Source: http://cisgw3.law.pace.edu/cases/970821g1.html
Timestamp: 2019-04-18 10:52:07+00:00

Document:
A German seller, plaintiff, made several deliveries of aluminium hydroxide to a French glass manufacturer, defendant. The buyer stored the chemicals in a silo, adding new material to that from previous deliveries. Due to the lack of quality of the aluminium hydroxide, the glass produced was defective. On the day after the second of the two deliveries in question, the buyer notified the seller that the goods received in two previous deliveries had been defective. The seller contested the lack of quality of the goods in the said deliveries and sued for the purchase price. The court of first instance allowed the claim.
The court dismissed the buyer's appeal. It held that the buyer was not released from its obligations under article 81(1) of the CISG, since the buyer was not entitled to declare the contract avoided. As to the first delivery in question, the court held that the buyer had failed to prove that the unusable aluminium hydroxide derived from this particular delivery. During the relevant time period, several deliveries had been made by the seller. Although the silo only contained chemicals delivered by the seller, if the defect had arisen from a different delivery, the buyer would have failed to notify the seller (article 39(1) CISG). As to the second delivery in question, the court found that, as defective glass already had been produced prior to the date of this delivery, the buyer had failed to prove any lack of quality of this particular delivery (article 35 CISG).
Moreover, the court held that the buyer had failed to examine the goods in time. Under normal circumstances, examination within a period of one month would have been reasonable. However, where delivered goods are mixed with previous deliveries, immediate inspection was said to be incumbent, since the defect would have been revealed even by means of simple tests (article 38(1) CISG).
The court held that, by mixing the aluminium hydroxide without prior examination, the buyer had failed to take due care of its own goods; consequently, it also failed to mitigate its loss (article 77 CISG). Thus, the buyer was not entitled to set-off with damages.
"The Higher District Court of Köln, in a 1997 judgment concerning the sale of aluminium hydroxide, affirmed the [Article 39(1)] general rule of the 'noble month,' but stressed that this 'noble month' is a vantage point by adding that the time-frame must be restricted in certain cases where the facts of the specific case reasonably prescribe it. The Court stated: 'Eine solche Frist [Monatsfrist] kann freilich nur für Waren gelten, bei denen keine Veranderungen zu besorgen ist . . .'. In this case, notice was given after the aluminum hydroxide provided by the seller had been placed in a large silo along with other shipments (and the buyer could not substantiate that all materials herein were provided by the seller). The time of the notice thus jeopardized the seller's possibility to ascertain the non-conformity. The Court restricted the flexible month to a shorter time-span with reference to the specific facts of the case and the purpose of Article 39." Andersen, Pace Review of the Convention on Contracts for the International Sale of Goods (1998) 124-125 and n.222.
The appeal of the Defendant [buyer] is admissible; on the merits, however, it cannot be successful.
The Plaintiff [seller] demands the undisputed purchase price amounting to 12,900 Deutsche Mark [DM] for 52 tons of aluminium hydroxide which were, according to the party's basic agreement, collected with the [buyer]'s silo vehicles in two parts on 13 January 1994 and 25 January 1994 and then filled into the [buyer]'s silo on the following days after the respective arrivals.
The Court of First Instance [District Court (Landgericht)] granted the [seller]'s claim. The appeals lodged which, by way of reversal of the challenged judgment, demand to dismiss the claim as inadmissible or alternatively as legally not justified, respectively, or to suspend the appellate proceedings until it is held that decision J 96-11.984 of the Court of Cassation in Paris on the [buyer]'s appeal against decision 95001880 of the Cour d'Appel Orleans of 3 January 1996 is not legally justified.
1.	The [seller]'s claim is admissible. The District Court (Landgericht) rightly affirmed its international jurisdiction. This, however, has to be considered ex officio also within the appellate proceedings according to Art. 19 of the European Convention on Jurisdiction and Enforcement of Judgments in Civil and Commercial Matters of 27 September 1968 in the version of 26 May 1989 (hereinafter Brussels Convention) which entered into force in relation to France on 1 February 1973. As mentioned correctly by the [buyer], � 512 a ZPO [*] does not apply in respect of the international jurisdiction.
