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CISG CASE PRESENTATION

France 29 January 1998 Appellate Court Versailles (Giustina International v. Perfect Circle Europe) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/980129f1.html]

Primary source(s) of information for case presentation: Case text

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Case identification

DATE OF DECISIONS: 19980129 (29 January 1998)

JURISDICTION: France

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

JUDGES(S): Gallet, président; Boilevin, Raffejeaud, conseillers; Le Grand, greffier

CASE NUMBER/DOCKET NUMBER: Arrêt no. 56; R.G. no. 1222/95

CASE NAME: Société Giustina International v. Société Perfect Circle Europe

CASE HISTORY: 1st instance Trib. com. de Versailles 23 November 1994 [affirmed]

SELLER'S COUNTRY: Italy [defendant]

BUYER'S COUNTRY: France [plaintiff]

GOODS INVOLVED: Machines


Case abstract

FRANCE: Court of Appeal Versailles 29 January 1998

Case law on UNCITRAL texts (CLOUT) abstract no. 225

Reproduced with permission from UNCITRAL

A French buyer placed an order with an Italian seller for two items of high-tech equipment.

After carrying out tests on two occasions at the seller's premises, the buyer reported the defects and indicated to the seller the necessary repairs and improvements. Following the delivery of the two machines, the buyer gave notice of non-conformity.

An appeal against the first-instance decision pronounced by the Commercial Court of Versailles was lodged with the Court of Appeal, which held that the buyer's various objections met the requirements of article 39 CISG, particularly since they had not been refuted by the seller. The appeal judges also noted that the buyer, when reporting the defects, had requested their rectification and had thus complied with the requirements set out in article 46 CISG.

With regard to the reasonable time for exercising the right of avoidance, as stipulated in article 49 CISG, the Court of Appeal noted that the buyer had not failed to comply with that provision by suing the seller after giving notice of its intention to have the contract avoided, since the buyer had reasonably endeavoured to maintain the contract in force and the seller had requested additional periods of time, which were granted by the buyer (article 47 CISG). Finally, the Court of Appeal concurred with the Commercial Court's ruling of avoidance of the contract, since the delivery of the goods, which did not conform with the order, had substantially deprived the buyer of what it was entitled to expect from the contract.

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Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issues: Articles 39 ; 46 ; 47 ; 49

Classification of issues using UNCITRAL classification code numbers:

39A [Requirement to notify seller of lack of conformity: buyer must notify seller within reasonable time];

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

47A3 [Buyer's right to fix additional period for performance: must set reasonable, specific and final period (buyer had accepted seller's request for additional time)];

49A [Buyer's right to avoid contract: exercised within reasonable time]

Descriptors: Lack of conformity notice, timeliness ; Repair ; Nachfrist ; Fundamental breach ; Avoidance

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Editorial remarks

Excerpt from Larry A. DiMatteo et al., 34 Northwestern Journal of International Law & Business (Winter 2004) 299-440 at 379

"[C]ourts have permitted buyers to avoid sales contracts on the basis of notices that were not specific with respect to the additional period of time granted to the sellers for performance. [This] court for example, permitted a buyer to avoid performance of a sales contract for high technology machinery on the basis that the seller advised the buyer of its intent to repair the machinery subsequent to its delivery.[482] The failure of the seller to effect adequate repairs pursuant to its promise justified the buyer's attempt to avoid the contract even in the absence of a specific time granted by the buyer for such repairs.[483] Under this version of Article 47, the time extension need not be precise but rather only capable of judicial interpretation as reasonable.[484]

482. See Giustina Int'l Sp.A. v. Perfect Circle Europe SARL, CA Versailles, 1e ch. Jan. 29, 1998, supra note 377.

483. Id. See also, LG Ellwangen 1 KfH O 32/95, Aug. 21, 1995 (F.R.G.), available at <http://cisgw3.law.pace.edu/cases/950821g2.html> [English translation by Ruth M. Janal, translation edited by Camilla Baasch Andersen] (German court determined that the period of time established by a German buyer for delivery of conforming goods by a Spanish seller of paprika was reasonable on the basis that the buyer only declared the contract to be avoided two weeks after the expiration of the original additional period of time to perform).

484. Furthermore, even if the initial period of time granted by the buyer is not reasonable, it may be rendered reasonable by delays in the buyer's declaration of avoidance. However, buyers would be wise to note that general demands to the seller to perform "promptly" or "as soon as possible" may be insufficient to meet the requirements of Article 47.

