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CISG CASE PRESENTATION

Austria 30 November 2006 Supreme Court (Water-jet cutting machine case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/061130a3.html]

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

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Case identification

DATE OF DECISION: 20061130 (30 November 2006)

JURISDICTION: Austria

TRIBUNAL: OGH [= Oberster Gerichtshof = Supreme Court]

JUDGE(S): Dr. Pimmer (Vorsitz), Dr. Schenk, Dr. Gitschaler, Dr. Kodek

CASE NUMBER/DOCKET NUMBER: 6 Ob 257/06x

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

CASE HISTORY: 1st instance LG Wels (GZ 4 C 16/04a-38) 21 February 2006; 2d instance OLG Linz (GZ 4 R 90/06t-42) 26 July 2006

SELLER'S COUNTRY: [-]

BUYER'S COUNTRY: [-]

GOODS INVOLVED: Water-jet cutting machine


IHR headnote

Reproduced from Internationales Handelsrecht (2/2007) 74

"Art. 40 CISG only relieves the buyer of his obligation to examine the goods and give notice of their non-conformity if the seller, who knew or could not have been unaware of the non-conformity, did not reveal this to the buyer on or before handing over the goods.

"The principle of performing pari passu also applies under the CISG."

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Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Article 40 [Also cited: Articles 35(3) ; 38 ; 39 ]

Classification of issues using UNCITRAL classification code numbers:

40B [Seller fails to disclose known non-conformity: seller loses right to rely on articles 38 and 39]

Descriptors: Lack of conformity known to seller

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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): Austria Supreme Court website [go to <http://www.ris.bka.gv.at/jus>, check "jus texte" box, enter "6 Ob 257/06x" as "suchworte", click "suche starten"]; Internationales Handelsrecht (2/2007) 74-75

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation)

Queen Mary Case Translation Programme

Austrian Supreme Court (Oberster Gerichtshof)

30 November 2006 [6 Ob 257/06x]

Translation [*] by Jan Henning Berg [**]

Edited by Institut für ausländisches und internationales
Privat- und Wirtschaftsrecht der Universität Heidelberg
Daniel Nagel, editor
[***]

JUDGMENT

  1. The appeal (Revision) is dismissed.

  2. Appellant [Seller] is liable to compensate Appellee [Buyer] for costs of the appellate proceedings in the amount of EUR 866.68 (including EUR 144.44 VAT) within fourteen days.

FACTS AND CASE HISTORY

[Seller] sold and delivered to [Buyer] a water-jet cutting machine. However, contrary to the offer, [Seller] did not integrate a "num-control" feature, but provided a different one which had been developed by [Seller] on its own. In previous instances, the courts dismissed [Seller]'s claim for payment of the purchase price, the rental fee for a substitute machine,3 and transport costs.

The dispute between [Seller] and [Buyer] was governed by the CISG. In accordance with Art. 40 CISG, the seller is not entitled to rely on the provisions of Arts. 38 and 39 CISG if the lack of conformity relates to facts of which he knew or could not have been unaware and which he did not disclose to the buyer. In that respect, both exceeding the time limits of Arts. 38 and 39 CISG and the expiration of the two-year term under Art. 39(2) CISG were irrelevant. The assembly of a control feature different from the agreed "num-control" amounted to a breach of contract and [Seller] was undoubtedly aware of this. The CISG embodied the principle of simultaneous performance of both parties' main obligations (Zug-um-Zug Prinzip) and therefore allowed a debtor to raise the defense of non-performance and to retain its own performance until the time that the other party was willing to perform its obligations (see 4 Ob 179/05k).

Upon [Seller]'s request, the Appellate Court allowed ordinary appeal ex post in accordance with 508 ZPO [*]. The interpretation of Art. 40 CISG was not clear and unambiguous enough so that the interpretation adopted by the Appellate Court could be seriously considered as the only correct one and that no doubts could arise.

Contrary to the judgment by the Appellate Court -- which does not legally bind the Austrian Supreme Court -- the present appellate proceedings are not admissible.

