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Reproduced with permission from the Cornell Review of the Convention on Contracts for the International Sale of Goods (1995) 51-94

excerpts from

Judicial Interpretation and Application of the CISG in Germany 1988-1994

Martin Karollus [*]

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[Delivery of goods of another kind vs. non-conforming goods]
[Article 35]

Due to the ambiguous statements in the Secretariat Commentary to the CISG, the delivery of goods of another kind (Falschlieferung), as opposed to non-conforming goods, is controversial.[151] The issue is whether the delivery of goods of another kind is to be regarded as a non-conforming delivery[152] or as no delivery at all.[153] Without discussion, the OLG Düsseldorf has taken the view that the delivery of goods of another kind is a non-conforming delivery, simply stating that Article 39 was applicable [OLG Düsseldorf (6 U 119/93) 10 February 1994].[154] Especially German lawyers should appreciate this, since the distinction between non-conforming goods and goods of the wrong kind (with a further distinction relating to the degree of deviation) is one of the biggest nuisances in German sales law.

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FOOTNOTES

* Professor of Law at the University of Bonn, Germany, from 1992 to February 1995. Currently, Professor of Law at the University of Linz, Austria. Address: Institut für Handels-und Wertpapierrecht, Universität Linz, A-4040 Linz-Auhof, Austria, Europe.

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151. John Honnold, Documentary History of the Uniform Law for the International Sales 419, 421-22 (1989).

152. See, e.g., Schlechtriem, supra note 22, at 54; Ulrich Huber, Die Haftung des Verkäufers nach dem Kaufrechtsübereinkommen der Vereinten Nationen und nach deutschem Recht 11 (1991); Karollus, supra note 20, 105-06; Josef Aicher, Leistungsstörungen aus der Verkäufersphäre, in Das Einheitliche Wiener Kaufrecht 114-23 (Hans Hoyer & Willibald Posch eds., 1992); Piltz, supra note 21, at 117; Schwenzer, supra note 149, at 324.

153. See Diskussionsbeiträge, in Das UNCITRAL-Kaufrecht im Vergleich zum österreichischen Recht 133, 135, 147 (Peter Doralt ed., 1985); Loewe, supra note 17, at 51; Karl Neumayer & Catherine Ming, Convention de Vienne sur les contrats de vente internationale de marchandises (1993).

154. Judgment of Feb. 10, 1994, OLG Düsseldorf, 1994 RIW at 1051.


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[Notice of non-conformity issues in this case and in other German cases]
[Article 39]

Unsurprisingly, the buyer's notice to the seller of non-conforming goods is an important issue.[158] Most important are timeliness, specificity, and the consequences of delay. CISG Article 44 has not been discussed by German courts, probably because German law contains similar provisions concerning the notice of non-conformity, which makes it unlikely that German courts would accept the existence of a "reasonable excuse" for not meeting the notice requirements at all.[159]

Notice is required in all cases of non-conformity contemplated in Article 35, including the delivery of goods of another kind [OLG Düsseldorf (6 U 119/93) 10 February 1994] [160] and the delivery of a minor quantity [OLG Düsseldorf 8 January 1993].[161] Under CISG Article 39(1), notice is due within a reasonable time after the non-conformity of the goods is discovered or ought to have been discovered. The buyer must examine the goods according to Article 38. The notice period begins to run when the buyer could have discovered the defect during a proper examination, whether the buyer did not actually discover the lack of conformity because he did not examine the goods properly or because he did not examine them at all. Given the opportunity for a proper examination and where the lack of conformity could have been discovered, a notice made seven days [OLG Düsseldorf 8 January 1993],[162] sixteen days [LG Stuttgart 31 August 1989],[163] or more than two months [OLG Düsseldorf (6 U 32/93) 10 February 1994] [164] after delivery is considered delayed.[165] In contrast, the notice is timely if the buyer examines the goods on the day of delivery and dispatches the notice on the day after [LG Aachen 3 April 1990].[166]

