Switzerland 9 March 2006 Kantonsgericht [District Court] Appenzell-Auserrhoden (Fitness equipment case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/060309s1.html]
DATE OF DECISION:
JURISDICTION:
TRIBUNAL:
JUDGE(S):
CASE NUMBER/DOCKET NUMBER: ER3 05 231
CASE NAME:
CASE HISTORY: Unavailable
SELLER'S COUNTRY: Germany (plaintiff)
BUYER'S COUNTRY: Switzerland (defendant)
GOODS INVOLVED: Fitness equipment
APPLICATION OF CISG: Yes
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
39A2 [Requirement to notify seller of lack of conformity: buyer must notify seller within reasonable time]; 78B [Rate of interest]
Descriptors:
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/1375.pdf>
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
Unavailable
Go to Case Table of ContentsCase text (English translation) [second draft]
Queen Mary Case Translation Programme
9 March 2006 [ER3 05 23]
This is a dispute between Plaintiff and Counterdefendant, hereafter referred to as [Seller], represented by Dr. iur. E. K., attorney, vs. Defendant and Counterclaimant, hereafter referred to as [Buyer], represented by lic. iur. W. R., attorney, concerning payment demand.
[Seller] requests the Court:
[Buyer] requests the Court:
FACTS OF THE CASE
A. [Seller] is a German subsidiary of the J. I. H. Corp. Limited. [Seller] distributes fitness equipment which is produced by the J. I. H. Corp. Limited seated in Taiwan. Customers are fitness centers, rehabilitation hospitals, hotels and the final consumers.
In the summer of 2004, [Buyer], who operates a physiotherapy practice, ordered from [Seller] a treadmill (Type Elite HRC; sales price: 1,185.00 €) and an ergometer (Type E3200 HRT; sales price: 530.00 €). The terms were delivery free domicile. [Seller] charged Company G. L. GmbH (limited liability corporation) in D__, Germany with the delivery. Company G. L. GmbH passed this task to T. T. GmbH (seated in P__) or to T. T. Germany GmbH (seated in L__, Germany).
The delivery was carried out on 20 September 2004. [Buyer] claims that the treadmill and the parquet floor of the practice were damaged at the delivery. [Seller] disputes its responsibility. [Buyer] paid for the ergometer but not the 1,185.00 € for the treadmill.
B. The parties could not reach a settlement out of court concerning the mutual claims, nor did the mediation committee that met on 12 August 2005 succeed. [Seller]'s representative instituted the present lawsuit before the judge of the Canton Court with its pleadings of 7 September 2005. The President of the Canton Court received the answer to the complaint and the counterclaim on 10 January 2006 and the answer to the counterclaim on 17 February 2006. The legal representatives of both parties were present at the oral main negotiation on 9 March 2006.
The decision was sent to the parties on 10 March 2006. On 24 March 2006, [Buyer] declared its appeal against this decision.
C. Other circumstances as well as further submissions of the parties will be referred to -- as far as necessary -- in the following.
REASONING
1. Concerning procedural issues
a) The value in dispute is to be estimated by adding the demands of the claim and the counterclaim (Art. 115(4) ZPO [*]). This results in a value in dispute of 3,760.45 FR.
b) [Seller] is seated in Germany. Therefore, this is a case with foreign tangency which requires particular consideration regarding the local jurisdiction and the applicable law.
The local jurisdiction is determined according to the Lugano Convention (SR 0.275.11, LugÜ [*]) to which both Germany and Switzerland acceded. According to Art. 2(1) LugÜ, an action is to be filed at the defendant's domicile. Defendant [Buyer] is domiciled in Lutzenberg, Switzerland. Accordingly, the Courts in the Canton Appenzell Ausserrhoden have jurisdiction over this dispute. The jurisdiction concerning the counterclaim is to be derived from Art. 6 No. 3 LugÜ.
In the relationship between Germany and Switzerland, sales contracts are to be assessed according to the UN Convention on Contracts for the International Sale of Goods of 11 April 1980 (CISG). The application of the CISG can be reached by two ways:
First, by the so-called autonomous application which is based on Art. 1(1)(a) CISG (approach according to the decision of the District Court Bielefeld of 15 August 2003, proceeding No. 15 O 5/03, p. 4, published at: <http://www.cisg-online.ch/cisg/overview.php?test=906>).
