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CISG CASE PRESENTATION

Germany 25 June 1997 Appellate Court Karlsruhe (Surface protective film case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/970625g1.html]

Primary source(s) for case presentation: Case text

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Case identification

DATE OF DECISIONS: 19970625 (25 June 1997)

JURISDICTION: Germany

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

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: 1 U 280/96

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

CASE HISTORY: 1st instance LG Heidelberg 2 October 1996 [reversed]; 3d instance BGH 25 November 1998 [reversing]

SELLER'S COUNTRY: Germany [defendant]

BUYER'S COUNTRY: Austria [plaintiff]

GOODS INVOLVED: Surface protective film


Case abstract

GERMANY: OLG Karlsruhe 25 June 1997

Case law on UNCITRAL texts (CLOUT) abstract no. 230

Reproduced with permission from UNCITRAL

A German seller, defendant, delivered surface-protective film to an Austrian buyer, plaintiff, for use by the buyer's business partner. The buyer did not test the film, which had to be self-adhesive and removable. When the film was removed from polished high-grade steel products, it left residues of glue on the surface. Upon being so advised, the buyer notified the seller the next day. However, this notice was given 24 days after the film had been delivered. The buyer paid the expenses of removing the glue residue and brought a claim for reimbursement of these expenses against the seller.

The CISG was applicable under both articles 1(1)(a) and 1(1)(b) CISG.

The court dismissed the buyer's claim, noting that, for durable goods, a reasonable period for examination would be 3 or 4 days (article 38(1) CISG), the extent and intensity of examination being dependent upon the type of goods, packaging and testing possibilities. Although there had been long-standing business relations between the parties, spot-checks and test treatments were required where the lack of conformity would have become evident only upon use. As subsequent testing indicated, had the buyer begun tests within 3 or 4 days after delivery, the defect would have been discovered within 7 days. For durable goods, notice should be given to the seller within 8 days after the lack of conformity ought to have been discovered. Therefore, as notice was given after the expiry of a reasonable notice period, the buyer lost its right to rely on the lack of conformity (article 39(1) CISG). Moreover, although under article 44 CISG the buyer could raise a reasonable excuse for failure to give the required notice in accordance with article 39(1) CISG, the former article did not apply to a failure to examine in keeping with article 38(1) CISG.

Further, the court held that it was insufficient that the seller had knowledge of the glue glazing. The buyer had to prove that the seller knew this would constitute a lack of conformity (article 40 CISG). By negotiating over the lack of conformity, the seller did not forfeit its right to plead that notice was given out of time. Taking into consideration the principle of good faith, such forfeiture could only be recognised if special circumstances so indicate (articles 7(1) and 80 CISG).

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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 issues: Articles 6 ; 7(1) and 7(2) ; 38(1) ; 39(1) ; 40 ; 44 ; 80 [Also cited: Articles 1(1)(b) ; 4 ; 14 ; 35 ; 36(1) and 36(2) ; 46(2) ]

Classification of issues using UNCITRAL classification code numbers:

6B [Choice of law: "Application of CISG is only excluded if it is clear with reasonable certainty that the parties by choice of law agreed on the substantive, non-uniform law of one of the Contracting States and precisely did not want the application of the CISG In this case, concrete grounds for contracting out of the Convention are missing: they particularly do not result from the Standard Business Conditions of the parties. The choice of law of a Contracting State 'German law is applicable' in general leads to the decisive application of the CISG ];

7A33 ; 7C22 [Principles of interpretation: application of good faith standards; Recourse to general principles on which Convention is based];

38A1 [Buyer's obligation to examine goods as soon as practicable in the circumstances];

39A2 [Requirement to notify seller of lack of conformity within reasonable time];

40A [Seller fails to disclose known non-conformity (sanction: seller loses right to rely on articles 38 and 39): court held buyer has burden of proof to so establish (burden not satisfied)];

44A [Excuse for failure to notify pursuant to article 39(1): court held that article 44 does not excuse noncompliance with article 38(1)];

80A2 [Party causing non-performance (loss of right): as a general principle]

Descriptors: Choice of law ; General Principles ; Good faith ; Examination of goods ; Lack of conformity notice, timeliness ; Lack of conformity known to seller ; Burden of proof

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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=296&step=Abstract>; [1997] Die deutsche Rechtsprechung auf dem Gebiete des internationalen Privatrechts im Jahre (IPRspr) No. 41; [1998] 3 Forum des Internationalen Rechts/The International Legal Forum 31-34

German: Schweizerische Zeitschrift für Internationales und Europäisches Recht (SZIER)/Revue suisse de droit international et de droit européen, 1998, 88-89

CITATIONS TO TEXT OF DECISION

Original language (German): cisg-online.ch <http://www.cisg-online.ch/cisg/urteile/263.htm>; Der Betriebsberater (DB) 1998, 393-395; OLGR Karlsruhe 1998, 25; Recht der Internationalen Wirtschaft (RIW) 1998, 235; [1997] Die deutsche Rechtsprechung auf dem Gebiete des internationalen Privatrechts im Jahre (IPRspr) No. 41; [1998] 3 Forum des Internationalen Rechts/The International Legal Forum 31-34; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=296&step=FullText>

Translation: Unavailable

CITATIONS TO COMMENTS ON DECISION

English: Van Alstine, 146 University of Pennsylvania Law Review (1998) 773 n.359 [general principles: good faith]; Ferrari, International Legal Forum (4/1998) 138-255 [234 n.869 (examination of goods)]; For a survey of close to 100 judicial and arbitral rulings on Article 39(1), go to the 1998 Pace essay on this subject by Camilla Baasch Andersen; Limbach/Ahearn, Derogation from Article 40 by the parties and conditions of Art. 40 CISG (2000) nn.5, 7; Witz, ICC International Court of Arbitration Bulletin, Vol. 11/No. 2 (Fall 2000) 16 n.20, 20 n.39; Kuoppala, Examination of the Goods under the CISG and the Finnish Sale of Goods Act (2000) 3.2.4, 4.4.1.4, 4.9 [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)]; Thompson, case commentary presented below; Bernstein & Lookofsky, Understanding the CISG in Europe, 2d ed., Kluwer (2003) § 4-9 n.141 & n.148; 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.86; Larry A. DiMatteo et al., 34 Northwestern Journal of International Law & Business (Winter 2004) 299-440 at nn.346, 352, 376, 386-387, 396; CISG-AC advisory opinion on Examination of the Goods and Notice of Non-Conformity [7 June 2004] (this case and related cases cited in addendum to opinion); [2004] S.A. Kruisinga, (Non-)conformity in the 1980 UN Convention on Contracts for the International Sale of Goods: a uniform concept?, Intersentia at 68, 71, 106, 111; [2005] Schlechtriem & Schwenzer ed., Commentary on UN Convention on International Sale of Goods, 2d (English) ed., Oxford University Press, Art. 6 paras. 12, 14 Art. 7 para. 30 Art. 38 paras. 14, 17 Art. 44 para. 5a; Henschel, The Conformity of Goods in International Sales, Forlaget Thomson (2005) 157; Schwenzer & Fountoulakis ed., International Sales Law, Routledge-Cavendish (2007) at p. 292

