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CISG CASE PRESENTATION

France 26 April 1995 Appellate Court Grenoble (Marques Roque Joachim v. Manin Rivière) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/950426f2.html]

Primary source(s) for case presentation: Case text

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Case identification

DATE OF DECISION: 19950426 (26 April 1995)

JURISDICTION: France

TRIBUNAL: CA Grenoble [CA = Cour d'appel = Appeal Court]

JUDGE(S): Beraudo (président); Baumet, Fallet (conseillers); Combe (greffier)

CASE NUMBER/DOCKET NUMBER: 93/4879

CASE NAME: M. Marques Roque Joachim v. La Sarl Holding Manin Rivière

CASE HISTORY: 1st instance Trib. com Grenoble (No. 254010) 11 September 1991 [affirmed in part]

SELLER'S COUNTRY: France (plaintiff)

BUYER'S COUNTRY: Portugal (defendant)

GOODS INVOLVED: Second hand portable warehouse shed


Case abstract

FRANCE: Court of Appeal Grenoble 26 April 1995

Case law on UNCITRAL texts (CLOUT) abstract no. 152

Reproduced with permission from UNCITRAL

A company with its place of business in France sold to an individual resident in Portugal a used warehouse for the price of 500,000 French francs, including the cost of dismantling and delivery, the price of the warehouse being 381,200 francs and the dismantling and delivery costs amounting to 118,800 francs. Following the buyer's refusal to pay the last part of the price on the grounds that the dismantled metal elements were defective, the Court of Appeal of Grenoble found that the disputed contract covered the sale of a used warehouse together with its dismantling and that it was apparent from the invoices submitted that the supply of services did not constitute the preponderant part [of the contractual obligations]. The court concluded that the contract therefore fell within the scope of application of CISG (art. 3(2)).

The Court of Appeal further stressed that the contract had been concluded between a seller with its place of business in France and a buyer resident in Portugal, that France was a State Party to CISG whereas Portugal had neither signed nor ratified it, and that it was therefore necessary to ascertain whether CISG was applicable through the provisions of private international law (art. 1(1)(b)).

Having invoked the Hague Convention of 15 June 1955 on the Law applicable to International Sales of Goods, the court arrived at French law, this being the law of the country where the seller had its habitual residence at the time when it received the order (art. 3, first paragraph, Hague Convention). The court accordingly applied CISG because "since 1 January 1988, the French domestic law applicable to international sales was the Vienna Convention of 11 April 1980". The court found, in the light of article 35 CISG, that a certain quantity of the goods were not fit for the particular purpose of reassembly in the identical form expressly made known to the seller. Since that defect related to only part of the warehouse and concerned metal elements which could be repaired, it did not constitute a fundamental breach such as to deprive the buyer of what he was entitled to expect under the contract. The court therefore found that this breach did not justify avoidance of the contract pursuant to article 49.

The Court of Appeal further noted that, in the event, such avoidance had not taken place, since the parties had determined that the seller would repair the damaged metal elements. In response to the buyer's objection that the [seller's] obligation was to restore the warehouse to a new state, the court found that it was not established that the seller had accepted such a task which would have served to multiply the value of some of the elements sold by a factor of 40. Having furnished the buyer with replacement elements which were only very slightly bent out of shape, the seller had, in conformity with article 46(3) CISG, repaired the defect in conformity with the goods sold.

The court awarded damages to the buyer after noting that the latter retained the right to claim damages notwithstanding the repair carried out at its own expense by the seller (art. 48(1)).

Finally, regarding interest on arrears and the capitalization of interest claimed by the seller, the Court of Appeal noted that article 78 CISG stated that any delay in payment gave rise to entitlement to interest on the arrears without notice being served and that such interest should start to accrue on the date on which the replacement goods were handed over to the buyer. The court decided that the interest would be capitalized at the end of one complete year to be counted from the date of submission of grounds of appeal in which the seller first made the request for interest.

