France 18 December 2003 Appellate Court Lyon (Coin change machines case)
[Cite as: http://cisgw3.law.pace.edu/cases/031218f1.html]
DATE OF DECISION:
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CASE NUMBER/DOCKET NUMBER: Unavailable
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CASE HISTORY: 1st instance Tribunal de Commerce de Lyon 16 March 2001; 3d instance Cour de Cassation 13 February 2007
SELLER'S COUNTRY: France [At issue: Contract with German supplier]
BUYER'S COUNTRY: France
GOODS INVOLVED: Automatic banknote-to-coin change machines
FRANCE: Court of Appeal of Lyon 18 December 2003
Case law on UNCITRAL texts (CLOUT) abstract no. 492
Reproduced with permission from UNCITRAL
Under a contract signed on 31 July 1995, the buyer S, a French public transport company, ordered 40 banknote-to-coin change machines from the seller P, which was also based in France. The machines were manufactured by a company based in Germany and used software supplied by another German company.
The first batch of 18 machines was delivered in October 1995 and faults became apparent as soon as the machines were installed. On 26 October 1995, the buyer S notified the seller P of a number of complaints concerning the non-conformity and various faults of the machines.
In January 1996, at the request of the computer programmer, his French distributor conducted tests on the machines but failed to correct the faults.
Following a lengthy correspondence between the three French companies, a decision was taken to send one of the machines to the German manufacturer for testing and any modifications that might be necessary. At the end of 1996, the buyer S was still in possession of nine machines that were still not functioning but had paid the seller P the sale price of 800,000 French francs.
On 23 October 1996, the buyer S issued a writ against the seller P before the Commercial Court of Lyon for avoidance of the sales contract, reimbursement of the sum paid and payment of damages. Claims for damages were subsequently lodged with the same court against the two German companies by the buyer S, on 23 October 1996 and 16 January 1997, and by the seller P.
In its judgement delivered on 16 March 2001, the Commercial Court accepted the claim of the buyer S, pronounced the sales contract of 31 July 1995 void and ordered the seller P to refund the sums paid and to pay damages. The Court dismissed the claims for damages against the two German companies, however, on the grounds that they were inadmissible under the time-barring provisions of paragraph 477 of the German Civil Code (BGB), in the version which was in force until 31 December 2001.
The Court of Appeal upheld the part of the judgement by the Commercial Court in which it had pronounced the sales contract of 31 July 1995 void. It varied, however, that part of the ruling in which the claims against the German companies had been declared inadmissible under German law.
With regard to the action by the French seller P against the two German companies, the Court noted that the contractual relationship was governed by CISG. It nonetheless dismissed the French seller P's claim on the grounds that P was itself responsible for the breach of contract with regard to the buyer S and that P had not shown that the expenses borne by it related to errors committed by the German companies.
With regard to the claim by the buyer S for damages from the two German companies, the Court began by considering the applicable law and, in that context, debated the nature of the contract. First, it noted that the fact that the manufacturer was supposed to supply machines to the specifications of the buyer S was not sufficient reason to describe the contract as a manufacturing contract and that, since the product had failed to meet the owner's very specific special requirements, the contract was, in this case, a sales contract.
In determining the applicable law, the Court agreed with the argument put forward by the German companies invoking the Convention on the Law Applicable to International Sales of Goods (The Hague, 15 June 1955), under which, in default of a law declared applicable by the parties, a sale was governed by the domestic law of the country in which the seller had its habitual residence at the time when it received the order; they argued that the direct action taken by the buyer against the manufacturer was of a contractual nature and therefore subject to German law. According to the defendants, the action was time-barred, since the German Civil Code provided for a limitation period of six months from the delivery of the movable goods.
The Court noted, however, that German law incorporated CISG, that the parties had not set it aside and, indeed, that the reference to German law in the general conditions of sale fully supported the statement that CISG was applicable.
The Court found that, by failing to meet the specifications of the buyer S, of which they had known, the German companies had breached the obligation imposed on them by article 35 CISG to deliver goods fit for any particular purpose expressly or impliedly made known to them at the time of the conclusion of the contract.
The Court then stated that "article 38(2) [sic] of the Convention provides that the buyer is time-barred if the seller has not been given notice of the lack of conformity of the goods within a period of two years from the date on which they were handed over". Without referring to the "reasonable time" mentioned in article 39(1), the court noted that the first machines had been installed on 24 October 1995 and that on 26 October 1995 the buyer S had made a number of complaints concerning the conformity of the goods.
Moreover, the Court observed that the buyer S could, under article 47 CISG, fix an additional period of time of reasonable length to allow the seller P to perform its obligations; during that period, S was not deprived of the right to bring proceedings against the seller P. The Court stated that the period provided for in CISG -- i.e. the two-year period -- must run from the date of expiration of the additional period of time. The Court observed that the time-barring could also be interrupted by the acknowledgement of liability by the seller P; and such acknowledgement had been made. The Court concluded that the action initiated by the French buyer S against the two German companies had not been brought too late and was therefore admissible.
The Court therefore found that the action of the buyer S in instituting direct proceedings against the two German companies for reparation for damage was admissible and well-founded.
Go to Case Table of ContentsAPPLICATION OF CISG: Yes [Article 1(1)(a)]
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:`
3B [Services (not) preponderant part of obligation]; 35B2 [Conformity of goods to contract: fitness for particular purpose made known to seller]; 39B [Requirement to notify seller of lack of conformity (cut-off period of two years): period only starts running after Nachfrist period has expired]; 47B [Notice fixing additional period for performance: buyer's remedies suspended during period]
Descriptors:
CITATIONS TO OTHER ABSTRACTS OF DECISION
English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=971&step=Abstract>
CITATIONS TO TEXT OF DECISION
Original language (French): CISG-France database <http://witz.jura.uni-sb.de/CISG/decisions/181203v.htm>; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=971&step=FullText>
Translation: Unavailable
CITATIONS TO COMMENTS ON DECISION
Unavailable
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