Go to Database Directory || Go to CISG Table of Contents || Go to Case Search Form || Go to Bibliography

CISG CASE PRESENTATION

Switzerland 19 April 2007 District Court Lugano (Children's play structure case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/070419s1.html]

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

Case Table of Contents


Case identification

DATE OF DECISION: 20070419 (19 April 2007)

JURISDICTION: Switzerland

TRIBUNAL: Pretore del Distretto [District Court] di Lugano

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: OA.2000.459

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Italy (defendant)

BUYER'S COUNTRY: Switzerland (plaintiff)

GOODS INVOLVED: Children's play structure


UNCITRAL case abstract

SWITZERLAND: Pretore del Distretto di Lugano (Lugano District Court),
[Judgement No. OA.2000.459] 19 April 2007

Case law on UNCITRAL texts [A/CN.9/SER.C/ABSTRACTS/149],
CLOUT abstract no. 1400

Reproduced with permission of UNCITRAL

Abstract prepared by Thomas M. Mayer

The court found that there had been a fundamental breach of contract under article 25 of the CISG. The Swiss buyers cancelled the sale of equipment for the construction of a children's playground because, firstly, the number and assembly of the play structures supplied did not correspond to what had been agreed and, secondly, the Italian seller had failed to provide safety certification. In addition, some of the goods presented manifest safety hazards, such as protruding screws. As the buyers had declared the contract avoided six days after the delivery of thedisputed goods, the court acknowledged that indubitably the deadlines had been met.

The seller was therefore obliged to refund to the buyers the down payments received. The buyers were also seeking damages to cover customs duties, transportation and storage costs, loss of profit owing to a lease for the establishment of a retail business, a claim for damages lodged against them by the said retail business, and the personnel costs incurred due to the dismantling and storage of the goods. The court granted them compensation only for damage suffered as a result of customs and transportation costs as well as loss of earnings, the other elements of the claim not having been sufficiently proven.

Go to Case Table of Contents

Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 25 ; 35 ; 49 ; 74 ; 78 ; 81 ; 84

Classification of issues using UNCITRAL classification code numbers:

25B [Definition of fundamental breach: substantial deprivation of expectation, etc.];

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

49A1 [Buyer's right to avoid contract (grounds for avoidance): fundamental breach of contract];

74A [General rules for measuring damages: loss suffered as consequence of breach];

78A [Interest on delay in receiving price or any other sum in arrears];

81C [Effect of avoidance on obligations: restitution by each party of benefits received];

84A [Restitution of benefits received: seller bound to refund price must pay interest]

Descriptors: Fundamental breach ; Avoidance ; Conformity of goods ; Damages ; Interest ; Restitution

Go to Case Table of Contents

Editorial remarks

EDITOR: Simon Laimer

A. Summary of the Judgment

The Swiss Plaintiff [Buyer] declared avoidance of a contract for the sale of a children's play structure six days after the delivery had been effected. It alleged that, on the one hand, the number and assembly of the equipment had lacked conformity with the contract and that, on the other hand, the safety certificate which had been promised by the Italian [Seller] had not been issued. The goods had shown severe lacks of safety, such as screws that stuck out. The [Buyer] requested repayment of the down payment plus 7% interest as well as compensation for custom duties, delivery costs, storage costs, lost profit on the basis of an intended renting out of the equipment -- which had been known to the [Seller] -- expenditure on personnel due to the dismantling and storing of the equipment and indemnification as regards claims by the potential renter.

The [Seller] claimed that the equipment had been in conformity with the contract, alleging that the delivered goods met the necessary safety standards. It requested payment of the residuaL purchase price plus 10% interest. Potential problems could solely be due to a poor installation of the equipment by the [Buyer]. The [Buyer] had both rejected the help of mechanics of the [Seller] and failed to support the composition of the equipment prior to the delivery.