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Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 3(2) ; 25 ; 35(2)(b) ; 46(3) ; 48(1) ; 49 ; 78

Classification of issues using UNCITRAL classification code numbers:

3B [Goods to be manufactured: services preponderant part of obligations];

25B [Definition of fundamental breach: substantial deprivation of expectation, etc.];

35B2 [Conformity of goods to contract: fitness for particular purpose made known to seller];

46C [Buyer's right to compel performance: right to require repair of non-conforming goods];

48A [Cure by seller after date for delivery: seller's right to remedy any failure to perform];

49A [Buyer's right to avoid contract: grounds for avoidance];

78A [Interest on delay in receiving price or any other sum in arrears]

Descriptors: Scope of Convention ; Services ; Fundamental breach ; Conformity of goods ; Cure ; Avoidance ; 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=109&step=Abstract>

Italian: Diritto del Commercio Internazionale (1995) 465-466 No. 88

Polish: Hermanowski/Jastrzebski, Konwencja Narodow Zjednoczonych o umowach miedzynarodowej sprzedazy towarow (Konwencja wiedenska) - Komentarz (1997) 286-288

CITATIONS TO TEXT OF DECISION

Original language (French): CISG - France website ("http://Witz.jura.uni-sb.de/CISG/decisions/260495v.htm"); CISG online website ("http://www.jura.uni-freiburg.de/ipr1/cisg/urteile/text/154.htm"); Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=109&step=FullText>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

English: Ferrari, International Legal Forum (4/1998) 138-255 [191 n.461, 192 n.472 (analysis of Art. 3(2)), 248 n.1029 (interest issues)]; Gillette/Walt, Sales Law Domestic and International (Foundation Press 1999) 37 [Art. 3(2)]; Koch, Pace Review of Convention on Contracts for International Sale of Goods (1998) 254-255 n.258-259 [fundamental breach: offer to cure/possible cure]; Mullis, Avoidance for Breach under the Vienna Convention: Critical Analysis of Some of the Early Cases (1998) n.87; Honnold, Uniform Law for International Sales (1999) 59 [Art. 3], 211 [effect of seller's offer to cure on buyer's right to avoid], 258 [Art. 35 (fitness for purpose)], 322 [Art. 48]; Behr, 17 Journal of Law and Commerce (1998) 266-288 [abstracts and comments on 29 interest rulings from 10 countries (this case presented at 283)]; Koneru, 6 Minnesota Journal of Global Trade (1997) 123-138 [comments on interest rulings in this case and other cases]; Boghossian, A Comparative Study of Specific Performance Provisions in the United Nations Convention on Contracts for the International Sale of Goods (1999-2000) nn.420, 453, 461; Kazimierska, Pace Review of the Convention on Contracts for the International Sale of Goods (1999-2000) n. 211; Spanogle/Winship, International Sales Law: A Problem Oriented Coursebook (West 2000) [when parties fail to designate the applicable law 52-68 (this case at 62-63); what sales contracts and what issues are not covered: service contracts 79-80 (this case at 80)]; Bernstein & Lookofsky, Understanding the CISG in Europe, 2d ed., Kluwer (2003) §: 2-5 n.38; §: 4-8 n.98; Tuula Ämmälä, 5 Turku Law Journal (1/2003) Sections 3.2; Graffi, Case Law on the Concept of "Fundamental Breach" in the Vienna Sales Convention, Revue de droit des affaires internationales / International Business Law Journal, No. 3 (2003) 338-349 at n.83; Liu Chengwei, Recovery of interest (November 2003) n.94; Larry A. DiMatteo et al., 34 Northwestern Journal of International Law & Business (Winter 2004) 299-440 at nn.498, 592-593; 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. 3 para. 6a Art. 25 paras. 20, 21a Art. 49 para. 7; Henschel, The Conformity of Goods in International Sales, Forlaget Thomson (2005) 224

French: Witz, Emptio-Venditio Internationales, Neumayer ed. (Basel 1997) 431-432, 439, 446, 449-450

German: Schlechtriem, Internationales UN-Kaufrecht (1996) 71 n.26

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Case text (English translation) [second draft]

Queen Mary Case Translation Programme

Cour d'Appel de Grenoble 26 April 1995
Marques Roque Joachim v. La Sarl Holding Manin Rivière

Translation by Charles Sant 'Elia [*]

R.G. no. 93/4879

REPUBLIC OF FRANCE
In the name of the French people

COMPOSITION OF COURT: During Arguments and Deliberation: Mr Berauda, Président; Mr Baumet, Conseiller;Mr Fallet, Conseiller; assisted during the arguments by Mrs. Combe, Court Clerk,

[FACTS AND PLEADINGS]

Following an invoice dated 30 March 1990 and confirmation on 2 April 1990, La Sarl Holding Manin Rivière [seller], established in Voreppe (38340) [France], sold to Mr. Roque [buyer], established in Junqueira, in the province of Coimbra in Portugal, a "portable warehouse shed", for the price of 500,000 F [French francs], including the dismantling and the costs of shipping.