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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=280&step=Abstract>; [1999] Transportrecht, Beilage "Internationales Handelsrecht" (TranspR-IHR) 10

French: [1998] Revue de jurisprudence de droit des affaires (RJDA) 304 N. 414

CITATIONS TO TEXT OF DECISION

Original language (French): CISG - France website ("http://Witz.jura.uni-sb.de/CISG/decisions/290198v.htm"); CISG online website ("http://www.jura.uni-freiburg.de/ipr1/cisg/urteile/text/337.htm"); Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=280&step=FullText>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

English: Boghossian, Pace Review of the Convention on Contracts for the International Sale of Goods (1999-2000) n.417; Bernstein & Lookofsky, Understanding the CISG in Europe, 2d ed., Kluwer (2003) §: 4-6 n.127; §: 6-7 n.44; §: 6-8 n.59; 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); [2005] Schlechtriem & Schwenzer ed., Commentary on UN Convention on International Sale of Goods, 2d (English) ed., Oxford University Press, Art. 47 para. 6

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Case text (English translation)

Queen Mary Case Translation Programme

Court of Appeals of Versailles 29 January 1998

Giustina International (S.p.A.) v.
Perfect Circle Europe, formerly Floquet Monopole (SARL)

Translation [*] by Charles Sant 'Elia [**]

Translation edited by Kirsten Statländer [***]

Decision no. 56
R.G. no. 1222/95

FRENCH REPUBLIC
In the name of the French People

[]

On the twenty-ninth of January nineteen-hundred and ninety-eight, the Court of Appeals of Versailles, 12th Chamber, 1st Section, has rendered the following ruling, announced in a public hearing, the suit having been argued in a public hearing on the eleventh of December nineteen-hundred and ninety-seven before: M. Gallet, presiding judge; M. Boileven and M. Raffejeaud, judges; assisted by Mme. Le Grand, clerk of the court; these judges having deliberated pursuant to the law.

In the matter between

[SELLER] Giustina International (S.p.A.) Company, having its principal office at Via Umbria Zona Industriale Pescarito, Turin 10099 San Mauro Torinese (Italy), bringing appeals by its legal representatives domiciled in that capacity in the said office, appellant on the principal appeal and appellee on the cross-appeal, filing by SCP Lambert Debray Chemin, attorneys before the Court of Appeals of Versailles; pleading by counsel de Richemont, attorney of the Paris bar,

and

[BUYER] Perfect Circle Europe Company, formerly Floquet Monopole (SARL), having its principal office at 53 Boulevard Robespierre, BP 31 78301 Poissy Cedex, by its legal representatives domiciled in that capacity in the said office, appellee on the principal appeal and appellant on the cross-appeal, filing by SCP Gas, attorneys before the Court of Appeals of Versailles; pleading by counsel Tremblay, attorney of the Chartres bar.

Summary of the facts and the procedure

The Court refers to its previous ruling of 24 April 1997, for the summary of the facts, the procedure and the initial claims of the parties. It suffices to recall that following a public tender issued on 21 June 1988, to which the [seller], whose main office is in Turin, responded on 2 October 1989, the [buyer] placed, on 11 January 1990, an order with this Italian company, through its representative in France, for two high technology double-edged roll grinder machines, at a cost of 8,300,000.00 francs.

By bailiff's act of 3 August 1993, the [buyer], asserting delay of delivery and the non-conformity of the machines which were defective, sued the [seller] for avoidance of the sale and for payment of sums as reimbursement of the payments made, and the compensation for [buyer's] loss of operating profits.

By judgment on 23 November 1994, the Court of First Instance of Versailles, ruling on these demands and on the counterclaim of the [seller] for payment of the balance of the price, refused the [seller's] counterclaim, declared the avoidance of the contract of 11 January 1990, ordered the [seller] to pay the [buyer] the sum of 6,327,680.00 francs, plus interest at the legal rate from 3 August 1993, and ordered the withdrawal of the sequester of [buyer's] property conducted at the request of the [seller].