The international jurisdiction of the District Court (Landgericht) Köln results from Art. 5 No. 1 of the Brussels Convention. According to that, legal proceedings can be taken against a person which has its registered seat in a Contracting State in another Contracting State before the Court of the place of performance, where a contract or claims based on a contract are the subject to the litigation. As laid down correctly in the challenged judgment, according to Art. 57(1)(a) of the United Nations Convention on International Sale of Goods of 11 April 1980 (hereinafter CISG) the place of business of the [seller] in B. [a location in Germany] is the place of performance as regards the [buyer]'s obligation to pay the purchase price.
The [buyer] does not allege that in so far a different place of performance had been agreed or was otherwise relevant.
2.	A suspension of proceedings until the decision on the [buyer]'s appeal against the cited judgment of the Appellate Court of Orleans is not required.
3.	The [seller]'s claim is legally justified. According to Art. 53 CISG, the [seller] is entitled to the purchase-money claim amounting to 12,900 [DM] put forward against the [buyer].
The claim is not ruled out by Art. 81 CISG as the [buyer] is not entitled to declare the contract avoided according to Arts. 49(1)(a), 45(1)(a), 35 CISG. That would require establishing a lack of conformity of the goods, of which [seller] was given notice within the time limit of Art. 39 CISG. This, however, cannot be assumed.
The [buyer] did not put forward substantively that the delivery of 25 January 1994 which was filled into the silo for lack of another possibility of storage on 26 January 1994 was defective. According to the [buyer]'s own submissions, the [buyer] already on 22 January 1994 located inclusions in the glass production which led to fractures. After microscope analyses, the [buyer] on 26 January 1994 notified the [seller]'s representative in France (L. France S.a.r.l.) of the defect of the material delivered. This cannot have referred to the material filled into the silo only on 26 January 1994.
On 27 January 1994, the [buyer] had taken samples from the silo in the presence of a bailiff. At the occasion of stirring the material, thick lumps grew which remained in the strainer after sifting the liquid whereas a sample of faultless aluminum hydroxide did not leave behind any lumps and was of a brighter coloring. By writing dated 4 August 1995, the [buyer] put forward that the materials examined on 27 January 1994 were samples from the delivery of 14 January 1994 and from the funnel in which the raw materials were stored before being put in the furnace. It cannot be assumed nor was it alleged by the [buyer] that the material filled into the silo only on 26 January 1994 had already got into the funnel. Consequently, it cannot be assumed that the material examined and declared defective on 27 January 1994 stemmed from the delivery of 25 January 1994.
If this delivery had been filled into the silo on 26 January 1994, the [buyer] would have violated the duty to mitigate the loss according to Art. 77 CISG. Consequently, the [buyer] could not be entitled to a damage claim aimed at the exemption of an existing debt in respect of a purchase price obligation.
Not even regarding the delivery of 14 January 1994 did the [buyer] put forward a defect substantively. It is undisputed that the material taken from the silo respectively from the funnel on 27 January 1994 was defective. It is disputed, however, whether the material taken stems from the delivery of 14 January 1994 or from the [seller] at all. If partially old material had been in the silo, no assessments as to the quality of the material delivered by the [seller] could have been made. According to the list of the deliveries between January 1993 and March 1994 submitted by the [buyer], the correctness of which is proven, the material obtained in the period in question solely stemmed from the [seller]. The allegation of the [seller] that the delivered quantity could not have satisfied the [buyer]'s wants, was not substantiated further. According to the cited list, the [buyer] had obtained at least 26.26 t from the [seller] in December 1993. Even assuming consequently that the silo only contained material from the [seller], it cannot be found out whether the sample stemmed from the delivery of 14 January 1994 or from a preceding delivery of the [seller]. As preceding deliveries had not been criticized as defective, claims were in so far not put forward.
