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CISG CASE PRESENTATION

France 26 May 1999 Supreme Court (Schreiber v. Thermo Dynamique) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/990526f1.html]

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

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Case identification

DATE OF DECISIONS: 19990526 (26 May 1999)

JURISDICTION: France

TRIBUNAL: Cour de Cassation [Supreme Court]

JUDGE(S): Lemontey, président; Durieux, conseiller rapporteur; Renard-Payen, conseiller; Gaunet, avocat général; Aydalot, greffier

CASE NUMBER/DOCKET NUMBER: P 97-14.315, Arrêt no. 994 D

CASE NAME: Société Karl Schreiber GmbH v. Société Thermo Dynamique Service et autres

CASE HISTORY: 1st instance Tribunal de commerce de Toulon 27 July 1994; 2d instance Cour d'appel d'Aix-en-Provence 21 November 1996 [affirmed]

SELLER'S COUNTRY: Germany [defendant]

BUYER'S COUNTRY: France [plaintiff]

GOODS INVOLVED: Laminated sheet metal


Case abstract

FRANCE: Cour de Cassation 26 May 1999

Case law on UNCITRAL texts (CLOUT) abstract no. 315

Reproduced with permission from UNCITRAL

The buyer, a French company, ordered 196 rolled metal sheets from a German company in August 1992. Delivery took place in several instalments between 28 October 1992 and 4 December 1992. On 1 December, the buyer cancelled the contract, principally on the ground that the products did not conform with the order as regards both quantity and quality. Fifteen days later, the buyer sued the seller with a view to having the sale declared void.

The appeal-court judges allowed the claim and dismissed the objection raised by the buyer on the basis of articles 38 and 39 CISG.

The seller referred the case to the Court of Cassation, pleading a breach of articles 38 and 39 CISG.

The Court of Cassation rejected the further appeal: "The Court of Appeal was solely exercising its sovereign discretion when, after considering the chronology of events, it concluded that the buyer had arranged for the goods to be inspected within what was a short and normal period, having regard to the heavy handling which the sheet metal required, and had given the seller notice of the lack of conformity within a reasonable time, within the meaning of article 39(1) CISG".

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Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 38 ; 39 ; 49 [Also relevant: Articles 25 ; 46 ; 81 ; 84 ]

Classification of issues using UNCITRAL classification code numbers:

38A1 [Time for examining goods: buyer obligated to examine goods as soon as practicable in the circumstances];

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

49A1 [Buyer's right to avoid contract (grounds for avoidance): fundamental breach];

Descriptors: Examination of goods ; Lack of conformity notice, timeliness ; Avoidance ; Fundamental breach

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Editorial remarks

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Citations to other abstracts, texts and commentaries

CITATIONS TO OTHER ABSTRACTS OF DECISION

English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=417&step=Abstract>

CITATIONS TO TEXT OF DECISION

Original language (French): CISG - France website "http://Witz.jura.uni-sb.de/CISG/decisions/260559v.htm"; [2000] Receuil Dalloz 788; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=417&step=FullText>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

English: Witz, ICC International Court of Arbitration Bulletin, Vol. 11/No. 2 (Fall 2000) 18 nn.28, 29; Bernstein & Lookofsky, Understanding the CISG in Europe, 2d ed., Kluwer (2003) §: 4-9 n.127; 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 72, 85, 86, 92; [2005] Schlechtriem & Schwenzer ed., Commentary on UN Convention on International Sale of Goods, 2d (English) ed., Oxford University Press, Art. 25 para. 21a Art. 39 para. 17; Schwenzer & Fountoulakis ed., International Sales Law, Routledge-Cavendish (2007) at p. 312; Peter Huber, CISG: The Structure of Remedies, 71 RabelsZ (2007) n.60

French: [November 1999] Contracts-Concurrence-Consommation, p. 14, note L. Leveneur, n.7, 274; [2000] Juris Classeur Périodique, La Semaine Juridique, Cahiers de Droit de l'Entreprise, note L. Leveneur; [2000] Witz, Receuil Dalloz 788-790

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Case text (English translation) [second draft]

Cour de Cassation - Première Chambre Civile 26 mai 1999
[Supreme Court - First Civil Part 26 May 1999]

Karl Schreiber GmbH v. Thermo Dynamique Service et al.