[Seller's position]

By additional and recapitulative briefs set down on 4 June 1997, the [seller] does not dispute the territorial jurisdiction of the Court of Versailles nor the application of French law, into which are integrated the provisions of the CISG. [Seller] points out that the [buyer] did not respect the obligation to give notice of lack of conformity to the seller within a reasonable time and nor did [buyer] fulfill the conditions of prolongation of this period of time, such as provided by Articles 39, 46 and 47 of the CISG, so that the [buyer] is deprived of the right to rely on the lack of conformity of the machines; [buyer's] demands are inadmissable for this reason. [Seller] asserts in the same way the inadmissibility of [buyer's] demand for avoidance of the sale, since it too was late, beyond the reasonable time required by Article 49 of the Convention. Subsidiary, [seller], referring to the opinion of an expert whom it appointed, alleges on the merits that proof is not provided that the machines would be unfit for the use for which they were intended, and advances that these machines, the delivery of which was accepted without reservation by [buyer], could have gone wrong because of misuse.

[Seller] clarifies that there is nothing indicating that the capacity index was not reached, nor that the machines exceeded the acceptable tolerance limit, adding that the possible imperfect adaptation is attributable to [buyer], which by its inactivity did not allow the realization of such adaptation, and which, furthermore, did not enable it to perform its obligation as a result. [Seller] maintains on the contrary that [buyer] did not perform its own commitments, notably by not allowing the satisfactory realization of the trial runs, by not assuring the adequate training of its staff.

[Seller] adds that [buyer] remains indebted to it for the sum of 1,972,320.00 francs, due to the seizure which it had exercised on the bank account of [buyer]. Furthermore, [seller] alleges that the invoked defects, which did not prevent [buyer] from taking advantage of the machines sold, do not justify the avoidance of the contract, the possibly applicable remedy being the reduction of the price.

In that case being necessary, [seller] seeks an expert report. [Seller] also considers that the proceeding commenced against it is vexatious and abusive. It asks the Court to:

-     Grant [seller]'s appeal and declare it sound;
-     Reverse in all its dispositions the judgment rendered in favor of the [buyer] on 23 November 1994 by the Court of First Instance of Versailles;
-     Award to [seller] the benefit of its previous documents and rule again.

[Seller] asks the Court to rule as follows:

1. On admissibility

-     To hold and consider inadmissable by virtue of the provisions of Articles 3(1), 46(3) and 47(1) of the United Nations Convention on Contracts for the International Sale of Goods of 11 April 1980, the demands brought by [buyer] against [seller] in its summons and complaint of 3 August 1993 by reason of an alleged lack of conformity of the goods;
-     To hold and adjudge in effect that [buyer] did not act within the reasonable time prescribed by [Article 39 of] the CISG;
-     To hold and adjudge that, in any event, [buyer] is deprived of the right to demand the avoidance of the contract, due to its failure to have acted within the reasonable time prescribed by Article 49(2)(b) of the CISG.

2. Subsidiary, on the merits

-     To hold and adjudge that [buyer] has not supplied proof of the lack of conformity which it alleges;
-     To hold and adjudge that, on the contrary, [buyer] did not perform its contractual commitments and that the disorders, supposing them established, are attributable to [buyer].

3. On [seller's] demand for payment

-     To order [buyer] to pay to [seller] the balance of the price of its acquisition, that is, the sum of 1,972,320 francs in principal, bearing in mind the settlement of accounts which occurred at the level of 6,327,680 f on the total amount of the market been supposed to be for 8,300,000 f;
-     To hold and adjudge that the aforementioned sum in principal be increased by interest at the legal rate from the day of the summons and complaint for payment, following the sequester of property effectuated by [seller] on the bank account of [buyer] on 22 December 1993.

[sic, no number "4" in text]

5. On the request for an expert evaluation

Before judging, to allow the Court to be enlightened on the technical aspects as well as on the aspects of account between the parties, [seller] requests the Court to order a measure of instruction and to appoint an expert of the Court's choice with the purpose:

- To seek all the documents and pieces that are useful for the fulfillment of its mission
- To understand the parties in their explanations as well as knowing everything for:
-     Clarifying the capacity terms appearing in the conditions of the contract;
-     Indicating the meaning of the indicators of capacity;
-     Mentioning the standards current at the time of the signing of the contract and those current at present;
-     Giving the reasons which can lead to erroneous conclusions during the aptitude tests made by [buyer] on the machines provided by [seller];
-     Analyzing the transmitted data;
-     Informing the Court about all the consequences which the technical observations can entail on the accounts between the parties;
-     Determine if the machines can function and if they are not affected by deficiencies with regard to the service that the buyer can expect from them.