French: Witz, Recueil Dalloz (1998) 310-311

German: Schlechtriem, Entscheidungen zum Wirtschaftsrecht (EWiR) 1997, 785-786

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Case text (English translation) and Case commentary

Reproduced with permission of 19 Journal of Law & Commerce (2000) 245-264

  • Case text

  • Case commentary [Editorial note (Albert Kritzer): The importance of this case and case commentary is underscored by the fact that issues associated with examination of the goods and notice of lack of conformity under Articles 38 and 39 of the Convention have been litigated in almost 200 cases -- over 20% of all CISG cases thus far reported. The OLG Karlsruhe case and the Thompson commentary on it set forth below should be read in conjunction with the appeal of this case and the ruling on it by the BGH [Bundesgerichtshof (Supreme Court of Germany)] <http://cisgw3.law.pace.edu/cases/981125g1.html>. Also relevant is a subsequent BGH ruling on examination and notice issues <http://cisgw3.law.pace.edu/cases/991103g1.html> and two commentaries by Peter Schlechtriem. The first of these Schlechtriem commentaries is presented with the latter BGH case; the second is a BGH Festschrift presentation that includes comments on both BGH cases and on examination and notice of lack of conformity in general. An English translation of the Festschrift commentary may be accessed at <http://www.cisg.law.pace.edu/cisg/biblio/schlechtriem3.html>; see Section IV.1 of this presentation (enforceability of the buyer's warranty claims).]

    Oberlandesgericht Karlsruhe [1] 25 June 1997 [2]

    Translation [*] of case text by Danielle Alexis Thompson

    Facts of the case

    The plaintiff [buyer] asserts a claim for damages against the defendant [seller], due to a delivery of adhesive foil covers which did not conform to the terms of the agreement. [Seller is a German firm, buyer an Austrian firm.] In March of 1995, the [buyer] ordered 7,500 square meters of foil from the [seller], for a price of 0.57 DM per square meter. The foil was supposed to be self-adhesive, and suitable for being peeled from polished premium steel sheets so that no adhesive residue would remain. The foil, which was delivered on March 28, 1995, did not meet these specifications because the acrylic adhesive which was applied was not suitable for that particular purpose.

    The [buyer] inspected the foil for correct quantity and readily apparent defects, but did not conduct an experimental removal of the foil from the metal sheets.[3] On April 20. 1995, the [B. Metal and Baths Construction Corporation] [page 245] [B. GmbH Company], which has a contract with the [buyer], informed the [buyer] that after removal of the foil "the entire adhesive residue remained on the polished surface, like an adhesive film." On Apri1 21, 1995, the [buyer] informed the [seller] of the lack of conformity.[4] B. GmbH Company cleaned the steel sheet surfaces at a cost of 492,240 Austrian Schillings [sA], for which they were reimbursed by the [buyer].

    The parties attempted to reach an agreement. In the various conversations and written correspondence that ensued, the [seller] never mentioned that she [5] found fault with the fact that the [buyer] had first informed her of the lack of conformity on April 21, 1995.

    The [buyer] demands compensation of 492,240 sA from the [seller]. She maintains that this amount was absolutely necessary for the cleaning of the metal sheets. Furthermore, the [buyer] contends that the complaint about the defective quality was made within the period prescribed by the CISG,[6] given that the General Business Terms and Conditions established by the [seller], which indisputably provide for a deadline of complaint of eight days, did not become part of the contract. The defect only became apparent after further processing of the adhesive film.

    The [buyer] was of the opinion that the [seller] had maliciously deceived her. Previously, the [seller] had indeed used unvulcanized rubber adhesive, which did not cause any such problems.

    The [seller] denied the complaint. According to her, the complaint regarding the defective quality was not made within the prescribed deadline. Furthermore, the [seller] maintains that this particular acrylic adhesive had been used on prior occasions. It was not that the adhesive was unsuitable, but rather that an incorrect adhesive charge was used in processing. The [seller] could not have foreseen this result. She also raised an objection based upon the time limitation stated in Paragraph 477 of the Bürgerliches Gesetzbuch (BGB ).[7]

    The Heidelberg trial court rendered a decision that the claim was justified and ordered the [seller] to pay the [buyer] 35,160 sA.[8] To avoid [page 246] repetition, reference will be made to the factual findings and decisive factors of that decision. The [seller] appealed the trial court's decision. She repeats and emphasizes her initial pleading. She considers a claim made after twenty-five days untimely, regardless of whether one considers Number 13 of the [seller's] General Business Terms and Conditions, Paragraph 377 of HGB,[9] or Articles 38 and 39 of the CISG.

    The [seller] moves for the reversal of the Heidelberg trial court decision of October 2, 1996, and requests that the suit be dismissed. The [buyer] moves for the dismissal of the appeal.

    In addition to the arguments the [buyer] made to the trial court, the [buyer] contends that she is excused under Article 44 of the CISG, since extensive sample testing was not necessary to inspect the delivered goods. Moreover, the [buyer] argues that the [seller] could not protest the possibly untimely complaint, since the [seller] raised no objections in prior negotiations regarding the claim for damages. Finally, the [seller] behaved in bad faith within the meaning of Article 40 of the CISG, because she was aware of the lack of conformity in the delivered foil.

    Due to the prolonged dispute of the involved parties, reference will be made to the written correspondence, including enclosures.

    Reasons for decision

    The [seller's] appeal from the decision of the Heidelberg trial court, October 2, 1996, is justified. Even though the protective foil, which was delivered by the [seller] on March 28,1995, was defective, the [buyer] is not entitled to damages due to the lack of conformity. She did not notify the [seller] of the lack of conformity within as short a period as was practicable and has thus lost her right to claim damages (Article 38 and Article 39 of the CISG). [page 247]

    I.   The legal relationship between the parties is governed by the UN Uniform Sales Law (CISG). Germany and Austria are Contracting States within the meaning of Article 1(a) of the CISG.[10] Furthermore, private international law (Articles 27 and 28 of the EGBGB [11]) leads to the application of either German or Austrian law and therefore to the application of the law of a Contracting State (Article 1(1)(b) of the CISG).

    The UN Sales Law would not be applicable only if it were sufficiently evident and certain that the parties stipulated on the substantive law of a respective Contracting State and simply did not want the CISG to apply (Article 6 of the CISG). There is no concrete evidence that the parties intended to reject the application of UN Sales Law. Specifically, no such intent is disclosed in the General Business Terms and Conditions of the parties. The reference to the law of a Contracting State (Number 13 of the General Business Terms and Conditions of the [seller] states: "German law applies") generally leads to the relevancy of the UN Sales Law, which constitutes German law for foreign trade as of January 1, 1991 (Detzer & Thamm, Betriebsberater 1992, 2370; Piltz, Internationales Kaufrecht, 1993, Par. 2, margin no. 111). According to Article 1(1)(b) of the CISG, the choice to apply the law of a Contracting State leads directly to the application of the UN Sales Law, and the exclusion of the UN Sales Law cannot be inferred when Article 1 is applied in connection with Article 6 of the CISG [12] (Compare to choice of law rules: Herber, in v. Caemmerer/Schlechtriem, Kommentar zum Einheitlichen UN-Kaufrecht, 2d ed., Art. 6, margin nos. 14, 16 et seq.).