The price of the warehouse shed was 381,200 F; the costs of dismantling and shipping totaled 118,800 F. The payment was to be made in three installments. The first two in the amounts of 170,000 F and 150,000 F were paid. [Buyer] refused to make the third payment for the reason that some of the disassembled metal parts where defective and could not be reassembled. He sought to establish that state of affairs through Mr. Bouvier, process server, on 7 August 1990.

Mr. Manin, director of the [seller] company sought to cure the defects in the damaged metal parts. He sought to establish their being cured through Mr. Langlois, process server, on 29 December 1992.

[Buyer] pleads to set aside the judgment rendered by the Commercial Court of Grenoble on 4 October 1993. [Buyer] pleads to have the Court:

-   Declare the contract of sale for the warehouse shed avoided;
- Order restitution of [buyer]'s payment to [seller] by national check no. 758729.16 of 30 March 1990 for 170,000 F drawn on B.C.P.;
- Require [seller] to reimburse to [buyer] the total sums expended from that day on (320,000 F) and to pay [buyer] as damages, the sum of 200,000 F. ;
- Also require [seller] to pay [buyer] the sum of 50,000 F as damages-interest, as well as 10,000 F by application of Art. 700 of the New Code of Civil Procedure; and
-Rule that [buyer] is holding the material in a proper manner, available to [seller].

[Buyer] alleges that at the moment of proceeding to the removal of the ordered framework, a third of the parts were unusable. He thus had to send four empty trucks back to Portugal. [Buyer] acknowledges that [seller] sought to remake the unusable parts but alleges that he did not hold to his promise. Not being able to use two-thirds of the metal framework in his possession, [buyer] demands avoidance of the contract and damages and interest.

[Seller] asks the court to:

-  Hold as baseless the appeal [buyer] entered on 14 December 1993;
-  Affirm in all its provisions the judgment rendered on 4 October 1993 by the Commercial Court of Grenoble;
-  Add to it relief for the appeal;
-  Order the compounding of interest due under Article 1154 of the Civil Code;
-  Order [buyer] to pay [seller] a sum of 5,000 F, under Art. 700 of the New Code of Civil Procedure, being the entire cost
   of the trial court proceedings and of the appeal.

[Seller] relies in essence on the fact that it met its obligation to deliver the goods by making available to [buyer] the metal framework which was ordered and which was transported to Portugal, except ten parts of damaged girders. [Seller] alleges that these parts were repaired and are available to [buyer].

[Seller] adds that [buyer] only sought avoidance of the contract when he was called before the Court of Coimbra at the time of the exequatur proceeding for the provisional order directing [buyer] to pay 180,000 F, the balance of the price.

REASONING OF THE COURT

- On the applicable law

The contract which gives rise to the suit includes the sale of a portable hangar and its dismantling; The invoices demonstrate that the service part of the agreement is not preponderant. The contract thus enters into the legal sphere of application of the CISG (Article 3(2)).

The contract was formed between a seller whose place of business is in France and a buyer whose place of business is in Portugal, thus in two different States. France is a party to the Convention. Portugal has neither signed nor ratified it. Consequently, it must be determined whether the Convention is applicable because "the rules of private international law lead to the application of the law of a Contracting State" (Article 1(1)(b));

-   For international sales of movable goods [objets mobiliers corporels]. the rules of conflict of laws are governed in France by the Hague Convention of 15 June 1955 on the Law Applicable to International Sales of Goods. The object of this contract is the sale of a portable hangar with dismantling. This falls within the category of goods to be manufactured or produced included in the sphere of application of the Hague Convention. Absent a choice of law, bearing in mind the circumstances which surround the formation of the contract, the applicable law is "the domestic law of the country where the seller has his usual place of business at the time when he receives the order"(Article 3, para. 1 of the Hague Convention).
- After 1 January 1988, the French national law applicable to international sales is the CISG; Consequently, the contract formed by [buyer] and [seller] in March 1990 is governed by the CISG.

During the hearing, the Court advised the parties of the application of that international instrument and invited them to make known, before 20 March, whether they intended to plead based on that Convention. The Court informed them that their silence would constitute a waiver on this point.

