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CISG CASE PRESENTATION

Austria 19 April 2007 Supreme Court (Scaffold hooks case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/070419a3.html]

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

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Case identification

DATE OF DECISION: 20070419 (19 April 2007)

JURISDICTION: Austria

TRIBUNAL: Oberster Gerichtshof [Supreme Court]

JUDGE(S): Dr. Schenk, Dr. Schramm, Dr. Gitschaler, Dr. Kodek

CASE NUMBER/DOCKET NUMBER: 6 Ob 56/07i

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

CASE HISTORY: 1st instance [-]; 2d instance OLG Innsbruck (GZ 3 R 124/06v-112) 10 January 2007 [affirmed]

SELLER'S COUNTRY: France (defendant)

BUYER'S COUNTRY: Austria (plaintiff)

GOODS INVOLVED: Scaffold hooks


Case note

Article 35 CISG - Conformity of goods:
Austrian Supreme Court (Oberster Gerichtshof)

19 April 2007 [6Ob56/07i]

Sarah E. Hilmer [1]

December 2007

On 19 April 2007, the Austrian Supreme Court (Oberster Gerichtshof) rejected the appeal of the Seller (French Company-Defendant) on the grounds that the requirements of § 502(1) of the Austrian Code of Civil Procedure (Zivilprozessordnung) were not fulfilled.[2] The Seller appealed in form of an extraordinary appeal (außerordentliche Revision) against the decision of the Appellate Court of Innsbruck on 10 January 2007 that ordered the Defendant (Buyer) to pay damages of the amount of 85,722.81 EUR.[3]

Facts

The parties entered into an agreement over the delivery of steel scaffolding decks. Based on that agreement the Appellant, a French company specialised in manufacturing these goods, delivered scaffolding decks and its hooks to the Austrian Plaintiff, the Buyer. The United Nations Convention on Contracts for the International Sale of Goods (`CISG`), in particular the key provision at issue, Article 35(1) - Conformity of goods, applied to the contract.

The Buyer alleged that the delivered goods, the hooks, not only did not comply with the agreed stability but also were not in line with the applicable European wide norm of HD 1000 standard (harmonization document 1000). Thus, the hooks were not fit for purpose to ensure stable and securely fixed scaffolds. On these grounds, the Buyer claimed damages for the breach of contract.

The Seller submitted that the delivered goods were in conformity with the HD 1000 standard, including the French amendments NF P 93-501, 502 and DTU P 22-701; and because the standard of the country of origin, not that of destination, is the determining factor so that the Austrian Norm B 4600 regulating steel works and engineering, as a standard of the country of destination, shall not be applicable.

Reasons

1. Pursuant to Article 35(1) the seller must deliver goods which are of the quantity, quality and description required by the contract and which are contained or packaged in the manner required by the contract. The Sellerīs extraordinary appeal relied upon former Austrian Supreme Court decisions ([2 Ob 100/00w] = SZ 73/70, [2 Ob 48/02a], [7 Ob 302/05w]), that the suitability of the goods for usual purposes is generally determined by the standards of the manufacturing country. Generally, health and safety standards as well as the national rules of composition, labelling and indication applicable in the country of destination, are not incorporated into the contract through the provisions of Art. 35(2) CISG, that is because the Seller shall not be responsible of the familiarisation with all relevant domestic laws of the country of the buyer's destination or final destination of the goods. The Court held that it is rather the buyer's responsibility to ensure that all legal standards of the country of destination are met by incorporating these regulations into the contract. However, this question appeared irrelevant to the decision at issue.

2. The generated facts from the mattersī previous court proceedings indicate that during partiesī negotiations the Seller agreed that its products will comply with the European HD 1000 standard. However, the delivered goods were unfit for its purpose, as the scaffolds bent, thus indicating they could not carry the weight of the workers. Concluding, the hooks were unfit for the particular purpose stated in the contract according to Article 35(2)(b) CISG. The Seller agreed to deliver goods complying with the buyer's specifications of which the Seller knew or ought to have known, irrespective of whether the parties have expressly incorporated these specifications into the contract.

3. The Seller further stated in this Appeal that the mattersī previous judgements did not meet Article 28 of the Treaty establishing the European Community (Vertrag zur Gründung der Europäischen Gemeinschaft) that prohibits quantitative restrictions and measures having equivalent effect on imports within Member States of the European Community. The Seller raised the treatyīs principle that the trade of goods shall be governed by the regulations of the country of origin, and submitted that the French regulations NF P 93501, 502 or DTU P 22-701 would apply to the case at issue, not the Austrian B 4600 standard regulations. The Court however, held that the Seller knew at the time of the conclusion of the contract that the delivered hooks were meant to be used to join scaffolding modules that were produced and sold by the Seller and if the hooks were deforming when being used, they were not even in compliance with the Sellerīs national standards being the country of origin.