    Other factors suggesting that the parties have rejected UN Sales Law are neither alleged nor evident.

    II.   The defective protective foil did not conform to the contract as required by Article 35 and Article 36 of the CISG. According to Article 38 of the CISG, the buyer "must examine the goods, or cause them to be examined, within as short a period as is practicable in the circumstances."

    This duty to examine, which also includes a sample test, was not performed in a timely manner by the [buyer]. She lost the right to rely on a lack of conformity of the goods according to Article 39(1) of the CISG, since she did [page 248] not notify the seller "within a reasonable time after [s]he ha[d] discovered it or ought to have discovered it." The inspection "within as short a period as is practicable in the circumstances"[13] should make it clear between the parties of the sales contract, whether or not the delivered goods will be accepted as conforming.

          1. Although Article 38 and Article 39 of the CISG do not explicitly quantify these time periods, Number 8 of the [seller's] General Business Terms and Conditions provides that complaints will only be considered if they are received in writing by the [seller] within eight days after the arrival of the goods. In the decision of this lawsuit it remains to be seen whether the [seller's] General Business Terms and Conditions have become part of the contract according to Article 4 and Article 14 et seq. of the CISG. Additionally, it is still unclear whether the [buyer] has been improperly disadvantaged by these Terms and Conditions when Article 4 and Article 7(2) CISG are applied, taking into account Articles 31(1), 27, and 28(1) and (2) of the EGBGB,[14] and Paragraph 9 of the AGBG.[15] This disadvantage is emphasized, when considering that the right to a claim would expire, even when latent defects exist, which cannot be discovered within eight days (cf. BGH NJW 1992, 575); there would not be an effective adjustment of the time frame.

    In fact, the [buyer] did not "examine the goods within a short time." Although she received the protective foil on March 28, 1995, her first written notice of the defect is dated Apri1 21, 1995. On that same date, the [buyer] telephoned the [seller] and relayed that her customer, the B. GmbH Company, had discovered adhesive residue on the metal surfaces during the processing of the mounted foil. The B. GmbH Company had informed the [buyer] of this problem on April 20, 1995. This claim for lack of conformity, therefore, was made twenty-four days after the delivery of the goods.

              a) Even though the time periods indicated in Article 38 and Article 39 of the CISG "are formulated less stringently" than in Paragraph 377 HGB [16] (Detzer & Thamm, BB 1992, 2375), and are in particular cases more flexible to administer, the buyer is obliged to examine the goods for non-conformity within a short period of time. The "median value" for this time frame for examination according to Article 38(1) of the CISG can, even regarding [page 249] durable goods, be based on a three-to-four-day time period. This figure can be corrected upward or downward as the particular case requires (Piltz, Internationales Kaufrecht, 1993, Par. 5, margin no. 52; OLG Koblenz, RIW 1989, 310 et seq.. zum Haager EKG [ULIS]; compare also to OLG Düsseldorf NJW-RR 1993, 999 regarding a claim relating to perishable goods).

              b) The extent and intensity of the examination are determined by the type of goods, packaging and the capabilities of the typical buyer. Even though the parties have had a long-standing business relationship, random tests are always required. A so-called test processing [17] is necessary if the lack of conformity which is to be detected is only apparent after the processing (OLG Köln, BB 1988 20 at Par. 377 HGB; Schwenzer, in v. Caemmerer/Schlechtriem, Kommentarzum Einheitlichen UN-Kaufrecht, 2d ed., Art. 38, margin no. 14).

    The [buyer] did not examine the adhesive foil. Above all, she did not perform a test process or an adhesive experiment, even though she was undoubtedly in a position to do so. She could have performed the adhesion process which would have led to the discovery of any defect in the product. The supporting expert opinion which the [buyer] procured from the österreichischen Kunststoffinstitutes [18] on August 21, 1995, confirms that such an adhesion test was possible: examinations performed between August 11 and August 17, 1995, resulted in "large amounts of organic residue" on the sheet metal surfaces, and these stain formations are objectionable. It is a fact then, that the test examination, which was incumbent upon the [buyer], would have resulted in the discovery of the stains after a maximum of seven days. If the [buyer] had begun with the test process after three or four days, she would have been able to notify the [seller] of the lack of conformity within ten or eleven days at the latest. H., a technician at B. GmbH Company, who was called as a witness during the trial, confirmed this: "We pull[ed] off the foil from one metal sheet after each charge. It revealed, in fact, that the adhesive stuck." Thus, it is proven that a hidden defect did not exist.

          2. The [buyer's] notice of the lack of conformity was too late. According to Article 39(1) of the CISG, the time limit for giving notice begins at that point in time at which the lack of conformity could have been discovered. This is at the latest ten or eleven days after the delivery; therefore on April 7th or 8th, 1995. [page 250]

    The time period for notice according to Article 39(1) of the CISG is to be assessed somewhat more generously than in Paragraph 377 of the HGB, which requires notice "unverzüglich" or "immediately."[19] It amounts to approximately eight days in the case of non-perishable goods (Piltz, Internationales Kaufrecht, 1993, Par. 5, margin no. 59; Landgericht Stuttgart, RIW 1989, 984; OLG Düsseldorf RIW 1993, 325). In the case of perishable goods, it often amounts to only a few hours (Schwenzer, in v. Caemmerer/Schlechtriem, Kommentar zum Einheitlichen UN-Kaufrecht, 2d ed., Art. 39, margin no. 16). Therefore, the complaint of April 21, 1995, is several days too late. The [buyer's] omission of the test process resulted in a failure to meet the time period for notification.

          3. According to Article 40 of the CISG, the seller cannot rely on the failure to meet the time period for notification if he knew or should have known of the lack of conformity of the goods and yet did not disclose it to the buyer. The wording in Article 40 of the CISG: "[of which he] could not have been unaware" reduces the evidence necessary to prove knowledge of the facts, which could otherwise be difficult (cf. Schwenzer, in v. Caemmerer/Schlechtriem, Kommentar zum Einheitlichen UN-Kaufrecht, 2d ed., Art. 40, margin no. 4).

    The [seller] knew, indeed, that the protective foil distributed by her was coated with acrylic adhesive. It is disputable, however, if she also knew or "could not have been unaware," that the adhesive coating would render the foil non-conforming. The buyer has to prove this knowledge, yet the [buyer] has not offered any such evidence. After all, the supporting expert opinion of the Austrian Institute for Synthetic Materials only found the specific acrylic adhesive involved here, and not all such adhesives in general, to be unsuitable. The [seller] also maintains, that she had used such adhesives on several prior occasions to coat her protective foils, without the formation of adhesive residue upon removal. This explanation cannot be disproved by the [buyer]; she points to a faulty adhesive, but not to the general unsuitability of this type of adhesive.

