Netherlands 11 October 2005 Appellate Court 's-Hertogenbosch (G&G Component Complementaries v. Errelle S.r.l.)
[Cite as: http://cisgw3.law.pace.edu/cases/051011n1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: LJN AU6646; Rolnummer C0400803/HE (date published: 24 November 2005)
CASE HISTORY: Unavailable
SELLER'S COUNTRY: Netherlands
BUYER'S COUNTRY: Italy
GOODS INVOLVED: [-]
THE NETHERLANDS: Court of Appeals of 's-Hertogenbosch,
11 October 2005 (G&G Component Complementaries v Errelle S.R.L.)
Case law on UNCITRAL texts [A/CN.9/SER.C/ABSTRACTS/94],
CLOUT abstract no. 944
Reproduced with permission of UNCITRAL
Abstract prepared by J. Smits, National Correspondent, and Bas Megens
The seller, an undertaking producing and selling print boards, entered into a contract with the buyer, a print board wholesaler, in 2000 for the sale of 3600 print boards. The buyer resold the goods to its customer in the Netherlands. Between October 2000 and February 2001 the seller delivered at least 2910 print boards to the buyer, which redispatched 2819 of them to its customer. After the seller had delivered the first 144 items in October 2000, the buyer informed it, by letter dated 12 October 2000, that its customer had discovered a number of defects on the goods and it required additional attention to quality and control. At some point the buyer examined 787 of the print boards already delivered and rejected 105 of these, sending them back to the seller in March 2001 and requesting the delivery of new boards. The buyer also informed the seller that it would cease payments, partly because its customer had done the same to it. Later, in May 2001, the seller agreed to replace the boards and requested that payments would commence again. In June 2001 the buyer proposed a payment schedule to the seller which would result in the total amount being paid over a period of 2 months. The seller accepted, but after three payments the buyer failed to comply with the schedule. In December 2001 the buyer informed the seller that upon receiving a complaint by its customer it had examined 273 print boards together with the customer, discovering 78 of them lacking the required quality. It eventually requested the seller to send it a credit note for 1975 print boards. The seller refused.
The seller sued the buyer before the Court of First Instance, requesting the payment of the transaction. The buyer requested the Court to rescind the contract and claimed damages. The Court of First Instance granted the seller the payment and rejected the buyer's claims. The buyer appealed. The Court of Appeals upheld the decision of the Court of First Instance to apply the CISG. The key questions of the proceedings were whether the seller had incorrectly performed the obligations arising from the contract, whether the buyer was justified in ceasing payments and in rescinding the contract and whether it was entitled to damages. It was clear, according to the Court, that the buyer had ceased payments to the seller in March 2001. After that date, however, the parties drew up a schedule to ensure full payment, in [installments], of the unpaid invoices (regardless of whether or not the buyer's customer would fully pay the buyer). Noting that the buyer had initially adhered to the payment schedule, it was opinion of the Court that the buyer lost its right to suspend payments on 7 June 2001 (when it proposed the payments schedule and the seller accepted it), since there was nothing to indicate that the buyer after this fact, informed the seller that it would once again cease payments, ex article 71(3) CISG.
As to the buyer's argument, pursuant to article 49 CISG, that the entire contract should be rescinded because the seller had incurred in late delivery with each delivered [installment], the Court stated that the buyer had failed to prove it. The order form on which the buyer indicated the delivery schedule it desired was not sufficient proof. The same applied to the faxes with which the buyer urgently requested the seller to deliver first 600 and then 300 printing boards. Since the buyer did not offer any further evidence, it could not be presumed that the seller had delivered the print boards too late. The contract of sale, thus, could not be rescinded on this ground.
The buyer had further argued that the contract should be rescinded, because the print boards did not conform to the contract for the same reason it had claimed damages. The buyer's letter of December 2001 contained a declaration of avoidance due to non-conformity. Nevertheless, the Court shared the Court of First Instance's determination that in regard to 249 print boards this rescission took place eight months after discovery of their defects -- which according to the buyer's letters, occurred in October 2000 and March 2001. It thus did not take place within a reasonable time (article 49(2)(b)(i) CISG). Therefore, the buyer could not claim rescission on this ground. As regards to the other print boards, the Court could not determine whether the buyer had lost its right to rescind on the basis of article 49(2)(b)(i) CISG, since the seller had not argued on this point.
The seller had objected that the buyer had neither a right to avoid the contract nor a right to damages, because it had not sufficiently examined the print boards and had not complained to the seller within a reasonable time after it had or should have discovered the shortcomings. The Court noted the relevance of article 38(1) and 39(1) CISG to the case. However, in light of the fact that the parties can agree to deviate from the CISG, the Court stated that it had to be determined whether the parties -- as the buyer claimed -- had indeed agreed that the seller would examine and test the print boards so that the buyer would -- in deviation of article 38(1) CISG -- no longer have to examine them. Since the seller disputed this point with motivation, the order form was silent on the issue and the buyer did not offer any further evidence, the existence of the agreement could not be presumed. Therefore the Court concluded that under article 38(1) CISG, the buyer was obliged to examine the print boards. As to the timing of the examination and its extent, the Court determined that since the delivery of the print boards took place, as agreed, in partial deliveries, the buyer should have examined each delivery separately and should have complained to the seller about each non-conforming delivery separately (article 38(1) CISG). The buyer should have verified the number and type of the delivered boards and examined whether there were any visible shortcomings (a "simple examination"). Pursuant to article 38(3) CISG, the buyer could defer a more thorough examination until the time at which the print boards had arrived at its customer's premises (but not until the moment when the customer started to assemble the goods). The Court acknowledged that the buyer had carried out the "simple examination" each time after receiving the print boards (and therefore conforming to article 38(1) CISG). As regards to those defects that the buyer had discovered or should have discovered in such an examination, the reasonable time referred to in article 39(1) CISG would commence at the moment at which the buyer executed this examination, i.e. directly after receiving the print boards. As regards to the other defects, the buyer should have discovered those, at the latest, shortly after the arrival of the print boards at its customer. At that moment, the reasonable time within which the buyer should complain to the seller commenced. The Court rejected the buyer's argument that the reasonable time referred to in article 39(1) CISG would not have commenced as yet, since the seller had not yet delivered all the 3600 print boards. The buyer failed to recognize that the contract of sale entailed the delivery of the print boards in partial deliveries and that, since the case at hand concerned individual goods, the seller fulfilled its obligation to deliver with each delivered shipment of print boards. The Court ultimately stated that the buyer had given to the seller timely notice of non-conformity only with regard to 155 print boards. The Court, therefore, upheld the seller's claim. The Court also denied the buyer's argument that the seller's claim should be rejected by reason of reasonableness and fairness, since -- apart from the fact that no concrete facts or circumstances had been put forward to reject the seller's claim -- article 7(1) CISG did not leave any room for deviation because of reasonableness and fairness. The Court finally granted the seller interests over the overdue purchase price under article 78 CISG. However, since the article does not determine which interest percentage should be applied, the Court, pursuant to article 7(2) CISG, settled the issue by reference to the law applicable by virtue of the rules of private international law. The Court concluded that the contract was most closely connected with Italy, since the seller, which had to perform the main obligation, had its place of business in Italy. Italian law would thus apply to determine the interest rate.Go to Case Table of Contents
APPLICATION OF CISG: [-]
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
CITATIONS TO OTHER ABSTRACTS OF DECISION
CITATIONS TO TEXT OF DECISION
Original language (Dutch): Website of the Dutch courts <http://www.rechtspraak.nl>
CITATIONS TO COMMENTS ON DECISION
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