The Court established on the basis of an expert opinion that there was a fundamental lack of conformity of the delivered goods, a poor instruction manual, and a lack of safety in several respects. The Court additionally held that there had been a tacit agreement that the goods had to meet the legal and technical minimum safety standards, as the equipment had been bought for commercial purposes and for public use. In order to assess the respective minimum standards both the Swiss and the European legal approach in respect to technical equipment -- however, not in respect to toys -- were analogously taken into account, as these were considered to embrace state-of-the-art-technology. The [Seller] had failed to submit either a safety certificate or the test report of the manufacturer. In addition it had failed to submit a declaration of conformity on the basis of a risk analysis.

As a conclusion to this, the Court held that a fundamental breach of contract would be present, wherefore the [Buyer] was entitled to avoid the contract (Arts. 25, 49(1)(a) CISG). In addition, the [Buyer] had declared avoidance within a reasonable time (Art. 49(2)(b) CISG). Hence, the Court concluded that the [Buyer] was entitled to claim contemporaneous restitution and damages (Arts. 81, 74 CISG). The [Seller] would be liable to refund the equivalent (the judgment does not clearly say whether this refers to Euros or Swiss francs) of the down payment in Lira [former Italian currency] plus interest since the day the payment was effected (Arts. 78, 84(1) CISG) as well as to collect the equipment. As the CISG does not provide for the interest rate, the Court assessed the interest rate on the basis of Italian law which was applicable according to the rules on the conflict of laws. The Court held that the [Buyer] would be entitled to claim compensation for the costs incurred in respect to customs duty, transport and for loss of profit. It, however, denied the residual claim for damages as these had not been sufficiently substantiated.

B. Comments

The Court qualified the lack of conformity as a fundamental breach of contract in the sense of Article 25 CISG. It mainly bases this assumption on the deviation of the goods from the contractually agreed specification. It obviously assumed according to Article 35(2)(b) CISG on the basis of a particular purpose -- which the [Seller] had been aware of [1] -- that the parties had tacitly agreed on public standards which the [Seller] had to meet.[2] It is particularly interesting in this respect that the Court based this assumption on the sole fact that a sale for commercial purposes or an intended public use was present. The Court argues that this should be supported by the fact that the [Buyer] was not able to obtain public liability insurance for the equipment as long as they did not meet the Swiss safety standards. It has to be assumed according to the leading doctrine and in contrast to this dubious assumption of the Court that a seller cannot be expected to be familiar with the rules of the State where the goods will be used,[3] unless the buyer includes them into the contract.[4] The Court failed to discuss whether the [Buyer] relied on the [Seller]'s skill and judgment.[5]

The establishment of the place of performance as regards the restitution of the goods at the [Buyer]'s place of business[6] and the determination of the interest rate, which is not provided for in the CISG,[7] are further interesting aspects of the decision. The Court follows the leading doctrine in this respect. Others focus on the rate of interest at the seller's place of business,[8] the buyer's place of business,[9] or determine the interest rate on the basis of an internationally usual interest rate such as LIBOR.[10] The necessary compensation due to a use of the goods was disregarded by the Court. This is possibly due to the fundamental defects of the goods.


FOOTNOTES

1. This is sufficient according to the leading doctrine (cf. Schlechtriem/Schwenzer, Kommentar zum Einheitlichen UN-Kaufrecht (2008), Art. 35 margin number 20 et seq.; Staudinger, Kommentar zum Bürgerlichen Gesetzbuch mit Einführungsgesetz und Nebengesetzen, Wiener UN-Kaufrecht (CISG) - Neubearbeitung (2005), Art. 35 margin number 26 et seq.; Soergel/Lüderitz, Bürgerliches Gesetzbuch mit Einführungsgesetz und Nebengesetzen 1312 - CISG (2000), Art. 35 margin number 12. This contrasts Swiss (Art. 197 Abs. 1 OR), German (§ 434 Abs. 1 Nr. 1 BGB) and Austrian law (§ 922 Abs. 1 S. 2 ABGB). The knowledge or the legibility of the obligee's expectations are seen as factors when determining whether the breach of contract has been fundamental, cf. OGH, in CISG-online 1047 = IHR 2005, 195 (196).

