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CISG CASE PRESENTATION

Germany 14 December 1994 Appellate Court Hamburg (Cobalt sulphate case)
[Cite as: http://cisgw3.law.pace.edu/cases/941214g1.html]

Primary source(s) for case presentation: CISG online case overview; case commentary


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Case identification

DATE OF DECISION: 19941214 (14 December 1994)

JURISDICTION: Germany

TRIBUNAL: OLG Hamburg [OLG = Oberlandesgericht = Provincial Court of Appeal]

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: 5 U 224/93

CASE NAME: German case citations do not identify parties to proceedings

CASE HISTORY: 1st instance LG Hamburg 5 November 1993 [affirmed]; BGH (Supreme Court) 3 April 1996 [affirming]

SELLER'S COUNTRY: Netherlands (plaintiff)

BUYER'S COUNTRY: Germany (defendant)

GOODS INVOLVED: Cobalt sulphate


Case abstract

Prepared by Robert Koch for commentary on fundamental breach

"In the case decided by the German Supreme Court, a Dutch company had entered into four separate sales agreements for the delivery of cobalt sulfate with the buyer, a German company. It was agreed that the goods should be of Brittish origin and that the seller should supply certificates of origin and quality. After the receipt of the documents, the buyer discovered that the sulfate came from South Africa, that the certificate of origin was wrong, and that the quality fell short of the description in the contract. The buyer several times declared the contract avoided. Both the Hamburg District Court and the Hamburg Court of Appeals held that there were no ground for contract avoidance.

"Affirming the lower courts' holdings, the German Supreme Court held that there was no fundamental breach justifying contract avoidance since the buyer could not show that the sale of South African cobalt sulfate in Germany or abroad was not reasonably possible. [According to the German Supreme Court, the delivery of goods, which do not conform to the contract either because they are of lesser quality or of different origin, does not constitute non-delivery. Thus the declaration of avoidance could not be based on art. 49(1)(b) CISG since the plaintiff had effected delivery.] The defendant therefore failed to demonstrate that it was substantially deprived of what it was entitled to expect under the contract. The Supreme Court expressly rejected the buyer's argument on appeal that the feasibility to cure a defect is the only decisive factor in determining fundamental breach and held that unfeasibility to cure does not necessarily constitute a fundamental breach.

"In the absence of express terms in the contract, the Supreme Court argued that in determining fundamental breach, the remedial system of the Convention and its underlying purposes, namely to preserve the enforceability of the contract and to restrain avoidance in favor of the damage or price reduction remedies, must be taken into account. The avoidance remedy, therefore, should only be allowed as a last resort in response to a breach so serious that the non-breaching party would have lost his interest in performing the contract. Finally, the Court held that the delivery of wrong certificates of origin and of quality did not amount to a fundamental breach of contract since the defendant could have obtained correct documents from other sources." Koch, Pace Review of the Convention on Contracts for the International Sale of Goods (1998) 244-245 and n.227.

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Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 25 ; 49(1) ; 62 ; 69(3) [Also cited: Articles 3 ; 35(2) ; 53 ; 58 ; 61 ; 74 ]

Classification of issues using UNCITRAL classification code numbers:

Unavailable

Descriptors: Avoidance ; Fundamental breach

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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; see abstract prepared for BGH 3 April 1996

(b) Other abstracts

See above

CITATIONS TO TEXT OF DECISION

Original language (German): cisg-online.ch <http://www.cisg-online.ch/cisg/urteile/216.htm>

Translation: Unavailable

CITATIONS TO COMMENTS ON DECISION

English: Koch, Pace Review of Convention on Contracts for International Sale of Goods (1998) 244 n.226 [fundamental breach (gravity of consequences of breach); remedy-oriented approach]; [2005] Schlechtriem & Schwenzer ed., Commentary on UN Convention on International Sale of Goods, 2d (English) ed., Oxford University Press, Art. 25 para. 7 ; Spaic, Analysis of Fundamental Breach under the CISG (December 2006) nn.310, 370

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Pace Law School Institute of International Commercial Law - Last updated March 20, 2007
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