CISG CASE PRESENTATION

Facts

Claimant [buyer] contracted with Respondent [seller] for the purchase of a machine for medical use. Once the machine was installed, [buyer] experienced several problems with its operation, including breakdowns and faulty parts. [Buyer] brought an action in state court, which was dismissed due to the presence of an arbitration clause. [Buyer] then referred the dispute to arbitration seeking rescission of the purchase contract, refund of the purchase price, and reimbursement for damage and loss. Neither party referred to the UN Convention of 1980 on the International Sale of Goods (CISG). Although considering it inapplicable, the Arbitrator made reference to the CISG in the context of "rules accepted for international contacts."

Applicable law

The contract provided that "all disputes arising from it shall be subject to arbitration." Both parties agree that the contract is subject to French law and neither party referred to CISG, which was considered inapplicable.

[Buyer's] assertions

[Buyer] asserted that [seller] failed to deliver a machine that corresponded to the description in the contract. Thus, [buyer] argued that it was entitled to rescission of the contract according to art. 1603 of the Civil Code because the object of the contract was defective.

[Buyer] made frequent complaints about failures and breakdown of the machine. In addition, machine parts were replaced repeatedly. The [seller] was aware of these defects and did not deny their existence as evidenced by the extensions of warranty. "Whether those defects led to the ultimate breaking down of the Machine" is irrelevant because the reported failures would be enough to justify an action under art. 1641 of the Civil Code. [page 55]

Conclusion

"Taking into account the complexity of the Machine, the discussions which went on throughout the execution of the contract and after the alleged ultimate breaking down of the Machine, the many interventions of persons in charge of the maintenance and the time elapsed between the letter of [buyer] … and the proceedings before the Court in … which interrupted the term of limitation, as well as the rules accepted for international contracts (such as art. 39 of the Vienna Convention) the [buyer] should be considered as having acted within the "short period" provided for by art. 1648 of the Civil Code…. The [buyer] assumes that the consequence of its action in due time is the rescission of the contract." [page 56]