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Germany 25 May 1999 District Court Berlin (Fabric case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/990525g1.html]

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

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Case identification

DATE OF DECISION: 19990525 (25 May 1999)


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

JUDGE(S): Unavailable


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

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Italy (plaintiff)

BUYER'S COUNTRY: Germany (defendant)


Classification of issues present

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


Key CISG provisions at issue: Articles 38 ; 39 ; 78 [Also cited: Articles 3(1) ; 7(2) ; 35 ; 45(1)(b) ; 58(1) ; 74 ]

Classification of issues using UNCITRAL classification code numbers:

38A ; 38B [Buyer's obligation to examine goods: time for examining goods; When contract involves carriage, postponement until after arrival at destination];

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

78A [Interest on delay in receiving price: determined by the law otherwise applicable in the absence of CISG]

Descriptors: Examination of goods ; Lack of conformity notice, timeliness ; Interest

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Editorial remarks

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Citations to case abstracts, texts, and commentaries


(a) UNCITRAL abstract: Unavailable

(b) Other abstracts

English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=445&step=Abstract>


Original language (German): Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=445&step=FullText>

Translation (English): Text presented below


English: 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.65; Liu Chengwei, Recovery of interest (November 2003) n.153; 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); Henschel, The Conformity of Goods in International Sales, Forlaget Thomson (2005) 246

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Case text (English translation)

Queen Mary Case Translation Programme

Landgericht Berlin 25 May 1999

Translation [*] by Christian P. Alberti, LL.M. [**]

Translation edited by Camilla Baasch Andersen [***]

Facts of the case

Plaintiff [seller], organized under Italian law, is a trading company dealing with the manufacture and sale of fabrics. [Buyer], a producer of women's clothing, is Defendant No. 1. [Defendant No. 2 has joint and several rights and responsibilities with [buyer].] On 31 January 1998, [buyer] ordered from [seller] a fabric named "Alpi" in two shades of color (06 and 07). Before placing this order, [buyer] had received samples of the fabrics from [seller] from which [buyer] manufactured sample coats for women. [Buyer] was completely satisfied with these samples.

On 28 April 1998, [seller] shipped to [buyer] part of the ordered fabrics. [Buyer] returned these fabrics unprocessed because of defects. [Seller] undertook a replacement delivery on 15 June 1998. This delivery was accepted by [buyer]. For these fabrics, under invoice No. 731 and 732, [seller] charged DM [Deutsche Mark] 22,790.82 and DM 34,718.76 to [buyer's] account. [Seller]'s lawsuit claims the payment of the resultant sum in the amount of DM 57,509.58.

[Buyer] challenges [seller]'s claim and [buyer] has filed a set-off and an alternative cross-action in the event [seller]'s claim is granted. The following are the uncontested facts:

-   Based on [buyer]'s order, dated 31 January 1998, [seller] furnished three partial shipments totaling 5,983 meters of fabric to [buyer]'s production business plants in Romania during the period 11 March 1998 to 15 April 1998.
- The total purchase price was DM 72,992.00. This was settled in full by [buyer]'s payments dated 25 and 26 May as well as 1 June 1998.
- Before, [buyer] examined the coats that meanwhile had been manufactured and shipped to his branch in Berlin. According to [buyer]'s evaluation on 5 May 1998, the fabrics of all of these coats were rough and visually matched neither the formerly presented samples of the fabrics nor the later manufactured sample coats.

[Seller] has applied for a judgment of DM 57,509.58 against [buyer] and Defendant No. 2.

[Buyer] and Defendant No. 2 ask the court to dismiss [seller]'s claim based on the following arguments:

-   [Buyer] and Defendant No. 2 set-off [seller's] claim with a reclaimed demand for repayment of the purchase price in the amount of DM 72,992.00 that has been paid by [buyer] for the partial shipments of fabrics to Romania in the time period from 11 March 1998 to 15 April 1998. [Buyer] and Defendant No. 2 contend that the contract between the parties is insofar nullified and [seller] is, therefore, unjust enriched in the amount of the pro rata purchase price of DM 72,992.60. Setting forth more detailed specifications, [buyer] and Defendant No. 2 assert in this respect that the fabrics shipped to Romania were defective and that this circumstance was not visible to the naked eye when handed over.
- Also, [buyer] and Defendant No. 2 contend that they gave notice to [seller] regarding the lack of conformity by phone on 5 May 1998. For this reason, [seller]'s sales manager came to [buyer]'s branch in Berlin on 9 May 1998 and likewise discovered that all coats "looked bad."

