Pace Law School
Institute of International Commercial Law - Last updated July 17, 2001
Queen Mary Case Translation Programme
Translation by Isobel Rauch
This is an action for damages brought by an Austrian [buyer] against a German [seller] for delivery of surface protection foil not in conformity with the contract.
In March 1995 the [buyer] ordered from the [seller] 7,500 m2 foil for DM 0.57 per m2. The foil had to be self-adhesive and removable from polished sheets of stainless steel so that no adhesive residues would remain. The foil delivered on 28 March 1995 did not meet these requirements; the acrylat conceiling adhesive was not suitable for this purpose.
The [buyer] tested the foil for completeness and defectiveness; [buyer] did not carry out test processing herself. Her contracting party, the firm of B. Metal and Baths Construction Corporation (B. GmbH), informed her on 20 April 1995, that "the complete adhesive residue" was sticking "to the polished surface like an adhesive film" after the foil was pulled off. On 21 April 1995, the [buyer] notified the [seller] of this lack of conformity. B. GmbH cleaned the stainless steel surfaces for öS 492,240, which it was paid by the [buyer].
The parties tried to reach an agreement; during several conversations and during correspondence. At this time, the [seller] did not complain about the fact that the [buyer] had not notified [seller] of the lack of conformity until 21 April 1995.
The [buyer] claims compensation from the [seller] for the öS 492,240 she paid to B. GmbH. [Buyer] alleges that this amount had been indispensable to clean the sheets of stainless steel, and that the notification of the defect was in due time according to the provisions of the CISG because the Standard Business Conditions of the [seller], which incontestably provide for an eight-day time limit for claims, did not become part of the contract. Buyer alleges that the defect became obvious only with continuous destruction of the adhesive foil.
The [buyer] also maintains that the [seller] misled her fraudulently -- namely, that the rubber adhesive used did not cause such problems.
The [seller] opposes the complaint. He considers the notification of the defect to have been unduly delayed and asserts that this type of acrylat adhesive had been applied earlier; that it was not unsuitable, but that the adhesive charge applied in this particular case was defective. This was not forseeable for him. The [seller] also pleads the statute of limitations under BGB [*] § 477.
The District Court of Heidelberg ruled that [buyer's] cause of action was justified and ordered the [seller] to pay öS 35,160. To avoid repetition, we refer to the facts and reasons of that decision.
The [seller] filed this appeal. He repeats and expands the arguments he made before the Court of First Instance. He considers a notification of a defect after 25 days not to be in due time, regardless of whether Clause No. 13 of his Standard Business Conditions, HGB [*] § 377, or CISG Arts. 38, 39 are used as a basis.
The [seller] petitions reversal of the judgment of the District Court of Heidelberg of 2 October 1996, and that the complaint be dismissed.
The [buyer] petitions denial of the appeal. In addition to her arguments before the Court of First Instance, [buyer] states that she should be excused under CISG Art. 44 because it was necessary to carry out extensive adhesion tests in order to examine the delivered foil. She also alleges that the [seller] may not plead that the notification of the defect was late, because [seller] negotiated with [buyer] over [buyer's] claim for damages. Finally, [buyer] alleges that the [seller] acted in bad faith in terms of CISG Art. 40 as [seller] knew that the delivered foil was lacking conformity with the contract.
Concerning the further arguments of the parties, we refer to the pleadings together with the enclosures.
Reasons of the decision
[Seller's] appeal of the ruling by the Court of First Instance that was handed down on 2 October 1996 is well-founded. Although the protection foil delivered by the [seller] on 28 March 1995 was defective, the [buyer] is not entitled to hold the [seller] liable for material defects because [buyer] did not notify the [seller] of the lack of conformity within a short period of time and therefore lost her rights (CISG Arts. 38, 39).
I. The Convention on Contracts for the International Sale of Goods (CISG) applies. Germany and Austria are Contracting States pursuant to CISG Art. 1(1)(a). Additionally, private international law (EGBGB [*] Arts. 27, 28) leads to the application of German or Austrian law and therefore to the application of the law of a Contracting State (CISG Art. 1(1)(b)).
Application of the 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 (CISG Art. 6). 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 (Clause No. 13 of the Standard Business Conditions of the [seller]: "German law is applicable") in general leads to the decisive application of the CISG, which has represented the German commercial law for foreign commerce since 1 January 1991 (Detzer/Thamm, Der Betriebsberater 1992, 2370; Piltz, Internationales Kaufrecht, 1993, § 2, para. 111). Pursuant to CISG Art. 1(1)(b), the choice of the law of a Contracting State leads to the application of the Convention, so that exclusion of the Convention cannot be concluded from Clause No. 13 read in connection with CISG Art. 6 (cf. concerning the choice of deviating law: Herber in v. Caemmerer/Schlechtriem, Kommentar zum Einheitlichen UN-Kaufrecht, 2d ed., Art. 6, para. 14, 16ff.).
Further grounds for the assumption that the parties had contracted out of the CISG have neither been alleged nor are apparent.