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

CIV. 1 D.G
COUR DE CASSATION
Public Hearing of 26 May 1999
M. LEMONTEY, Chief Justice
Appeal No. P97-14.315

French Republic
In the Name of the French People

The SUPREME COURT OF APPEALS, First Civil Part, has rendered the following judgment.

On the appeal brought by the company Karl Schreiber GmbH [seller], whose principal office is Postrach, 1540 5908 Neunkirchen (Germany), appealing a judgment entered on 21 November 1996 by the Court of Appeals of Aix-en-Provence (2nd chamber), in favor of:

- Thermo Dynamique Service company [buyer], whose principal office is 215 Route de Marseille, 83000 Toulon,

- Damstahl France company, whose principal office is 28, avenu Maréchal Foch, 92260 Fontenay-aux-Roses, and

- Lyonnaise de Banque company, whose principal office is 8 rue de la République, 69001 Lyon, respondents to the appeal.

[Seller] invokes, in support of its appeal, the sole grounds for setting aside the judgment, annexed to the present judgment.

The COURT, assembled pursuant to article L. 131-6, paragraph 2, of the Code of Judicial Organization, at the public hearing of 7 April 1999, where were present, M. Lemontey, Chief Justice, M. Durieux, Rapporteur Appellate Judge, M. Renard-Payen, Appellate Judge, M. Gaunet, Attorney General, Mme Aydalot, Clerk of the Chamber.

By the report of M. Durieux, Appellate Judge, the observations of SCP Baraduc and Duhamel, attorney for [seller], of Maître Choucroy, attorney for [buyer], the conclusions of M. Gaunet, Attorney General, and after having deliberated pursuant to the law,

Informs [seller] of the discontinuance of its appeal with respect to DAMSTAHL FRANCE and LYONNAISE DE BANQUE.

On the sole grounds of appeal:

- WHEREAS [buyer] had ordered, on 5 August 1992, 196 rolled metal sheets from [seller]; delivery took place between 28 October 1992 and, for the greater part, 4 December 1992; [buyer] revoked the contract by letter of 1 December 1992 principally for the reason that the goods did not conform to the order, neither in quantity, nor in quality; by its behavior on 15 December 1992 it had established an avoidance of the sale;

- WHEREAS [seller] challenges the judgment of the Court of Appeals of Aix-en-Provence, 21 November 1996, for having set aside the plea invoked by [seller] on the basis of Articles 38 and 39 CISG, according to [seller's] grounds, that the Court of Appeals, which found the time between inspection tests performed by [buyer] on 9 and 11 November 1992 and the imprecise reporting of the "non-conformity in the agreed quality, dimensions and quantities" made by the [buyer] on 1 December 1992, did not draw the proper legal conclusions from its own assertions, in violation of the aforementioned provisions;

- WHEREAS we find that the Court of Appeals only used its sovereign discretion in maintaining, after having recalled the chronology of the facts, that the buyer had inspected the goods in a prompt and normal period of time, bearing in mind the handling that the [goods] required and that [buyer] had alerted [seller] of the non-conformities within a reasonable time in the meaning of Article 39(1) CISG;

- NOW THEREFORE the grounds for appeal cannot be accepted.

FOR THESE REASONS:

- REJECTS the appeal; and

- Orders [seller] to pay the costs.

So done and adjudged by the SUPREME COURT of APPEALS, First Civil Part, and pronounced by the presiding Chief Justice during its public hearing on the twenty-sixth May nineteen hundred ninety-nine.


