Source: http://cisgw3.law.pace.edu/cases/040906g1.html
Timestamp: 2019-04-19 22:46:25+00:00

Document:
A Norwegian furniture store, S A.S., owned approx. 500 containers, inter alia, models Equimodal and Cobra, which were for sale as a consequence of a restructuring. In the spring of 2001, the [Buyer] purchased thirty-one containers model Cobra from S A.S. On 1 November 2001, the [Seller] bought the remaining containers which were still located at S A.S.
In the spring of 2002, the [Buyer] contacted the [Seller] expressing interest in purchasing more containers, model Cobra. On 3 July 2002, the [Buyer] first ordered one additional model Cobra container and, on 22 July 2002, another five model Cobra containers, which were delivered and paid for.
On 26/30 July 2002, the [Buyer] ordered another fifteen containers, model Cobra, year of construction 1998 (enclosure B 7). These containers were delivered between 19 July and 12 August 2002. [Buyer] then shipped them to her customers two to eleven days following their arrival at [Buyer]'s facilities.
Changes had been made to these containers, as well as to the thirty-one containers the [Buyer] had previously purchased directly from S A.S., namely, recesses had been detached from struttings of the underbody (compare enclosure B 3). In October 2002, [Buyer] received complaints about this from her customers. The [Buyer], in turn, notified the [Seller] of the defects by telephone on 28 October 2002, advised that the container's stability was affected thereby, and lodged costs of repair of approx. 400 Euros each (enclosure B 9). Further telephone calls followed on 12 November and 18 December 2002 (enclosures B 10 and B 11), whereupon the [Seller] communicated on 19 December 2002 that no alterations of the bottom had been carried out after the delivery of the virgin containers (enclosure B 1).
On 11 March 2003, the [Buyer] ordered another container (enclosure K 7) and indicated a need for still another nine containers, provided that the prototype was in a good unmodified condition (enclosure B 8). The additional nine containers were then ordered by writing of 25 March 2003 (enclosure K 6). Subsequently, the [Seller] invoiced these ten containers; they were model Equimodal (enclosures B 14 and K 4).
On 3 April 2003, the [Buyer] ordered another four containers model Equimodal, which the [Seller] brought to account of 84.000 NOK (short for Norwegian Crown) (enclosure K 1).
By writing of 14 April 2003 (enclosure B 15), the [Buyer] complained that only four of the fourteen containers were built in 1998, the remaining ten had already been built in 1997. [Buyer] alleged that this does not comply with the [Buyer]'s order. Moreover, [Buyer] stated that the altered containers should be repaired at the expense of the [Seller]. Subsequently, the [Buyer] charged 18,500.28 Euros for costs of repair of forty-six containers (enclosure K 3). The [Seller] replied to the [Buyer] by writing of 29 April 2003 (enclosure B 5), by which [Seller] explained, that he himself did not carry out any modifications, and that S A.S., the company from which [Seller] had purchased the containers, would not be prepared to do anything in this regard. Finally, on 12 May 2003 the [Seller] offered to either give [Buyer] a discount of 150 Euros per container or to repair the containers by his own technicians in Hamburg (enclosure B 6). The [Buyer] rejected the discount as insufficient and a repair by the [Seller] as impossible (enclosure B 13).
By way of action, the [Seller] requests the purchase price for the last four containers that [Buyer] purchased. The [Buyer] seeks an offset for repair costs in the amount of 402.18 Euros per container, and also claims against the, in her opinion, overpaid price for ten containers, which should have a loss in value of 12.5% (in the amount of 5,809.80 Euros) because of the wrong year of construction (compare enclosure K 2).
The [Seller] alleges that the [Buyer] is not entitled to claim damages or to assert a reduction in price. It is [Seller]'s position that the alterations to the containers would not amount to a defect. However, even if the containers were defective, claims for damages would be excluded because the [Buyer] did not meet her obligation to examine the goods in a timely manner and did not give notice of lack of conformity within a reasonable time. According to the [Buyer]'s own submission, her customers' complaints would have had to have been already received in August. Furthermore she bought similarly modified containers, identical in construction, from S A.S. in the spring of 2001, so that the modifications would already have been known to [Buyer] earlier, which incidentally could have been noticed by a proper examination. The [Buyer]'s first notice of lack of conformity was dated 14 April 2003. The [Seller] states that, moreover, the [Buyer] did not set a time limit for supplementary performance which the [Seller] accordingly did not decline.
Concerning the containers model Equimodal, the year of construction was not mentioned in [Buyer]'s orders. The correspondence brought forward by the [Buyer] refers to containers type Cobra. [Buyer] would have known that the containers type Equimodal had a prior year of construction.
The [Seller] sought to have the [Buyer] ordered to pay 10,297.90 Euros together with 8% interest above the base rate since 4 May 2003. [Seller]'s claim was granted by default judgment of 5 April 2004 which was served on the [Buyer] on 13 April 2004. The [Buyer] filed a protest on 26 April 2004. The [Seller] requests the court to uphold the default judgment of 5 April 2004.
The [Buyer] files for annulment of the default judgment and dismissal of the action.
[Buyer] alleges that the containers would have lost their stability because of the recesses in the partitions where the truss would have been weakened; disruptions and deflections would have arisen (compare enclosure B 12). Because of the alterations, the containers would have lost the approval and necessitated a new acceptance test. The defects would not have been noticeable on a first inspection. After receipt of customer complaints, [Buyer] immediately would have reprimanded the defects to the [Seller] who, however, would have rejected his responsibility. [Buyer]'s repair cost 402.18 Euros per container. Repair of the containers by the [Seller]'s technicians would not have been suitable because the containers had circulated with customers after their arrival in Hamburg and had to be repaired immediately to avoid loss of rent.
