: It would have been sufficiently specific and brought within a reasonable time. The time limit for notification set in Art. 39(1) CISG depends on the circumstances of the case. Generally, the appropriate time limit may range from one month to two weeks (see: Staudinger/Magnus, BGB, 1999, Art. 39 CISG, note 49). As the delivered goods are non-perishable and the circumstances of the case do not indicate a shorter period, the notification on 9 October 2001, eleven days after delivery, seems to be appropriate. The judgment of the District Court does not refer to these matters at all.

The notice of the deficient pullovers given by [Buyer]'s daughter and his wife to [Seller]'s manager and several other [Seller] representatives during their visit to Company PH meets the legal requirements as regards clarity and specificity of the complaint.

Art. 39(1) CISG requires the buyer to specify the lack of conformity of delivered goods with the contract. As the District Court correctly stated, the buyer's notice of the lack of conformity must be so clear and specific that it allows the seller to react in an appropriate way. The seller must be enabled to select the response it deems appropriate amongst the several options provided by the CISG: [Seller] may chose to cure or replace the deficient goods, or it may insist on examining the claimed lack of conformity itself (see judgment of the German Federal Supreme Court (Bundesgerichtshof; BGH) in: NJW, 1982, p. 2730; Staudinger/Magnus, ibidem, note 21). Apart from these standards, the buyer's notice is not required to be given in a certain form (Staudinger/Magnus, ibidem). [Buyer]'s note of complaint as given on 9 October 2001 suffices all these requirements.

      2. The District Court wrongly ruled that [Buyer]'s declared set-off was ineffective because, according to the Court, [Buyer] did not quantify the claim against which it wanted to set-off [Seller]'s claim for payment. However, in the brief that reached the Court on 31 May 2002 [Buyer] did denote the claim it intended for set-off with the amount of 980.02 Euro.

      3. The District Court failed to judge upon [Buyer]'s cross-action at all. If the Court realized that according to 222(2) of the German Code of Civil Procedure (Zivilprozeßordnung; ZPO) the time limit for pleadings had expired on 31 May and not on 30 May 2002, it must be assumed that it would have admitted [Buyer]'s counterclaim under 128(2), 222(2) of the German Code of Civil Procedure (Zivilprozeßordnung; ZPO).

III. The Appellate Court holds that following 538(2) of the German Code of Civil Procedure (Zivilprozeßordnung; ZPO) the District Court's judgment must be set aside and the case referred back to the District Court.

Retrial seems to be necessary because relevant facts of the case which are fundamental for a correct judgment on [Seller]'s claim have not yet been considered. As regards [Buyer]'s cross action, the District Court denied any judgment at all. All this necessitates an extensive taking of new evidence. A trial of the case by the Appellate Court itself would deprive the parties of an appellate instance (Berufungsinstanz) in which the underlying facts of the case can be revised. Moreover, it does not fall within the genuine competence of an Appellate Court (Berufungsgericht) to inquire into hitherto fully unknown facts of a case itself. For this reason, it seems appropriate that the case be remanded to the District Court, which has to retry it on all relevant circumstances.

IV. 8(1), sentence one, of the German Court Fees Act (Gerichtskostengesetz; GKG) provides that parties do not have to bear the costs of appellate proceedings in situations in which the costs would not have arisen had the case been properly tried in the first instance. 8(1) of the German Court Fees Act (Gerichtskostengesetz; GKG) applies when the judgment of the court of first instance suffers from obvious substantial errors (see Judgment of the German Federal Supreme Court (Bundesgerichtshof) in: BGHZ vol. 98, pp. 318 - 320). Ignoring essential submissions and a counterclaim brought by [Buyer], the District Court infringed [Buyer]'s right to be heard in court. This failure amounts to an obvious substantial procedural error under 8(1) of the German Court Fees Act (Gerichtskostengesetz; GKG). An appeal against these irregularities would not have been necessary, if the District Court had tried the case properly in the first instance. Hence, the parties cannot be expected to bear the costs of this appeal (see judgment of the German Federal Supreme Court (Bundesgerichtshof) in: NJW 2000, pp. 3786 - 3789).

As regards the out-of-court expenses, the District Court has already decided in a new judgment.

A second appeal (Revision) is not admissible under 543(2) of the German Code of Civil Procedure (Zivilprozeßordnung; ZPO).


FOOTNOTES

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

** 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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