Cour d'appel d'Aix-en-Provence 21 novembre 1996
[Court of Appeals of Aix-en-Provence 21 November 1996]

JUDGMENT ON THE MERITS No. 806
21 November 1996
2nd Chamber
Docket No. 94118531
DP

S.T.S. THERMO DYNAMIQUE SERVICE [Buyer]

v.

Sté DAMSTAHL FRANCE [Seller's INTERMEDIARY]
Sté KARL SCHREIBER [Seller/MANUFACTURER]
Sté LYNNNAISE DE BANQUE [GUARANTOR BANK]

Judgment of the 2nd Civil Chamber
21 November 1996

ADJUDGES on appeal from a Judgment rendered 27 July 1994 by the Toulon Tribunal of Commerce.

COMPOSITION OF THE COURT at the time of the argument and consultation of judges:

Presiding Judge: Mr. DRAGON; Appellate Judges: Mr. ISOUARD, Mrs. CORDAS; Clerk, at the time of the arguments: Sylvie CARBUCCIA

ARGUMENTS: At the public hearing of 18 October 1996 the Presiding Judge informed the parties that the judgment would be rendered 21 November 1996.

HOLDS: At the public hearing of 21 November 1996 by Mrs. CORDAS, Appellate Judge attended by Sylvie CARBUCCIA, Clerk.

NATURE OF THE JUDGMENT: Deemed Final.

Names of the parties

S.T.S. THERMO DYNAMIQUE SERVICE [Buyer], whose principal office is 215 route de Marseille in Toulon (Var), APPELLANT, represented by SCP Primout-Faivre, Associated Solicitors before the Court. Assisted by Maître Eric Houlliot, Attorney of the Toulon Bar.

v.

DAMSTAHL FRANCE whose principal office is at 28 avenue Maréchal Foch in Fontenay aux Roses (Yvelines), DEFAULTING RESPONDENT.

KARL SCHREIBER GmbH [Seller], by its legal representative in office residing in that capacity at the principal office Postrach 1540 5908 Neunkirchen (Germany)

RESPONDENT, represented by SCP Blanc, Associated Solicitors before the Court. Assisted by Maître Judith Adam Caumeil, Attorney of the Paris Bar.

LYONNAISE DE BANQUE, SA with assets of 620,000,000 f [French Francs] whose principal office is in Lyon 0001- 8 rue de la République, registered in the Registre du Commerce under the number B 954507976, conducting lawsuits and proceedings by its legal representative, residing in that capacity in the said principal office, RESPONDENT, represented by SCP Sider, Associated Solicitors before the Court. Assisted by Maitre Bonvino, Attorney of the Toulon Bar.

Facts and procedure

[Buyer] had on 5 August 1992 ordered, through DAMSTAHL FRANCE's intermediary, 196 laminated metal sheets CUAL 9 N13 Fe2 of which - 98 of dimension 12/240/101 and - 98 of dimension 25/245/1036.

The order was accepted by [seller] on 6 August 1992 under reservation of cover insurance that had been realized by the credit insurer of that company and LYONNAISE DE BANQUE's security as far as concerns [buyer].

Delivery was made between 26 October 1992 and 4 December 1992.

As to the reasons that the delivery times had not been respected, and that the delivered goods were not conforming, neither in quantity, nor in quality with respect to what [buyer] ordered, [buyer] had renounced the contract by letter of 1 December 1992, then fixed on 15 December 1992 in avoidance [résolution: avoidance, or cancellation ex tunc] of the sale and subsequent invalidity of the bank security.

By judgment of 27 July 1994 the Toulon Tribunal of Commerce dismissed [buyer's] complaint and ordered it, with LYONNAISE DE BANQUE, to pay [seller] the sum of f 353,535 plus interest.

The judgment of this Tribunal also specified that the security was held only to the extent of its pledge of f 193,553, and that DAMSTAHL FRANCE was removed from the action.

[Buyer] appealed that judgment.