In the event [seller]'s claim is granted, [buyer] and Defendant No. 2, as joint creditors (Gesamtgläubiger [*]), seek DM 58,428.00 by means of an alternative cross-action plus 5% interest since the service of the alternative cross-action.

-   [Buyer] and Defendant No. 2 allege that 5,008 coats have been manufactured from the defective fabrics shipped to Romania in March and April 1998 by [seller]. These coats were already sold but because of the defects the client never accepted the coats and, therefore, never paid the purchase price agreed upon.
- With regard to 600 coats "Model 90802-063" in the shade of color 06, [buyer] and Defendant No. 2 allege that they have lost profits totaling DM 97.38 per coat. The sales price in the amount of DM 230.52 has been faced by manufacturing costs totaling DM 133.14.

[Seller] asks the court to dismiss the alternative cross-action.

Grounds for the decision

A.  [Seller's] claim is admissible and founded [i.e., it meets formal requirements and presents sufficient cause].

     I.  The international jurisdiction of the Court is based on Art. 1 in connection with Art. 2(1) of the European Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters [EuGVÜ]. The EuGVÜ is applicable as it became effective for Germany in relationship to Italy on 1 March 1995 (BGBl. II [*] at 221, dated 8 February 1995) and the dispute in the case at hand concerns a commercial matter pursuant to Art. 1(1) EuGVÜ. According to Art. 2(1) EuGVÜ, the Court at [buyer]'s residence has jurisdiction. Under Art. 53(1) EuGVÜ, the company's place of business is equivalent to the residence mentioned in the previous provision.

     II.  [Seller]'s claim also presents sufficient cause. Pursuant to Articles 53 and 62(1) of the United Nations Convention on Contracts for the International Sale of Goods [CISG], [seller] is entitled to be paid by [buyer] for the shipment of goods [seller] charged to [buyer]'s account on 15 June 1998 under invoices No. 731 and 732.

          1.  The CISG is applicable to the case at hand as the requirements of Art. 1 CISG are satisfied. Both Germany and Italy are parties to the Convention; the parties to the contract have their branch offices in Germany and Italy; and both States are Contracting States (Palandt-Heinrich, Art. 28 EGBGB [*], n. 27).

          2.  Both parties can assert their rights on their own behalf and create obligations at their own expense. Considering a company's personal status, i.e., the determination of law which is relevant for a company's legal relationship, the German international private law lacks a written regulation (Palandt-Heinrich, id., addendum to Art. 12 EGBGB, n. 1). The preponderant opinion is that the link for the determination of the pertinent law is the actual residence of a company's head office (BGHZ [*] 78, 318 at 334; Staudinger-Großfeld, 13th ed., IntGesR,[*] n. 33). This applies also to companies incorporated under the law of a Member State of the European Union, as long as the link to the place of business does not lead to relocation-bars of residence (Sitzverlagerurngsschranken) (Staudinger, id., n. 117 and 120). The record, however, offers no assistance in this regard.

     a)  [Buyer]'s admissibility as a party in court is based on 124 HGB [*] and that of Defendant No. 2 is supported by 13(1) GmbHG.[*] Pursuant to 128 HGB, Defendant No. 2 is jointly liable with [buyer].

     b)  [Seller] operates as a "società in accomandita semplice" [limited partnership], abbreviated as s.a.s. Under Art. 2318 in connection with Arts. 2315, 2298, 2293, and 2266(2) Cc [*], such a company is able to assert claims in its own name through its managing partner.

          3.  [Seller]'s claim is due. Pursuant to Art. 58(1) CISG, the purchase price is due when the seller places either the goods or documents controlling their disposition at the buyer's disposal. On 15 June 1998, the purchased fabrics were delivered to their destination in Romania as agreed upon.