REASONING OF THE COURT

1. Pursuant to Art. 40 CISG, the seller is not entitled to rely on the provisions of Arts. 38 and 39 CISG if the lack of conformity relates to facts of which he knew or could not have been unaware and which he did not disclose to the buyer. This provision relieves the buyer from its duty to examine the goods and give notice under Arts. 38 and 39 CISG, if the seller knew or could not have been unaware of the lack of conformity but nevertheless failed to disclose this. It would be unjust and unnecessary formalism in such cases to oblige the buyer to inform the seller about any non-conformities when the latter has already been aware or could not have been unaware of them (Honsell, Kommentar zum UN-Kaufrecht, Art. 40 para. 1). However, Art. 40 CISG does not relieve the buyer from its obligation to give notice of a lack of conformity if the seller has disclosed them to the buyer within due time. However, this disclosure must be made prior to or at the time of the handing over of the goods at the latest according to the leading doctrine (Honsell, Art. 40 para. 8; Staudinger/Magnus, CISG, Art. 40 para. 10; Karollus, UN-Kaufrecht, p. 128 footnote 91). In case of disclosure prior to the conclusion of the contract Art. 35(3) CISG would in any event exempt the seller from liability (Honsell, Art. 40 paras. 8 and 10; Schlechtriem/Schwenzer/Schwenzer, Kommentar zum Einheitlichen UN-Kaufrecht, Art. 40 para. 7). Schwenzer (see reference above) seems to presuppose that the seller must disclose a lack of conformity by the time of the handing over of the goods at the latest, as well. This follows unequivocally from her subsequent statements, namely that in case of disclosure the buyer will usually either reject or accept the goods. However, rejection of goods is only possible until the point in time when the buyer has taken them over from the seller. Any argument that subsequent knowledge or subsequent possibility of knowing of a lack of conformity on the part of the buyer triggered a duty to notify the defect to the seller while the latter (as in the present case) has even been positively aware of the defect has never been raised by any legal scholar and would clearly run contrary to the idea expressed in Art. 40 CISG - being a provision which seeks not to protect a seller acting in bad faith.

2. The courts in the previous instances have positively found that [Buyer] (translator's note: The correct reference here should have been to [Seller]) had acted in bad faith, with the result that the burden of proof does not have to be addressed in this case (cf. Tobias Malte Müller, Die Beweislastverteilung für die Bösgläubigkeit des Verkäufers im Rahmen des Art. 40 CISG, IHR [*] 2005, 16).

3. The courts in the previous instances have stated that a limitation of statutory warranty to a certain number of hours in operation would not amount to a waiver of the CISG. There is no impropriety in their legal assessment which would require the issue to be addressed in a judgment by the Austrian Supreme Court. The same applies to the legal opinion expressed in the judgment in previous instances that the buyer had not subsequently declared his acceptance of the goods.

4. According to preceding jurisprudence (4 Ob 179/05k; 10 Ob 122/05x; RIS-Justiz [*] RS0120302), the principle of simultaneous performance of both parties' main obligations (Zug-um-Zug Prinzip) is applicable under the CISG. It allows a debtor to raise the defense of non-performance and to withhold his own performance until the other party is willing to perform.

5. Therefore, the adjudication of the present dispute does not depend on questions of law having the quality required by 502(1) ZPO [*]. Hence, the appeal has to be dismissed.

6. The decision on costs of the appellate proceedings is based on 41, 50 ZPO.


FOOTNOTES

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

Translator's note on other abbreviations: IHR = Internationales Handelsrecht [German journal on international commercial law]; RIS-Justiz = Rechtsinformationssystem des Bundes [Austrian Federal Database on Law]; ZPO = Zivilprozessordnung [Austrian Code on Civil Procedure].

** Jan Henning Berg has been a law student at the University of Osnabrück, Germany and at King's College London. He participated in the 13th Willem C. Vis Moot with the team of the University of Osnabrück. He has coached the team of the University of Osnabrück for the 14th Willem C. Vis and 4th Willem C. Vis (East) Moot.

*** Ph.D. candidate Daniel Nagel has studied law at the University of Heidelberg and at the University of Leeds.

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Pace Law School Institute of International Commercial Law - Last updated June 24, 2008
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