2. Cf. Schlechtriem, IPRax 2001, 161 (162). According to Brunner, UN-Kaufrecht - CISG (2004), Art. 35 margin number 16, the determination of the decisive local users is insufficient. The „buyer must have particular grounds due to the circumstances of the case to rely on the seller's expert knowledge as regards the applicable regulations"

3. Cf. BGH, in CISG-online 144 = BGHZ 129, 75 (81) commented on by Daun, NJW 1996, 29 f., as well as Schlechtriem, IPRax 1996, 12; OGH, in CISG-online 576 = IHR 2001, 117 (120) = IPRax 2001, 149 (152), with critical remarks Schlechtriem, ibid, 161 (162 f.); OGH, in CISG-online 1495. d.o. Schlechtriem, IPRax 1996, 12 et seq.

4. Schlechtriem/Schwenzer, Art. 35 margin number 17 with further references; Schlechtriem highlights the restrictive interpretation of the courts in this respect.

5. Cf. Reinhard, UN-Kaufrecht (1991), Art. 35 margin number 6. According to Staudinger/Magnus, Art. 35 margin number 31, the buyer may rely on the seller's skill and judgment in cases of doubt.

6. Cf. OGH, in TranspR-IHR 1999, 49 = CISG-online 483; OLG Karlsruhe, in IHR 2003, 125. In respect to ulis, cf. OLG München, in RIW 1980, 728 f. Cf. Schwenzer, IPRax 1988, 214; Schack, IPRax 1987, 217; Laimer, Durchführung und Rechtsfolgen der Vertragsaufhebung bei nachträglichen Erfüllungsstörungen (2009), 137, in respect to the costs of the restitution, 141.

7. Cf. Laimer, Durchführung und Rechtsfolgen der Vertragsaufhebung bei nachträglichen Erfüllungsstörungen (2009), 197 with further references.

8. Schlechtriem/Schwenzer/Hornung/Fountoulakis, Art. 84 margin number 17; Honsell/Weber, Kommentar zum UN-Kaufrecht (1997), Art. 84 Rz 10; Piltz, Internationales Kaufrecht (2008), § 5 margin number 321. Cf. OLG München, in CLOUT 133 = CISG-online 143; HGer Zürich, in CISG-online 327 = CLOUT 214. Cf. DiMatteo et al., International Sales Law (2005), 150.

9. Honnold, Uniform Law for International Sales under the 1980 United Nations Convention³ (1999), margin number 451.2. Cf. Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry, in CISG-online 449.

10. Cf. in this respect ICC Court of Arbitration, Collection of ICC Arbitral Awards 1991-1995, 1046 = CISG-online 71.

Go to Case Table of Contents

Citations to other abstracts, case texts and commentaries

CITATIONS TO OTHER ABSTRACTS OF DECISION

German: Swiss Review of International and European Law (SRIEL), 1-2/2008, p. 193 ff.

CITATIONS TO TEXT OF DECISION

Original language (Italian): Unavailable

Translation: Unavailable

CITATIONS TO COMMENTS ON DECISION

Unavailable

Go to Case Table of Contents

Case text (English translation)

Queen Mary Case Translation Programme

Pretore del Distretto [District Court] of Lugano

In the name of the Republic and Canton of Ticino
[Proceeding OA.2000.459]

A.B. (1) and C.B. (2) v. D. s.a.s.