The [seller] did not admit a defect of the deliveries at issue by taking the content of the silo which was emptied by the [buyer] after the taking of the samples on 27 January 1994. Such a defect was contested by the [seller] consistently. Already in reply to the rebuke of 26 January 1994, the [seller] informed the [buyer] by fax of the same day that the reserved sample out of the delivery 13 January 1994 was faultless. At the occasion of the acceptance of the material to be transported to the [buyer] in three silo-vehicles, the [seller] emphasized that there was no link between the material delivered and the problems that occurred.
In accordance with the ruling of the District Court (Landgericht), a violation of the duty to give notice of defects is to be assumed.
According to Art. 39(1) CISG, the buyer loses the right to rely on a lack of conformity of the goods if he does not give notice to the seller within a reasonable time after he has discovered it or ought to have discovered it. Therefore, the time for claims starts to run at the time at which the seller can ascertain the lack of conformity after the obligatory duty to examine the goods according to Art. 38 CISG.
According to Art. 38(1) CISG, the buyer must examine the goods, or cause them to be examined within as short a period as is practicable in the circumstances. Consequently, the time limit to examine the goods and the time limit for claims are to be added and constitute a total time limit for the notification of defects (von Caemmerer/Schlechtriem/Schwenzer, Kommentar zum Einheitlichen UN-Kaufrecht, 2d edition, Art. 39 No. 20; Honsell/Magnus,Kommentar zum UN-Kaufrecht, 1997, Art. 38 No. 13). The buyer is obliged to examine the goods only in so far it is reasonable and usual. At any rate, the examination has to be appropriate as customary in trade and particularly thorough (Schwenzer, loc. cit. Art. 38 No. 13) where the risk of high consequential damages is likely; also experts are to be called if qualities which are difficult to examine are at issue (Magnus, loc. cit. No. 15, 17). The time limit depends on the objective circumstances of the particular case, above all on the nature of the goods and the defect as well as on the necessity of the examination.
In Germany, normally a period of two weeks is recommended (Magnus, loc. cit. Art. 38 No. 22, 24, Art. 39 No. 21). Basically, the time limits are to be assessed more generously than according to the precedents regarding �� 377, 378 HGB [*] and the Uniform Law on International Sales (ULIS) [*] in force before. Moreover, the traditions of other Contracting States -- which, as for example France, grant generous time limits -- have to be taken into consideration with respect to a uniform interpretation of the law. Consequently, the time limit of one month should be assessed as a rough average (compare Schwenzer, loc. cit., Art. 38 No. 16, Art. 39 No. 17).
Certainly, such a time limit can only be granted with respect to goods where no changes are to be expected which would contravene the purpose of Arts. 38, 39 CISG, namely to find out quickly whether the performance was proper (Magnus, loc. cit., Art. 39 No. 4) and to secure the relevant means of proof (Schwenzer, loc. cit., Art. 38 No. 4). Where, as in the case at hand, goods are concerned which are to be mixed with material of the same kind, the examination has to take place before the mixing. Otherwise it is difficult to find out which delivery the defective goods stem from. That applies regardless of the allegation that the whole material stemmed from the [seller]. On the one hand, this is disputed; in so far it is not sure whether or not the [seller]'s material was defective. On the other hand, the obligation to examine exists for each delivery separately.
Therefore, the aluminum hydroxide received from the [seller] should have been examined right after the arrival at the [buyer] before it was filled into the silo. An immediate examination of each delivery could be expected from the [buyer], as no particularly complicated procedure of examination was necessary. The defect could have been detected easily at sight by way of comparing the colors of samples out of the silo-vehicleand faultless material which was stored at the [buyer] or by way of touching, stirring or sifting the sample from the silo-vehicle. According to the minutes of bailiff G. dated 27 January 1994 concerning the examination of the aluminum hydroxide taken out of the [buyer]'s silo, the sample was of a darker coloring than the compared faultless material. At the occasion of stirring the material, thick lumps grew which remained in the strainer after sifting the liquid. These lumps developed also by merely pressing the material by hand. The parties present - the representative of the [seller] amongst them - agreed on the facts that the difference in coloring was as obvious as the difference at touching the material.