4. Further in this extraordinary appeal, the Defendant applied for a dismissal of two previous appeals (Berufungen) against the decision of the Court of First Instance. The Court concluded on that point that the Defendant failed to substantiate, that these appeals would have been successful or more successful than its first ordinary appeal.

Judgement

The extraordinary appeal has been dismissed on the basis that the requirements of § 502(1) of the Austrian Code of Civil Procedure were not fulfilled.


FOOTNOTES

1. PhD candidate, LL.M in International Law and Dispute Resolution, Barrister and Solicitor of the NSW Supreme Court, Mediator, ADR consultant, teaches ADR in P.R. China, India and Vietnam, contact <hilmer@sarahhilmer.com>

2. Case number (6Ob56/07i)

3. Case umber GZ 3 R 124/06v-112; Damages of the amount of 85,722.81 EUR have been ordered against the Defendant.

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Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Article 35(1) [Also cited: Article 38 ]

Classification of issues using UNCITRAL classification code numbers:

35A ; 35B [Conformity of goods to contract: quality, quantity and description required by contract; Requirements implied by law]

Descriptors: Conformity of goods

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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/1495.pdf>; see also Austrian Court website <http://www.ris.bka.gv.at/jus/>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

French: Claude Witz, Recueil Dalloz (23 October 2008) 2628

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Case text (English translation)

Queen Mary Case Translation Programme

Austrian Supreme Court (Oberster Gerichtshof)

19 April 2007 [6Ob56/07i]

Translation [*] by Veit Konrad [**]

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

JUDGMENT

As the requirements of § 502(1) of the Austrian Code of Civil Procedure (Zivilprozessordnung; ZPO) were not met, the extraordinary appeal (außerordentliche Revision) is dismissed in accordance with § 508a(2) of the Austrian Code of Civil Procedure (Zivilprozessordnung; ZPO) (§ 510(3) of the Austrian Code of Civil Procedure (Zivilprozessordnung; ZPO).

REASONING

In 2002, the parties concluded a framework agreement for the delivery of steel scaffolding decks. Pursuant to its obligations under this contract, Defendant-Appellant [Seller], a French company specializing in the development and manufacturing of these products, delivered to the Plaintiff-Appellee [Buyer] scaffolding decks plus the hooks for them which are used to attach the decks to the scaffolding. This delivery is governed by the United Nations Convention on Contracts for the International Sale of Goods (hereafter referred to as CISG).

[Buyer]'s position

[Buyer] claims damages for breach of contract.

[Buyer] alleges that the hooks that were delivered did not have the agreed stability; that they did not conform to the HD 1000 standard (harmonization document 1000), which was applicable throughout Europe, and that they were not fit for the purpose to ensure stable and securely fixed scaffolds for the people who work on them.

[Seller]'s position

[Seller], on the other hand, insists that the delivered goods, i.e., the scaffolding decks and the hooks, altogether complied to the HD 1000 standard, including the French amendments NF P 93-501, 502 and DTU P 22-701. Generally, the standard of the country of origin, not that of the country of destination, should apply in cases like that. For that reason, [Buyer] was not entitled not rely on the Austrian B 4600 standard.

RATIO DECIDENDI

1.1 According to Art. 35(1) CISG, the seller must deliver goods which are of the quantity, quality and description required by the contract and which are contained or packaged in the manner required by the contract. If the parties have not sufficiently specified the quantity, quality and description required under their agreement, Art. 35(2) CISG provides some objective criteria to define the performance due under the contract. In this respect, the purpose for which the goods are meant to be used is of vital importance. Whether or not the seller complies with his duty to perform under the contract depends on whether the delivered goods:

   -    Are fit for the purposes for which goods of this kind would ordinarily be used (Art. 35(2)(a) CISG),
 
   -    Are fit for the particular purpose expressly or impliedly stipulated in the contract (Art. 35(2)(b) CISG),
 
   -    Possess the quality of goods which the seller has held out to the buyer as sample or model (Art. 35 (2)(c) CISG), or
 
   -    Are contained or packaged in the manner usual for such goods, or in an manner adequate to preserve and protect the goods (Art. 35(2)(d) CISG).

(See the judgment of the Austrian Supreme Court [2 Ob 100/00w] = SZ 73/70; Posch in: Schwimann, ABGB, 2006, Art. 35 UN-Kaufrecht, note 7.)

