Spain 28 April 2004 Appellate Court Barcelona (Metallic covers case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/040428s4.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: Rollo No. 862/2003-B
CASE HISTORY: 1st instance Juzgado de Primera Instancia No. 2 de Vic 14 July 2003
SELLER'S COUNTRY: Spain (plaintiff)
BUYER'S COUNTRY: Portugal (defendant)
GOODS INVOLVED: Metallic covers for network of a sewage system
SPAIN: Audiencia Provincial de Barcelona 28 April 2004
Case law on UNCITRAL texts (CLOUT) abstract no. 553
Reproduced with permission of UNCITRAL
The dispute concerned the sale of metal inspection covers for sewerage systems, for which a Portuguese company (the buyer) had concluded a contract with a Spanish company (the seller) in 1999 with the aim of fulfilling its commitments as a contractor for two public works projects in Portugal. The covers ordered were of the Transit and Delta models. The Portuguese company alleged that the product did not meet the specifications set out in the contract and that the covers supplied were faulty, and it therefore claimed reimbursement of part of the price already paid plus damages for the loss incurred through the removal of the unusable covers already installed and their entire replacement with new ones (replacement covers were purchased from third parties). The seller filed a counter-claim, denying breach of contract and seeking payment of the outstanding sum. The lower court ruled in favour of the seller. The buyer lodged an appeal.
The court of appeal held that the parties had agreed that the CISG should apply. Regarding breach of contract, it examined firstly the allegations of the buyer that the Delta covers failed to meet the resistance standards indicated in the seller's catalogue and that there were certain defects in the polyethylene seals of the covers. The court pointed out that a lack of conformity with the resistance standards indicated could not be concluded from the expert reports. However, the seller had admitted that there had been defects in the seals and offered to replace them free of charge, an offer which had been rejected by the buyer. The court considered that the seller had complied with the provisions of paragraphs (2) and (3) of article 46 CISG and it had not been proven that replacement was not viable.
As regards the Transit covers, the buyer alleged firstly that the product was highly unsuitable for the purpose for which the buyer had intended it, that purpose being known to the seller. The court rejected the buyer's claim, citing article 35(2)(b) of the Convention. Firstly, it pointed out that the fact that the seller had achieved a business quality accreditation (International Standard ISO 9001) did not mean that it was under any obligation to be familiar with the needs of the buyer. Secondly, it rejected the contention that the way in which the various models of covers were presented in the seller's catalogue could have misled the buyer, since the buyer was a qualified public works contractor. Therefore, the buyer could not have been unaware that the project under which the Transit covers were to be installed required type D400 covers with a diameter of 600 mm, which neither matched the specifications given for the Transit covers in the catalogue nor was evident from the prior negotiations between the parties. In fact, the court held, citing article 8(2) CISG, that the seller had not been informed of the requirements of the works for which the covers were intended and that, at the buyer's request that the covers bear the inscription "D400", the seller had replied that that would require the purchase of a different model, which had been confirmed following the conclusion of the contract, when the seller sent to the buyer a sample of the inscription, which did not incorporate what had been requested by the buyer.
Secondly, the buyer alleged that there were resistance deficiencies in the Transit covers. The court considered that allegation to be correct. The catalogue indicated a resistance of up to 40 tons, which according to experts allows tolerances of ±3. The seller's own resistance test carried out prior to delivery showed resistance indices of 25 to 35 tons, in spite of which the seller proceeded with the delivery. The court held that the seller had committed a fundamental breach (article 25 CISG).