          4.  According to Art. 78 CISG in connection with Arts. 1284 and 1282 Cc, [seller] is also entitled to interest of 5% per year since due date. Art. 78 CISG sets forth that a party is entitled to interest on the claim for the purchase price from the moment the claim is due. Pursuant to Art. 7(2) alt. 2 CISG, the amount of interest payable according to the CISG is based upon the law applicable by virtue of the rules of private international law (Schlechtriem/Herber, Art. 7 CISG, n. 39). Here, the applicable law derives from Art. 3(1) in connection with Art. 28(1) sent. 1 and (2) EGBGB [*]. The law that has the closest link to the contract is pertinent. With regard to a sales contract, the characteristic of performance is the delivery of the object of purchase; here performed by [seller]. Given that [seller] is situated in Italy, Italian law is applicable. According to Art. 1284(1) Cc [*], the legal interest rate amounts to 5% and Art. 1282(1) Cc sets forth that claims for money are interest-bearing from the moment they fell due.

[Seller]'s claim for the purchase price is not affected by [buyer]'s set-off, as it is inadmissible.

Based on Art. 3(1) in connection with Art. 28(1) and (2) EGBGB and in view of the aforementioned principles, Italian law is also applicable with regard to the question of admissibility of the set-off. Most significant are Articles 1241 et seq. Cc. Generally, the so-called legal compensation (compensazione legale) pursuant to Art. 1243(1) Cc lapses a dept by set-off. Hereafter, the effect of redemption occurs independently from a corresponding declaration on the part of the holder of the counterclaim. Besides mutuality, similarity, and recoverability, such a legal compensation can only occur if the requirement of readiness for adjudication is also satisfied. To be satisfied, the latter requirement sets forth that the claim and the counterclaim are certain both with regard to the merits and amount. However, according to Italian law, this criterion is also satisfied if the claim is actually contested but the denial is apparently unfounded (Kindler, Einführung in das italienische Recht [Introduction to the Italian law], 1993, 14, n. 15). Here, [seller]'s denial of [buyer]'s counterclaim is not apparently unfounded. [Seller] alleges that the delivered fabrics were not defective. Subsequently, there would be a need for taking evidence.

Into consideration comes further a consensual compensation (compensazione consensuale) according to Art. 1252 Cc. However, it lacks already the parties' consent because [seller], inter alia, specifically asserted the inadmissibility of the set-off.

Also a judicial compensation (compensazione giudiziale) according to Art. 1243(2) Cc is not pertinent. A counterclaim that is not ready for adjudication can only be claimed in a law suit by means of a cross-claim; the [German] notion of a lawsuit set-off (Prozessaufrechnung) is alien to the Italian law (Kindler, id., n. 16).

In the case at hand, [buyer] and Defendant No. 2 chose explicitly to claim in the amount of DM 72,992.00 by means of a judicial compensation. A reinterpretation of this legal action is impossible according to the chamber [KG [*]] because [buyer] and Defendant No. 2 explicitly claimed an additional DM 58,428.00 by means of a cross-action.

B.  The cross-action is admissible, but unfounded.

     I.  The cross-action is admissible.

           1.  The court's jurisdiction to adjudicate on the cross-action is based on Art. 6 No. 3 EuGVÜ [*]. The asserted counterclaim by means of a cross-action is a coherent claim in terms of the aforementioned provision.

           2.  The admissibility of the cross-action is neither affected by the circumstance that it has been claimed only in the alternative nor by the condition that [seller]'s action of payment will be granted. In fact, steps in the proceedings are generally absolute [i.e., conditions are generally not permitted] (RGZ 144, 73); in specific, if the procedural condition is of external nature. However, this is not the case when a step in the proceedings is subject to an inner procedural condition (RGZ 157, 379). Under those circumstances, the lawsuit is not subject to uncertainty regarding whether or not the condition occurs. The occurrence rather derives directly from the law suit itself in which the condition has been implemented.

II. However, [buyer] is not entitled to assert any damage claims. This conclusion is

derived from Arts. 3(1), 35, 45(1)(b), 74 CISG. According to Articles 38(1) and 39(1) CISG, a party to the contract may exercise its rights based on non-conformity only if the party examines the delivered goods within as short a period as is practicable in the circumstance and gives notice to the seller after discovery. Otherwise, the party loses all legal remedies available under Art. 45 CISG (Schwenzer/Schlechtriem, id., Art. 39, n. 30).

In the case at hand, [buyer] failed to examine the delivered goods within as short a period as is practicable in the circumstance. Pursuant to Art. 38(2) CISG, the goods had to be examined when they arrived at their destination. The stipulated place of delivery was a production business plant of [buyer] in Romania. The first partial shipment arrived on 11 March 1998. Nevertheless, [buyer] did not cause the goods to be examined until 5 May 1998 at his plant location in Berlin.