The courts have tried to define the requirements of a proper examination. For example, a proper examination will allow: the buyer of shoes to discover that they are losing color and that the workmanship is bad [LG Stuttgart 31 August 1989],[167] the buyer of shirts to discover that the style is not correct [OLG Düsseldorf (6 U 32/93) 10 February 1994],[168] and the buyer of pickled cucumbers to discover that the quantity is not correct [OLG Düsseldorf 8 January 1993].[169] Generally, the examination must be made when the goods arrive at the place of delivery. However, if the seller knew that the goods were to be redirected, the examination can be deferred until the goods have arrived at their final destination under Article 38(3) [OLG Köln 22 February 1994].[170] Under Article 6, the parties can agree to substitute other examination requirements for these default rules [OLG Düsseldorf 8 January 1993].[171]

Any other modification of Articles 38-44 is possible under Article 6; the parties can intensify or mitigate the burden of notice. The LG Baden-Baden considered an intensification, where the general contract conditions of an Italian tile seller provided that notice of a non-conformity must be provided within thirty days of the invoice date [Baden-Baden 14 August 1991].[172] The buyer, to justify his failure to provide notice within the thirty-day period, claimed that the non-conformity of the tiles was not discoverable upon examination. The LG Baden-Baden decided that the buyer had lost his right to rely on the lack of conformity.

This holding is correct if the clause was valid and had become part of the contract.[173] However, since the clause did not distinguish between discoverable and non-discoverable defects, its validity is questionable. In my opinion, the clause is extremely unfair because it prevents the buyer from exercising his rights as to a lack of conformity that is latent for more than thirty days.[174]

Under German law such a clause would be invalid, but German law was not applicable to the contract.[175] Italian law should have been applied to determine the clause's validity.[176] Since the LG Baden-Baden did not even discuss this problem, the outcome under Italian law is uncertain.[177]

Furthermore, the notice must specify the nature of the non-conformity under Article 39(1). The LG München I decided that the specificity requirement was not met when a buyer of shoes complained generally about bad fit and workmanship [LG München 3 July 1989].[178] I do not agree with the court. Generally, the requirement of specificity should not be exaggerated. Consider that it was the seller who delivered non-conforming goods; the buyer ought not have to bear the risk of non-conforming goods through unrealistic notice specificity requirements [BGH 2 June 1982 (a ULIS decision)].[179] A more general complaint, considered in context, should be sufficient.

Article 39 does not require that the notice of non-conforming goods be transmitted by a certain means of communication. While the notice can be made by telephone, the buyer has to prove that the telephone call was made and its content. Even worse, German courts will not even consider evidence of a telephone call if the buyer cannot exactly specify the date of the call and the other party to the conversation [LG Stuttgart 31 August 1989; LG Frankfurt 13 July 1994].[180] The reason for this is that German procedural law does not allow a party to prove a point with Ausforschungsbeweis (purely exploratory offers of unspecified facts). However, I do not agree with this procedural law; the buyer who does not know the exact date of the telephone conversation should be able to furnish supporting evidence of both its occurrence and content. If the offered evidence is not convincing, the judge will disregard it.

If the buyer fails to provide notice, he loses the right to rely on the lack of conformity.[181] Foregone remedies for such reliance include, for example, substitute delivery,[182] repair,[183] or price reduction. The same rule applies where the buyer fails to provide notice of delivery of a lesser quantity of goods than required by the contract, at least in cases of a hidden shortage (verdeckte Minderlieferung);[184] the buyer loses his right to demand delivery of undelivered goods, and he has to pay the full price.[185] It is doubtful, however, that the same rule applies when the delivery documents accurately reflect the delivery of less than the contracted quantity (offene Minderlieferung) [OLG Düsseldorf 8 January 1993].[186] In this case, the seller probably knows or, at least, ought to know of the shortage, and therefore notice is not required.[187]

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FOOTNOTES

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158. Furthermore, German courts have considered the buyer's notice of non-conforming goods under ULIS Articles 38-40. Since ULIS and CISG concepts are very similar in this context, these decisions will be influential on CISG interpretation. Most of the decisions are published in Peter Schlechtriem & Ulrich Magnus, Internationale Rechtsprechung zu EKG und EAG 231-300 (1987).

