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CISG CASE PRESENTATION

Germany 8 February 1995 District Court München (Standard software case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/950208g4.html]

Primary source(s) for case presentation: Case text


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Case identification

DATE OF DECISION: 19950208 (8 February 1995)

JURISDICTION: Germany

TRIBUNAL: LG München [LG = Landgericht = District Court]

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: 8 HKO 24667/93

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

CASE HISTORY: Unavailable

SELLER'S COUNTRY: France (plaintiff)

BUYER'S COUNTRY: Germany (defendant)

GOODS INVOLVED: Standard software


Case abstract

Germany: LG München 8 February 1995 [cited as 8 March 1995]

Case law on UNCITRAL texts (CLOUT) abstract no. 131

Reproduced with permission from UNCITRAL

The German [buyer] ordered a computer programme from the French [seller]. The programme was delivered and installed. The parties also intended to conclude a second contract concerning the use of the programme, but the negotiations on that contract failed. The [buyer] then refused to pay the purchase price of the programme, which was delivered and installed.

The court held that the CISG was applicable as the parties had their place of business in different CISG Contracting States and as the CISG applies to standard software. The court further found also that the parties had agreed on all particulars of the sale of the programme and therefore had concluded a sales contract.

It was held that the [buyer] could not rely on a possible lack of conformity of the software programme, since it had not effectively given notice of the defect but had only asked for assistance in addressing the problems identified. As a result, the court ordered the [buyer] to pay the purchase price and interest at the rate of 5%.

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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 1(1) ; 39(1) ; 78 [Also cited: Articles 3(1) ; 14 ; 18 ; 23 ; 35(2)(c) ]

Classification of issues using UNCITRAL classification code numbers:

1D [Basic rules of applicability: definition of "goods" (standard computer software)]

39A [Requirement to notify seller of lack of conformity: character of notice required (mere request for assistance in addressing problems encountered termed ineffective notice)];

78B [Rate of interest]

Descriptors: Applicability ; Scope of Convention ; Goods, definition of ; Computer software ; Lack of conformity notice, specificity ; Interest

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Editorial remarks

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Citations to other abstracts, case texts and commentaries

CITATIONS TO OTHER ABSTRACTS OF DECISION

English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=225&step=Abstract>

Italian: [1998] Diritto del Commercio Internazionale 1084-1085 No. 187

Polish: Hermanowski/Jastrzebski, Konwencja Narodow Zjednoczonych o umowach miedzynarodowej sprzedazy towarow (Konwencja wiedenska) - Komentarz (1997) 272

CITATIONS TO TEXT OF DECISION

Original language (German): cisg-online.ch <http://www.cisg-online.ch/cisg/urteile/203.htm>; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=225&step=FullText>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

English: Ferrari, International Legal Forum (4/1998) 138-255 [196 n.507 (definition of "goods")]; Honnold, Uniform Law for International Sales (1999) 55 [goods (computer "hardware" and "software")]; for a survey of German case law on specifying the nature of the non-conformity, go to 1998 Pace essay by Camilla Baasch Andersen at Section III.1.1.; Kuoppala, Examination of the Goods under the CISG and the Finnish Sale of Goods Act (2000) 4.3.1 [analysis of related articles 38, 39, 40 and 44 (includes digests of relevant material in many CISG cases; also digests cases under a domestic sales code that is patterned, for the most part, after the CISG)] ; Spanogle/Winship, International Sales Law: A Problem Oriented Coursebook (West 2000) [what constitutes a sales contract and what issues are not covered: goods 77-79 (this case at 78-79)]; Diedrich, "The CISG and Computer Software Revisited", 6 Vindobona Journal of International Commercial Law and Arbitration, Supplement (2002) 71-72; Bernstein & Lookofsky, Understanding the CISG in Europe, 2d ed., Kluwer (2003) § 2-5 n. 55; § 3-2 n. 19; § 4-8 n. 99; § 4-14 n. 204; Larry A. DiMatteo et al., 34 Northwestern Journal of International Law & Business (Winter 2004) 299-440 at n.406; Article 78 and rate of interest: Mazzotta, Endless disagreement among commentators, much less among courts (2004) [citing this case and 275 other court and arbitral rulings]; [2005] Schlechtriem & Schwenzer ed., Commentary on UN Convention on International Sale of Goods, 2d (English) ed., Oxford University Press, Art. 1 para. 21 Art. 39 para. 6; Henschel, The Conformity of Goods in International Sales, Forlaget Thomson (2005) 250; Sarah Green & Djakhongir Saidov, Software as Goods, Journal of Business Law (March 2007) nn.69, 85