According to this, a hidden defect which, as alleged by the [buyer], could only have been detected by way of microscope and chemical analysis cannot be assumed. The fact that it took several days for the [buyer] to analyze the produced glass, does not mean that such an analysis was necessary to detect the defect of the material delivered. The allegation of the [buyer] that the fact that the aluminum hydroxide was unserviceable for the production of glass could not be inferred from a darker coloring and the formation of lumps, was put forward decidedly for the first time in the appellate procedure. Considering the assessment of the bailiff, this allegation is not sufficiently substantiated. It is mentioned in the minutes that several entities of glass were examined that showed defects which were due to the usage of unsuitable aluminum hydroxide and that all of the examined glasses contained a lump of aluminum hydroxide. It is obvious that the formation of lumps of the raw material leads to the formation of lumps in the produced glass. Should the [buyer], who is sufficiently competent as a glass producer, have intended to deny that, an understandable explanation had been required.
It cannot be inferred from the writing of the [seller] of 26 January 1994, that a visual examination would only have revealed a particularly unusual soiling. It is only mentioned there that the transport vehicles were examined regarding contamination by employees of the [seller].
The [buyer]'s obligation to examine existed regardless of the fact that faultless goods were delivered before and the [seller] had carried out analyses to ensure the quality and had taken reserve samples. A quality control agreement by which the [buyer] had stipulated exemption from the obligation to examine and give notice of defects is not alleged (compare Schwenzer, loc. cit., Art. 38 No. 29).
If the [buyer] was consequently obliged to examine the aluminum hydroxide delivered by the [seller] immediately, namely before filling it into the silo, also an immediate notice of the detected defect was required. In the age of communication by fax, the period of transmission does not essentially affect the assessment of the time limit for claims. Therefore, the rebuke could and should have transmitted as well before the filling of the silo to maintain the right to plead defects of the object of purchase. The rebuke of 26 January 1994 was delayed.
The [buyer] does not claim avoidance of the contract by taking back of the material. As the [seller] accepted the content of the silo stating that there was no link between the delivered material and the problems occurred, the taking over of the material does not have contractual meaning as stated already by the District Court (Landgericht).
Finally, the purchase-money claim does not fail due to the set-off with the claim for consequential damages amounting to the purchase-money claim stated alternatively by the [buyer]. According to what has been said, there is no offsettable contractual claim according to Arts. 45(1)(b), 74 CISG, on which the German Courts have to rule due to the connection with the claim according to Art. 6 No. 3 of the Brussels Convention (Kropholler, loc. cit., Art. 6 No. 37).
Consequently, the appeal is not legally justified and must be dismissed with the consequence as to costs according to � 97(1) ZPO [*]. The judicial pronouncement of the provisional enforceability is based on �� 708 No. 10, 713 ZPO [*].
Value of the appeal in dispute: 25,800 [DM] (12,900 [DM] claim + 12,900 [DM] precautionary set-off).
* All translations should be verified by cross-checking against the original text. For the purpose of this translation, the Plaintiff-Appellant of Germany is referred to as [seller]; the Defendant-Appellee of France is referred to as [buyer]. Amounts in German currency (Deutsche Mark) are indicated as [DM].
Translator's note on other abbreviations: Brussels Convention = EuGVÜ = Gerichtsstands- und Vollstreckungsübereinkommen in Zivil- und Handelssachen [European Convention on Jurisdiction and Enforcement of Judgements in Civil and Commercial Matters]; HGB = Handelsgesetzbuch [German Commercial Code]; ULIS = Uniform Law on International Sales [1964 Hague International Sales Law antecedent to the CISG]; ZPO = Zivilprozessordnung [German Code of Civil Procedure].

References: Art. 19
 Art. 5
 Art. 57
 Art. 53
 Art. 81
 Art. 39
 Art. 77
 Art. 39
 Art. 38
 Art. 38
 Art. 39
 Art. 38
 Art. 38
 Art. 38
 Art. 39
 Art. 38
 Art. 39
 Art. 39
 Art. 38
 Art. 38
 Art. 6
 Art. 6