[Buyer] was not exempted from his obligation to examine the goods notwithstanding the fact that it was a sale by sample; the examination is obligatory even if the sample does not contain any defects.

The method of examination is subject to the circumstances of the individual case. In particular, in a case of goods which undergo a further processing, the goods are to be processed on a test basis and examined accordingly. Additionally, in a sale of fabric, the duty to examine requires also the examination of the filament, the color fastness, and the condition of the surface of the fabric (Schwenzer, id., Art. 38, n. 14).

[Buyer] did not satisfy his duty to process the fabric at first on a test basis. After the fabric was completely processed it was impossible for [seller] to produce a remedy by undertaking a compensation delivery. But this is exactly one of the scopes of Art. 38 CISG. Moreover, [buyer] also failed to give notice to [seller] within a reasonable time. According to Art. 39(1) CISG, [buyer] had to give notice of the lack of conformity within a reasonable time after he could have discovered the defectiveness of the goods. In view of the aforesaid regarding [buyer]'s obligation to examine the goods, the time limit to give notice began in mid-March 1998. Considering that, depending on the circumstances of the individual case, the reasonable time period to give notice does not regularly exceed one month (Schwenzer, id., Art. 39, n. 17), [buyer]'s alleged notice on 5 May 1998 was not timely given.

The record also gives no indications that, pursuant to Art. 40 CISG, [seller] is not entitled to rely on the facts that [buyer] failed to examine the goods and to give notice of defects in due time. The requirements of this provision that need to be adduced as evidence by [buyer] are only satisfied if the lack of conformity is eye-catching (Schwenzer, id., Art. 40, n. 4). The record, however, offers no assistance in this regard. Both [buyer] and Defendant No. 2 argued that the defectiveness of the fabrics shipped to Romania was not visible to the naked eye when handed over and that the lack of conformity only became apparent after having processed the fabrics.

C.  The accessory decisions [on the costs and the provisional enforceability] are based on 91 and 709 sent. 1 ZPO [*] (details regarding the wording of the decision on the provisional enforceability are to be found in: KG NJW [*] 1977, 2270).


* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff of Italy is referred to as [seller]; Defendant No. 1 of Germany is referred to as [buyer]. Amounts in German currency (Deutsche Mark) are indicated as [DM].

Translator's note on other terms and abbreviations: BGB = Bürgerliches Gesetzbuch [German Civil Code]; BGBl. II = Bundesgesetzblatt II [German Federal Law Gazette II]; BGHZ = Entscheidungen des Bundesgerichtshofs in Zivilsachen [Case Reporter on decisions of the Federal Court of Justice in civil matters]; Cc = Codice civile [Italian Civil Code]; EGBGB = Einführungsgesetz zum Bürgerlichen Gesetzbuch [Introductory Law of the German Civil Code: contains intertemporal and international choice of law rules]; EuGVÜ = Europäisches Übereinkommen über die gerichtliche Zuständigkeit und die Vollstreckung gerichtlicher Entscheidungen in Zivil- und Handelssachen [European Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters]; Gesamtgläubiger = Joint creditor [Where there are joint and several creditors, each is entitled to claim the whole performance himself, but the debtor owes only one performance; see 428 et seq. BGB]; GmbHG = Gesetz betreffend die Gesellschaften mit beschränkter Haftung [German Limited Liability Company Law]; HGB = Handelsgesetzbuch [German Commercial Code]; IntGesR = Internationales Gesellschaftsrecht [International Corporate Law]; KG = Kammergericht [Superior Court of Justice; in this case: chamber of the District Court of Berlin]; NJW = Neue Juristische Wochenschrift [German law journal]; RGZ = Entscheidungen des Reichsgerichts in Zivilsachen [Case Reporter on decisions of the Supreme Court of the Reich in civil matters]; ZPO = Zivilprozessordnung [German Civil Procedure Code].

** Christian P. Alberti, LL.M., Associate, Institute of International Commercial Law of the Pace University School of Law, is a trainee lawyer at the District Court of Frankfurt, Germany.

*** Camilla Baasch Andersen, Fellow, Institute of International Commercial Law of the Pace University School of Law, is a Lecturer at Queen Mary, University of London.

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