Second, by the indirect way through Art. 118(1) IPRG [*] and Art. 3(1) of the Hague Convention on the Law Applicable to International Sales of Goods (SR 0.221.211.4). The latter provision refers to the domestic law of the country where the [Seller] is seated. In the instant case, this is Germany. Germany is a Contracting State to the CISG which is moreover classified as domestic law (Amstutz/Vogt/Wang, Commentary on the IPRG, Basel 1996, Art. 118 para. 4). This results -- as already mentioned -- in the application of the CISG as well (cf. also: Commercial Court of the Canton St. Gallen, 11 February 2003, proceeding No. HG.2001.11-HGK, p. 4, published at: <http://www.cisg-online.ch/cisg/overview.php?test=900>, which also opted for the application by the conflict of laws).
c) The factual competence results from Art. 8 No. 2 ZPO.
2. Concerning the main issue
[Buyer] refuses payment of the purchase price by reason of the treadmill being defective (see case record 9, p. 6 et seq.). [Seller] objects that the notice of defects was given late (see case record 13, p. 4).
According to Art. 39(1) CISG, the buyer loses the right to rely on a lack of conformity of the goods if he does not give notice to the seller specifying the nature of the lack of conformity within a reasonable time after he has discovered it.
As already mentioned, the treadmill was delivered on 20 September 2004. According to [Buyer]'s statements, the damage occurred on the day of delivery while [Buyer] was present. Therefore, the period within which notice of defects had to be given commenced to run on 20 September 2004. On trial, [Seller] accepted [Buyer]'s e-mail of 3 October 2004 (see case record 16) as notice of defects. [Buyer] did not substantiate an earlier notice. There is indeed a reference to a previous telephone conversation in the above-mentioned e-mail. However, the content of this conversation is unknown. It is therefore unsettled whether [Buyer] specified the lack of conformity on the occasion of the telephone conversation as is required by Art. 39(1) CISG. The consequences of the lack of evidence are to be borne by [Buyer] who has the burden of proof for the compliance with the period within which notice is to be given. Thus, it is to be assumed that a notice of defects in accordance with existing law was not given on the occasion of the telephone conversation.
It remains to be examined whether or not [Buyer] acted within a "reasonable time" pursuant to Art. 39(1) CISG by sending the e-mail. Generally, one week is considered to be a reasonable time for giving the notice (cf. Canton Court Schaffhausen, 27 January 2004, published in: SZIER 2005, p. 123; Appellate Court (Oberlandesgericht) Linz, 1 June 2005, proceeding No. 1 R 68/05h, published at: <http://www.cisg-online.ch/cisg/overview.php?test=1088>). In the instant case, notice of defects was given ten days after the damage had been discovered. [Buyer] neither alleged nor proved that there were reasons for an extension of the period. In any event, such reasons are not evident. [Buyer] not only knew about the claimed defect which was of simple nature but also who was to be contacted. Moreover, [Buyer] -- as owner of the practice-- did not have to await internal decision-making processes which usually would have required certain time. Furthermore, there were no public holidays in Switzerland or Germany in the period between 20 September and 2 October 2004. Only on 3 October -- which anyway was a Sunday -- there was the "German Unification Day". However, this did not concern [Buyer] who lives in Switzerland. The notice of defect given on 3 October 2004 was therefore late. As a consequence, [Buyer] cannot rely on a possible defect of the treadmill or, respectively, [Buyer] is generally not entitled to any warranty rights. It can thus remain undiscussed whether -- as [Buyer] purports -- the buyer is granted a right to withhold performance according to the CISG in case of an insufficient performance by the seller (cf. Supreme Court of Austria, (November 2005, proceeding No. 4 Ob 179/05k, published at: <http://www.cisg-online.ch/cisg/overview.php?test=1156>).
Therefore, [Buyer] owes [Seller] the purchase price in the amount of 1,185.00 €. [Buyer] did not dispute the exchange rate applied by [Seller]. Thus, 1,185.00 € are to be converted to 1,860.45 FR.
[Seller] demands 5 % default interest on the claimed amount since 20 October 2004. The purchase price becomes due by handing over the goods (Art. 58(1) CISG). If a party fails to pay the price, the other party is entitled to interest on it since the due date (Art.78 CISG); a dunning is not necessary (cf. Commercial Court of the Canton St. Gallen, 11 February 2003, proceeding No. HG.2001.11-HGK, p. 8, loc. cit.). In the case at hand, the goods were handed over on 20 September 2004. The invoice of 20 September 2004 (Claimant's exhibit No. 2) determines a time for payment of 30 days. The commencement of the interest run on 20 October 2004 -- as determined by [Seller] -- is therefore proven. The CISG does not contain a provision concerning the interest rate. According to legal literature and case-law, the extent of the interest rate is to be determined by domestic law which is qualified by the conflict-of-laws to be the law applicable to the contract (cf. Commercial Court of the Canton St. Gallen, 11 February 2003, proceeding No. HG.2001.11-HGK, p. 8, loc. cit.). [Seller] claims 5 % default interest which complies with the Swiss provision of Art. 104(1) OR [*] and is thus not to be objected. This interest rate would also be justified if German law were applied (cf. District Court (Landgericht) Bielefeld, 15 August 2003, proceeding No. 15 O 5/03, p. 5, loc. cit.).