19 April 2007

Translation [*] by Paolo Esposito [**]

Edited by Simon Lainer

THE PROCEEDINGS

On 2 August 2000, Plaintiffs A.B. (1) and C.B. (2) (hereinafter "[Buyers]") [of Lugano, Switzerland] (represented in the proceeding by Alain Susin of Lugano) filed a claim against Defendant D. s.a.s. (hereinafter "[Seller]") [of Italy] (represented in the proceeding by Brunoni Molino Mottis Adami of Lugano), requesting the District Court of Lugano to declare the sales contract entered by the parties regarding the amusement park structure "Super Play" avoided, and to order the [Seller] to refund the sum of Italian Lire 17,900,000, plus interest, against restitution of the item sold. Additionally, [Buyers] requested the District Court to award the additional amount of Swiss francs [Sfr.] 14,589.05 for damages.

The [Seller] filed its defense and counterclaim for the payment of Italian Lire 27,000,000.

The District Judge heard the parties at the preliminary hearing held on 21 March 2001 and subsequently gathered the evidence.

Having considered the written final memoranda timely filed by the parties; having perused and analyzed the submissions and documents of the case; and having recalled the 15 March 2007 order (pursuant to which the parties renounced to be personally re-heard for a new final discussion after the District Court transferred the case to another District Judge), the District Judge rendered the decision on the case pursuant to the ordinary procedure, which is subject to appeal.

FACTUAL ANALYSIS AND REASONING OF THE COURT

After a series of negotiations started in October 1998, and continued throughout 1999, in November 1999 the parties entered into a sales contract for an installation called "Super Play", a framework structure with dimensions of cm 486 x 606 x 360 circa, consisting of (and containing) several children's games, for the price of Italian Lire 44,900,000. The [Seller], the Italian manufacturer of the structure, delivered it to the [Buyers] on 18 March 2000 at the YY Shopping Center in Grancia (see doc. no. 4, para II, 1/2/3, B, a, b, c, e, pp. 6-7; [Seller] submission, para II, 1/2/3, B, a, b, ad c, e, p. 3).

According to the [Buyers] (who are traders active in the field of games for children, see statement of claim, p. 2):

   -    The structure delivered by the [Seller] has since the beginning shown a lack of conformity (as it did not possess the agreed modular and standard structure);
 
   -    The structure also presented numerous defects and did not comply with the existing safety regulations (the compliance with which the [Seller] would have guaranteed), thus being totally unfit for the purposes for which it was purchased (that is, to be leased to and used by third parties).

The [Buyers] informed the [Seller] of this and expressed their intention to bring the contract at an end, thus claiming restitution of the price paid for the goods. The [Buyers] did so by written communications on 23 March 2000 (doc. E), 12 April 2000 (doc. F) and 10 May 2000 (doc.G).

The [Seller], an Italian company specializing in sports and leisure products and technologies (doc. C e H), alleges full conformity of the structure with both the contract stipulations and the applicable technical and safety regulations. The [Seller] also stresses that, if any problem occurred, they have to be ascribed to the defective assembling of the structure by the [Buyers], which was not carried out according to technical standards. Further, [Buyers] refused to avail themselves of the [Seller]'s assemblers' support at the time of the delivery in Grancia, as well as to participate in the assembling and testing of the structure at the [Seller]'s premises before it was shipped. [Seller] therefore rejects [Buyers]' objections and claims the payment of the outstanding balance of the price.

[Buyers] requested the District Judge to declare the contract in dispute avoided and, consequently, to order the [Seller] to take the structure back, to refund the advance cost paid (Italian Lire 17,900,000) plus interest at a rate of 7% from 23 March 2000, and to pay Sfr. 14,589.05 plus interest at a rate of 7% in damages.

[Seller], in its reply filed on 24 November 2000, entirely opposes the [Buyers]' requests and, by way of counterclaim, asked the District Court to order [Buyers] jointly to pay Italian Lire 27,000,000, plus interest at a rate of 10% from 18 March 2000.

The parties, in the subsequent submissions filed on 3 January 2001, 5 February 2001 and 27 February 2001, have integrally confirmed their requests, restating them at the hearing on 21 March 2001.