          4. According to Article 44 of the CISG, and notwithstanding Article 39(1), the buyer can sue for damages if [s]he has a "reasonable excuse" for the omission of the required notice. The [buyer] was unable to furnish such an excuse. Article 44 of the CISG relieves the buyer only from the omission or neglect of the notice requirements stated in Article 39(1) of the CISG. The buyer is not excused, however, if [s]he did not duly execute the examination [page 251] required by Article 38 of the CISG: If the belated notice is caused by the fact that the buyer did not inspect the goods in the mandatory manner, [s]he cannot rely on Article 44 (Piltz, Internationales Kaufrecht, 1993, Par. 5, margin no. 78; Huber, in v. Caemmerer/Schlechtriem, Kommentar zum Einheitlichen UN-Kaufrecht, 2d ed. Art. 44 margin nos. 1 and 4). This is the case here. The required examination of the quantity and defects in the goods did not encompass all of the steps for inspection required by Article 38 of the CISG, which also includes a test process.

          5. No other reasons exist that would preclude the [seller] from relying on the missed time period for notification.

              a)Moreover, it is uncertain in light of Articles 35, 38, and 39 of the CISG and the notice requirement if the [seller], according to German law (Par .459 Abs. 2 BGB), had guaranteed or warranted certain properties of the goods. "Lack of conformity," in Article 35 of the CISG, is not to be influenced by the national attitudes and interpretations of the parties represented in the agreement (Piltz, Internationales Kaufrecht, 1993, Par. 5, margin no. 25); German legal concepts such as "Fehler" (defect / flaw) and "zugesicherte Eigenschaften" (guaranteed properties / warranties) are therefore not transferable to the CISG. Warranty provisions are only relevant in the context of Article 36(2) and Article 46(2) of the CISG, but not to the notice requirements.

              b) Finally, the [seller] did not forfeit her right to rely on the late notice. According to Article 7(1) and Article 80 of the CISG, principles of good faith are relevant to the legal process. Included in this is the interdiction of venire contra factum proprium (the principle of estoppel) (Herber, in v. Caemmerer/Schlechtriem, Kommentar zum Einheitlichen UN-Kaufrecht, 2d ed., Art. 7, margin no. 37), due to prior inadmissible exercise of legal rights.

    Article 7(1) and Article 80 of the CISG do not preclude the [seller] from making reference to the [buyer's] belated notice during the trial, even though the [seller] did not make the late notice about the lack of conformity an issue during pre-trial negotiations. The pre-trial negotiations of the [seller] are also to be viewed in light of the long-standing business relationship. The [seller] investigated the claimed defects and offered a substitute delivery of equal value. Even if this were an isolated case, it would be in the [seller's] best interest to change the production process and employ another adhesive, if a defect existed. It is recognized in Paragraph 377 HGB,[20] that negotiation regarding complaints about defects does not imply a [page 252] waiver of the right to plead that the notice of lack of conformity was not timely sent (see Baumbach/Duden/Hopt, HGB-Kommentar, 29th ed., Par. 327, margin no. 14).

    A contrary judgment would lead to the result, that every willingness to negotiate, even for reasons of fair dealing, would for the seller, be accompanied by the danger of losing the right to object to the belated notice; this is not appropriate (BGH BB 1978, 1489). These legal principles are also applicable under the CISG. Therefore, here as well, the specific circumstances of a particular case must clearly establish an intentional waiver. The [buyer] did not offer such circumstances. They also did not become obvious from the written correspondence presented by the parties. Consequently, the mere fact that negotiations regarding the lack of conformity took place, does not create a "valid right" for the [buyer].

    III. [The order for payment of costs is based on ZPO 91(1). The declaration of the judgment to be provisionally enforceable follows from ZPO 708 No. 10, 711. The fixing of the gravamen is based on ZPO 546(2) (1).] [ZPO = Zivilprozeßordnung (German Code of Civil Procedure).]


    FOOTNOTE

    * All translations should be verified by cross-checking against the original text. For purposes of this presentation of the translation, the Plaintiff of Austria is referred to as [buyer]; the Defendant of Germany is referred to as [seller]. Amounts in Austrian currency (Austrian Schillings) are indicated as [sA].

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    [Case commentary]

    Oberlandesgericht Karlsruhe 25 June 1997

    Buyer beware: German interpretation of the CISG has led to results unfavorable to buyers

    Danielle Alexis Thompson

    Introduction
    --   Article 38 and the buyer's obligation to examine the goods
    --   Article 39 and notice of non-conformity
    --   Article 40
    --   Article 44
    Conclusion
    --   Drafting options

    Introduction

    Since the Federal Republic of Germany became a CISG member State on January 1, 1991,[21] German courts have had a number of opportunities to apply and interpret the provisions of the CISG.[22] These courts, as well as other foreign courts, are "interpreting the CISG in ways which are unfamiliar to their American counterparts, forming an important and nuanced jurisprudence."[23] The United Nations' call for uniform interpretation and application of the CISG,[24] which has prompted widespread comment on whether such a goal is attainable or even desirable,[25] requires practitioners to [page 253] grant consideration to how foreign jurisdictions have applied CISG. The difficulties of achieving uniformity are obvious when one considers the vast differences each country that applies the CISG brings to the interpretation process. Admittedly, it is nearly impossible for a court to "transcend its domestic perspective and become a different court that is no longer influenced by the law of its own nation State."[26] The phenomenon of the "homeward trend,"[27] or the tendency for a court to see a legal problem though its domestic lenses, is arguably one of the greatest barriers to uniformity.

    The decision of the Oberlandesgericht, translated above, reflects this tendency, as well as the trend among foreign judicial decisions to be increasingly unfavorable to buyers.[28] Although the German court's application of Articles 38, 39, 40 and 44 would alarm many American lawyers who are most comfortable with the Uniform Commercial Code, it provides an illustrative example of how foreign judicial bodies may interpret the CISG.

    Article 38 and the buyer's obligation to examine the goods

    According to Article 38, a buyer "must examine" the goods. Article 38, however, is less clear as to the extent to which this inspection must be carried out and within what time period. As revealed by the case translated above, the nature and extent of the examination required by German courts is particularly stringent.[29] Indeed, the [buyer] examined the goods for quantity and readily [page 254] apparent defects. The court's decision that the examination was not sufficient rested primarily on the fact that the buyer had not conducted any type of sample testing. The court's assertion that a test processing is necessary when the lack of conformity to be detected is only apparent after processing, seems to imply that no defect can ever be latent; just about any defect is discoverable after thorough examination. The court apparently ignored the view among many scholars and the drafters of the CISG, which supports a more buyer-favorable interpretation. The examination should be one which is "reasonable under the circumstances. The buyer normally is not required to make an examination which would reveal every possible defect."[30] The German court's requirement of a test processing fails to consider whether it would be practicable or economically feasible and efficient to conduct such experimentation; i.e., whether it would be reasonable under the circumstances. In the German court's opinion, since the [buyer] could have performed the adhesion process which would have led to the discovery of any defect in the product, the [buyer] should have done so. Little consideration is given to the costs and benefits involved.

