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CISG CASE PRESENTATION

Austria 1 June 2005 Appellate Court Linz (Hydraulic crane case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/050601a3.html]

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

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Case identification

DATE OF DECISION: 20050601 (1 June 2005)

JURISDICTION: Austria

TRIBUNAL: OLG [ = Oberlandesgericht = Appellate Court]

JUDGE(S): Dr. Erich Wanko (chief judge), Dr. Wolfgang Poth, Gerhard Hasibeder (Magisters)

CASE NUMBER/DOCKET NUMBER: 1 R 68/05h

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

CASE HISTORY: 1st instance Landesgericht Salzburg 2 February 2005

SELLER'S COUNTRY: Austria (plaintiff)

BUYER'S COUNTRY: Germany (defendant)

GOODS INVOLVED: Hydraulic crane


Headnote

Reproduced from 5 Internationales Handelsrecht (2005) 6:252

     "In the absence of extraordinary circumstances, an examination and notice period of 14 days is to be considered as appropriate."

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Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 38 ; 39

Classification of issues using UNCITRAL classification code numbers:

38A [Buyer's obligation to examine goods: time for examining goods];

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

Descriptors: Examination 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 (German): cisg-online.ch website <http://www.cisg-online.ch/cisg/urteile/1088.pdf>; see also 5 Internationales Handelsrecht (2005) 6:252-253

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

French: Claude Witz, Recueil Dalloz (22 February 2007) 538

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Case text (English translation)

Queen Mary Case Translation Programme

Appellate Court (Oberlandesgericht) Linz

1 June 2005 [1 R 68/05h]

Translation [*] by Stefan Dietrich [**]

Edited by Todd Fox [***]

The Higher Regional Court of Linz, as Appellate Court, adjudged through Chief Judge Dr. Erich Wanko and Dr. Wolfgang Poth and Mag. Gerhard Hasibeder in the legal matter of Auto K*****-P***** GmbH [Seller], represented by Dengg-Vavrousek-Hölber, lawyers in 5600 St. Johann/Pg., versus Ch****** K**** [Buyer] of Germany, represented by Schöppl and Waha, lawyers in 5020 Salzburg, in a lawsuit involving 10,386.00 on [Buyer]'s appeal against the decision of the District Court of Salzburg of 2 February 2005, 6 Cg 42/04m-13, in a closed session and after an oral appellate hearing:

HOLDING

[Buyer]'s appeal is denied.

[Buyer] is ordered to reimburse [Seller] within 14 days for the costs of the appellate proceedings in the amount of 1,161.54 (therein 190.86 turnover tax and 16.38 cash expenditures).

GROUNDS FOR THE DECISION

On 7 January 2003, [Buyer] purchased a Negrisolo Hydraulic Crane for its truck from [Seller]. [Seller] assembled and mounted the crane onto [Buyer's] truck on [Seller]'s premises on 17 May 2003. On 12 June 2003, [Seller] accordingly invoiced a total amount of 10,386.00, which [Buyer] never paid.

In this action, brought on 20 February 2004, [Seller] sought payment from [Buyer] of the invoiced amount for [Seller]'s proper performance.

[Buyer] sought dismissal of the suit and alleged that payment was not due. [Buyer] alleged that the crane was not suitable for usage because it did not conform to the agreed German regulations for accident prevention and therefore had to be enhanced. Moreover, [Buyer] alleged that [Seller] did not comply with the [Buyer]'s order: [Buyer] had ordered a crane type G 25 A, but [Seller] delivered a type CF 3/A. The crane was not allowed to be put into operation and was therefore worthless to [Buyer] because an inspection log book, in which the inspection must be documented before the initial operation can begin, was not received. [Buyer] claimed to have repeatedly brought these problems to [Seller]'s attention by telephone and that [Seller] assured remedial action.

[Seller] responded that after placing the initial order [Buyer] wanted a crane with a longer range and ordered a type CF 3/A, which is of the same construction type but a stronger model, and also signed a packing slip in this regard when the crane was mounted. Furthermore, [Seller] claims that it offered to obtain the log book at its own expense and to arrange for the typing. [Seller] alleges that, contrary to the requirements of Art. 39 CISG, [Buyer] did not give notice specifying lack of conformity within a reasonable time. For more than six months after the crane's assembly [Buyer] never raised an objection about the delivery; rather, [Buyer] stated during a telephone call that it could not pay due to a lack of business.

In the contested judgment, the Court of First Instance allowed [Seller]'s claim in its entirety; [Buyer] was directed to pay the amount sued for as well as the costs of litigation.