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Case text (English translation)

Queen Mary Case Translation Programme

District Court of Munich (Landgericht)

8 February 1995 [8 HKO 24667/93]

Translation [*] by Dr. Peter Feuerstein [**]

Translation edited by Todd J. Fox [***]

Facts

The [seller] is a manufacturer of computer software, particularly a programme called Graphiplus, and is the sole legal owner of that software programme.

With an order placed in writing, dated 26 February 1993, the [buyer] ordered the Graphiplus programme from the [seller] in a network version for five additional workplaces for a total price of 31,500 DM [Deutsche Mark]. Earlier, namely since 23 November 1992, the [seller] had delivered the programme to the [buyer] for testing purposes. In exchange, the [buyer] had given a bank guaranty to the [seller].

The final installation of the programme at the [buyer's] location was due on 28 April 1993. In the ensuing time, negotiations took place between the parties over the conclusion of a detailed contract concerning the use of the programme. In a letter dated 8 July 1993, which according to the [buyer's] pleadings was only sent to the [seller] after 30 July 1993, the [buyer] stated that the draft contract sent to the [buyer] by the [seller] was unacceptable to the [buyer]. Furthermore, [buyer] had decided not to use the [seller's] programme. At the same time, the programme was sent back to [seller].

The [seller] had invoiced the programme to the [buyer] on 22 April 1993, for 31,500 DM. The present litigation concerns the payment of this invoice to the [seller].

[Seller's position]

The [seller] requests that [buyer] be ordered to pay [seller] 31,500 DM plus 5% interest on this amount from 1 October 1993.

[Buyer's position]

The [buyer] pleads that [seller's] claim be dismissed.

The [buyer] argues that a final sales contract had not come into existence between the parties. Furthermore, the deliveries of the [seller] were defective; therefore, the [buyer] in any event rightfully avoided the sales contract. [Buyer's] letter, dated 8 July 1993, has to be recognized as a declaration of avoidance of the contract.

The [buyer] submits that, at the time of placing the order on 26 February 1992, the [seller] had essentially stated that the conclusion of a contract in German was a costly matter and the parties had to first make progress concerning that matter themselves. When the [buyer] confirmed its intention to buy, the parties would then agree on the details of the contract later. In this conversation, the [buyer] had requested the [seller] to repair some defects that had appeared during the testing period and the [seller] had promised to repair the defects prior to installation.

After the installation on 28 April 1993, the [buyer] discovered that the objected software defects still appeared in the programme. On approximately 10 May 1993, witness M. had a telephone conversation with the [seller] and repeated the complaints concerning the defects to the [seller]. The witness furthermore pointed out that the programme did not function simultaneously at all workplaces.

Grounds for the decision

The [seller's] claim is admissible and successful. The adjudicated main amount is owed to the [seller] as the contractually agreed upon price for the sale and use of the Graphiplus software programme. Additionally, the [seller] is entitled to the requested interest on the amount after the date of maturity (Art. 78 CISG, 352 HGB [*]). The [buyer]'s objections are unsuccessful.

1. As the [seller] has already correctly pointed out in its claim, the provisions of the CISG apply to this contractual relationship since the parties have their places of business in different Contracting States to the Convention.