    Furthermore, the court failed to take into consideration that what is considered reasonable will necessarily be influenced by contractual provisions, trade usage, the type of goods involved and the sophistication and resources of the parties.[31] While noting that the extent and intensity of examination are determined by the type of goods, packaging and the capabilities of a typical buyer, the court failed to address how these factors affected what should be considered reasonable in this particular case. Instead, the court merely stated that even though the parties had a long-standing business relationship, random tests are always required. Thus, the court completely disregarded the fact that the relationship of the parties may have influenced the [buyer's] presumption that the adhesive glue used was the same as what had been used on prior occasions. Specifically, the court ignored the possibility that established practices may have been developed [page 255] between the parties, such that an extensive examination was not necessary.[32] Given the long-standing business and contractual relationship in the case at bar, the court should have taken past practices into account when determining what would have been a reasonable examination under the circumstances.

    The court's interpretation of the time period allowed for inspection was equally stringent. Article 38's reference to "within as short a period as is practicable in the circumstances," with its latent ambiguity, has lead to a variety of interpretations as to the appropriate time period for examination. Not surprisingly, the German court tended to compare its own domestic law with that of the CISG. Although not strictly applying German law,[33] which would require an examination immediately upon delivery (unverzüglich nach der Ablieferung), the court seemed to be less flexible than what the CISG would allow.

    While Article 38 does not state a specific time period during which inspection must occur, the requirement that the inspection be made within a "short period" is undoubtedly more flexible than its predecessor, Article 38 ULIS,[34] which required that examination be made "promptly."[35] In any event, it is doubtful that the CISG requires immediate examination, since such language is lacking in Article 38.[36]

    Although the CISG fails to designate a fixed time period, the German court essentially does so, indicating that even in cases where non-perishable goods are concerned, examination within a three-to-four-day time frame is expected. By fixing a specific time period, the court seems to permit less flexibility than the language of Article 38 allows. In essence, the court suggests that an examination is almost always practicable within three or four days. Its rendition of what is "practicable in the circumstances" omits consideration that an independent third party may be needed to examine the goods, that the technology required to conduct such an examination might not [page 256] be readily available, and that other circumstances may limit a buyer's ability to conduct an expedient examination.

    Furthermore, the court apparently rejects the suggestion of a number of commentators that the requirement to examine should be read in conjunction with Article 39's duty to give notice within a reasonable time.[37] Other German courts have seemingly accepted the view that "the proper timetable for inspection is determined by reference to the time needed for reasonable notice of non-conformity."[38] The courts, however, like the court in the case at bar, still seemed to impose a duty to inspect the goods within a few working days. In doing so, these courts reject the idea that the seller is unlikely to suffer any injury if the examination is late but the notice is still seasonable.[39]

    While the instant case illustrates how one German court dealt with the ambiguities of Article 38, it is nearly impossible to anticipate how other jurisdictions and even other German courts will interpret the CISG in similar factual situations. Regardless of whether one considers the German court's interpretation correct or incorrect, however, the message to parties to a contract governed by the CISG is clear: German judicial interpretations have a tendency to construe both the time and the scope of examination duties very strictly. Buyer Beware.

    Article 39 and the notice of non-conformity

    Article 39(1) requires a buyer who receives non-conforming goods to give the seller notice specifying the nature of the non-conformity.[40] A "lack of conformity" under that Article includes defects in quantity, quality , description, and packaging.[41] Although the court in the instant case did not [page 257] voice any disapproval with regard to the buyer's specificity in describing the lack of conformity, a number of German courts have held that the specificity requirement was not met.[42] In addition to being specific, the notice must be given within a reasonable time after the buyer discovered, or ought to have discovered, the non-conformity.[43] If a buyer fails to give proper notice [s]he will be unable to rely on the non-conformity for any remedy.[44] The rights which a buyer forgoes in the case of insufficient notice include the right: to claim damages under Article 45(1)(b), to require delivery of substitute goods under Article 46(2), to require repair under Article 46(3), to declare the contract avoided under Article 49 and to reduce the price under Article 50.[45] Thus, the buyer in the instant case must forego any of her usual remedies, and is forced to keep the non-conforming goods as well as to pay the contract price in spite of the non-conformity.[46] The result seems unjustifiably favorable to the seller when one considers that the buyer notified the seller of the non-conformity the day after she had received complaints from her customers.

    Although allowing for some derivation, the court fixed somewhat specific time periods for notice. The court determined that the time period for notice amounts to often only a few hours in the case of perishable goods and approximately eight days in the case of non-perishable goods. Whether it did so intentionally or not, the fact that the court specifies certain time periods implies its unwillingness to truly examine the facts of each case to determine what constitutes a reasonable time. The fact that the [buyer's] notice fell outside the bounds of these arbitrary time periods seems to be the paramount reason the court denied the [buyer's] complaint.

    The court found that, had the buyer conducted a test processing of the adhesive foil, she would have been able to notify the [seller] of the lack of conformity within ten to twelve days at the latest. The court's conclusion that ten to twelve days would have been reasonable was based on expert testimony [page 258] produced by the [buyer] at trial which was apparently meant to show that the product was indeed non-conforming. Instead, the court used the testimony as evidence that a test processing would have revealed the defect, and the time needed for such experimentation to occur. This interpretation presumes that Article 38 requires a buyer to conduct such an extensive examination, and that defects which are discovered in the process can no longer be considered latent. Such a strict interpretation of the CISG seems inconsistent with the idea that the buyer's examination need not reveal every possible defect.[47] In determining what scope of examination is necessary, the German court failed to address the costs and benefits of conducting an examination and the relationship between the parties which may have rendered action beyond the buyer's initial inspection for quantity and apparent defects unnecessary .

