Spain 10 March 2009 Appellate Court Madrid (Wine case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/090310s4.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: Recurso de Apelación No. 759/2008
CASE HISTORY: 1st instance Juzgado de Primera Instancia No. 37 de Madrid 28 May 2008
SELLER'S COUNTRY: Spain
BUYER'S COUNTRY: Germany
GOODS INVOLVED: Bottles of wine
SPAIN: Madrid Provincial High Court  10 March 2009
Case law on UNCITRAL texts [A/CN.9/SER.C/ABSTRACTS/147],
CLOUT abstract no. 1386
Reproduced with permission of UNCITRAL
The case involved a contract for the sale of 20,880 bottles of medium sweet red table wine. During distribution of the wine the German buyer began to receive complaints from customers and bottles were sent back due to the defective quality of the product, the cost of which the buyer was obliged to refund, eventually amounting to a total of 5,197 returned bottles. This led to a series of demands for payment addressed to the Spanish seller. The seller did not dispute the shortcomings of the product and conceded that it had been sterilized with sorbic acid. The buyer commissioned a report on the wine. The samples contained benzoic acid, which is prohibited in the processing of wine.
The legitimacy of certain elements claimed as compensation for damages (art. 74 CISG) was disputed.
First, the transport costs incurred while returning goods to the seller were in dispute. The lower court and the appeal court dismissed this application for compensation made by the buyer since the decision to transport the goods to Spain after the discovery of shortcomings was made unilaterally by the buyer and disputed by the seller. This expense was incurred at the sole discretion of the buyer, and its usefulness or necessity not established; it thus should not impact the seller. It was also impossible to qualify the restitution of the unsuitable goods as “reasonable” behaviour which the seller should pay for in accordance with the provisions of articles 8 and 9 CISG. Regarding non-tradable goods, it was difficult to envisage what would require, or would make advisable, the transportation of these goods from the buyer’s domicile to the seller’s facilities, or why it would be impossible or more expensive to destroy or dispose of the goods in the place where they were located.
Second, in connection with the buyer’s expenditure incurred by obtaining the report on the condition of the wine, the Court held that this was a checking activity into which the buyer was forced in a purely contractual and extrajudicial domain as the only way to ascertain the defective quality of the supplied goods, including their potential to harm consumers of the product, and also to put to the seller the consequences of its failure to comply with the contract. Therefore the claimed costs, directly derived from the breach attributable to the seller, must be borne by the seller.
Third, recognition or non-recognition of the amount claimed by the buyer in terms of loss of profit, equivalent to the profit lost by not selling on the wine that had been purchased, was based on the provisions of articles 74 and 76 CISG: that is, it depended on whether the loss suffered by the injured party was “foreseen or ought to have been foreseen at the time of the conclusion of the contract” by the party in breach.
Disagreeing with the reasoning of the lower court’s ruling, the appeals court considered that the economic loss suffered in this regard was indeed foreseeable at the time of the conclusion of the contract. Simply because the seller was aware of the addition of benzoic acid to the wine supplied, and knew as a wholesaler in the sector that it was inappropriate to add that substance to wine, it was therefore foreseeable that it would be impossible to sell it to third parties and that the buyer would consequently suffer a certain loss. The buyer did not have the status of end consumer but of merchant, according to which status the buyer aimed to resell what it had acquired to third parties, consequently making a profit from the markup applied to the resale price. The defective quality of the wine intended by the buyer for resale to third parties was the foreseeable cause of a loss of profit.
1. Previously heard by Madrid Court of First Instance No. 37, 28 May 2008.
APPLICATION OF CISG: [-]
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
CITATIONS TO OTHER ABSTRACTS OF DECISION
Spanish: CISG-Spain and Latin America website <http://www.cisgspanish.com/seccion/jurisprudencia/espana/?provincia=Madrid>
CITATIONS TO TEXT OF DECISION
Original language (Spanish): CISG-Spain and Latin America website <http://www.cisgspanish.com/jurisprudencia/espana/audiencia-provincial-de-madrid-10-marzo-2009/>; see also Fuente: Aranzadi Westlaw
Translation: CISG-Spain and Latin America website <http://www.cisgspanish.com/wp-content/uploads/2013/03/SAPMadrid10.03.2009englishtranslation.pdf>
CITATIONS TO COMMENTS ON DECISION
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