According to the findings of fact of the Court of First Instance, which can be found at pages 3 to 6 (AS 65-71) of the judgment and which are referred to, [Buyer] originally ordered from [Seller] a type G 25 A crane with a range of 4.7 meters (m) for a purchase price of 8,553.00 net and subsequently asked for an additional telescopic ladder to cover a broader range, wherefore a type CF3/A crane with a range of 5 m was delivered, for which an additional purchase price of 470.00 net had been agreed upon. In addition, [Seller] was commissioned to assemble the crane. Upon delivery of the crane, the operating instructions and the EC-declaration of conformity were given to [Buyer]. An inspection log book does not exist and was not delivered to [Buyer]. [Buyer] tested the crane during the course of assembly but did not give notice of any deficiencies. Thereafter, [Seller]'s managing director reminded [Buyer] about the outstanding account several times by telephone; apart from a seal for the lifting cylinder, which [Seller] ordered but [Buyer] has not picked up, no objections were made by [Buyer].

With respect to the law, the Court of First Instance summarized its findings as follows:

According to Art. 1(1)(a) CISG, the UN Convention on the International Sale of Goods applies. Pursuant to Art. 38 CISG, the buyer must examine the goods within as short a period as is practicable. According to Art. 39 CISG, the buyer loses the right to rely on a lack of conformity if he does not give notice specifying the nature of the lack of conformity within a reasonable time. The Supreme Court regards -- apart from special circumstances -- an examination and notification period of 14 days as reasonable. Moreover, the buyer must specify in the notice the nature of the lack of conformity.

Here, there was a lack of a specified notice in due time pursuant to Art. 39(1) CISG, such that "the claim for relief was to be rejected". In default of a notice, [Buyer] cannot rely on a possible lack of conformity of the goods and loses all remedies available under such a claim.

The Court of First Instance based its ruling on costs on 41(1) ZPO [*] and on [Seller]'s counsel's corresponding index of costs.

[Buyer]'s timely appeal is against this judgment. [Buyer] bases its appeal upon nullity, improper procedure, non-conformity of the records, false findings of fact as a result of improper consideration of evidence, as well as incorrect legal judgment. [Buyer] seeks reversal of the decision due to nullity or, alternatively, amendment of the decision such that [Seller]'s claim is dismissed entirely. In the alternative, another application for reversal is filed.

[Seller] replied to the appeal in due time and seeks dismissal of the appeal.

[Buyer]'s appeal based on nullity is not justified.

[Buyer] sees a contradiction in the decision and therewith a nullity pursuant to 477 (1) (9) ZPO [*] since the Court of First Instance allowed the [Seller]'s entire claim in its holding, yet in its legal assessment the Court of First Instance stated that the [Seller]'s claim is to be dismissed. However, [Buyer's] reliance on nullity grounds under 477 (1) (9) ZPO -- that the decision contradicts itself -- is not applicable since that provision only concerns a contradiction in the judgment's holding itself, whereas a contradiction in the decision's reasons would not be sufficient (Kodek in Rechberger, ZPO, 2nd ed., para. 12 to 477 ZPO; Stohanzl, ZPO, 15th ed., E 117 to 477 ZPO). Furthermore, a contradiction between the decision's holding and its reasons is not present, because the Court of First Instance justified its grant of the action in the decision's reasons -- thus in accord with its reasons -- in that [Buyer] had not given timely notice of possible defects and therefore lost all remedies. The cited clause "so that the claim for relief was to be rejected" is obviously a dictation mistake but not a nullity pursuant to 477 (1) (9) ZPO. The appeal on nullity was therefore to be rejected.

The remainder of the appeal is also not justified. The Appellate Court considers [Buyer]'s argument concerning remedies to be unsound, in contrast to the correct reasoning in the contested decision below ( 500(a) ZPO). Accordingly, this Court refers to the reasoning recited by the Court of First Instance. The details of the appeal will only be gone into briefly:

It was not a procedural defect for the Court of First Instance to not obtain the requested automobile-expert report as evidence of the necessity of a log book for an industrially used crane, because the Court of First Instance came to the legal conclusion that, in default of a timely notice of a possible non-conformity to the contract, this motion for the admission of evidence is legally irrelevant.

That the date of "12 June 2003", claimed to be contrary to the record [aktenwidrig] was not the date of the crane's assembly-- as asserted by the Court of First Instance (obviously also erroneously) -- is correct; in fact, 12 June 2003 was the date on which the invoice underlying the claim was issued. In any event, the fact that the crane had actually been transferred, according to the bill of delivery (see enclosure ./A), before that date, on 17 May 2003 -- as mentioned in the appeal -- was not a matter of contention in the first instance proceedings. [Buyer] did not advance any concrete contrary response to [Seller]'s submission in this regard, so that the date of the crane's assembly, mentioned in the appeal, has to be taken as conceded. The likewise contested finding as contrary to the record that [Buyer] declared it needed the crane to draw shrubs, trees and greens out of private gardens, is insignificant for the legal judgment; [Buyer] has not pointed out a fundamental importance of this finding claimed to be contrary to the record.