After the gathering of the evidence, the parties renounced the final oral discussion scheduled on 10 May 2005 and filed their final written submissions, restating their claim and counterclaim.

The dispute has an international character, as it concerns a contract for the sale of movable goods between contracting parties having their places of business in different States, Switzerland (buyers) and Italy (seller). Both countries are signatories of the Vienna Convention on the International Sale of Goods (hereinafter: Convention), which is therefore applicable to the matter at issue pursuant its article 1(1)(a).

[Buyers]' cause of action is grounded on article 49 of the Convention, according to which the buyer can declare the contract avoided only if the seller's breach of obligations under the contract or the Convention constitutes a fundamental breach (article 49(1)(a)). Only if the above mentioned condition is met are the [Buyers] entitled to the remedies they claim. It must be therefore be determined whether the alleged violation by the [Seller] constitutes a fundamental breach of contract.

Under article 25 of the Convention, a breach is fundamental if it causes the other party to suffer such a detriment as to substantially deprive that party of the benefit it was entitled to under the contract. The focus of article 25 is not on the importance of the breach in itself, but rather on the consequences that such a breach has for the injured party who, as a result of the breach, must have lost interest in the performance of the contract. Furthermore, it is important that the party in breach knew, or was in a position to know, that the obligation breached was essential for the other party (see Neumayer / Ming, Convention de Vienne sur les contrats de vente international de marchandises, Commentaire, 1993, n. 3, 4 e 5 ad art. 25). Specifically, with regard to defects in the goods delivered, minor discrepancies in the quality bargained for do not allow the buyer to discharge the contract ((Neumayer / Ming, op. cit. n. 5 ad art. 25).

In case at stake, the [Buyers] claim that (1) the equipment delivered does not correspond to the equipment bargained for in the contract; and (2) that the equipment does not comply with the safety regulations in force, and therefore the equipment is completely unfit for the purpose for which it was bought -- that is, its lease to and use by third parties. The [Seller] reasserts instead the conformity of the equipment to the contractual agreement and states that, with regard to the safety standards, the equipment meets higher and stricter standards than Italian and European laws on the matter.

As to the first point, the documentation exhibited reveals that the positioning of the games in the Super Play structure as stated in the contract drawings (doc. 4) is totally different from that indicated in the assembling instructions of the structure provided to the [Buyers] (doc. 20).

   -    Both on the first and second level, the entrances and exits, and the majority of the numerous play areas of the structure as indicated in the contract, are located in parts of the Super Play that are wholly different from the ones in the structure delivered;
 
   -    Further, the second level of the structure delivered comprises only five games (slide, buoys, mats, vertical rolls, roll stairs) against the seven bargained for in the contract (slides, oscillating boa, upwards and downwards platforms in staggering mats, roll stairs, fixed handlebars, and war-path); and
 
   -    The first level of the structure delivered does not appear to have the climbing rope and the cobweb, again, contrary to the contractual agreement.

The Court's technical expert, in his evaluation of the goods delivered and the goods bargained for in the contract, examined the contract (doc. 4), the assemblying instructions (doc. 20) and the Super Play project (doc. 11) and clearly stated that the goods are non-conforming (see expert report dated 25 June 2004, para 3.2 at p. 3).

In the light of the above, it is therefore possible to ascertain that, as to the number of games the structure is made of and their position in the structure, Super Play -- in the most part -- differs form the contract and consequently does not comply with parties' agreement.

As to the point, relating to the lack of safety requirements:

   -    The expert report has first established (report supplement 17 February 2005, para 1 at p. 1) that structures of this type are not subject to any European or international technical regulation yet; therefore, they are not subject to the provisions of EN 1176 (the European technical law regarding the general safety requirements for play-structures for children, see also doc. 23) that both parties claimed applicable.
 