As the costs for the payment summons demanded by [Seller] share the fortune of the debt enforcement (Art. 68(2) SchKG [*]), they are not to be decided about. The agency fee's are included in the official costs (Art. 77(1) ZPO).
3. Concerning the counterclaim:
[Buyer] stated that -- on the occasion of the delivery -- there occurred damage to the parquet floor of the practice amounting to 1,900.00 FR which [Seller] was obliged to compensate.
[Buyer] has to substantiate his illustration of these circumstances. [Buyer] offered to present his wife as witness as well as himself as a party for giving evidence concerning the course of events of 20 September 2004 disputed by [Seller]. The Court refrained from interrogating both him and his wife according to Art. 173 ZPO and [Buyer] according to Art. 195(3) ZPO. As to procedural law, Aco Jankovic (case record 13, p. 4) offered by [Seller] as witness could also have been invoked by [Buyer] (Art. 152(2) ZPO). On trial, [Buyer] expressly objected to Aco Jankovic as a witness. Other evidence was not offered. Therefore, it is unclear what actually happened on 20 September 2004. Thus, there is no basis for a claim of [Buyer] against [Seller] and the counterclaim is consequently to be dismissed.
4. Costs:
a) For the result of this proceeding, [Buyer] is obliged to pay the official costs (Art. 81(1) ZPO). The Court's fees are fixed as 750.00 FR (Art. 14 GO).
b) As well for the result if this proceeding, [Buyer] has to compensate [Seller] for all expenses caused by this legal proceeding, Art. 86 ZPO. [Seller]'s legal representative based his invoice (case record 17) for the calculation of a medium honorarium on the value in dispute and also claimed an additional expense for the counterclaim by way of an increase according to Art. 11 AT as well as an additional fee according to Art. 12 AT. This is not correct. The honorarium is measured according to the value in dispute of the claim and the counterclaim and amounts in the case at hand to 1,628.00 FR. In addition, there are cash expenditures in the amount of 55.50 FR as well as sales tax. Altogether, [Buyer] has to pay [Seller] unofficial costs in the amount of 1,811.45 FR.
DECISION
1. [Buyer] is obliged to pay to [Seller] 1,860.45 FR plus interest of 5 % since 20 October 2004.
2. In the same amount, the objection filed in the debt enforcement No. 48316 of the prosecution office [Beitreibungsamt] Appenzeller Vorderland of 13 May 2005 is removed.
3. The [Buyer]'s counterclaim is dismissed.
4. The official costs, composed of
| - | 130.00 FR for agency's fees, |
| - | 750.00 FR Court's fees, |
| - | resulting in a total amount of 880.00 FR, |
are imposed on [Buyer] with deduction of 230.00 FR already paid by [Seller] in advance. [Seller] is granted a right of recovery against [Buyer] for this amount.
5. [Buyer] is obliged to compensate [Seller] for unofficial costs in the amount 1,811.45 FR.
6. [...]
The President of the Canton Court:
lic. iur. Walter Kobler
FOOTNOTES
* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff of Germany is referred to as [Seller] and Defendant of Switzerland is referred to as [Buyer].
Translator's note on other abbreviations: IPRG = Bundesgesetz zum Internationalen Privatrecht [Swiss Conflict of Laws]; LugÜ = Luganer Gerichtsstands- und Vollstreckungsübereinkommen [Lugano Convention on Forum and Execution]; OR = Obligationenrecht [Swiss Law of Obligations]; SchKG = Bundesgesetz über Schuldbeitreibung und Konkurs [Swiss Act on Insolvency and Collection of Debts]; ZPO = Zivilprozeßordnung [Swiss Civil Procedure Code].
** Florian Arensmann is a law student at the University of Osnabrück, Germany, and participated in the 13th Willem C. Vis International Commercial Arbitration Moot with the team of the University of Osnabrück.
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