    The German court also failed to address the fact that the sophistication of the parties may influence whether notice is given within a reasonable time. A few commentators have suggested that Article 39 should be read in light of the circumstances which may cause delay in inspection.[48] Buyers in third-world countries, for example, may have to rely on experts to inspect the goods for conformity.[49] Additionally, had the court focused on the reasons behind the notice provision, it may have reached a different conclusion. Notice allows a seller to take the necessary steps to remedy the non-conformity or cure the defect.[50] Furthermore, the notice provision allows the seller to gather evidence regarding the goods' condition.[51] Notice also serves to prevent fraud in cases where a buyer may have found a more attractive bargain and is now attempting to avoid the contract in bad faith.[52] By requiring prompt notice, Article 39 reduces the likelihood that a buyer can escape performance based on trivial non-conformities about which she did not punctually complain. For these reasons, Article 39 sets forth a maximum period of two years in order to prevent buyers from relying on non-conformities which may not have been [page 259] caused by an act or omission of the seller.[53] The non-conformity, for example, may not have been caused by a breach of an obligation of the seller, but rather by external influences after risk of loss has passed or by normal wear and tear.[54]

    In the instant case, the appellate court failed to recognize that the seller's ability to cure any defect, gather evidence, or to protect herself from buyer fraud was in no way compromised by the buyer's allegedly belated notice. In contrast, in making its determination that notice was timely, the lower court explicitly evaluated whether the purposes behind the notice provision would still be served if the seller was not permitted to rely on Article 39. That court found that the [seller] was not hindered in taking measures to test and evaluate the defects and to protect her own rights.[55] Particularly, the court noted that since the goods involved were not perishable or otherwise the type of goods which may deteriorate due to normal wear and tear, there was no particular hurry to send notice.[56] The court further recognized that the international character of the CISG requires that its provisions be read in the context of some of the more "liberal solutions provided by the different legal systems of other Contracting States"[57] and that the period of time which is reasonable is usually a longer period than the one to which German courts are accustomed.

    The lower court was correct in recognizing that although certain civil law traditions may be reflected in the CISG, the goal of uniform interpretation necessitates courts to transcend their domestic biases. "[T]he CISG is neither wholly of the Civil Law nor of the Common Law, but borrows from both -- and yet is also something entirely distinct."[58] Indeed, the notice provisions of the CISG are also distinct from American laws. The language of Article 38 and Article 39,[59] as compared to "seasonable" notice required by U.C.C. 2-602(1), arguably implies that a buyer has less time to notify the seller of any non-conformity under the CISG than under the U.C.C.[60] [page 260]

    While it is apparent that the CISG's time for notice provisions lie somewhere between the German unverzüglich (immediately) and the American concept of seasonable, the question nonetheless remains as to its exact positioning on the spectrum. A number of other German cases have likewise placed a heavy burden on the buyer, leading to some criticism that Germany "has been too strict in cutting off buyers' claims based on delay in notifying the seller of defects."[61] The question of the exact stringency of the CISG notice provision will undoubtedly remain until other foreign jurisdictions have an opportunity to interpret Article 39 and are forced to consider how German courts have resolved the issue.

    Presently, given the subjectivity of when notice is reasonable and the varying interpretations of foreign courts, a party's certainty can only be provided through carefully drafted contractual provisions. Although Article 39 provides for a maximum two years for notice, courts have given great deference to the intent of the parties, and parties wishing to alter the time period can explicitly so provide in the contract.[62]

    Article 40

    A buyer may be able to retain her rights under Article 40 of the CISG even if she did not "examine the goods and/or did not provide the seller with notice of the non-conformity."[63] If the seller knew or could not have been unaware of the non-conformity and yet did not disclose it to the buyer, the buyer may be protected under that Article. The German court was unwilling to rely on this provision, however, since it determined that the seller did not know that the change in the product used would be unsuitable or constitute a non-conformity. Thus, the court did not even address whether the change in the type of acrylic used may, in and of itself, have constituted a [page 261] non-conformity under the contract. Even if, as the [seller] argued, the acrylic was used on prior occasions, the expectations of the buyer due to prior dealings with the seller may suggest that any such change would render the product non-conforming. Had the court addressed the duty of the seller to provide goods which conform to the contract in further detail, it may have come to the conclusion that the seller should have at least notified the buyer of any change in the product. Instead, the court merely stated that the [buyer] failed to produce sufficient evidence so that the [seller] knew or could not have been unaware that the adhesive coating would render the foil non-conforming.

    Article 44

    If the buyer can show reasonable excuse for her failure to give notice, she may be permitted to reduce the price or claim damages, except loss of profit, in accordance with Article 44. While one may accuse the court of interpreting the provisions of Articles 38 and 39 too strictly, the German court's interpretation of Article 44 seems to reflect the general consensus that Article 44 is a safe harbor provision only in extreme circumstances.[64] Thus, the court correctly held that the [buyer] did not furnish any reasonable excuse for the omission of the required notice.

    The court, however, continued its analysis and came to the rather surprising conclusion that Article 44 only relieves a buyer from the omission or neglect of the notice requirements stated in Article 39(1); a buyer is not entitled to rely on Article 44 if she did not duly execute the examination required by Article 38. Since the belated notice in the instant case was caused by the fact that the buyer did not inspect the goods in the mandatory manner, she would be unable to claim any relief under Article 44 even if she had a reasonable excuse.

    Once again, the court appears unaware of the propriety of reading Articles 38 and 39 in conjunction. By placing such importance on the occurrence and intensity of an inspection, the court fails to consider circumstances where no inspection may occur, but notice is still timely. In those situations, the buyer, under the German court's analysis, would be left without recourse. [page 262]

    Conclusion

    Perhaps the decision of the Oberlandesgericht can be explained as a demonstration of the formalism and strictness that pervades German culture. The tendency is to criticize the German court for misconstruing the CISG provisions in a way that reflects civil law, rather than what American lawyers think that body of law should represent. One may consider, however, that perhaps Americans too can be blamed for seeing the CISG through their own domestic lenses. American criticism of foreign judicial interpretations may merely be a manifestation of distrust of anything unfamiliar. If the goal of uniformity is ever to be realized it requires all lawyers and courts, both foreign and domestic, to strive for international understanding. Unfortunately, in the meantime, the uncertainty of how courts will apply the CISG necessitates clearly drafted contractual provisions that leave no room for misinterpretation.

    Drafting options

    For the practitioner drafting an international sales contract, particular attention should be paid to provisions requiring notice. In light of the varying interpretations of when an examination is sufficient and when notice is given within a reasonable time, lawyers should consider whether their client's bargaining power would allow them to draft the agreement to provide greater certainty regarding notice. Under Article 6 of the CISG the parties can intensify or mitigate the burden of notice.[65] In order to do so, the parties should explicitly state in the contract that they are opting-out of the applicable CISG provisions. The contract should clearly define the manner and extent of the examination to be conducted,[66] the time period for examination, and the period permissible for subsequent notice of non-conformity. Parties are also advised to distinguish between latent and apparent non-conformities to be certain that such a clause would be considered valid and part of the contract, rather than excessively unfair. Carefully drafted contract provisions will [page 263] allow buyers protection that will not be available if one merely relies upon the interpretation of international sales law.[67] [page 264]


    FOOTNOTES

    1. OLG Karlsruhe, UNILEX, No.1 U 280/96 (June 25, 1997). [].

    2. The German judicial system consists of the following:

    --   The Amtsgerichte (AG) are lower courts which have jurisdiction over minor cases (usually, disputes up to 10,000 DM) and always decide at first instance.

    --   The Landgerichte (LG) decide cases involving disputes over 10,000 DM at the first instance, as well as appeals from the Amtsgerichte.

    --   The Oberlandesgericht (OLG), which is the tribunal deciding the instant case, is generally the appellate court from the Landgericht. OLG decisions are quite influential, since in many cases, the OLG has final appellate jurisdiction.