6. On the demands for damages and interest

-     To order [buyer] to pay to [seller] a sum of 100,000 francs for abusive process.

7. On the demand in conformance with Article 700 of the NCPC.

-     To order [buyer] to pay to [seller] a sum of 100,000 f (hundred thousand francs) by application of the provisions of Article 700 of the NCPC.

8. On court expenses

-     To order [buyer] liable for the entire first instance trial expenses and the appeal, which will be recovered by the SCP Lambert Debray Chemin, attorneys, according to the provisions of Article 699 of the NCPC.

[ Buyer's position]

By recapitulative briefs and in reply entered on 7 October 1997, [buyer], being appellant in the cross-appeal concerning the fact that it had been denied compensation for its loss of operating profits, maintains that it has given notice to [seller] of the observed lack of conformity as soon as it had knowledge. [Buyer] deduces from this that its demands are admissable, indicating, furthermore, that the provisions of Articles 46 and 47 of the CISG are not applicable in the case at bar. [Buyer] also maintains that its action for avoidance of the sale is admissible with regard to Article 49 of the CISG.

On the merits, [buyer] alleges that [seller] sold machines not corresponding to what was foreseen in the contract terms as well as in the offer and the order. Disputing any fault in the phase of the elaboration of the studies, [buyer] alleges that it refused the temporary receipt of the machines and, during the delivery, had asked for the presence of a technician from [seller], until the machines corresponded completely to the performances fixed by the contract terms, so that the delivery was only conditionally accepted. [Buyer] points out that the machines did not meet the agreed standards and disputes the survey report produced by [seller]. [Buyer] refutes any fault on its part for the origin of the non-conformities, and alleges that the machines are totally unusable and were never run. [Buyer] asserts that this situation caused it significant damages, justifying compensation. Specifically, [buyer] asks the Court to:

-     Award to the [buyer] the whole benefit of the present documents;
-     Judge the [seller] unfounded in its appeal and deny all of its demands, ends and claims;
-     Judge that the [buyer]'s demands are perfectly admissable by virtue of the provisions of the CISG;
-     Judge furthermore that [buyer] has provided proof of the alleged lack of conformity;
-     Judge that the [buyer] perfectly executed its contractual commitments, and that no disorder is attributable to it;
-     Judge that the alleged lack of conformity constitutes a fundamental breach of the contract;
-     Deny [seller's] demand for an expert evaluation, as unjustified and ill founded;
-     Judge, as a consequence, that [buyer] is perfectly founded in seeking the avoidance of the contract, by the wrongs and the exclusive fault of [seller];
-     Order the avoidance of the contract;
-     Order [seller] to pay to [buyer] the sum of 6,327,680 francs increased by the legal interest from the date of the commencement of suit by [buyer], in conformance with the repayment of the sums paid by [buyer], within the framework of the disputed sale, up to full payment;
-     Recognize that [buyer] will return the sold machines, upon receipt of the sum of 6,327,680 f, increased by the above-mentioned accrued interest.

In its cross-appeal, the [buyer] asks the Court to:

-     Further order the [seller] to pay to the [buyer] the sum of 2,780,217 francs in conformance with the compensation of [buyer's] damage of exploitation and its financial damage;
-     Order [seller] to pay [buyer] the sum of 109,927.20 francs TTC, so as to compensate [buyer] for the cost of the transfer and storage of the machines since 1994;
-     Order the withdrawal of the seizure effectuated on 22 December 1993 at the request of the [seller] in the hands of Credit Lyonnais of Saint Germain en Laye (78) on the bank account of [buyer], from the pronouncement of the ruling to intervene.Order the withdrawal of the seizure effectuated on 22 December 1993 at the request of the [seller] in the hands of Credit Lyonnais of Saint Germain en Laye (78) on the bank account of [buyer], from the pronouncement of the ruling to intervene.

-     The determination of the conformity or lack thereof of the machines delivered by [seller];
-     The collection of the elements of proof allowing the assessment of the damages suffered by the [buyer] because of the non-conformities.

[Buyer] further asks the Court to:

-     Hold [seller] liable for the payment of the sum of 50,000 f (fifty thousand francs) in conformance with Article 700 of the NCPC.
-     Hold [seller] liable for the entire court expenses whose subtraction for the benefit of SCP Gas, attorneys, to the offers of law, and this, according to the provisions of Article 699 of the NCPC.

