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CISG CASE PRESENTATION

Belgium 14 November 2008 Appellate Court Ghent (Volmari Werner v. Isocab NV) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/081114b1.html]

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

Case Table of Contents


Case identification

DATE OF DECISION: 20081114 (14 November 2008)

JURISDICTION: Belgium

TRIBUNAL: Hof van Beroep [Appellate Court] Ghent

JUDGE(S): L. Thabet

CASE NUMBER/DOCKET NUMBER: 2008/AR/912

CASE NAME: Volmari Werner v. Isocab NV

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Belgium (defendant)

BUYER'S COUNTRY: Germany (plaintiff)

GOODS INVOLVED: Deep freeze chambers


Classification of issues present

APPLICATION OF CISG: Yes [Article 1(1)(a)]

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 3 ; 38(1) ; 39 [Also cited: Article 6]

Classification of issues using UNCITRAL classification code numbers:

3A ; 3B [Goods to be manufactures; Services [not] preponderant part of obligation];

38A [Buyer's obligation to examine goods: time for examining goods];

39A1 ; 39A2 [Requirement to notify seller of lack of conformity: buyer must notify seller within reasonable time; Specification of nature of non-conformity]

Descriptors: Services ; Examination of goods ; Lack of conformity notice, timeliness ; lack of conformity notice, specificity

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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 (Dutch): Click here for Dutch text of case; see also CISG-online.ch website <http://www.globalsaleslaw.com/content/api/cisg/urteile/1907.pdf>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation) [second draft]

Queen Mary Case Translation Programme

Court of Appeal Ghent

14 November 2008 [2008/AR/912]

Translation [*] by Maarten Draye [**]

PARTIES

VOLMARI WERNER, trader, [a German national] having his residence in Germany, (...), Plaintiff in appeal [Buyer] [...]

Vs.

[...]

ISOCAB N.V., a private limited liability company [under Belgian law], having its legal seat in Bavikhove [Belgium], defendant in appeal [...] [Seller].

[...]

1. [PROCEDURAL ASPECTS]

[...]

2. [APPLICABLE LAW]

As his principle argument, [Buyer] challenges the holding of the first judge that the agreement between himself and [Seller] is an international sales agreement to which the [CISG] applies.

[Buyer] is of the opinion that it is a contracting-agreement, to which, pursuant article 4 of the European Treaty on the Law Applicable to Agreements (Rome, 19 June 1980...), Belgian law would apply as lex contractus, and more specifically, that articles 1779 et seq. of the Belgian Civil Code relating to contracting would apply.

[Buyer] cannot be followed in this.

In support of his submission, [Buyer] refers in vain to the part of the total invoice amount of 26,334.55 EUR claimed by [Seller] that relates to the Hamma bakery [...].

From these -- as such undisputed -- exhibits, it appears that on 16 June 2004 [Buyer] ordered from [Seller] the delivery and assembly of two freezing chambers with appliances at the Hamma bakery. In the order confirmation of 24 June 2006, this was described as "proj. nr. 2418198." It was for a total of 52,000.00 EUR, payable in three installments:

   -    17,300.00 EUR "bei Versandbereitschaft" (i.e., at sending), invoiced on 28 June 2004, payable by 28 July 2004;
 
   -    17,300.00 EUR "bei Montage-beginn" (i.e., at beginning of assembly), invoiced on 26 July 2004, payable by 28 August 2004;
 
   -    17,400.00 EUR "bei Fertigstellung" (i.e., at finishing of assembly), being the final invoice in dispute, payable by 20 September 2004;

The submitted -- and as such not disputed -- proposal for this project (the so-called "allgemeine Verkafsbedingungen" [i.e., the "general conditions of sale"]) for a total amount of 52,000.00 EUR, foresaw ... an amount of 12,570.00 EUR for the part "assembly" only.

The reference to the invoices of the alleged "sub-contractor" ISK Gmbh in the amount of 15,700.00 EUR is in this respect not relevant. The reason is that the copies of these invoices as submitted by [Seller] (insofar as it can be accepted that these all relate to the disputed delivery and assembly at the Hamma bakery) nowhere indicate to any extent that they would relate to any assembly or other labor performances in itself. Moreover, it is not because this company ISK is labeled "sub-contractor" (in correspondence not coming from [Seller]) that the agreement between [Buyer] and [Seller] must all of a sudden be qualified as a contracting agreement. Furthermore, it appears from the submitted invoices that the company ISK did not invoice [Seller], but the company EMS-Isoliertüren Micckeleit GmbH & Co [i.e., a manufacturer of insulation doors].

Erroneously, [Buyer] is of the opinion that in the abovementioned proposal, the mention of "Ausfühurung" [i.e., performance] at the end of every part, is to be read as delivery of labor or other services. Indeed, a correct reading of the exhibit in question demonstrates that each time, a detailed technical description is given of the goods to be delivered, and that it does not concern any (additional) services or works to be performed.