    --   The Bundesgerichtshof (BGH) is the highest civil court. It is the court of last resort in the Federal Republic of Germany for civil matters. An appeal to the BGH is only allowed under special circumstances.

    See Martin Karollus, Judicial Interpretation and Application of the CISG in Germany 1988-1994, in REVIEW OF THE CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS (CISG) 51, 55 (Cornell Int'l L.J. ed., 1995).

    3. This experimental removal of the foil from the metal sheets will, hereinafter, be referred to as a sample test or a test processing. In situations other than the specific case at bar, a sample test will refer to whatever test may be necessary in order for a particular buyer to discover defects in the delivered goods.

    4. Although the German text states that the [seller] informed the [buyer] of the lack of conformity, the translator is quite certain that this is a typographical error.

    5. The German text refers to both [buyer] and [seller] as female parties.

    6. United Nations Convention on Contracts for the International Sale of Goods, Apr. 11, 1980, S. TREATY Doc. No. 98-9 (1983), 19 I.L.M. 668 (1980) (entered into force on Jan. 1, 1998), also available in 15 U.S.C.A. app. at 49 (West Supp. 1996), 52 Fed. Reg. 6262-80, 7737 (1987), U.N. Doc. A/CONF.97/18 (1980) [hereinafter CISG].

    7. The Bürgerliches Gesetzbuch is the German Civil Code.

    8. According to the trial court, the [buyer] was only entitled to this amount. The [seller] had offered evidence that the sheets could have been cleaned at a cost of 35,160 sA.

    9. Paragraph 377 of the Handelsgesetzbuch (HGB) reads:

    "[Inspection and Notice Requirements] (1) If the sale is a commercial transaction for both parties, the buyer must inspect the goods immediately upon delivery to the extent possible according to regular business practices. If a defect is discovered, the seller must be notified immediately. (2) If the buyer neglects to notify the seller, the goods will be considered to be approved by the buyer, unless the defect involved is latent and could not have been discovered during inspection. (3) If the defect later becomes apparent, notice must be given immediately after discovery. Otherwise, the goods will be considered to conform to the contract, even in light of the defect. (4) In order to secure the rights of the buyer, it is sufficient that notice be timely sent. (5) If the seller has concealed the defect in bad faith, then he cannot rely on these provisions."

    10. See CISG, supra note 6, art. 1(1) ("This Convention applies to contracts of sale of goods between parties whose places of business are in different States: (a) When the States are Contracting States; or (b) When the rules of private international law lead to the application of the law of a Contracting State.").

    11. Einführungsgesetz zum Bürgerlichen Gesetzbuche (EGBGB). The EGBGB is the introductory law to the German Civil Code.

    12. See CISG, supra note 6, art. 6 ("The parties may exclude the application of this Convention or, subject to article 12, derogate from or vary the effect of any of its provisions.").

    13. CISG, supra note 6, art. 38(1).

    14. See supra note 11.

    15. AGBG stands for the Gesetz zur Regelung des Rechts der Allgemeinen Geschiiftsbedingungen. The AGBG is a law which regulates general business terms and conditions.

    16. See supra note 9.

    17. The court is apparently requiring buyers to conduct an experimental test run of the process used in manufacturing or finishing the delivered goods. See also supra note 3.

    18. Austrian Institute for Synthetic Materials.

    19. See supra note 9.

    20. See supra note 9.

    21. See CISG Contracting States and Declarations Table, 17 J.L. & COM. 449 (1998).

    22. See Karollus, supra note 2, at 54 (noting that by 1994 German courts had published 23 decisions dealing with the CISG). See also John O. Honnold, The Sales Convention: From Idea to Practice, 17 J.L. & COM. 181, 183 (1998) (mentioning that Germany led the pack with over one hundred CISG decisions by 1998).

    23. Andrew J. Kennedy, Recent Developments: Non-Conforming Goods Under the CISG-What's a Buyer to Do?, 16 DICK. J. INT'L L. 319, 319 (1998).

    24. See CISG, supra note 6, art. 7(1) ("In the interpretation of this Convention, regard is to be had to its international character and to the need to promote uniformity in its application and the observance of good faith in international trade.").

    25. See Harry M. Flechtner, The Several Texts of the CISG in a Decentralized System: Observations on Translations, Reservations and other Challenges to the Uniformity Principle in Article 7(1), 17 J.L. & COM. 187 (1998). See also Harry M. Flechtner, The U.N. Sales Convention (CISG) and MCC-Marble Ceramic Center, 1nc. v. Ceramica Nuova D'Agostino, S.p.A.: The Eleventh Circuit Weighs in on Interpretation, Subjective Intent, Procedural Limits to the Convention's Scope, and the Parol Evidence Rule, 18 J.L. & COM. 259 (1999); V. Susanne Cook, CISG: From the Perspective of the Practitioner, 17 J.L & COM. 343 (1998).

    26. John E. Murray, Jr., The Neglect of CISG: A Workable Solution, 17 J.L & COM. 365, 367 (1998).

    27. Professor John O. Honnold discusses the "homeward trend" in his book, DOCUMENTARY HISTORY OF THE UNIFORM LAW FOR INTERNATIONAL SALES 1 (1989).

    28. See Kennedy, supra note 23, at 320.

    29. Accord Kennedy, supra note 23, at 326 (stating "[n]owhere is the formalism and strictness of the recent CISG jurisprudence more apparent than in how detailed the examination and the resulting notice must be."). See also A1ejandro M. Garro, The U.N. Sales Convention in the Americas: Recent Developments, 17 J.L & COM. 219, 229-30 n.61 (1998) (stating "[s]everal decisions rendered by German courts indicate that the expression 'as short ... as is practicable' actually means what is says. See, e.g., Amtsgericht Riedlingen, UNILEX No. 2 C 395/93 (Oct. 21, 1996) [sic] (GE) (examination must be made within three days of delivery and notice of lack of conformity must be sent within the next three days); Landgericht Düsseldorf, UNILEX No. 31 O 231/94 (June 23, 1996) (GB) (stating that the time for examination of the goods was limited to a few working days)").

    30. Kennedy, supra note 23, at 328 (citing Commentary on the Draft Convention on Contracts for the International Sale of Goods, Prepared by the Secretariat, reprinted in OFFICIAL RECORDS OF THE UNITED NATIONS CONFERENCE ON CONTRACI'S FOR THE INTERNATIONAL SALE OF GOODS, U.N. Doc. A/CONF.97/5 (1981), at 34). See also Franco Ferrari, Specific Topics of the CISG in the Light of Judicial Application and Scholarly Writing, 15 J.L. & COM.1, 107 (1995) (stating "[a]s far as the standard for inspection is concerned, it has also been suggested that the buyer (or someone of his staff or even a third person authorized to do so) does not have to make extraordinary efforts; it is sufficient that in inspecting the goods he employs the skills of a reasonable person of the same kind, i.e., of a reasonable person involved in a contract of the same type in the particular trade concerned.").

