Source: http://cisgw3.law.pace.edu/cases/980729g1.html
Timestamp: 2019-04-19 14:28:16+00:00

Document:
An Italian seller, the plaintiff, delivered soles to a German buyer, the defendant, for the production of sport shoes. The buyer objected to the quality of some soles by letter and refused to pay the full purchase price. The seller sued buyer for the outstanding amount. The buyer declared set-off with damages and alleged that it had to commission a third company to remedy the defects in the soles.
The court found that the seller's claim was justified under Article 62 CISG. The buyer ordered the soles and received them.
The court granted interest under Article 78 CISG.
[Seller] demands payment of the purchase price in the amount of 212,161.70 DM [Deutsche Mark]. The [buyer] ordered from the [seller] (a manufacturer of shoe soles and rubber items with place of business in Italy) 100,000 pairs of article no. 2449 Walking Soles at a price of DM 5.60 per pair and 600 pairs of the article T 1075 Halle Ambra at a price of DM 3.10 per pair. The [buyer] used article 2449 Walking Soles for the manufacture of sports shoes, which [buyer] sold to the German Army. The [seller] delivered to the buyer 50,000 pairs of article no. 2449 and 600 pairs of article T 1075 goods.
Following these invoices the [buyer] paid to the [seller] an amount of DM 61,600.00 on 21 May 1997. [Buyer] paid the further amount of DM 49,218.14 and DM 38,850.00, which the [seller] credited towards its invoice no. 862 of 18 November 1997 (the invoice being in the amount of DM 88,863.60).
"Enclosed please find 15 pairs of soles with various deficiencies in quality."
The [seller] demands payment of the purchase price in the amount of DM 212,161.70. [Seller] submits that the parties agreed that payment was to be made forty-five days after the date of the respective invoice. The parties further stipulated the conditions contained in the record of their negotiations of 22 March 1997.
- DM 212,161.70 from 27 July 1997.
The [buyer] requests the Court to dismiss the claim. [Buyer] submits that its manager agreed with the [seller]'s commercial agent, witness S., that payment of the purchase price was to be due only after the [buyer] had delivered its goods to the Army Procurement Office. The parties furthermore agreed that the period for notices of lack of conformity would begin after the presentation of the manufactured walking shoes at the German Services. In addition, the [buyer] had been unable to process 2,481 pairs of soles due to their inferior quality. The Army Authorities had returned 2,700 pairs of shoes due to defective gluing of the knob-sole with the soft-step-sole. As a result, the [buyer] examined and rectified the shoes that were in production. [Buyer] commissioned a third party with the remedy of the soles, and was charged an amount of DM 13,020.00 (cf. invoice of 30 June 1997). [Buyer] submits that the [seller] accepted these costs. The [buyer] further suffered a loss of profit in the amount of DM 102,465.00 (DM 37.95 a pair) for the shoes the Army had returned.
The Court has gathered evidence in the form of witness testimony ... and ... refers to Court protocol BL.95 ff.d.A of 24 June 1998. For detailed aspects of the facts and the disputed items, the Court refers to the memoranda exchanged between the parties as well as the above mentioned protocol.
The [seller]'s claim is both admissible and justified. The [seller] is entitled to payment of the purchase price in the amount of DM 212,161,70 in accordance with Article 62 of the United Nations Convention on Contracts for the International Sale of Goods, which applies to the contract as both Germany and Italy are Contracting States.
1. The [seller] is entitled to payment of the purchase price in the desired amount, because the [buyer] undisputedly ordered and received 50,000 pairs of article no. 2449 Walking Soles at a price of DM 5.60 a pair. It is furthermore not disputed that the [buyer] ordered and received 600 pairs of the article T 1075 Halle Ambra at a price of DM 3.10 each. The [buyer] paid DM 61,600.00 of the total purchase price of DM 273,761.70, leaving a remaining claim for payment in the amount of DM 212,161.00.