The fact that the transaction at issue concerns a computer software programme does not hinder the application of the CISG. According to the opinion of the Court, the sale of standard software for an agreed price is a "contract of sale of goods" within the meaning of Art. 1 CISG. Schlechtriem/Huber (CISG, 1990, Annotation 21 to Art. 1) also agree on the classification of computer software as goods under the CISG.

2. With the mutual signing of the order - containing an agreement on the name of the programme and its price - an effective contract came into existence between the parties under Arts. 18, 23 CISG. The circumstance that the parties perhaps intended to conclude a more detailed contract about the use of the programme does not hinder the effective conclusion of the "sales contract." Decisive is the fact that the parties had agreed on the necessary minimum content that they were looking to agree upon (cf. Schlechtriem/Huber, op. cit., Annotation 10 prior to Art. 14 CISG).

3. The [buyer], who has the burden of proof according to general principles, has not proven its objection that the mutual signing of the order documented only the basic intention to buy and not the conclusion of the contract. The [buyer] has also refrained from calling the initially proffered witness and has not presented any other evidence. The Court does not expect a further clarification of the facts by hearing the parties as witnesses according to 448 ZPO [*], due to the fact that the [buyer] itself evidently does not have a clear perception of the facts in question (at first calling witness M. and then dispensing with him).

4. The [buyer] also cannot successfully base its defense on the alleged defects. It is undisputed that the programme was entrusted to the [buyer] for testing purposes for three months. Under Art. 35(2)(c) CISG, the delivered programme, which undisputedly matched the programme used for testing purposes, was in conformity with the contract. The [buyer] has not proven that the [seller] had promised to repair the defects discovered during the testing period. As far as calendar dates are concerned, the witness was only able to testify to facts of April and July 1993, a long time after the conclusion of the contract. These dates were no longer appropriate to challenge the conformity of the sample. Furthermore, the testimony of the witness is not useful to the resolution of the disputed facts, as the witness was not at all informed about the commercial side of the transaction in question; the witness did not even know that a testing period had been agreed upon and practiced.

Witness T, on the other hand, credibly testified that at the end of the test period no complaints had been made pertaining to any defects. Also, neither Mr. B, nor witness M had complained about any defects during the time that witness T had undertaken to become acquainted with the programme.

5. Regarding the alleged defect regarding the inability of the programme to function simultaneously at several workplaces, the [buyer] cannot derive any rights from this without pursuing the question of whether this disputed defect is actually present (testimony by expert). If there is such a defect, the [buyer] has in any case not given an effective notice of the lack of conformity of the goods in accordance with Art. 39 CISG. Witness D testified to have notified the [seller] in writing of the facts. However, the question of the Court, whether the witness had objected to these facts, was answered in the negative by the witness, who reasoned that it is not his habit to reprimand. According to his view, the programme employed a very good method in searching for the optimal level of the production process.

In the letter presented by the [buyer], dated 13 July 1993 and directed to the [seller], the witness did not give notice of a lack of conformity but only requested assistance from the [seller] in addressing the problem identified.

The order for costs is based on 91 ZPO [*]; the order for the preliminary enforcement is based on 708, 709 ZPO.


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Plaintiff of France is referred to as [seller]; the Defendant of Germany is referred to as [buyer]. Monetary amounts in German currency (Deutsche Mark) are indicated by [DM].

Translator's note on other abbreviations: HGB = Handelsgesetzbuch [German Commercial Code]; ZPO = Zivilprozessordnung [Civil Procedure Act].

** Dr. Peter Feuerstein is an International Legal Consultant. He conducted his post graduate research at Cambridge University, England, where he studied at Clare College in preparation of his Doctoral Dissertation. He received his Dr. jur. from Philipps-University of Marburg, Hessia, Germany, in 1977. The second-iteration redaction of this translation was by Dr. John Felemegas.

*** Todd J. Fox is an Associate of the Institute of International Commercial Law of the Pace University School of Law. He received his LL.M. summa cum laude from Albert-Ludwig-Universität Freiburg.

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Pace Law School Institute of International Commercial Law - Last updated March 12, 2007
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