1.2 In adherence to the Supreme Court's practice (see judgments of the Austrian Supreme Court [2 Ob 100/00w] = SZ 73/70, [2 Ob 48/02a], [7 Ob 302/05w]), which [Seller]'s extraordinary appeal relies upon, the suitability of the goods for usual purposes is generally determined by the standards applicable in the country where the seller has his place of business. As a general principle, health and safety standards as well as the national rules of composition, labeling and indication applicable in the country of destination, are not incorporated into the contract through the provisions of Art. 35(2) CISG, because the seller shall not be responsible to make himself familiar with all the relevant national law of the country of the buyer's place of business. Equally, the mere fact that the buyer has notified the seller of the final destination of the delivered goods does not oblige the seller to keep to the public legal standards applicable in that country. It clearly falls within the buyer's responsibility to ensure that all legal standards of the country of destination are met by incorporating these regulations into the contract. However, this question is irrelevant to the decision at issue.

1.3 Considering the fact finding conducted in previous instances, the Court must conclude that the negotiations between the parties have not only been essentially based upon a prospectus of [Seller]'s, which expressly guarantees that [Seller]'s products would all meet the requirements of the European HD 1000 standard, but the [Buyer] also positively knew at the time the contract had been concluded that the scaffolding decks and the hooks (type "ECO") that were ordered were designated to build scaffolds with other parts that had been produced and sold by [Seller]. However, the goods that were delivered were unfit for this purpose. When used in the construction of scaffolds, they bent, as they could not stand the weight lasting upon them. Thus the hooks (type "ECO") were unfit for the particular purpose stipulated in the contract between the parties in the sense required under Art. 35(2)(b) CISG. A seller is obligated to deliver goods complying with the buyer's specifications of which the seller knew or ought to have known, irrespective of whether the parties have expressly incorporated these specifications into the contract (see Posch, ibidem, note 10).

2. In its appeal, [Seller] claims that the previous instances' decisions violated Art. 28 of the Treaty establishing the European Community (Vertrag zur Gründung der Europäischen Gemeinschaft; EGV) which prohibits quantitative restrictions and measures having equivalent effect on imports within Member States of the European Community. This treaty, according to [Seller], establishes the principle that within its scope the trade of goods shall be governed by the regulations of the country of origin. Thus, [Seller] argues that the French regulations NF P 93501, 502 or DTU P 22-701 would apply to the case at issue, not the Austrian B 4600 standard regulating steel works and engineering.

However, considering that [Seller] knew at the time of the conclusion of the contract that the delivered hooks (type "ECO") were designated to be used to join scaffolding modules that were actually produced and sold by [Seller], the Court concurs with the Court of Second Instance's finding that, if the hooks deformed when used in this way, they would not comply with the national standards of the country of [Seller]'s place of business, either.

3. Referring to § 482 of the Austrian Code of Civil Procedure (Zivilprozessordung; ZPO), which precludes a party from introducing new claims or new sets of fact into the appellate proceedings, the Court of Second Instance rejected [Seller]'s submission that [Buyer] had failed to comply with its duties under Art. 38 CISG to examine the delivered hooks within as short a period as it was practicable in the circumstances and, consequently, has failed to give specified notice of the presumably defective goods within reasonable time. Within the current appellate proceedings, [Seller] argues that its previous submission to the Court of First Instance that "[Buyer] did not substantiate the claimed defects" did actually entail the allegation that [Buyer] had not properly examined the goods as required under CISG provisions.

Yet, contrary to this, [Seller] has relied on the assumption that the delivery of goods did actually conform to the parties' agreement throughout the proceedings in all previous instances. The allegation that [Buyer] failed to examine the goods and therefore failed to give specified and timely notice according to the CISG presumes that the delivered hooks had been defective and thus did indeed not comply with the contract. Given these contradictory statements, the Court of Second Instance correctly found that [Seller] was unrightfully trying to introduce a new set of facts to the trial.

4. [Seller]'s extraordinary appeal (außerordentliche Revision) also concerns the dismissal of its two other appeals (Berufungen), each of which has been brought as a reaction to the Court of First Instance's findings. However, [Seller] fails to substantiate, that these appeals would have been successful or more successful than its first ordinary appeal (Berufung). Instead of bringing a specified pleading, [Seller] merely refers to the "standardized unity" of all of its three previous appeals. With the dismissal of [Seller]'s extraordinary appeal (außerordentliche Revision), all of these problems become irrelevant.

[...]


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Austrian Plaintiff-Appellee is referred to as [Buyer]; the Defendant-Appellant seated in France is referred to as [Seller].

** Veit Konrad has studied law at Humboldt University, Berlin since 1999. During 2001-2002 he spent a year at Queen Mary College, University of London, as an Erasmus student.

*** Daniel Nagel has been a law student at Heidelberg University since October 2002 and an exchange student at Leeds University in 2004/2005.

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Pace Law School Institute of International Commercial Law - Last updated November 7, 2008
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