The court is apprised of that appeal, and by the expert examination set down 25 October 1995 by Mr. BALOUX, expert designated by appellate judge's order of the joinder of issues on 19 June 1995.

On the basis of that report, the [buyer] petitions the court to hold that the sheets delivered did not conform to the contract and that they were ridden with defects which rendered them unsuitable for their use.

[Buyer] further seeks to have the court hold that the obligation of the "brief time" [dans un délai raisonnable: "within a reasonable time"] required by Art. 39 CISG, applicable in the instant case, was respected;

To accordingly hold judicial avoidance of the sale that took place between the parties, and to acknowledge [buyer's] willingness to restore the laminated metal sheets that it has in stock against restitution of the sum of f 42,729,479 corresponding to the sale price with interest to be calculated from the date of the rulings.

To order also [seller] to pay [buyer] that sum with capitalization of interest.

[Buyer] claims, in addition, to have suffered financial and commercial injury amounting to f 514843 for which it seeks reparation from [seller], as well as compensation for an injury borne of the [seller's] abusive and unjustified resistance [to this litigation], for which [buyer] demands f 100,000 in damages and interest.

[Buyer] finally seeks f 50,000 in application of Art. 700 N.C.P.C. [Noueau code de procédure civile: New Code of Civil Procedure].

[Seller] has moved for a pure and simple affirmation of the judgment by the Appellate Court of the judgment maintaining that there had not been any agreement between the parties regarding the necessity of further machining of the laminated metal sheets.

[Seller] contests, in addition, the terms of the expert report by maintaining that the norm C.C.P.U. DIN 500 49 31b to which the parties had referred did not impose upon [seller] a particular inspection, and that [seller] had only to verify the chemical composition and the mechanical values of the material, which [seller] claims to have done.

[Seller] adds that in holding to its obligation it did not exempt [buyer] from conducting a test itself upon receipt of the goods.

And [seller maintains that [buyer] did not conduct that test and bring to [seller's] attention the defects of the goods in the "brief time" [dans un délai raisonnable: "within a reasonable time"] required by the CISG;

That [buyer] must thus forfeit the right to prevail relying on those defects.

[Seller] seeks finally 50,000 f in application of Art. 700 N.C.P.C.

LYONNAISE DE BANQUE, which had executed the judgment on provisional execution ordered, declares to have been reimbursed by [buyer], and to longer be owing any obligation with respect to the [seller].

It thus demands that it be removed from the action but asserts to have been joined in the suit uselessly and cross-claims the entire order requiring it to pay f 20,000 by way of damages and interest for abusive procedure and f 18,090 by application of Art. 700 N.C.P.C.

(...)

Reasons for the judgment

The inadmissibility of the appeal had not been raised. Nothing in the files leads the Court to automatically do so.

The judgment will be held deemed final.

Once and for all the removal from the action of DAMSTAHL issued by the Tribunal, may be confirmed, no one having moved against it on appeal.

Under application of Art. 39 CISG:

- That law applicable in the area of international sale of goods envisions in its Art. 38 that the buyer must inspect the delivered goods within as short a period as is practicable in the circumstances [dans un délai aussi bref que possible au égard aux circonstances];

- And in its Art. 39 which a buyer forfeits the right to rely on a defect of conformity if it does not notify the seller specifying the nature of that defect within a reasonable period beginning at the moment either when it was noticed, or should have been noticed.

From the exhibits adduced at trial -- fax, correspondence, delivery order -- it follows:

- That a first part of the order had been delivered 28 October 1992 with some reservations of "quality control, conformity and quantity" contained on the C.M.R.;

- That some tests of the plates had been conducted on 9 and 11 November 1992 by [buyer];

- That some faxes seeking information had been exchanged between [buyer] and DAMSTAHL on 16 and 19 November 1992;

- That the annulment of the contract for "non-conformity in quality dimensions and established quantities", had been made known to the seller by letter of 1 December 1992;

- That finally, the notice of avoidance of the sale for non-conformity had been sent on 15 December.