Payment of the purchase price is furthermore due. The [buyer] did not succeed in proving to the Court that the [seller] granted [buyer] a respite in payment. Witnesses S. and B. concurred in their testimony that such an agreement was not formed. The [seller]'s commercial agent, witness S., testified that the [buyer]'s manager had made a settlement request, which he had then forwarded to the [seller]. It follows from this testimony that he did not form a contractual agreement on a respite in payment with the [buyer]'s manager. Witness S. furthermore testified that he did not receive an answer from the [seller] regarding the request. This is supported by the testimony of witness B., who also reported that the [seller]'s owner did not give a definite answer granting a delay. For this reason, the Court concludes from the testimony of the witnesses that the [buyer]'s manager did not form a binding understanding with the [seller] regarding a respite in payment. The onus of proof for the respite in payment is on the buyer. Following the negative result of the taking of evidence, the due date for the payment without the respite in payment is the one stated on the invoices, that is, forty-five days after the invoicing date.
2. The [seller]'s claim for payment of the purchase price was not diminished by way of [buyer]'s set-off. The [buyer] is not entitled to damages under Art. 74 et. seq., Art. 38 et. seq. and Art. 45 et. seq. CISG.
Under Arts. 38, 39 CISG, the [buyer] was obliged to examine the goods and give notice to the [seller] specifying the nature of the lack of conformity within a reasonable period of time after [buyer] discovered it. The [buyer] gave notice of the non-conformities solely with its letter of 17 September 1997 to the [seller] and with its letter of 23 September 1997 to the [seller]'s commercial agent. Neither notice meets the requirements set out by Art. 39 CISG, as they do not specify the nature of the lack of conformity. This requirement is intended to enable the seller to picture the non-conformity and to take the appropriate steps, i.e., send a representative to the buyer to examine the goods and arrange for a substitute delivery or remedy the defect. In determining the required precision of the notice of non-conformity, a mixture of objective and subjective standards has to be applied, taking into account the position of both the buyer and the seller in the economic system as well as the nature of the goods. A more specific notice can be expected from an expert than from an uninformed buyer. Very general complaints such as "not in order", "defective quality or delivery of wrong goods", "inferior and poor quality", "poor workmanship" or general expressions of dissatisfaction ("not as we imagined") are insufficient for the purposes of the CISG (cf. v.Caemmerer/Schlechtriem, 2nd ed. 1995, Art. 39 n. 7).
A correct notice of non-conformity requires that the buyer indicate to which extent there is a diversion in quantity and what kind of deviation in quality [buyer] is notifying of (cf. Pilz, Internationales Kaufrecht, � 5 n. 67). If the goods were examined, the buyer needs to report the results of the examination. The [buyer]'s two notices of non-conformity do not satisfy these requirements. Neither of the letters expounds on the nature of the alleged lack of conformity of the soles. The [buyer] therefore failed to give notice specifying the defect under Art. 39 CISG and is not entitled to rely on the lack of conformity (Art. 39(2) CISG).
The [buyer] is further not entitled to declare a set-off with the costs for the remedy of the soles in the amount of 13,020.00, since [buyer] did not submit at what time the [seller] was supposed to have accepted this claim. On 13 May 1997, the Court drew the [buyer]'s attention to the fact that it had not sufficiently substantiated its submission. The [buyer] is unable to claim these costs under Art. 45 CISG in connection with Art. 38 et seq. CISG, because a notice specifying the nature of the lack of conformity is missing with regard to these defects.
The [seller]'s claim for payment of the purchase price was not diminished by the [buyer]'s performance under Art. 53 et. seq. CISG. While it is undisputed that the [buyer] effected further payment to the [seller] in the amount of DM 49,218.40 and DM 38,850.00, it is also undisputed that the [seller] credited these payments towards the open invoice of 18 September 1997. The receipts submitted by the [buyer] do not show its intention to make the payment towards any specific invoice. Thus, the [seller] was entitled to credit the amount towards any of the invoices.
The claim for interest is based on Art. 78 CISG.
** Ruth M. Janal, LL.M. (UNSW), a Phd candidate at Albert-Ludwigs-Universität Freiburg, has been an active participant in the CISG-online website of the University of Freiburg.

References: Art. 74
 Art. 38
 Art. 45
 Art. 39
 Art. 39
 Art. 39
 Art. 45
 Art. 38
 Art. 53
 Art. 78