The value of the delivered goods that must be taken into account is therefore clearly more important than the value of the services rendered. Consequently, the application of the CISG to this agreement cannot be excluded in the sense of article 3(2) CISG.

A similar conclusion is due with regard to the other parts of the invoices claimed by [Seller] for a total amount of 26,334.55 EUR: it does not appear from any of these invoices that it would relate to anything else than sales agreements. This is, moreover, not disputed.

The parties have their places of business in different countries: [Buyer] in Germany and [Seller] in Belgium. Both countries are party to the CISG (article 1(1)(a) CISG).

There is no indication that the parties have excluded the application of the CISG (article 6 CISG).

The fact that the delivered goods had to be made to specifications in the workshops of [Seller] (which is in fact not proven in the present case) does not in itself prevent the application of the CISG: article 3(1) CISG provides indeed that contracts are to be considered sales unless the party who orders the goods undertakes to supply a substantial part of the materials necessary for such manufacture production (which also does not appear to be the case, and has in any case ... not been demonstrated).

For the qualification of the agreement as a sales agreement in the sense of the CISG, it is furthermore not a determining factor whether in the general conditions of sales mention is made of delivery of goods and services, whether also assembly is provided, whether mention is made of a construction site and at which moment payment is to be made: the clear rationale behind article 3(2) is indeed to bring delivery-agreements with the obligation to assemble the goods within the scope of application of the CISG.

The foregoing allows us to conclude with certainty that the CISG applies in the present case, pursuant to article 3(2) CISG.

The judgment of the first judge must therefore be confirmed on this point.

[....]

3. [THE MAIN CLAIM: NON-CONFORMITY]

[Buyer] submits that the non-conformity has been raised in time, i.e., both prior to the repairs by [Seller] on 27 January 2005 (which, according to [Buyer], only related to one part of the shortcomings) by means of his letters of 16 August 2004, 17 August 2004, 10 November 2004 and 24 November 2007; and, after these repairs, by means of his letters of 7 July 2005 and 7 November 2007.

Also on this point, [Buyer]'s position cannot be followed.

The CISG explicitly imposes on a buyer to investigate and notify.

Each non-conformity that is noted must be made known to the seller within the time frames provided in articles 38 and 39 of the CISG. If not, the buyer loses the right to rely on these non-conformities:

   -    Pursuant to article 38(1) of the CISG, the buyer must examine the goods, or cause them to be examined, within as short a period as is practicable in the circumstances;
 
   -    Pursuant to article 39(1) of the 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 or ought to have discovered it.

It is reasonable to also apply Article 39 of the CISG in case of defective repairs. After a defective repair by the seller, the buyer can again rely on all of his rights as creditor. For this purpose, the buyer must inform the seller within a reasonable time of the fact that the repairs have been performed in a defective or unsatisfactory way. Article 39 must therefore be applied by analogy.

In this regard, it is essential that, as a result of [Buyer]'s complaint, [Seller] has effectively proceeded to effect repairs on 27 January 2005. This repair was confirmed on 2 February 2005, and is as such not disputed.

[Buyer] does not dispute the intervention by [Seller]. However, in his submissions before the first judge dd. 23 October 2007, he alleges that during these repairs only one of the reported non-conformities was taken care of.

When [Buyer], as a merchant, does not react and/or protest in time and in a sufficiently specific manner to/against the confirmation/notice dd. 2 February 2005 from the repairing [Seller], in which it was stated that the reported non-conformities to the freezing chambers have been repaired, this must be considered as an acceptance by [Buyer] that all of the reported non-conformities had been repaired.

Indeed, nothing indicates that [Buyer] informed the [Seller]/repairer within a short period after 2 February 2005 (that being the day on which the [Buyer] was notified that these repairs had taken place), that the repairs had only remedied one of the reported non-conformities, as was argued by [Buyer] in his submissions before the first judge.

Whereas [Buyer] alleges that he has notified [Seller] by telephone, this is denied by [Seller] and has not been demonstrated by [Buyer].

It must therefore be concluded that on 27 January 2005, [Seller] has effectively undertaken to repair all of the non-conformities that had been reported by [Buyer] at that moment.

Whether or not the repairs had in fact been completed in good order, is further irrelevant. This, because it is not demonstrated that [Buyer] has informed [Seller], specifying the nature of the lack of conformity, within a reasonable time after he has discovered or ought to have discovered that the repairs had not been performed in good order.

It is considered that all repairs were made on 27 January 2005.

The Hamma bakery apparently informed [Buyer] on 31 May 2005 of its discontent with the result. At that moment, i.e., 31 May 2005, there can therefore be no doubt that [Buyer] was aware of the non-conformity of the repairs.

There is proof of protest by [Buyer] only in the form of a "note" from Thomas Weber, which ia dated 7 November 2005.

Insofar as it can be accepted that [Seller] did in fact get knowledge of the contents of this "note", it was not made within the reasonable time frame required by the CISG.