By briefs filed on 4 November 1997, [seller] attempts to refute the arguments of [buyer], and insists again on the necessity of an expert evaluation. By briefs filed on 18 November 1997, [buyer] contradicts again the last submissions of the appellant [seller]. The proceeding was closed by an order of the judge of the Court on 25 November 1997, and the matter was pleaded at the audience of 11 December 1997.

ON THIS, the Court rules:

-   as to the admissibility of the demands of the [buyer]

CONSIDERING THAT, according to the provisions of Article 39 of the CISG, which the parties agree is effectively applicable to the disputed sale:

"(1) The buyer loses the right to rely on a lack of conformity of the goods if he does not give notice to the seller specifying the nature of the lack of conformity within a reasonable time after he has discovered it or ought to have discovered it.

"(2) In any event, the buyer loses the right to rely on a lack of conformity of the goods if he does not give the seller notice thereof at the latest within a period of two years from the date on which the goods were actually handed over to the buyer, unless this time-limit is inconsistent with a contractual period of guarantee."

THAT this requirement of giving notice of the lack of conformity within a reasonable time does not imply the introduction of an action at law by the buyer but requires only, on its part, that clear and precise information be given to the seller of the contesting that is occurred by the delivery of the goods sold;

THAT in the case at bar, it stands out from the letter dated 6 March 1991, not disputed, sent by the [buyer] to the Dismo company, representing the [seller] in France, that the [buyer] -- immediately after the examination conducted from 19 to 22 February 1991, by one of its directors on the premises of the Italian manufacturer where the temporary receipt of the goods had to take place -- informed the [seller] of the non-conformity with the order of the two machines that were the object of the sale, and listed the various improvements needed before a new acceptance inspection could take place.

THAT, by another letter, likewise not disputed, dated 17 April 1991, [buyer] confirmed directly to [seller] its refusal to accept the machines tested on 10, 11, and 12 April 1991, by enumerating the reasons and by clarifying the conditions to which any new acceptance of the goods was conditioned; that, after the delivery of the two machines, effectuated successively, at the end of September / beginning of October 1991 for the first and at the end of January 1992 for the second, at the request of [seller] -- so as to be able to continue its trial runs in the actual conditions of use -- [buyer] also indicated their non-conformity, repeatedly, notably by its fax of 6 April 1992 and its correspondence of 11 December 1992, which followed a meeting of the parties which, according to the produced and unchallenged report, had been the occasion to remind about the observed imperfections; that all these assertions, supported by the results of the effectuated trial runs, meet all the more the requirements of Article 39 of the CISG, as recalled above; that they were not refuted by [seller], as it will be further clarified later;

THAT thus, it is established that the lack of conformity upon which [buyer] relies was given notice of to [seller] in the required manner, so that no forfeiture may be asserted against [buyer]; that it is established likewise that [buyer] has, at the same time as it gave notice of the lack of conformity, demanded that it be remedied, and thus perfectly meets the requirements of Article 46 of the CISG;

THAT it is necessary to note that the additional period of time granted to [seller] for the performance of its obligations resulted from the demands of the latter, announcing, in several pieces of correspondence, in which, lastly, that of 23 June 1993, the intention to look for solutions of the persisting dysfunctions; that the [seller] is thus without any right to blame [buyer] for having let "degenerate" the reasonable time envisioned by Article 47 of the CISG according to which "the buyer may fix an additional period of time of reasonable length for performance by the seller of his obligations", being added that the complexity of the problems encountered and the stakes in bringing about that conformity, as much as the repeated commitments of the manufacturer, justified the granting of such a period of time on behalf of the buyer; considering that, according to the terms of Article 49 of the same Convention:

"(1) The buyer may declare the contract avoided: (a) if the failure by the seller to perform any of his obligations under the contract or this Convention amounts to a fundamental breach of contract []

"(2) However, in cases where the seller has delivered the goods, the buyer loses the right to declare the contract avoided unless he does so: [] (b) in respect of any breach other than late delivery, within a reasonable time: (i) after he knew or ought to have known of the breach; (ii) after the expiration of any additional period of time fixed by the buyer in accordance with paragraph (1) of article 47, or after the seller has declared that he will not perform his obligations within such an additional period ...";

THAT in the present case, [buyer] did not misunderstand these provisions as to a reasonable time to act, by suing [seller], in August 1993, after the delivery, while [buyer] had reasonably wanted to save the formed contract and while the [seller] still claimed additional periods of time; that it is necessary, moreover, to point out that [buyer] had notified its intention to see the contract avoided, by letter of 17 June 1993, sent by its counsel to [seller];

THAT it follows that the Court rightly allowed the admissibility of [buyer's] demands.