However, since the buyer had also made an error in selecting the product (having ordered covers suitable for footways and verges, which it then installed on the carriageway of a road), the court found that the conduct of each of the contracting parties had contributed to the final outcome and it therefore reduced by 50per cent the sum payable to the seller for the sale of the Transit covers.Go to Case Table of Contents
APPLICATION OF CISG: Yes
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
8B [Interpretation of party's statements or other conduct: interpretation based on objectivestandards]; 25B [Definition of fundamental breach]; 35B2 [Conformity of goods (requirements imposed by law): fitness for particular purpose made known to seller]
8B [Interpretation of party's statements or other conduct: interpretation based on objectivestandards];
25B [Definition of fundamental breach];
35B2 [Conformity of goods (requirements imposed by law): fitness for particular purpose made known to seller]
CITATIONS TO OTHER ABSTRACTS OF DECISION
English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=1003&step=Abstract>
Spanish: CISG-Spain and Latin America website <http://www.uc3m.es/cisg/respan31.htm>
CITATIONS TO TEXT OF DECISION
Original language (Spanish): CISG-Spain and Latin America website <http://www.uc3m.es/cisg/sespan31.htm>; see also Fuente: Aranzadi Westlaw JUR 2004\150425; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=1003&step=FullText>
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISIONEnglish: Spaic, Analysis of Fundamental Breach under the CISG (December 2006) n.304 Go to Case Table of Contents
Case text (English translation) [second draft]
Queen Mary Case Translation Programme
Translation [*] Daniel Solomon [**]
The case in controversy involves the purchase of metallic covers for networks of a sewage system. The purchase was arranged in 1999 by a Portuguese company [Buyer] with a Spanish company [Seller] to allow the [Buyer] to fulfill a commitment as contractor for two public works projects in Portugal. The covers were ordered in both the Transit model and the Delta model. The [Buyer] alleges that the products did not conform to the specifications provided in the contract and that the covers were defective. Therefore, the [Buyer] tried to obtain restitution of part of the purchase price, calling also attention to the fact that the damage produced by replacement of the useless covers already placed in the work required substitution of other goods (from third companies). The [Seller] denies the breach and asks for the payment of the contract price. The decision of the Court of First Instance gave the judgment to the [Seller]. The [Buyer] appeals the judgment.
The Appeals Court considered, in the first term, that the parties agreed to the application of the CISG.
The Delta model
In relation to the breach, the Appeals Court examined the allegations regarding the Delta cover model where the [Buyer] indicated that the covers did not reach the levels of resistance indicated in the [Seller]'s catalog, and had defects in the polyethylene boards of the covers. The Court noted that expert information did not clarify whether the non-conformance also included the failure to reach the indicated levels of resistance. On the other hand, the defects in the boards were admitted by the [Seller], who offered to substitute different goods. The [Buyer], nevertheless, rejected this offer. The Court concluded that the [Seller] complied with paragraphs (2) and (3) of Art. 46 of the CISG; without it, the [Seller]'s offer to substitute was ineffective.
The Transit model
The Transit model cover is also of concern, the [Buyer] alleges, because of the radical inaptitude of the product for the purpose given by the [Buyer] and known by the [Seller]. The Court mentioned Art. 35(2)(b) of the CISG and rejected the [Buyer]'s claim. The Court indicated that the [Seller] relied on a certain standard of enterprise quality (ISO 9001). This does not imply that the [Seller] is forced to know the [Buyer]'s necessities. The Court rejects the claim that the representation in the [Seller]'s catalog of the different models was able to induce error by the [Buyer], since the [Buyer] had a specific expertise in the field as a public works contractor. The [Buyer] could not ignore that the Transit covers it demanded required covers of class D400 with a diameter of 600 mm, which was not fulfilled by the Transit covers according to the catalog. In fact, mentioning Art. 8(2) of the CISG, the Court concluded that the [Seller] had not been made aware of the exigencies of the works to which the covers were destined. Before the [Buyer]'s order for the covers, it appeared that in class D400, the [Seller]'s confirmation indicated that the [Buyer] requested the sale of a different model. This was confirmed after the contract was signed and the [Seller] sent the [Buyer] a sample of the class of product, to which the [Buyer] did not object.
In second term, the [Buyer] alleged defects of resistance in the Transit covers. The Court correctly decided this allegation. The catalog indicates a resistance of up to 40 tons, and according to the experts it admits tolerances in +/-3. The [Seller]'s own test of resistance conducted before the delivery reveals indices of resistance of between 25 and 35 tons, despite what the [Seller] came to deliver. The Court considered that there was a fundamental breach by the [Seller] (Art. 25).
However, as the product also had the defect when the [Buyer] was selecting (the [Buyer] ordered covers adapted for strolls and borders, that it placed in a highway), the Court concluded that the final result imputable to each of the contractors was 50% of the amount to be paid to the [Seller] for the sale of the Transit covers.
* All translations should be verified by cross-checking against the original text. For purpose of this translation, the Plaintiff of Spain is referred to as [Seller] and the Defendant of Portugal is referred to as [Buyer].
** Daniel Solomon (student, Washington University School of Law), Spanish-American Institute, Seville, Spain (Jan. 2002 - June 2002) [studied Spanish language, politics and culture], Bachelor of Arts, Political Science with high honors, Michigan State University (May 2003)Go to Case Table of Contents