Spain 19 December 2007 Appellate Court Pontevedra (Frozen and cooked seafood case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/071219s4.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: Recurso No. 681/2007
CASE HISTORY: 1st instance Juzgado de Primera Instancia No. 1 de Cambados 7 May 2007 [modified]
SELLER'S COUNTRY: Possibly EEUU (plaintiff)
BUYER'S COUNTRY: Spain (defendant)
GOODS INVOLVED: Frozen and cooked seafood
SPAIN: Pontevedra Provincial High Court, 19 December 2007
Case law on UNCITRAL texts [A/CN.9/SER.C/ABSTRACTS/83],
CLOUT abstract no. 849
Reproduced with permission of UNCITRAL
The Spanish buyer was sued by the seller (possibly from the United States) for non-payment of the contract price for a trade in edible crabs, both cooked and frozen, and cockles. Specifically, a claim relating to certain invoices had been dismissed by the court of first instance on the grounds that the merchandise was defective and that the buyer had complained about the defect within a reasonable time, in accordance both with article 39 of CISG and with the Commercial Code and its associated case law. The seller considered, however, that articles 38 and 39 of CISG had not been correctly applied.
The Provincial High Court held that CISG, articles 38 and 39, imposed two essential obligations on the buyer: to examine the goods and to inform the seller of any lack of conformity. In order to determine compliance with these obligations, the court first took into account the perishable nature of the goods, which, although frozen, were for human consumption and therefore had to be treated with particular care. Secondly, the court considered that examination of the merchandise was a very straightforward matter and any defects could easily be spotted. It was sufficient to open any container in each batch at random in order to be able to assess the evidence of their deterioration by the characteristic colour and smell of goods in poor condition. Thirdly, the court noted that the defects had not been found until over four months after the first consignment, two months after the second and seven weeks after the third. The buyer had then delayed informing the seller of the defects for a further month. Fourthly, it appeared that in a previous contract a claim by the buyer had been lodged in a matter of days and resolved by means of a simple reduction in price. On the basis of all these considerations, the court held that the time exceeded that which could be considered a reasonable period of time under CISG, article 39, paragraph 1, and the time frame established for examination under article 38, paragraph 1.
In the court's view, a reasonable time should be counted in days or, at most, a number of weeks, although it could be longer in the case of durable or sophisticated merchandise. Setting a time frame was, in the court's view, sensible from the point of view of legal safeguards, since it was a question of ensuring that the passage of time did not introduce elements that might skew any possible claim and complicate evidentiary issues, such as those in the case before the court, where there were doubts about the time at which the defects occurred in the merchandise.
Lastly, the court held that a party could not cite national legislation - the Commercial Code or the associated case law - since CISG was the authority of choice, except where a case related to matters that were not expressly settled in CISG (art. 7, para. 2).Go to Case Table of Contents
APPLICATION OF CISG: Yes
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
38A [Buyer's obligation to examine goods: time for examining goods]; 39A2 [Requirement to notify seller of lack of conformity: buyer must notify seller within
38A [Buyer's obligation to examine goods: time for examining goods];
39A2 [Requirement to notify seller of lack of conformity: buyer must notify seller within reasonable time]
CITATIONS TO OTHER ABSTRACTS OF DECISION
Spanish: CISG-Spain and Latin America website <http://www.uc3m.es/cisg/respan70.htm>
CITATIONS TO TEXT OF DECISION
Original language (Spanish): CISG-Spain and Latin America website <http://turan.uc3m.es/cisg/sespan70.htm>; see also Fuente: Aranzadi Westlaw JUR 2008\81370
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
UnavailableGo to Case Table of Contents
Queen Mary Case Translation Programme
Translation [*] by Luiz Gustavo Meira Moser [**]
Edited by Guillermo Coronado Aguilar [***]
FACTS OF THE CASE
Plaintiff [Seller] requested from the Defendant [Buyer] the payment of invoices related to a contract for the sale of frozen and cooked seafood.
