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CISG CASE PRESENTATION

Switzerland 9 March 2006 Kantonsgericht [District Court] Appenzell-Auserrhoden (Fitness equipment case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/060309s1.html]

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

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Case identification

DATE OF DECISION: 20060309 (9 March 2006)

JURISDICTION: Switzerland

TRIBUNAL: Kantonsgericht [District Court] Appenzell-Ausserhoden

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: ER3 05 231

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Germany (plaintiff)

BUYER'S COUNTRY: Switzerland (defendant)

GOODS INVOLVED: Fitness equipment


UNCITRAL case abstract

SWITZERLAND: Kantonsgericht Appenzell-Ausserrhoden (Fitness equipment case) 9 March 2006 [ER3 05 231]

Case law on UNCITRAL texts [A/CN.9/SER.C/ABSTRACTS/90],
CLOUT abstract no. 909

Reproduced with permission of UNCITRAL

Abstract prepared by Thomas M. Mayer

The dispute in the present case concerned the sale of a moving walkway to a physiotherapy practice in SWITZERLAND. The buyer, claiming that at the time of delivery the goods sold were damaged, refused to pay the sale price. The seller, a company having its headquarters in Germany, sought payment, alleging that the defects had been reported belatedly.

The seller's legal action was successful. The court held that notice of nonconformity had to be given within a reasonable time after discovery (article 39(1) CISG) and that a period of one week was usually sufficient. In the present case, however, notification had occurred more than ten days after discovery and was therefore belated.

The court granted to the seller the payment of the sale price plus interest on arrears as from the date of delivery, in conformity with articles 78 and 58(1) CISG. In line with prevalent judicial opinion, the rate of interest was determined in accordance with the national law applicable to the contract within the meaning of Swiss private international law.

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Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 39(1) ; 78 [Also cited: Article 58(1) ]

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: Lack of conformity notice, timeliness ; Interest

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Editorial remarks

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Citations to other abstracts, case texts and commentaries

CITATIONS TO OTHER ABSTRACTS OF DECISION

German: Swiss Review of International and European Law (SRIEL) 1/2007, 150 et seq.

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

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Case text (English translation)

Queen Mary Case Translation Programme

Canton Court (Kantonsgericht) Appenzell Ausserhoden

9 March 2006 [ER3 05 23]

Translation [*] by Florian Arensmann [**]

Edited by Jan Henning Berg [***]

This is a dispute between Plaintiff and Cross-defendant, hereafter referred to as [Seller] vs. Defendant and Cross-plaintiff, hereafter referred to as [Buyer], concerning a claim for payment.

[Seller] requests the Court:

  1. To oblige [Buyer] to pay to [Seller]:
    -  Swiss Francs [Sfr.] 1,860.45 plus 5 % interest since 20 October 2004;
    -  Sfr. 70.00 costs of the payment summons; as well as
    -  Sfr. 130.00 for agency fees;
  2. To remove the objection filed by [Buyer] in relation to the debt enforcement No. 48316 of the prosecution office [Beitreibungsamt] Appenzeller Vorderland;
  3. To dismiss the [Buyer]'s counterclaim;
  4. To order [Buyer] to bear all costs of the proceedings.

[Buyer] requests the Court:

  1. To dismiss the [Seller]'s claim;
  2. To oblige [Seller] to pay to [Buyer] an amount of Sfr. 1,900.00 and to order [Seller] to bear all costs of the proceedings.

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 final consumers.

In the summer of 2004, [Buyer], who operates a physiotherapy practice, ordered from [Seller] a treadmill (Type Elite HRC; sales price: Euros [EUR] 1,185.00) and an ergometer (Type E3200 HRT; sales price: EUR 530.00). The terms were delivery free buyer's domicile. [Seller] commissioned Company G. L. GmbH (limited liability corporation) in D__, Germany to perform 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 in the course of delivery. [Seller] disputes its responsibility for the damage. [Buyer] paid the ergometer but did not pay the EUR 1,185.00 for the treadmill.