159. See Handelsgesetzbuch [HGB] §§ 377-78.

160. Judgment of Feb. 10, 1994, OLG Düsseldorf, 1994 RIW at 1051.

161. Judgment of Jan. 8, 1993, OLG Düsseldorf, 1993 RIW at 325.

162. Id.

163. Judgment of Aug. 31, 1989, LG Stuttgart, 1990 IPRax at 317.

164. Judgment of Feb. 10, 1994, OLG Düsseldorf, 1995 RIW at 55.

165. But see Ingeborg Schwenzer, Art. 39: Mängelrüge, in Kommentar zum Einheitlichen UN-Kaufrecht 357, 361-62 (Ernst von Caemmerer & Peter Schlechtriem eds., 2d ed. 1995).

166. Judgment of Apr. 3, 1990, LG Aachen, 1990 RIW at 492.

167. Judgment of Aug. 31, 1989, LG Stuttgart, 1990 IPRax at 317.

168. Judgment of Feb. 10, 1994, OLG Düsseldorf, 199S RIW at 55.

169. Judgment of Jan. 8, 1993, OLG Düsseldorf, 1993 RIW at 325.

170. Judgment of Feb. 22, 1994, OLG Köln, 1994 RIW at 973.

171. Judgment of Jan. 8, 1993, OLG Düsseldorf, 1993 RIW at 325; Ulrich Magnus, Zum räumlich-internationalen Anwendungs bereich des UN-Kaufrechts und zur Mängelrüge, 1993 IPRax 390, 391-92 (1993).

172. Judgment of Aug. 14, 1991, LG Baden-Baden, 1992 RIW 62.

173. See supra part IV.5.

174. See Karollus, Rechtsprechung (II), supra note 58, at 169.

175. See Gesetz zur Regelung des Rechts der Allgemeinen Geschäftsbedingungen [AGBG] § 9.

176. See EGBGB art. 28.

177. Even if the clause would have been valid under Italian law, the German judge could still have held the clause invalid under the doctrine of ordre public (public policy).

178. Judgment of July 3, 1989, LG München I, 1990 IPRax 316.

179. Judgment of June 2, 1982, BGH, 1982 NJW 2730, 2731 (considering notice specificity requirements under ULIS).

180. Judgment of Aug. 31, 1989, LG Stuttgart, 1990 IPRax at 317; Judgment of July 13, 1994, LG Frankfurt am Main, 1994 NJW-RR at 1265.

181. CISG, supra note 4, art. 39(1). But see id. art. 40, 44.

182. Id. art. 46(2).

183. Id. art. 46(3).

184. A "hidden shortage" arises when the quantity of goods actually delivered is less than the contract amount, but the invoice or delivery documents incorrectly report delivery of the full amount. See Judgment of Jan. 8, 1993, OLG Düsseldorf, 1993 RIW at 325.

185. Id. See Herber & Czerwenka, supra note 16, at 186-87; Schwenzer supra note 165, 365-66; Ulrich Huber, Art. 51: Teilweise Nichterfüllung, in Kommentar zum Einheitlichen UN-Kaufrecht 507, 510 (Ernst von Caemmerer & Peter Schlechtriem eds., 1st ed. 1990). Contra Herbert Stumpf, Art. 39: Mängelrüge, in Kommentar zum Einheitlichen UN-Kaufrecht 335, 338 (Ernst von Caemmerer & Peter Schlechtriem eds., 2d ed. 1995) (stating that the buyer only has to pay for the quantity actually delivered).

186. The OLG Düsseldorf expressly stated that it did not want to treat this issue. Judgment of Jan. 8, 1993, OLG Düsseldorf, 1993 RIW at 325.