-    as to the merits of [buyer's] demands

CONSIDERING THAT [seller] is ill-founded to dispute the lack of conformity of the machines which it delivered in response to [buyer's] order;

THAT indeed, it emerges from the aforementioned correspondence, emanating from the [buyer], that both machines do not meet the requirements of the order and the terms of the contract, accepted and not disputed by the manufacturer, in what concerns the characteristics of productivity as well as the qualitative specificities of the manufactured products, with regard notably to the coefficient of capacity, to the height and to the parallelism which were contractually specified; that these pieces of correspondence, stating [buyer]'s assertions, are confirmed -- notably concerning the non-compliance with the tolerances related to the coefficient of capacity and to the parallelism -- by the statements of the trial runs which show the exceeding of the agreed standards;

THAT [seller], not only did not dispute these pieces of correspondence upon their receipt, but even admitted the content in its own correspondence; that thus, after the letters of 17 July and 4 September 1991 stating the necessity of working in the actual production conditions to be able to improve the situation, one can read in [seller]'s letter of 11 March 1993 that it is going to make "attempts of rectification"; in [seller's] letter of 20 April 1993 that it is going to begin the attempts, in [seller's] letter of 23 June 1993 in which it recognizes "the difficulties in obtaining a constant qualitative level of manufactured parts", that [seller] affirms "its will and its disposition to continue the search for roll grinders the most adequate for obtaining the desired quality", that it hopes " to be able to achieve good results in the quality of the parts", and that [seller] is " ready to look for the other solutions which will allow a good use of the machines";

THAT [seller] did not dispute the terms of the report of the common meeting of 11 December 1992, when it is mentioned that [seller] "acknowledges the non-conformity of the machines and its error as to the extrapolation of good results by a rotary machine obtained on an inline machine"; that in this respect, if in [seller's] reply letter of 18 December 1992 it disputes its sole responsibility for the encountered problems, [seller] acknowledges "having thought to be able to resolve the existing problems with the machines and achieve a use of them, even under conditions different from those foreseen in the contract terms" and "confirms [its] will to manage to achieve a technical solution which allows a use of the machines according to the needs" of the buyer;

THAT, contrary to what [seller] maintains, the delivery of the machines to [buyer]'s premises was not made without reservation on behalf of the [buyer], because it stands out from [buyer]'s fax of 26 September 1991, which is not challenged, that [buyer] accepted only "on the condition that the [seller] provide a technician, the time which will be necessary, so that the machines' performance correspond in all respects to the terms of the contract ";

THAT, to contest these dysfunctions a posteriori, it cannot invoke, not contradictorily, the survey report produced in [seller]'s demand, by M. Cheroute who clarifies at once that "this report was elaborated from the data supplied by the [seller] from paper data and not from data of parts manufactured and measured in front of [him]," so that it thus lacks probative value; that it is necessary to note that this report, which confirms, however, the defects of parallelism, illustrates, for the most part the reservations on the methodology of evaluation of the machines' performance; that, however, this opinion, taken up again by [seller] to criticize the control standards put in place, is countered by the observation that [seller] subscribed to them by joining them, by making the observations made by [buyer] its own and by employing them to search, in vain, for the solutions;

THAT [seller] cannot invoke [buyer's] failures to cooperate between the two companies for the adjustment and adaptation of the machines; that it must be remembered that [buyer] delivered some significant quantities of material in order to permit the conduct of trial runs and that the lateness of some material, for which it is not established that [buyer] was responsible, appears to have no causal link with the conformity of the machines ; that in any case, [seller] did not, on that occasion, clarify nor demonstrate at trial, the nature of the difficulties which it would engender nor the consequences on its ability to perform its obligations; that, moreover, [buyer] had agreed to take delivery of the two machines, at the request of [seller], to allow [seller] to conduct the trial runs within the actual conditions of their use;