The finding sought, that at the conclusion of the contract [Buyer] arranged with [Seller]'s managing director for the transfer of the log book, cannot replace the need for a timely notice of lack of conformity after delivery of the goods. The further requested conclusion, that a test report exists for this crane, cannot be reliably found from the mentioned enclosure ./4, since there it is only stated that included in a crane's delivery is also a log book; this statement does not automatically mean that a log book exists for this crane. As far as [Buyer] desires this Court to conclude that [Buyer] gave timely notice that the crane cannot lift a weight of 400 to 500kg, or that the crane's arm cannot be swayed any more, this is countered by the fact that no deficiencies were alleged in the first instance proceedings about the crane not functioning properly -- except for the alleged wrong delivery. Also, the re-order of a seal for the lifting cylinder was not a part of the [Buyer]'s submission to the Court of First Instance.

The conclusion of the Court of First Instance contested by [Buyer] on appeal -- that [Seller] was not requested to make any improvement or cure any defects - was apparently drawn from the testimony of [Seller]'s managing director, which the Court of First Instance reasonably believed. Moreover, [Buyer]'s first instance submission that [Seller] delivered the wrong crane has already been vitiated by [Buyer]'s own testimony, because [Buyer] itself conceded that it agreed with [Seller]'s managing director to have a crane type CF 3/A delivered instead of the originally ordered crane (page 9 in ON 12 = AS51). Moreover, it would be inexplicable why [Buyer] had not returned the crane long ago, if its submission that the crane is valueless for it were correct. Also significant is the fact that [Buyer] could not document a single one of its alleged notices of lack of conformity. Neither on the bill of delivery signed by [Buyer] nor on the invoice accorded to [Buyer] from [Seller] was there a reprimand or notice of defects, nor were the contents of a telephone call recorded in written form. The written invoice of 12 June 2003 was also not responded to in writing. Thus, reliable evidence that [Buyer] requested [Seller] to remove defects is not on hand. Whether this is a matter of an agriculturally or commercially used crane, is likewise immaterial for the legal assessment. There is no reason to diverge from the findings of fact of the Court of First Instance.

In legal respects, the Court of First Instance correctly described the period for examination as well as the requirements of a notice of lack of conformity in regard to time and content pursuant to Arts. 38, 39 CISG (see RIS-Justiz [*] RS0110999, RS0111000 and RS0116099). Accordingly, there was no specified and timely notice of lack of conformity pursuant to these provisions regarding the claim in the first instance that the inspection log book was missing. The seal for the lifting cylinder, for which [Buyer] had properly given notice, was in any case ordered by [Seller] but has not been picked up by [Buyer]; according to the findings of fact of the Court of First Instance, [Buyer] did not raise any other deficiencies, so the Court of First Instance correctly allowed the [Seller]'s claim.

The [Buyer]'s appeal is unsuccessful.

The ruling on the costs is based upon 41 and 50 ZPO [*], whereas the additionally listed court charges were to be awarded only to the extent effectively spent. In accordance with 500(2) (3) ZPO, in default of the existence of an important legal question in the circumscribed relevance pursuant to 502(1) ZPO the regular revision [appeal on points of law] was not allowed; rather, the clarification of questions of fact were in the foreground.

Higher Regional Court Linz, Dept. 1, on 1 June 2005. Dr. Erich Wanko (Chief Judge)


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Plaintiff of Austria is referred to as [Seller] and the Defendant of Germany is referred to as [Buyer]. Amounts in the European currency (Euro) are indicated as [].

Translator's note on abbreviations: RIS-Justiz = Rechtsinformationssystem des Bundes [Austrian government electronic databank for laws and jurisprudence]; ZPO = Zivilprozessordnung [Austrian Code of Civil Procedure].

** Stefan Dietrich, Dipl. iur University of Bochum, LL.M. University of London (2004/2005). His fields of law are International Commercial Law and Corporate Law. Since January 2006 articled clerk with the Higher Regional Court (OLG) Hamm.

*** Todd Fox received his J.D. from Rutgers University and his LL.M. summa cum laude from the University of Freiburg, Germany. A member of the Bar of the State of Pennsylvania, he is an Associate of the law firm of Gleiss Lutz of Stuttgart, Germany, specializing in commercial arbitration. He is also an Associate of the Institute of International Commercial Law of the Pace University School of Law.

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