   -    Nonetheless, the technical expert regarded the product in dispute as an installation and, therefore, as a technical structure rather than a play structure (expert report, para 3.1 at p. 1, and supplement report 17 February 2005, para 4 at p. 3). As a consequence, the expert stated the Super Play has to comply with the Federal law on safety of installations and technical appliances (LSIT), according to which the merchantability of installations and technical appliances is possible only if they do not endanger the life and health of users and third parties (LSIT, art. 3).
 
   -    Thus, the installation has to meet the essential health and safety requirements established in art. 4 LSIT (as defined by the Federal Council, having also regard to the applicable international law) or, in their absence, the installation must be structured according to the recognized state-of-the-art technical provisions. The fundamental health and safety requirements are implemented through the technical norms set out by the competent federal office, possibly among those harmonized at the international level.
 
   -    Lacking harmonized technical norms for the assessment of the safety of an installation, the manufacturer can demonstrate that the installation placed on the market (and the technical solution chosen) is without risks for the life and health, e.g., by means of the so-called danger analysis. The expert considers the mentioned European technical provision EN 1176 not to be an harmonized norm, and not to be considered as such in Switzerland, therefore. not having direct juridical relevance.
 
   -    Nonetheless, in assessing the safety of a product, it is still possible to refer to parts of the said European text by way of analogy as "recognized technical rules" (supplement report 17 February 2005, para 1, p. 1 and para 4, p. 3).

On this premise, the expert has pointed out the lack of the necessary "signed certification of compliance with rules" (which obligation being that of the manufacturer), consisting either in the confirmation by an accredited certification body or in a check-sheet from the manufacturer listing all the parts relevant for safety that have been tested, in accordance with EN 1176 or other safety regulations (expert report 5 June 2004, para. 3.1, p. 2 and supplement report 17 February 2005, para 2, p. 2).

   -    Similarly, the "declaration of conformity based on an analysis of dangers" (that, as an alternative to the above mentioned certification of conformity, the manufacturer could have supplied) and the documentation containing information on safety and maintenance were missing;
 
   -    Additionally, the documentation containing the assembling instructions was considered inadequate (expert report, 25 June 2004, para 3.1, p. 2 and para 3.3, p. 3).
 
   -    Furthermore, the expert has reported some protruding objects like screws, bolts, etc., as incompatible with the safety provisions set in the corresponding technical norms UN 1176, applicable by analogy (expert report, 25 June 2004, para 3.1, p. 2).

Based on the above considerations, the expert concluded that the Super Play does not conform to the minimal safety criteria imposed by Swiss law (LSIT and OSIT) and by those parts of the law EN 1176 applied by way of analogy as recognized technical rules (expert report 25 June 2004, para 3.1, p. 2, and report supplement 17.02.05, para 2, p. 2). Thus the expert report contradicts the [Seller]'s argument (that was, in any event, unsubstantiated) that the structure meets standards superior to those "of safety set in the Italian and European provisions as found in the UNI texts", and specifically "the parameters set by the provisions UNI EN 1177 with reference to the European provisions EN 1176-1: 1998, issued with regard to children's games" ([Seller] submission, p. 11).

The actual conformity of the Super Play supplied with the product bargained in the contract and its conformity and compliance with the minimum legal and technical safety rules were two of the seller's obligations resulting from the sales contract of 29 November 1999. The former obligation was express, while the latter was implied as it was obvious to the [Seller] that the structure had been purchased by the [Buyers] for commercial purposes (the structure had to be delivered at the Gancia shopping center to be assembled there -- see [Seller] submission, pp. 7/8; docs. 15 and 16). As it was destined to be used by the general public, the structure had to necessarily comply with safety regulations. If not, the structure would not have been included in the risk covered by the insurance policy for "enterprise and products civil liability" (such inclusion in the risk covered by the insurer was subject to compliance with the safety provisions dictated by the Swiss office for the prevention of casualties (doc. L)).