THAT the [seller] can no longer impute to [buyer] a bad use of the machines as the cause of the difficulties, since these difficulties existed even before the delivery and since the attempt at the adjustment, after the delivery, was made in the presence of [seller's] own technicians; that [seller] can no longer claim that [buyer] did not undertake the training of its staff, for lack of a causal link between this assertion and the non-conformity of the machines, being added, moreover, that, in its fax of 6 April 1992, [buyer] demanded from [seller] the commencement of the training; that no convincing element of proof comes to consolidate the assertion of the [seller] as to the role of the irrigation system supplied by the buyer in the dysfunctions found in the machines;

THAT, in these conditions, it is perfectly established, without being necessary to order an expert evaluation, that [seller] performed its obligation to deliver deficiently by not supplying machines conforming with [buyer]'s order, while no fault on the part of [buyer] is proved; that [seller's] deficient performance of its contractual obligations, which [seller] would normally have been capable of remedying within the additional period of time granted, substantially deprived [buyer] of what it was entitled to expect from the contract, because it is demonstrated that [buyer] was not able to have the expected use of these machines, the contractually defined standards being essential for the automobile market for which the manufactured parts are intended;

THAT the Court has, thus, justly, held the avoidance of the sale contract formed between the parties, ordered [seller] to return the amount of the received price, raised by interest at the legal rate as from the commencement of the suit below, and ordered the withdrawal of the sequester of property exercised by the [seller]; that it is also advisable to recognize [buyer's] commitment to return the disputed machines, which will be held, however, by the effect of the avoidance;

-    on the compensation of damages suffered by [buyer]

CONSIDERING THAT the [buyer] is justified in demanding interest on the sums it paid in vain to [seller] within the framework of its contractual obligations, during the performance of the contract, and of which [buyer] was deprived without counterpart; that, however, [buyer] has not demonstrated that these sums would have rested wholly in its inherited accounts, notably bearing in mind necessary investments; that, furthermore, contrary to [buyer's] claims, it is advisable to hold interest at the legal rate; that according to these elements and to the duration of immobilization of the aforementioned sums, the Court is capable of estimating at 500,000.00 francs (five hundred thousand francs) the sum to which the [buyer] can claim, in repair of its financial damage, by the effect of the avoidance held for the exclusive fault of [seller];

THAT the [buyer] has also justified, by the production of invoices, expenses related to the transport and for stocking as well as for the checking of the machines, at the level of 109,927.20 francs;

THAT, on the other hand, [buyer] has not supplied convincing elements of proof allowing one to characterize the ensuing damage, which results according to [buyer] out of the use of [buyer's] old machines which would require the employment of a larger number of employees than the machines ordered from [seller], being added that, furthermore, [buyer] admits to having increased the performance of these old machines;

CONSIDERING THAT equity does not demand the application of Article 700 of the NCPC.

[Ruling of the Court]

FOR THESE REASONS the Court, ruling publicly, and in the last resort:

-     DECLARES admissible the appeal brought by the [seller] and the cross-appeal brought by the [buyer], against the judgment entered on 23 November 1994 by the Court of First Instance of Versailles;
-     AFFIRMS the entered judgment in all its provisions, adding to it;
-     RECOGNIZES the [buyer] of its commitment to return the disputed machines, upon payment, by the [seller], of the sum of 6,327,680.00 francs plus the interest related to it, and, as needed, the same holding this restitution, under this condition;
-     ORDERS the [seller] to pay to the [buyer] the sum of 609,927.20 francs, as damages and interest;
-     HOLDS the [seller] liable for the entire expenses, which can be directly recovered by SCP Gas, according to the provisions of Article 699 of the NCPC;
-     DENIES the parties their other further or opposite demands.

AND HAVE SIGNED THE PRESENT RULING: the clerk, Mme. Le Grande; the president, M. J-L Gallet.


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 [buyer]; the Defendant of Italy is referred to as [seller]. Amounts in French currency (French francs) are at times 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. In addition to translations of French case texts for the cisgw3 database, he has translated Italian decisions and texts on linguistics into English.

*** Kirsten Stadländer is a student of law at Humboldt University Berlin. She was a member of the team of Humboldt University at the 9th Willem C. Vis International Commercial Arbitration Moot 2001/02 and is a coach of the team at the 10th Willem C. Vis International Commercial Arbitration Moot 2002/3.

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Pace Law School Institute of International Commercial Law - Last updated August 9, 2005
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