187. CISG, supra note 4, art. 40.


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[Avoidance issues in this case and in other German cases]
[Article 49]

In most cases of late delivery, the buyer can avoid the contract only after fixing an additional period for delivery. Only under exceptional circumstances does late delivery constitute a fundamental breach and allow immediate avoidance.[189] An example of exceptional circumstances is the late delivery of fashionable articles. However, in a case involving fashionable articles, the AG Oldenburg in Holstein discussed only Article 49(1)(b) and dismissed the buyer's declaration of avoidance because he had not fixed an additional period for delivery [AG Oldenburg 24 April 1990].[190] Perhaps the court did not sufficiently consider Article 49(1)(a).[191] This result could be correct because, apart from the fact that there may have been no delay at all,[192] the parties indicated the delivery dates with the symbol "+/-." The intended meaning of this symbol could have been that there was no precise time for delivery. If so, the delayed delivery would not have constituted a fundamental breach.

If the buyer receives non-conforming goods or goods of another kind, Article 49(1)(b) is not applicable. Therefore, the buyer can avoid only if the breach is fundamental.[193] However, Article 49(1)(b) is applicable if the buyer demands delivery of substitute goods under Article 46(2) because the substitute delivery is regarded as a delivery under Articles 31-33 and the provisions relating to delivery apply (again) [OLG Düsseldorf (6 U 119/93) 10 February 1994].[194] The buyer can fix a period for substitute delivery and avoid the contract if the seller does not deliver within the fixed period. If the buyer does not fix an additional period, avoidance is possible only if the breach is fundamental.[195] A fundamental breach occurs if the seller declares seriously and definitely (ernsthaft und endgültig) that he will not deliver substitute goods, but does not occur if he only declares that he cannot deliver at the moment [OLG Düsseldorf (6 U 119/93) 10 February 1994].[196]

According to Article 49(2)(b)(i), a declaration of avoidance based on breach other than late delivery must be made within a reasonable time after the buyer knew or ought to have known of the breach. A delay of two [OLG Frankfurt 20 April 1994] [197] or four months [OLG München 2 March 1994] [198] was held to be not reasonable. Of course, a declaration made after one day is timely [OLG Frankfurt 17 September 1991].[199]

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FOOTNOTES

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189. Id. art. 44(1)(a).

190. Judgment of Apr. 24, 1990, AG Oldenburg in Holstein, 1991 IPRax at 338.

191. See Enderlein, supra note 134, at 314-15.

192. See supra Part V.5.

193. One of the most controversial CISG issues is the definition of a fundamental breach in respect to defective goods, especially when the defect can be cured by substitute delivery or repair. See Honnold, supra note 1, §§ 184, 296; Michael Will, Article 48, in Commentary on the International Sales Law 347, 356-58 (C.M. Bianca & M.J. Bonell eds.,1987); Aicher, supra note 152, at 136-42; Martin Karollus, UN Kaufrecht: Vertragsaufhebung und Nacherfüllungsrecht bei Lieferung mangelhafter Ware, 1993 Zeitschrift für Wirtschaftsrecht 490; Peter Schlechtriem, Art. 25: Wesentliche Vertragsverletzung, in Kommentar zum Einheitlichen UN-Kaufrecht 207, 217-19 (Ernst von Caemmerer & Peter Schlechtriem eds., 2d ed. 1995); Huber, supra note 128, at 442-45.

194. Judgment of Feb. 10, 1994, OLG Düsseldorf, 1994 RIW at 1051. See Huber, supra note 128, at 449.

195. CISG, supra note 4, art. 49(1)(a).

196. Judgment of Feb. 10, 1994, OLG Düsseldorf, 1994 RIW at 1051.

197. Judgment of Apr. 20, 1994, OLG Frankfurt am Main, 1994 RIW at 595.

198. Judgment of Mar. 2, 1994, OLG München, 1994 RIW at 596.

199. Judgment of Sept. 17, 1991, OLG Frankfurt am Main, 1991 RIW at 951.


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[Interest issues in this case and in other German cases]
[Article 78]