In its brief of 24 March 1994, the [seller] pleaded the applicability of the CISG, incidentally that in the absence of a reconstitution plan, the warehouse shed was "an ensemble of adjustable and used parts, which allowed for the rebuilding of one or more warehouses of a total surface similar to that of the original warehouse shed." [Seller] alleges that it did not commit a fundamental breach, that it repaired the defective parts and that it is holding them available for [buyer].

[Seller] asserts that the retention by [buyer] of 36% of the price whereas the damaged material represented 3.4% of the total of the sale justifies its demand for damages and interest.

As of 19 April 1995, [buyer] has not submitted to the Court any briefs. His silence must thus be interpreted as a failure to plead.

On the question of whether the contracting parties intended to sell and purchase a portable warehouse or a metal framework, it is clear from the terms "portable warehouse" and "dismantling" which appear in the invoice of 30 March and the confirmation of 2 April 1990, that the agreement of the parties is based on a certain unit, before being disassembled to be later reassembled in the identical manner. It is also clear that the sale did not involve some small metal beams which could be reused in a different structure, let alone some scrap-iron refuse.

It is to be determined whether the [seller] had delivered goods conforming to the contract as required by Article 35 of the CISG.

It is agreed between the parties, that a certain quantity of goods (a third according to [buyer], ten parts of girders according to the [seller]) were not fit for the special use of reassembly in the identical manner brought expressly to the seller's attention.

However, this defect relates only to a part of the warehouse shed and concerns some metal parts which it was possible to repair; it did not constitute an essential breach of the kind that would substantially deprive [buyer] of that which he had a right to expect under the contract (Article 25). It does not justify an avoidance of the contract (Article 49), and it is a fact that the contract was not avoided in August 1990.

It is agreed that the parties had agreed that the [seller] would repair the damaged metal parts.

[Buyer] alleges that the commitment relates to repairs to render it like new. However, [buyer] has not established that the [seller] had accepted such an obligation, which would increase by forty times (cost of the new worked steel) the value of certain of the sold parts.

[Seller] has established through Mr. Langlois' affidavit that it is holding available for [buyer] ten parts of rectilinear girders which have only ten slight deformations. Consequently, the [seller] has remedied, pursuant to Article 46(3) of the CISG, the lack of conformity of the goods which it had sold. Whereas [buyer] did not come to take delivery of those repaired goods. [Buyer] has not established that, after being remedied, the goods are still unfit to be used in the reconstruction of the warehouse.

However, pursuant to Article 48(1) of the CISG, the buyer retains a right to damages despite the remedying in kind done by the seller at his own expense.

The Court, taking account of the delay suffered by [buyer] and of the fact that he had to or would have had to send out some transport vehicles twice, grants him, as damages 50,000 F, representing ten percent of the full sale price. The amount owed to [seller] by [buyer] is thus reduced to 130,000 F.

On the demands for interest and the compounding of the interest, Article 78 of the CISG provides that any delay in payment gives rise to the payment of interest, without a legal demand being necessary. The interest thus will run, on 130,000 F, from 1 October 1990, the date on which the damaged girders were held available for [buyer], after being repaired. The interest will be compounded until one full year will have lapsed, counting from the pleadings of 28 September 1994, which made the demand for the first time.

As to the restitution to [buyer] of the national certified check for 170,000 F, this will take place only after the payment of the debt owed to the [seller].

As to the sums sought by each party under Article 700 of the New Code of Civil Procedure, each is partially liable. It is thus equitable that the parties bear the fees and trial costs which they have incurred.

RULING OF THE COURT

For the above reasons, the Court, ruling publicly and after a full hearing of all parties, having deliberated pursuant to the law:

-  Partially amends the challenged judgment;
-  Orders [buyer] to pay to [seller] 130,000 F, for the balance of the sale price;
-  Orders [seller] to remit to [buyer] the check for 170,000 F., when it has received payment of the debt owed it;
-  Denies the parties the remainder of their demands;
-  Holds that the parties shall bear the fees and trial costs which they have incurred.


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purpose of this presentation, the Plaintiff-Appellee of France is referred to as [seller]; the Defendant-Appellant of Portugal is referred to as [buyer]. Monetary amounts in the currency of France [French francs] are indicated as [F].

** Charles Sant 'Elia has a B.A. in Political Science and Italian Literature from New York University and studied Political Science at the Universitá degli Studi di Firenze. He received his J.D. from Pace University School of Law and is admitted to the Bar of the States of New York and Connecticut.

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Pace Law School Institute of International Commercial Law - Last updated December 2, 2005
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