As explained above, the [Seller] delivered a structure partially different from that agreed to and that did not conform to the minimum safety standards, and thus breached two of its contractual obligations. Specifically, the breach relating to safety of the structure has determined the actual impossibility for the [Buyers] -- active retailers of children games -- to use Super Play for the purpose for which it was bought, that is, its lease against payment by third parties, e.g., at the M-M shopping center of the YY Mall in Grancia, where it was intended to be assembled for use by the shopping-center's clients during an event organized between 27 March and 1 April 2000 (doc. S, T and U, and witness xx, transcript 18.06.01, p. 4).

It is therefore evident that non-compliance with the minimum safety regulations rendered the Super Play at stake totally unsuitable for the commercial purposes that the [Buyers] intended to pursue. Such circumstance configures a fundamental prejudice that substantially deprives the [Buyers] of the benefit they were entitled to expect from the contract (art. 25 of the Convention) and, therefore, entitles them to legitimately discharge the contract pursuant to the above mentioned art. 49(1)(a) of the Convention.

The [Buyers]' attorney sent written notice of avoidance on 23 March 2000 (doc. E). The notice was restated with letter of 10 May 2000 (doc. G) after the inspection carried out on 24 March 2000 at the YY Shopping Center by the Swiss UPI safety-delegated chief, who already raised perplexities regarding the safety of the Super Play and stated the lack of compliance with provisions of SN EN 1176. In the light of the fact that the structure has been delivered by the [Seller] to the [Buyers] on 18 March 2000, the notification of the decision to avoid the contract -- that took place only six days after delivery -- results absolutely timely with reference to art. 49(2)(b) of the Convention, accord to which the buyer has to declare the contract avoided within a reasonable time after having knowledge of the contractual breach, otherwise he loses his right.

From the previous analysis emerges that the [Buyers] had the right to discharge the contract under art. 49 of the Convention as a consequence of the [Seller]'s proved breach of two fundamental obligations, and that the [Buyers]' intention was communicated to the [Seller] within a reasonable time.

Consequently, the [Buyers] are entitled to compensation for damages suffered as a result of the breach, namely, the refund of expenses uselessly incurred in relation to the contract, the loss of profit (art. 81(1) and 74 of the Convention), and the restitution of what has been already paid (art. 81(2) of the Convention).

Therefore, the [Buyers]' claim for restitutiont of the advance payment of Italian Lire 17,900,000 (plus interest) on account of the agreed price has to be granted.

As compensation for the damages suffered, the [Buyers] also request the payment of the following sums:

a)    Sfr. 3,039.05 for customs expenses;
b)    Sfr. 150 for freight expenses;
c)    Sfr. 2,500 for storage expenses;
d)    Sfr. 2,400 loss of profit from M-M;
e)    Sfr. 5,000 as damages due to M-M;
f)    Sfr. 1,500 for workmanship for dis-assembling the game before storage.

From the documents exhibited, it is proved that the sums sub a) and b) for a total amount of Sfr. 3,189.05 have been legitimately (although uselessly) paid and have to be refunded. The amount sub a) (relating the shipment of the Super Play from Italy to Switzerland) is evidenced by the invoice issued by the freight forwarder and the receipt of payment (see doc. Q); the one sub b) (trasportation from the YY Shopping Center in Grancia to the Lugano domicile of the [Buyers]) is evidenced by the bill paid on delivery (see doc. R).

The amount sub d), for the loss of profit of Sfr. 2,400 caused by the forced annullment of the lease of the Super Play to YY between 27 March and 1 April 2000, was proved by means of documentary evidence of the related contract (doc. S) and by witness statement rendered on 18 June 2001 by the board member of M-M, xx (see transcript, p. 4). This amount has therefore to be awarded as well.