This chronology of facts shows that the buyer had inspected the goods which it had received within a quick and normal period of time, bearing in mind the heavy handling of the plates called for, and some incompressible periods of time which the inspection required, and had warned its seller of the non-conformities that it deemed unacceptable, within a period sufficiently reasonable so that no forfeiture clause could be opposed to it.

The grounds drawn from Art. 39 CISG are thus to be set aside.

On the merits

The agreement of the parties emerges, following the exchange of faxes which occurred between [seller], its agent in France DAMSTAHL, and [buyer], on 31 July 1992 and 4 August 1992, purchase order of 5 August 1992 of [buyer] and of the acceptance which was made of the purchase order by [seller] the next day 6 August.

The exhibits adduced at trial reveal:

- That the order specified:

- That the confirmation bore the elements of the order but differed as to the date of delivery and the number of the plates;

- That it was further added "conforming to DIN 17 665/17 670/ 17 675 with WAZ DIN 50 049 31".

This being the first delivery checked plate by plate by [buyer], revealed in a great majority of the dimensions outside the contractually established limits (inspection slip of 9 November 1992), which had not been challenged by [seller] at the time of the visit that the company's technicians made on [buyer] on 7 May 1993, and which had been confirmed by the judicial expert.

There is thus already non-conformity with respect to one of the terms of the order that is acknowledged by the seller.

Being a question of the state of the surface of the plates, [buyer's] order was clearly expressed and moreover, corresponded to proposals which had been made to it by DAMSTAHL-[seller] during the preliminary exchanges by fax of 31 July and 4 August 1992

The indications given in that regard by the seller were:

- "The surface appearance and the flatness are suited perfectly to the application for exchanger tubular plates" (30/07);

- "The surface appearance is that of a laminated product and is wholly suited to the application for tubular plates" (4/08).

The mention of the DIN norms envisioned or added in the contract documents establish at first, as the expert had pointed out, that the seller could not but have had knowledge of the use to which the plates ordered from it were destined, since it spontaneously points to the norm DIN 17 675 applicable to plates (which are in dispute) in copper alloy for condensers and heat-exchangers.

If that norm allows certain occasional and minimal surface irregularities that is not for want of contractual specifications which existed in the instant case, and as much as at any stage of the proceedings, that they do not prevent the later use of the materials.

In the case at bar, the inspection slip well established by [buyer] that by its destined final customer of the goods shows the existence of defects in such quantities as to be unacceptable:

- "important concentrations of indications of linear rounded types observed on the crude surfaces of the plates";

- "geometric defects: twists bending;

- "appearance defects: hammering grinding marks.

And the expert was able to conclude: "After all the tests and visual examination, I can affirm that the sheets are absolutely unacceptable for the use for which they were destined (plates for heat-exchanger heads)".

The elements of the file such as the expert evaluation show therefore that the goods delivered were not conforming, in their definitive characteristics with respect to those which had been ordered.

To that non-conformity, it must be added, that [seller] did not respect the time of delivery which it had promised by contract. The delivery was to have been done the end of October 1992. The greater part occurred on the 4 December 1992.

Under these circumstances, [buyer's] refusal to accept the goods was justified and its demand for avoidance of the sale is well founded.

The avoidance of the sale has, as a consequence, the restitution of the goods against restitution of the price.

The goods had been invoiced f 376,769 and paid.

That sum will thus be returned to the buyer with legal interest to be calculated from the day in which it had been settled, being recognized that the bank that had provided its security (guarantee) and which had paid, had been reimbursed by the [buyer].

The judgment shall thus be amended to reflect this expense item.

[Buyer] seeks in addition the compensation of a further injury, which is expedient to examine well since the [seller] does not challenge the different items which have been evaluated by the expert:

- The purchase cost of rolled metal sheets from another supplier, LAGICA, the overcost owed to the machining of those sheets, and the overcost due to the additional hours do not constitute an injury, [buyer] not being able by obtaining restitution of the sale price by [seller] to have it reimbursed in addition the price of sheets that it had to buy elsewhere indeed, but that it had to pay at any stage of the proceedings:

- [Justified] Overcost due to shipping. It is justified on bills. f 5482.