Article 78 allows for the collection of interest on any monetary arrearage, without prejudice to damages recoverable under Article 74. Unfortunately, Article 78 does not provide for the calculation of an appropriate interest rate. Accordingly, the allowed interest rate must be calculated under national law.[223] The issue is which national law is applicable to determine the interest rate. Most authors [224] and courts [LG Hamburg 26 September 1990; OLG Frankfurt 13 June 1991; OLG Frankfurt 18 January 1994; OLG München 2 March 1994; OLG Koblenz 17 September 1993; OLG Düsseldorf (6 U 119/93) 10 February 1994] [225] have generally agreed that the law applicable to the issue of interest is the Vertragsstatut (the law that governs the contract apart from CISG); in the absence of a choice of law provision in the contract, the applicable law would be the seller's law [OLG Koblenz 17 September 1993; OLG Düsseldorf (6 U 119/93) 10 February 1994].[226] At least one court decided that the creditor's law was applicable [LG Frankfurt 16 September 1991; see also LG Stuttgart 31 August 1989 and KG Berlin 24 January 1994 (Neither decision making clear whether interest was granted according to Article 78 or damages according to Article 74)] [227] and another court did not decide on the question because the results did not differ.[228] In addition, some authors have proposed other solutions, such as application of the law of the debtor's country[229] or of the country which issued the currency specified in the contract.[230] These solutions have not been adopted by the courts. The problem is of considerable importance since interest rates are rather low in some states (four or five percent in Austria and Germany) but much higher in others (ten percent in Italy and more than fifty percent in Bulgaria).[231] The contracting parties should avoid these uncertainties by agreeing on an interest rate or by choosing the applicable law.

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FOOTNOTES

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223. CISG, supra note 4, art. 7(2). Article 7(2) also -- and primarily -- provides for a gap-filling according to general principles. But, in the present case, that does not seem to be possible because the Vienna Conference failed to agree on any principles.

224. See Gert Reinhart, Fälligheitszinsen und UN-Kaufrecht, 1991 IPRax 376 (1991); Herber & Czerwenka, supra note 16, at 347; Karollus, supra note 20, at 227; Piltz, supra note 21, at 280-82; Hermann Eberstein & Klaus Bacher, Art. 78: Zinsen, in Kommentar zum Einheitlichen UN-Kaufrecht 665, 672-73 (Ernst van Caemmerer & Peter Schlechtriem eds., 2d ed. 1995)

225. See Judgment of Sept. 26, 1990, LG Hamburg, 1990 RIW at 1019; Judgment of June 13, 1991, OLG Frankfurt am Main, 1991 RIW at 591-92; Judgment of Jan. 18, 1994, OLG Frankfurt am Main, 1994 RIW at 241; Judgment of Mar. 2, 1994, OLG München, 1994 RIW at 596-97. See generally Judgment of Sept. 17, 1993, OLG Koblenz, 1993 RIW at 938; Judgment of Feb. 10, 1994, OLG Düsseldorf, 1994 RIW at 1051.

226. See Judgment of Sept. 17, 1993, OLG Koblenz, 1993 RIW at 938; Judgment of Feb. 10, 1994, OLG Düsseldorf, 1994 RIW at 1051.

227. Judgment of Sept. 16, 1991, LG Frankfurt am Main, 1991 RIW at 954. See Hans Stall, Inhalt und Grenzen der Schadensersatzpflicht sowie Befreiung con der Haftung im UN-Kaufrecht, im Vergleich zu EKG und BGB, in Einheitlichen UN-Kaufrecht und nationales Obligationenrecht 257, 279-80 (Peter Schlechtriem ed., 1987). See also Judgment of Aug. 31, 1989, LG Stuttgart, 1990 IPRax at 317-18; Judgment of Jan. 24, 1994, KG Berlin, 1994 RIW at 683-84 (neither decision making clear whether interest was granted according to Article 78 or damages according to Article 74).

228. Judgment of June 13, 1991, OLG Frankfurt am Main, 1991 RIW at 591-92.

229. See Hans Stoll, Internationalprivatrechtliche Fragen bei der landesrechtlichen Ergänzung des Einheitlichen Kaufrechts, in Festschrift für Murad Ferid 495, 509-10 (Andreas Heldrich et al. eds., 1988).

230. See Wolfgang Grunsky, Anwendbares Recht und gesetzlicher Zinssatz, in Festschrift für Franz Merz 147, 147-57 (Walter Gerhardt et al. eds., 1992).

231. Perez, supra note 21, at 281-82.

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Pace Law School Institute of International Commercial Law - Last updated July 9, 1999
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