II. The defective protection foil is not in conformity with the contract in terms of CISG Arts. 35, 36. Pursuant to CISG Art. 38, the buyer "must examine the goods, or cause them to be examined within as short a period as is practicable in the circumstances". The [buyer] did not comply with the requisite examination duties, including test processing in due time. [Buyer] lost her right to rely on lack of conformity of the goods under CISG Art. 39(1), because she did not "give notice ... within a reasonable time after (s)he has discovered ... or ought to have discovered" the incontestable lack of conformity. The examination "within a short period" is designed to clarify between the contracting parties, if the delivered goods will be accepted as being in conformity with the contract.
1. Whereas CISG Arts. 38, 39 do not put these time periods in concrete terms, Clause No. 8 of the Standard Business Conditions of the [seller] provides that complaints will only be taken into consideration if they are received in written form by the [seller] within eight days after the arrival of the goods. It may remain undecided for the decision of the lawsuit, if the Standard Business Conditions of the [seller] became part of the contract pursuant to CISG Arts. 4, 14 et seq., and whether or not they are an inappropriate discrimination against the [buyer] pursuant to CISG Arts. 4, 7(2) in conjunction with EGBGB [*] Arts. 31(1), 27, 28(1) and (2), AGBG [*] § 9. It may be an argument for the existance of such discrimination that the right to file a complaint is extinguished even if there are hidden defects that cannot possibly be discovered within eight days (cf. BGH [*] Neue Juristische Wochenschrift 1992, 575); a reduction keeping the provision valid is excluded.
In fact, the [buyer] did not "examine within a short period". The protection foil was delivered to [buyer] on 28 March 1995. Her first written notification of a defect was dated 21 April 1995, following a telephone notification of the [seller] on the same day. Immediately before that her contracting party, the firm B. GmbH, had noticed adhesive residue on the metal surfaces during the processing of the foil and informed her about it on 20 April 1995. Consequently, [buyer's] notification of a defect occured twenty-four days after the delivery of the goods.
a) Even if the time periods in CISG Arts. 38, 39 "are formulated a little more leniently" than in HGB [*] § 377 (Detzer/Thamm, Der Betriebsberater 1992, 2375) and are supposed to be handled more flexibly in a particular case, the buyer is required to examine the goods for lack of conformity within a short period of time.
A "mean" for such examination period pursuant to CISG Art. 38(1), which may be corrected upwards or downwards as the case may be, may be assumed three to four days (Piltz, Internationales Kaufrecht, 1993, § 5, para. 52; OLG Koblenz, Recht der Internationalen Wirtschaft 1989, 310 et seq. zum Haager EKG [ULIS]; cf. also OLG Düsseldorf 8 January 1993 [http://cisgw3.law.pace.edu/cases/930108g1.html] concerning the notification for perishable goods).
b) The extent and thourougness of the examination depend on the kind of goods, their packaging and the resources of the typical buyer. Even in the case of long-standing business relations, taking samples is always reasonable and a so-called test processing is necessary if the defect that may be discovered during the examination will only be visible after the processing (OLG Köln, Der Betriebsberater 1988, 20 zu § 377 HGB;[*] Schwenzer in v. Caemmerer/Schlechtriem, Kommentar zum Einheitlichen UN-Kaufrecht, 2d ed., Art. 38, para. 14).
The [buyer] did not examine the adhesive foil herself; in particular, she did not carry out a test processing or adhesion tests, although she would have been able to do so without any fuss and the adhesion tests would have been absolutely suitable to recognize the defects. The expert opinion from the Austrian Institute for Synthetic Materials dated 21 August 1995, -- requested by the [buyer] -- confirms the suitablity of adhesion tests; examinations carried out between 11 until 17 August 1995, showed "large amounts of organic residue" on the metal sheet surfaces, which give cause for complaint because of the formation of stains.
Thus it is certain that a test processing, for which the [buyer] is responsible, would have shown stains after at most seven days. If the [buyer] had begun the test processing after three to four days, she would have been able to notify the [seller] of the defect after ten to eleven days at the latest.
A technician with the firm B. GmbH, Witness H., who was involved during the settlement procedure, confirms this. He states: "We are pulling the foil off a metal sheet from each charge; in the concrete case the adhesive turned out to stick to the metal sheet." Thus, it is at the same time certain that a hidden defect did not exist.
2. The [buyer]'s notification of the lack of conformity was late. Pursuant to CISG Art. 39(1) the time period for notification begins at the moment that the defect could have been detected; this was ten to eleven days after the delivery at the latest, thus 7 or 8 April 1995.
The time period for notification pursuant to CISG Art. 39(1) is more generous than in HGB [*] § 377 ("immediately"); it comes to about eight days for non-perishable goods (Piltz, Internationales Kaufrecht, 1993, § 5, para. 59; LG Stuttgart 31 August 1989 [http://cisgw3.law.pace.edu/cases/890831g1.html]; OLG Düsseldorf 8 January 1995 [http://cisgw3.law.pace.edu/cases/930108g1.html]), for perishable goods it often comes to only a few hours (Schwenzer, in v. Caemmerer/Schlechtriem, Kommentar zum Einheitlichen UN-Kaufrecht, 2d ed., Art. 39, para. 16). Thus, the notification of the defect on 21 April 1995 is several days late. The test processing omitted by the [buyer] caused the failure to satisfy the time period for notification.