ON THE ABOVE
The Court of First Instance rendered a decision partially favorable to the [Seller], compelling [Buyer] to pay the amount of € 108,238,58 in relation to the invoices plus legal interest as well as the court expenses as a result of the non-payment of the above mentioned invoices. Both [Seller] and [Buyer] appealed the decision.
[Seller] alleged in its appeal that the decision of the Court of First Instance a quo did not cover all the invoices related to the contract for sale of goods concluded with [Buyer] and argued that the [Buyer] failed to give notice of the lack of conformity of the goods related to those unpaid invoices within a reasonable time.
[Buyer] alleged in its appeal the lack of standing to be sued, and requested from the [Seller] the non-payment of those invoices referred to in the decision of the Court of First Instance.
The Appellate Court applied the United Nations Convention on International Sale of Goods (CISG) and decided that only questions not covered by this Convention should be governed by the rules of private international law (art. 7(2) CISG).
Concerning the merits of the case, the Appellate Court stated that [Buyer]'s notice of lack of conformity had not been sent within the limits set forth in Arts. 38 and 39 CISG. The Court held that the [Buyer] had failed to examine the goods within a reasonable time thereafter (Arts. 38(1), 39(1) CISG). The Court emphasized that one month or more is too long a time period for examining frozen and cooked seafood since perishable goods can deteriorate quickly in the absence of suitable conditions.
In such a case, the examination has to be immediately on delivery or on the very next days and the notice has to be given shortly thereafter. The Court considers that there are two essential obligations for the [Buyer]: they are the examination of the goods within as short a period of time as is practicable in the circumstances, and, if a lack of conformity of the goods is discovered, to give notice to seller within a reasonable period of time. In order to fulfill these obligations, the Court stated that those perishable goods, even though frozen or cooked, were destined for human consumption and, consequently, a greater diligence should be adopted. In particular, the Court found that a period of more than a few weeks after delivery is not reasonable taking into account the fact that the defects were easily recognizable.
The Pontevedra Appellate Court granted [Seller]'s appeal for the following reasons:
1. Arts. 38 and 39 of CISG require the [Buyer] to examine the goods and give notice of lack of conformity to the [Seller] within a reasonable time, duties that were not performed by the [Buyer];
2. As the [Buyer] failed to prove that it has given notice within this time frame, the Court held that it had lost the right to rely on any non-conformity (Art. 39(1) CISG). The Appellate Court further explains that notifying within a reasonable period of time contributes to legal certainty and does not leave commercial relations undefined which would permit questioning and avoids expanded allegations causing hardship for both parties.
3. Finally, the Appellate Court stated that the perishable goods, even though frozen or cooked, were destined for human consumption and, consequently, required a greater diligence, a duty that the [Buyer] failed to perform. Permitting a broad period of time, with the limit of two years in the present case, anything more than the inconvenient recently exposed, will put the execution of the contract for only one of the parties, being as the goods are exclusively under his control, without intervention of the counterpart.
The Appellate Court of Pontevedra reversed the 1st instance decision.
ON THIS GROUND
The Appellate Court reverses the judgment of the lower court and compels the [Buyer] to pay the amount of € 129,822, plus the legal interest on this amount from the date of the filing of the appeal, as well as the court expenses.
* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff is referred to as [Seller]; Defendant is referred to as [Buyer]. Amounts in European currency (Euros) are indicated as [€]
** Luiz Gustavo Meira Moser is a member of the Brazilian Arbitration Committee, YIAG, Association Suisse d'Arbitrage (ASA), ICDR, International Law Association - Brazilian Committee and Queen Mary Case Translation Programme participant. Moser is the Brazilian correspondent in the Global Sales Law Project.
*** Guillermo Coronado Aguilar was a participant in the 15th annual Willem C. Vis International Commercial Arbitration Moot representing Universidad Panamericana, camput Guadalajara. He is now correspondent of the Global Sales Law Project directed by Ingeborg Schwenzer and adaptor from English to Spanish of articles of the book "Commentary on the UN Convention on the International Sale of Goods", directed by Ingeborg Schwenzer and Edgardo Muñoz. He is Legal Advisor for the law firm Coronado Figueros y Associados, S.C.Go to Case Table of Contents