The amounts sub c) and e) are instead not admissible, as neither the storage expenses of Sfr. 2,500 nor the claimed Sfr. 5,000 for damges allegedly suffered by M-M have found any evidentiary confirmation. Similarly the amount of Sfr. 1,500 sub f) for costs of workmanship cannot be awarded as not sufficiently evidenced, because the mere declaration in doc. V does not suffice, especially when the payment of such amount has not been discussed and confirmed during the witness' report examination.

On the sums awarded above interest is due (arts. 78 and 84(1) of the Convention). As to the interest on the sales price, it is due at least from the day of the payment, so the date requested by the [Buyers] (23 March 2000) has to be admitted; such date has to be also considered for payment of interest on damages.

The rate of interest is a matter not governed by the Convention. Therefore, it has to be determined according to Italian law, applicable pursuant to the renvoi in art. 117 LDIP, as the parties do not appear to have subjected their contract to any other provisions (art. 116 LDIP; see also decision IICCA rendered on 12 February 1996, at 12.1995.300 - 8). Thus, [Buyers]' request of a 7% rate of interests, which is lower than that set out in article 1284 Italian Civil Code (10%), must be granted.

The [Seller]'s counterclaim has to be rejected in its entirety. It is uncorrobrated as a consequence of the main claim being awarded.

Taxes, expenses and costs follow the event (art. 148 Code of Civil Procedure). Considering the value of Super Play (Sfr. 36,000 circa) and the damages claimed (Sfr. 14,589.05), the [Buyers] -- who successfully declared the contract avoided and have been awarded Sfr. 5,589.05 in damages -- are the winning party, with a proportion of 5/6 in respect of the main claim, and fully in respect of the counterclaim (which has a value of Sfr. 21,000 circa). Consequently, the [Seller] will bear the cost and expenses of the proceedings.

[THE JUDGMENT]

Recalling articles 1(1)(a), 25, 49, 74, 78, 81, and 84 of the Convention, 116 and 117 LDIP, 1284 Italian Civil Code, and 148 Code of Civil Procedure, the District Judge of Ticino orders as follows:

1.    The [Buyers]' claim is partially granted.
 
1.1  As a consequence, the contract for the sale of the Super Play that was concluded by the parties is declared avoided, and the [Seller] is ordered to pay to the [Buyers] jointly, the corresponding amount of Italian Lire 17,900,000, plus interest at a rate of 7% from 23 March 2000. The Super Play shall be taken back by [Seller] against payment of the said amount.
 
1.2  [Seller] is ordered to pay [Buyers] Sfr. 5,589.05 in damages, plus interest at a rate of 7% from 23 March 2000.
 
2.    The [Seller]'s counterclaim is wholly rejected.
 
3.    [Buyers] shall jointly and severally bear 1/6 of the court's tax relating to the main claim (Sfr. 2,000) and the costs of the legal action, including those of the expert. [Seller] shall pay the remaining 5/6. [Seller] shall also reimburse the [Buyers] (jointly) the amount of Sfr. 3,500 for the costs advanced in relation to the main claim.
 
4.    The tax relating to the counterclaim (reduced ex art. 20 LTG) of Sfr. 800 and the relating costs are to be borne by the [Seller]. [Seller] shall also reimburse the [Buyers] (jointly) the amount of Sfr. 2,100 for the costs relationing to the counterclaim.
 
5.    The decision shall be communicated to the parties by service to their lawyers.

The Judge of the District of Lugano
Avv. Franca Galfetti Soldini

The Secretary of the District Court
Avv. Massimo Romero


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Plaintiffs of Switzerland are referred to as [Buyers] and the Defendant of Italy is referred to as [Seller].

** Paolo Esposito, LL.M., FCIArb, avvocato (Italian lawyer) & solicitor (England and Wales).

Go to Case Table of Contents
Pace Law School Institute of International Commercial Law - Last updated November 11, 2014
Comments/Contributions
Go to Database Directory || Go to CISG Table of Contents || Go to Case Search Form || Go to Bibliography