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CISG CASE PRESENTATION

Romania 6 June 2003 High Court of Cassation and Justice (Terracotta stoves case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/030606ro.html]

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

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Case identification

DATE OF DECISION: 20030606 (6 June 2003)

JURISDICTION: Romania

TRIBUNAL: Inalta Curte de Casatie si Justitie [High Court of Cassation and Justice]

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: Decision no. 2957/2003; Dossier no. 945/2002

CASE NAME: SC M.R. Canada v. SC M.N. SA Deva

CASE HISTORY: 1st instance Hunedoara Tribunal 23 January 2001; 2d instance Court of Appeal of Alba Iulia 16 November 2001 [reversed]

SELLER'S COUNTRY: Romania (defendant)

BUYER'S COUNTRY: Canada (plaintiff)

GOODS INVOLVED: Terracotta stoves


Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 36(1) ; 38(2) ; 39(1)

Classification of issues using UNCITRAL classification code numbers:

36A2 [Time for assessing conformity of goods (conformity determined as of time when risk passes to buyer): seller responsible when lack of conformity becomes apparent later];

38A [Time for examining goods: buyer's obligation to examine goods];

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

Descriptors: Conformity of goods ; Examinatin of Goods ; 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 (Romanian): Available online at <http://www.scj.ro/cautare_decizii.asp>; click here for the pdf of this text

Translation: Unavailable

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation) [second draft]

Supreme Court of Justice of Romania, Commercial Section

6 June 2003 [Decision no. 2957/2003; Dossier no. 945/2002]

Translation [*] by Larisa Boanta [**]

REGARDING THE PETITION AT HAND:

After examining the documents from the dossier, the following is found.

In the lawsuit registered on 3 August 2000, the Plaintiff SC M.R. [Buyer] of Canada brought an action against Defendant SC M.N. SA Deva [Seller] of Romania asking for:

   -    The resolution of a contract for the delivery of twelve terracotta stoves type L and fifteen terracotta stoves type D, that were deficient in their quality, delivered by the [Seller] on 13 July 1997, and to put the parties in the position they were before the contract was concluded;
 
   -    Payment of damages in the amount of US $12,298, representing the price of the goods, transportation costs, insurance, services, custom taxes, and laboratory taxes.

The commercial and administrative section of the Hunedoara Tribunal, in decision number 133 of 23 January 2001 entered the judgment as it was formulated against the [Seller] for damages alleged by the [Buyer] as well as court fees in Romanian currency in the amount of 16,550,000 lei. In its decision, the Hundoara Tribunal [Court of First Instance] stated that:

   -    The parties concluded, in a simplified form, an order followed by execution, a sale-purchase contract for twenty-seven terracotta stoves, exported to Canada, a contract falling under the uniform norms established by the United Nations Convention for the International Sale of Goods [CISG], concluded in Vienna on 11 April 1980, to which Romania adheres in accordance with Law no. 24/991;
 
   -    The delivered goods, according to invoice number 5015 of 31 July 1997 and acceptance minutes, were proven to be non-conforming in quality, after verification by the specialized firm I.T.S from Canada, in violation of the quality norms transmitted by the Defendant [Seller];
 
   -    The acceptance that took place at the delivery of the goods was in reference to the quantity of the goods and their exterior appearance, and that it was not conducted in compliance with standard number 3/199, more specifically the preparation of separate documentation for each product.
 
   -    Based on Article 36(1) of the Convention invoked, because of the lack of conformity in quality, the [Seller] is liable to the [Buyer] for the reimbursement of the price paid ($5,340) transportation ($1,675) insurance ($196), services ($2,180) and space rental, inspection, custom taxes, laboratory taxes ($2,803).

The [Seller] appealed this decision, arguing that:

   -    The court entered the judgment for the restitution of the sales price even though the [Buyer] is in the possession of the goods and the quality of the goods was wrongfully assessed in accordance with Canadian standards;
 
   -    The goods were accepted by the [Buyer], and therefore quality defects cannot be claimed, and that the [Seller] is not liable for damages demanded.

The commercial and administrative section of the Court of Appeals of Alba Iulia in decision number 796 of 16 November 2001, dismissed the [Seller]'s appeal as without merit, affirming the decision of the Court of First Instance to bring about the resolution of the contract, the restoration of the previous condition and to have the [Seller] bear all costs incurred by the [Buyer].