B. The parties could not reach a settlement out of court concerning the mutual claims, nor was the mediation committee successful, which had met on 12 August 2005. [Seller]'s legal 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 main oral hearing on 9 March 2006.

The decision was sent to the parties on 10 March 2006. On 24 March 2006, [Buyer] filed its appeal against this decision.

C. Other circumstances as well as further submissions of the parties will be referred to in the following as far as necessary.

REASONING OF THE COURT

1. Concerning procedural issues

      a) The value in dispute is to be estimated by adding the claim and the counterclaim (Art. 115(4) ZPO [*]). This results in a value in dispute of Sfr. 3,760.45.

      b) [Seller] is seated in Germany. Therefore, this is a case of international dimension which requires particular consideration regarding the territorial jurisdiction and the applicable law.

Territorial jurisdiction is determined according to the Lugano Convention (SR 0.275.11, LugÜ [*]) to which both Germany and Switzerland have 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 follows 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). Applicability of the CISG can be established through either of two alternative routes:

      First, the CISG may be applicable under 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, the CISG may apply indirectly 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) Subject matter jurisdiction of the Court follows from Art. 8 No. 2 ZPO.

2. Concerning the substance of the case

[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 non-conformity was given too 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. During trial, [Seller] accepted [Buyer]'s e-mail of 3 October 2004 (see case record 16) as notice of defects. [Buyer] did not prove that it had given 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 indeterminable for the Court 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 to prove 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 any particular 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 easily perceivable -- but also who was to be contacted. Moreover, [Buyer] -- being the owner of the practice-- did not have to await internal decision-making processes which would have required some 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 was a Sunday anyway -- had there been the German National Holiday (Tag der Deutschen Einheit). However, this did not concern [Buyer] who is domiciled 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. Respectively, [Buyer] is generally not entitled to any warranty rights. It can thus remain open 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 EUR 1,185.00. [Buyer] did not dispute the exchange rate applied by [Seller]. Thus, EUR 1,185.00 are to be converted to Sfr. 1,860.45.

[Seller] demands 5 % default interest on the claimed amount since 20 October 2004. The purchase price becomes due at the time of handing over of the goods (Art. 58(1) CISG). If a party fails to pay the price, the other party is entitled to interest on the sum since the date of maturity (Art.78 CISG); any legal reminder 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. It is therefore proven that the claim for interest arose on 20 October 2004 -- as determined by [Seller]. 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 the domestic law which is the law applicable to the contract under conflict of laws rules (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] are assessed in the same manner as the debt enforcement (Art. 68(2) SchKG [*]), they are not to be decided about. The agency fees are included in the official costs (Art. 77(1) ZPO).

3. Concerning the [Buyer]'s counterclaim:

[Buyer] stated that on the occasion of delivery damages had occurred to the parquet floor of his practice which amounted to Sfr. 1,900.00 and which [Seller] was now 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 Sfr. 750.00 (Art. 14 GO).

      b) As well for the result of 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 to Sfr. 1,628.00 in the case at hand. In addition, there are cash expenditures in the amount of Sfr. 55.50 as well as sales tax. Altogether, [Buyer] has to pay [Seller] unofficial costs in the amount of Sfr. 1,811.45.

DECISION

1. [Buyer] is obliged to pay to [Seller] Sfr. 1,860.45 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

   -    Sfr. 130.00 for agency fees,
   -    Sfr. 750.00 Court fees,
   -    resulting in a total amount of Sfr. 880.00,

are imposed on [Buyer] with deduction of Sfr. 230.00 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 Sfr. 1,811.45.

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]. Amounts in the uniform European currency (Euro) are indicated as [EUR]. Amounts in the currency of Switzerland (Swiss Francs) are indicated as [Sfr].

Translator's note on other abbreviations: AT = Anwaltstarif [Swiss rules on attorney's fees]; 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 [Code of Civil Procedure of the Canton Appenzell].

** 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.

*** Jan Henning Berg is a law student at the University of Osnabrück, Germany, and participated in the13th Willem C. Vis Moot with the team of University of Osnabrück.

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Pace Law School Institute of International Commercial Law - Last updated May 7, 2010
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