To no avail, [Buyer] is currently referring to an alleged earlier reaction, i.e., a letter that he alleges to have written to [Seller] on 7 July 2005. The [Seller] disputes the existence of this exhibit, and submits that it never received this letter. As no proof has been submitted as to the sending of this document, it cannot be determined whether it was actually conveyed to [Seller]. In any case, the letter was addressed to Mr. Thomas Weber (who, moreover, appears to have stopped working for [Seller] long before, i.e., 31 December 2003, which is not disputed).

In any case, the writing of 7 July 2005 cannot be accepted as a notice in the sense required by article 39 CISG, namely, specifying the nature of the lack of conformity, and sent to [Seller] within a reasonable time after the [Buyer] had discovered or ought to have discovered that the repairs had not been performed in good order. In the disputed writing of 7 July 2005, insofar it is real and has actually been sent, it is only stated that the invoice dd. 30 June 2005 ... was being sent back, as this invoice related to necessary repairs. Insofar as this would relate to the current dispute (which has not been demonstrated), it is in any case not a notice of non-conformity of repairs made including the necessary specifications.

At the very least for reasons of apparent inertia, [Buyer] did in the given circumstances lose his right to rely on the fact that the repairs of the goods delivered by [Seller] do not conform to the agreement (article 39 CISG).

[....]

Considering the foregoing, the first judge has correctly held that [Buyer] is under the obligation to pay to [Seller] the sum agreed upon for the "project Hamma bakery." The [Buyer] cannot rely on the exception non adimpleti contractus, nor is he entitled to any remuneration for costs of the repairs or loss of value.

[....]

The judgment of the first judge must therefore be confirmed in this sense.

4. [THE ADDITIONAL CLAIM: NEW ISSUES OF NON-CONFORMITY]

Only in his last submissions in appeal dated 31 July 2008, did [Buyer] launch an additional claim for "newly occurred problems at Hamma bakery".

For this purpose, reference is made to (...) a copy of a letter dated 7 May 2007 from [Buyer] to [Seller] with the following content:

"The non-conformities of the cooling installations that have been delivered and assembled by you and that have been reported on various occasions have not been remedied yet. At the same time, we wish to give you notice of additional assembly and construction defects we have identified. In addition to the known defects (picture 1 to 6), the following defects have been found:

-    The handles of the sliding-doors are falling apart. These were not manufactured in accordance with the state of the art (see pictures 7+8).The turning doors have uncovered fillings on the inside -- construction error (see picture 9).
 
-    Massive flowing away of water under the cooling cells (see picture 10 +11). The division walls of the cells around the lock are oxidizing and the groove-and-pen-system has major leakage issues (see picture 12)."

[Seller] challenges also the validity of this exhibit, submits that it never received it and labels it an [...] exhibit created for the purpose of the present dispute.

Regardless of this challenge, the [Buyer]'s additional claim must be dismissed for lack of validity.

Indeed, insofar as these problems would have constituted newly incurred problems, as is submitted by [Buyer], they would not relate to a fact or an act that was brought before the first judge. Hence, the present additional claim is brought for the first time in appeal and, consequently, not valid pursuant to article 807 of the Belgian Code of Civil Procedure.

Insofar as the problems would be based on any fact or document that was submitted before the first judge (which has, in fact, not been demonstrated by [Buyer]), the conclusion is also that the additional claim is not valid: indeed, as the expiration of the limitation period and/or the loss of the claim is not as such regulated in the CISG and the parties have not chosen a law to cover such issues, the law of Belgium applies as law of the country to which the party, who is to effect the performance which is characteristic of the contract, has the closest connection (articles 4.1 and 4.2 of the Rome Convention). More specifically, this is in the present case article 1648 of the Belgian Civil Code, which provides that the claim based on defects of an annulling character must be brought by the buyer within a short time period.

Where the sale dates from 16 June 2004, and even taken into consideration that the main claim for lack of conformity would have been brought on 12 September 2006 ..., the additional claim was not brought within the required "short period" when taking into account the first complaints made ... by letter of 16 August 2004. This is, for obvious reasons, the same for cases where the claim was only brought for the first time at the time of the last submissions in appeal dd. 31 July 2008.

[....]

CONSIDERING THE FOREGOING,

THE COURT ... declares the appeal valid, yet without ground and, hence, confirms the judgment of 12 December 2007.

[....]


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 Belgium is referred to as [Buyer].

** Maarten Draye, Lic. Jur. (K.U. Leuven), M. Econ. Pol. (K.U. Leuven), LL.M. (Queen Mary, U of London) is a member of the Brussels Bar where he works as an Associate at the law firm of Hanotiau & van den Berg. His practice focuses on both domestic and international commercial litigation and arbitration. Maarten Draye can be contacted at <maarten.draye@hvdb.com>.

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Pace Law School Institute of International Commercial Law - Last updated October 19, 2009
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