3. Under CISG Art. 40 the seller is not entitled to rely on the failed time period for notification if seller knew or could not have been unaware of the lack of conformity and nevertheless concealed it from the buyer. The language in CISG Art. 40: "of which he . . . could not have been unaware" constitutes relief for proving knowledge, which can otherwise be difficult to prove (cf. Schwenzer in v. Caemmerer/Schlechtriem, Kommentar zum Einheitlichen UN-Kaufrecht, 2d ed., Art. 40, para. 4).
The [seller] indeed knew, that the protection foil sold by him was coated with acrylat adhesive. It is contentious, however, to assert that [seller] knew or "could not have been unaware" that this adhesive coating would turn the foil to goods not in conformity with the contract. The buyer has to prove this knowledge. The [buyer] did not offer any evidence for that. Besides, the expert opinion of the Austrian Institute for Synthetic Materials only considers the applied acrylat conceiling adhesive as not suitable, not such adhesives in general. The [seller] also alleges having applied such adhesives several times on his foils before and that such adhesive residues had never formed at removal. The [buyer] cannot refute this statement; it indicates that the adhesion is defective, but not that the type of adhesive is generally unsuitable.
4. Pursuant to CISG Art. 44, the buyer can claim damages notwithstanding CISG Art. 39(1) if she has a "reasonable excuse" for her failure to give the required notice. The [buyer] was not able to present such an excuse. CISG Art. 44 only discharges the buyer in cases of failure to give notice or disregard of the requirements of CISG Art. 39(1). [Buyer] will not be excused from not having properly carried out the examination provided for in CISG Art. 38 if the belated notification was caused by the fact that the buyer did not examine the goods in a due way. [Buyer's] reference to CISG Art. 44 fails (Piltz, Internationales Kaufrecht, 1993, § 5, para. 78; Huber, in v. Caemmerer/Schlechtriem, Kommentar zum Einheitlichen UN-Kaufrecht, 2d ed., Art. 44, paras. 1 and 4).
The case here is that the examination of extent and damage of the goods did not cover all examination measures required by CISG Art. 38, which in this case includes a test processing.
5. Nor is the [seller] prevented by other reasons from relying on the missed time period for notification.
a) It may remain to be seen for CISG Arts. 35, 38, 39 and the obligation to notify the defect, if the [seller] -- in accordance with German law (BGB [*] § 459(2)) -- warranted certain characteristics of the goods. Because "lack of conformity" under CISG Art. 35 is independant from nationally shaped ideas of agreements between the parties (Piltz, Internationales Kaufrecht, 1993, § 5, para. 25), German-law terms like "defect" or "warranted characteristics" are therefore not transferable to the CISG.
Promises of guarantee are only relevant for CISG Art. 36(2) and Art. 46(2), not for obligations to notify.
b) Finally, the [seller] did not forfeit his right to rely on the late notification of the defect.
Under CISG Art. 7(1), 80, principles of good faith are also decisive for the exercise of a right. This includes for instance the prohibition of venire contra factum proprium (Herber in v. Caemmerer/Schlechtriem, Kommentar zum Einheitlichen UN-Kaufrecht, 2d ed., Art. 7, para. 37), the inadmissible exercise of a right because of former conduct.
The pretrial conduct of the [seller] concerning the lack of conformity -- in connection with the fact, that the [seller] did not introduce the late notification of the lack of conformity of the goods as a subject under negotiation -- does not, however, lead to the consequence that the [seller] is excluded from pleading late notification by virtue of CISG Arts. 7(1), 80. The pretrial conduct of the [seller] has to be seen in connection with the long-lasting privity. The [seller] examined the alleged defects and offered replacement by way of a settlement. It was of considerable interest for him -- unaffected by this particular case -- whether a defect existed, because he might have to change his production and use a different adhesive.
Concerning HGB [*] § 377, it is acknowledged that negotiations about the notified defect do not necessarily mean that the seller renounces his right to raise the objection of lateness (see Baumbach/Duden/Hopt, HGB-Kommentar, 29th ed., § 327, para. 14).
A different interpretation would lead to the consequence that any readiness to enter into negotiation -- even out of good will -- would put the seller in danger of losing the objection of timeliness; this is not appropriate (BGH [*] Der Betriebsberater 1978, 1489). These principles of law are also applicable to the CISG. Here also particular circumstances of the case are necessary in order to conclude that there is a definite renunciation of a right. The [buyer] did not submit such circumstances; nor do they show from the presented correspondence of the parties. Consequently, a "holding meriting protection" of the [buyer] certainly did not result from the negotiations about the lack of conformity.
III. The order for payment of costs is based on ZPO [*] § 91(1). The declaration of the judgment to be provisionally enforcable follows from ZPO §§ 708 No. 10, 711. The fixing of the gravamen is based on ZPO § 546(2) (1).
TRANSLATOR'S NOTES