- Overcost due to supplementary testing rendered necessary by the defects. This item will be set aside, the injury suffered by the [buyer] by the fact of a particular affectation of its personnel to that supplementary testing not having been shown.

- [Justified] Overcost due to the stocking of the sheets f 15,000. This item of injury results directly from the obligation of restitution of the goods. It is owed.

Financial overcost:

- The calculation made by the expert of the interest which would be owed on the bank security appeared theoretical.

- No justification is borne by what [buyer] had to pay in that regard a sum of f 39,478 . This item will be set aside.

Late fees: One does not see what injury [buyer] could have suffered by the fact of a late fee which it never paid since the judgment had deducted it.

The administrative fees such as the translation fee are nothing but some fees which would normally have been foreseen and covered by the risk management of the business. They do not give rise to a particular injury.

Commercial injury:

- The expert declares to have received confirmation from a client of [buyer] (M. Bourgeois HAMON INDUSTRIE) of what the incident with [seller] had adversely played out for [buyer] in the choice of further orders.

- [Justified] One must thus recognize to [buyer] the reality of a moral injury resulting from a loss of credit beside its clientele, which will be compensated, on the basis of elements provided by the file, by the sum of f 50,000 .

The compensation redressing the further financial injury suffered by the [buyer] must thus be fixed at the [total sum justified] of f 70,582, which the [seller] will be ordered to pay.

[Seller] which does not prevail, must also bear the charge of the expenses and of the court costs of the proceedings to the extent of f 15,000 for [buyer] and f 10,000 for LYONNAISE DE BANQUE.

[Buyer] does not, on the other hand, show the existence of a wrongful act [faute: fault, wrongful act, behavior for which an actor will be held liable when legal causation is shown] imputable to that [seller], of a nature to render abusive [seller's] right to defend the suit. The demand for damages and interest presented by way of that claim will thus be rejected

The bank is not justified regarding damage which it would have suffered by its entry into the "useless" suit of these proceedings, that it was by a separate balance of that which is compensated by the indemnity of Article 700 N.C.P.C. That demand for damages and interest is likewise rejected.

For these reasons

The Court of Appeals of Aix-en-Provence sitting publicly and by judgment deemed final:

- Receives the appeal;

- Affirms the judgment which removed DAMSTAHL FRANCE from the action amended for the excess;

- Declares the resolution of the sale which took place between [buyer] and [seller] pursuant to an order of 5 August 1992, accepted on 6 August 1992;

- Orders [seller] to reimburse [buyer], against restitution of the sold goods, the sum of f 376,769 (three hundred seventy-six thousand seven hundred sixty-nine francs), with interest at the legal rate, to be calculated from the day of the ruling;

- Orders [seller] to pay to [buyer] the additional sum of f 70,582 (seventy thousand five hundred eighty-two francs) by right of damages and interest;

- Takes notice that LYONNAISE DE BANQUE had been reimbursed by [buyer] of the sums which it had to settle in execution of the judgment;

- Orders [seller] to pay under Article 700 N.C.P.C. to [buyer] the sum of f 15,000 (fifteen thousand francs) to LYONNAISE DE BANQUE the sum of f 10,000 (ten thousand francs);

- Rejects all other claims; and

- Orders [seller] to pay the costs, those of appeal being separated in favor of [buyer's attorney] S.C.P. Primout-Faivre and [LYONNAISE DE BANQUE's attorney] S.C.P. Sider.

THE CLERK, THE PRESIDING JUSTICE

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FOOTNOTE

* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Plaintiff-Respondent of France is referred to as [buyer]; the Defendant-Appellant of Germany is referred to as [seller]. Amounts in French currency (French francs) are indicated as [f].

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

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