    31. See Kennedy, supra note 23, at 328.

    32. See CISG, supra note 6, art. 9(1) ("The parties are bound by any usage to which they have agreed and by any practices which they have established between themselves.").

    33. See Para. 377 HGB, supra note 9.

    34. See Convention Relating to a Uniform Law on the International Sale of Goods, July 1, 1964, with Annex, Uniform Law on the International Sale of Goods, reprinted in 13 AM. J. COMP. L. 453 (1964).

    35. See Ferrari, supra note 30, at 105.

    36. See Fritz Enderlein, Rights and Obligations of the Seller Under the UN Convention on Contracts for the International Sale of Goods, in INTERNATIONAL SALE OF GOODS: DUBROVNIK LECTURES 133, 167 (Petar Sarcevic & Paul Volken eds., 1986) (suggesting that the fact that the CISG fails to designate a fixed time period requires that the length of period for examination depend on the circumstances). But note that some commentators have stated that examination should be made immediately. See also Ferrari, supra note 30, at 105 (citing Wolfgang Reishafer, Diskussionsbeitrag, in DAS UNCITRAL-KAUFRECHT IM VERGLEICH ZUM ÖSTERREICHSCHEN RECHT 134 (Peter Doralt ed., Vienna 1985)).

    37. See Kennedy, supra note 23, at 324. For a somewhat similar proposition, see Enderlein, supra note 36, at 166 (stating "it is not the examination itself that determines whether [the buyer] keeps his rights arising from non-conformity of the goods or whether he loses them, but rather the notice to the seller (Art. 39). The examination is carried out only in preparation of the notice. If the buyer discovers a non-conformity without examining the goods, he may and has to notify the seller.").

    38. Kennedy, supra note 23, at 325 (citing LG Düsseldorf, UNILEX, No. 31 O 231/94 (June 23, 1994)).

    39. See Kennedy, supra note 23, at 324.

    40. "The requirement of Article 39 that the buyer must specify the nature of the non-conformity is similar to UCC 2-605(1), which requires the buyer 'to state in connection with rejection a particular defect,' or be barred from 'relying on the unstated defect to justify rejection or establish breach.' " The purposes of both provisions are to allow the seller to cure. HENRY GABRIEL, PRACTITIONER' S GUIDE TO THE CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS (CISG) AND THE UNIFORM COMMERCIAL CODE (UCC) 119 (1994).

    41. See id. at 118 (citing CISG art. 35).

    42. See Karollus, supra note 2, at 70 (explaining for example that "the LG München decided that the specificity requirement was not met when a buyer of shoes complained generally about bad fit and workmanship"). Karollus also mentions that stringent specificity requirements may result in the buyer bearing the risk of non-conforming goods, even though it was the seller who made the non-conforming delivery.

    43. See CISG, supra note 6, art. 39.

    44. See Kennedy, supra note 23, at 322 (stating "notice is the only way for [buyers] to retain any remedies in the event they receive defective goods."). See also CISG, supra note 6, art. 39.

    45. See Enderlein, supra note 36, at 170. See also GABRIEL, supra note 40, at 117.

    46. See Enderlein, supra note 36, at 170 (noting that when a buyer loses [her] rights under CISG Article 39 [s]he must retain the non-conforming goods and pay the contract price. provided that CISG Article 40 or Article 44 does not apply).

    47. See supra note 30 and accompanying text.

    48. See GABRIEL, supra note 40, at 117 (citing Elizabeth Hayes Patterson,United Nations Convention on Contracts for the International Sale of Goods: Unification and the Tension Between Compromise and Domination, 22 STAN. J. INT'L L. 263, 283-84 (1986)).

    49. See GABRIEL, supra note 40, at 117. For a similar proposition, see also Lisa M. Ryan, The Convention on Contracts for the International Sale of Goods: Divergent Interpretations, 4 TUL. J. INT'L & COMP. L. 99, 110-11 (1995) (suggesting that in developing nations, where merchants tend to be "less knowledgeable of commercial practices concerning the international sale of goods and, therefore, may be unaware of their duty to provide prompt notice of [non-conformity]," a divergent and less stringent interpretation of the requirements of Article 38 is necessary).

    50. See Enderlein, supra note 36, at 171.

    51. See JOHN O. HONNOLD, UNIFORM LAW FOR INTERNATIONAL SALES 255 at 277 (3d ed. 1999).

    52. See id.

    53. See Enderlein, supra note 36, at 171-72.

    54. See id. at 172.

    55. See OLG Karlsruhe, UNILEX, No. 1 U 280/96 (June 25, 1997), which includes the decision of the LG Heidelberg of Oct. 2, 1996.

    56. See id.

    57. OLG Karlsruhe, supra note 1, English ABSTRACT.

    58. Kennedy, supra note 23, at 319.

    59. The examination must be "within as short a period [of time] as is practicable in the circumstances." CISG, supra note 6, art. 38(1). The notice which follows must be within a reasonable time after inspection. See CISG, supra note 6, art. 39(2).

    60. See Kennedy, supra note 23, at 324 n.15.

    61. Honnold, supra note 22, at 185 (citing Michael Joachim Bonell & Fabio Liguori, The U.N. Convention on the International Sale of Goods: A Critical Analysis of Current International Case Law (Part II), I (new series) UNIFORM L. REV. (UNIDROIT 359, 360 (1996) (citing five German cases in support, the authors assert that "the case law seems to be moving in the direction of a rather strict interpretation of the criteria of time set out in Articles 38 and 39 [of the CISG], requiring the buyer to conform to generally brief terms.")).

    62. Note however, if the parties merely extend the contractual period of guarantee, "the buyer is still obliged to examine the goods within a reasonable period of time and to give notice of any discovered non-conformity within a reasonable time. [S]he may not wait till [sic] the very end of the period of guarantee to give notice of apparent defects." Enderlein, supra note 36, at 173. In order to provide the buyer more tangible protection, the parties should expressly provide as to what constitutes a "reasonable" period of time after discovery of the defect.

    63. GABRIEL, supra note 40, at 120.

    64. See Kennedy, supra note 23, at 334 (stating "Article 44, however, is a last resort provision and provides little shelter for a buyer."). See also id. at 339.

    65. See Karollus, supra note 2, at 70 (noting that a German court (LG Baden-Baden) upheld a general contract condition of an Italian tile seller which provided that notice of a non-conformity must be provided within thirty days. The court found that the buyer lost [her] right to rely on the non-conformity, even though the buyer claimed that the non-conformity was not discoverable upon examination). See also Kennedy, supra note 23, at 333 (stating "if a contract guarantees the performance of computers for five years, this provision would override Article 39's two-year limit.").

    66. For instance, the parties may agree on a mathematical-statistical control of quality, as well as whether and what types of testing of the goods will be required. Should the examination include each single item, or merely spot-checks?

    67. See Kennedy, supra note 23, at 325 (noting "it is the contract itself, rather than the CISG as governing law, that will give buyers their greatest protection.").

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