Against the decision of the Court of Appeals, the [Seller] declared recourse and appealed to the Supreme Court, based on art 304 point 9 of the Civil Procedure, pleading that the decision is unfounded and not legal because:

   -    The goods were accepted at the shipment date, as far as quality and quantity and the [Buyer] assumed the risk of damages;
 
   -    The deficiencies in regards to the cracks at the joints, as a result of transportation and repeated handling, could have been repaired, and that the [Seller] offered to send a team for this purpose, but the [Buyer refused;
 
   -    The resolution of the contract and the restoration of the parties to their previous condition, were made in violation of Law no. 24/1991, unilaterally, because the [Buyer] has possession of the goods and in the same time it was awarded damages for the restitution of the price and all of the direct costs (importing licenses, authorizations, custom formalities).

The [Seller] alleged and the Supreme Court holds that:

      The [Seller]'s appeal is well founded, the decision entered violates the provisions of Law no 24/1991, regarding the adherence to the United Nations Convention for the International Sale of Goods.

      The [Seller] fulfilled its obligation of delivery and transfer of the goods to the [Buyer] on 31 July 1997.

      On that date, the minutes of the acceptance were concluded, through which the representative of the [Buyer] declared the quantity and quality of the accepted goods in conformity with the agreement, according to invoice no. 5015 of 31 June 1997.

      The [Buyer] cannot claim apparent defects after the goods were loaded in the container provided by the [Buyer] and the goods were delivered to the first shipper.

      According to Article 36 of the CISG, the seller is responsible for any lack in conformity that exists at the moment when the risks of damages are transferred to the buyer, even if this deficiency does not appear until later.

      The cracks claimed by the [Buyer] are either apparent defects, or they did not exist at the time of the acceptance of the goods which took place when they were sent.

      From the dossier, it cannot be determined when the goods arrived at the destination, or if the inspection was made on that date, during the unloading from the container, and not after a couple of months, time during which it is not known where they were stored and what type of handlings occurred.

      The previous courts ignored the provisions of Art. 38(2) of the CISG, according to which, the buyer has to inspect the goods or to submit them to inspection during the shortest period of time possible, taking circumstances into account. In the case in which the contract involves the transportation of the goods, the inspection can be delayed until their arrival at the destination.

      Or, the [Buyer] did not prove that the inspection of the goods was made when they were picked up from the shipper.

      In these circumstances, the tests done by ITS on December 22, 1997, that ascertain numerous cracks at joints, emission of smoke and the increase of temperature to approximately 125 degrees Celsius, cannot be determinative and used against the [Seller], because the tests cannot identify the goods as the ones shipped by the [Seller].

      Therefore, the provisions of Art. 39(1) of the CISG are applicable, meaning that, the buyer forfeits the right to prevail relying on lack of conformity if it does not inform the seller of it, specifying the nature of the defect, in a reasonable time, calculated from the time it discovered the defect or it should have discovered it.

      The term of two years, invoked by the action, referred to in Art. 39(2), does not refer to the discovery of the non-compliance, that, as shown, has to take place at the arrival of the goods at their destination, according to Art. 38(2) but it refers to the formulation of the claim.

      As a result, in regards to the [Seller]'s fulfillment of the obligations, the [Buyer]'s request for the resolution of the contract is groundless, the liability for the quality deficiencies invoked lacks proof. Admitting the resolution and restoring the parties to their previous condition, whichever way it could have been imposed, in the situation in which the Complainant [Buyer] proves the existence of the goods (after approximately five years) it follows that it should be obligated to surrender them to the [Seller], since it was restituted the price of the goods, so that under this aspect the solution is exceptionable.

Following the abovementioned, the [Seller]'s petition will be admitted, and the decision of the Appeals Court will be modified by entering the appeal initiated by the [Seller] and by changing fully the judgment of the Hunedoara Tribunal no. 133 of 23 January 2001 by dismissing the [Buyer]'s action as without merit.

Based on Art. 274 of the Civil Procedures, the [Buyer] will have to pay court fees in the amount of 23,400,000 lei to the [Seller]. 

FOR ALL OF THESE REASONS, IN THE NAME OF THE LAW, IT IS DECIDED

   -    To enter the petition by [Seller] against the decision no 796/A/2001 of 16 November 2001 of the Appeals Court of Alba Iulia, which it modifies, in the sense that the court enters the appeal declared by the same party and changes fully judgment no. 133 of 23 January 2001 of the Hunedoara Tribunal, in the sense that it dismisses the action of [Buyer] as without merit.
 
   -    The court orders the [Buyer] to pay to the [Seller the sum of 23,400,000 lei for appeal and petition costs.

This decision is final, irrevocable.

Declared today 6 June 2003 during a public hearing


FOOTNOTES

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

** Larisa Boanta [Jurius Doctor expected in May of 2010 from Pace University School of Law, White Plains NY. Associate Candidate for Pace Environmental Law Review. Summer Associate in 2008 at Rubin Meyer Doru & Trandafir, Bucharest Romania].

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Pace Law School Institute of International Commercial Law - Last updated December 8, 2008
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