The [Buyer] further claims, that it would have been agreed upon that containers with a year of construction 1999, at best 1998, should have been delivered. Already in the first order of fifteen containers, the year of construction 1998 would have been made subject to condition. The next orders would have referred to the original date. She would have rebuked the wrong year of construction several times. [Buyer] attributes to the added age of the containers a loss in value of 12.5% of the purchasing price.
Concerning further details of the parties' submissions, the court's ruling defers to the contents of the preparatory pleadings that were exchanged together with their attachments.
The [Seller]'s action is well founded.
1. The [Seller] is undisputedly entitled to payment from the [Buyer] of the purchase price for the last four containers the [Buyer] purchased. As the parties have their places of business in different countries, the Convention on Contracts for the International Sale of Goods (CISG) applies - both Norway and Germany acceded to the Convention. Art. 53 CISG provides that the buyer must pay the price for the goods as required by the contract.
The claim undisputedly amounts to 84,000 NOK; which is 10,297.90 converted into Euros.
2. The claim has not been offset by the [Buyer]'s set-off. The [Buyer] is not qualified to claim for damages and to have the purchase price of the containers reduced.
a)	Pursuant to Arts. 45 and 74 CISG, damages can be claimed if the seller fails to perform any of his obligations under the contract. Part of these obligations is to deliver goods which are of the quality required by the contract, which is the case, if the goods are fit for the purposes for which goods of the same description would ordinarily be used, Art. 35 CISG.
In order to be able to assess whether the quality is proper, the buyer must examine the goods within as short a period as is practicable in the circumstances, Art. 38(1) CISG. This is a flexible time limit, which basically starts to run at the time of delivery, i.e., the handing over of the goods to the buyer; its expiration depends on individual factors, such as the opportunity to examine, the effort involved, the availability of technical facilities, etc.
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, Art. 39(1) CISG. The "reasonable time", in turn, is determined according to the circumstances of the individual case and can be assessed at approx. one month, provided that no anomalies exist (compare Schlechtriem, Kommentar zum Einheitlichen UN-Kaufrecht 3d ed., Art. 39 Rn. 17; Staudinger-Magnus, Wiener UN-Kaufrecht 1999, Art. 39 Rn. 35 - 49).
When the lack of conformity was notified in time, the buyer must fix an additional period of time of reasonable length for performance by the seller of his obligations first, Art. 47 CISG.
The fifteen containers in dispute, delivered by the [Seller], did not conform to the contract. Indeed, they have been used, so they may feature usual signs of abrasion. In contrast to this, the alterations to the supporting parts do not form a part of usual abrasion. Caused by the modifications to the bottom-struttings, the container's stability and carrying capacity have been affected. The [Buyer] did not have to put up with this.
However, the [Buyer] failed to provide timely notification of the lack of conformity so she can no longer derive rights from this. The detached recesses constitute apparent defects, in contrast to hidden defects, which could have been detected by a face inspection. Neither technical equipment, nor particular expert knowledge was necessary to identify the manipulations. Moreover, these have been that ample, so that immediate attention would have been called to them in an inspection without corrective lenses. The [Buyer] failed to examine the bottom of the containers at the inspection. To the extent this was not readily possible at the moment the containers were dropped off, the examination should have been carried out no later than the pick up of the containers in the course of their delivery to the [Buyer]'s customers. It cannot be discerned that such an inspection would have caused [Buyer] unacceptable expenses. Accordingly, the [Buyer] could have and must have been able to detect the defects not later than eleven days after the delivery, thus up to 23 August 2002.
Following this, these identifiable defects would have to be notified in a reasonable time. The court rates this time as within one month, so that the notice had to be carried out by the end of September 2002. In fact, the damage to the ground trusses had been notified at the earliest one month later than that, namely, on 28 October 2002.
Extraordinary circumstances, which seem to justify a longer time are not present. On the contrary, the notice of lack of conformity had to be brought forward at an early stage because the containers have been in permanent use and after a longer period of time it is difficult to determine which defects existed on delivery and which are to be ascribed to subsequent use. Through a preferably early notification of the defects, the [Seller] had to be given the possibility to recover his losses from his supplier on his part, too. Moreover, the [Buyer] had to realize that a proceeding after the expiration of the time-limit would more and more confuse the issue of recourse. Accordingly, it could be expected of her by all means, to bring forward her complaints promptly.
b)	Also, the prerequisites for a reduction of the purchase price for the ten containers built in 1997 are not existent. Pursuant to Art. 50 CISG, the price can be reduced if the goods do not conform with the contract, irrespective of whether or not the price has already been paid. However, the court cannot find that the containers differ from the contractual requirement. It cannot be learned from the evidence presented, that the parties agreed upon the year of construction 1998/1999. And supplementary verbal agreements were not brought forward by the [Buyer].
The year of construction is not mentioned in [Buyer]'s order of 11 March 2003. Nor is it mentioned in the supplemental writing of 12 March 2003; the good condition of the prototype is alluded to, but not the year of construction. Nor does the re-order of 25 March 2003 contain any information on this. Insofar the [Buyer] cannot refer to her order of 26 July 2002. Indeed, the year of construction 1998 is indicated there, but that reference is to containers model Cobra, whereas in the subsequent order it was the matter of containers type Equimodal. Already in March 2002 the [Seller] indicated in this regard that Equimodal-containers would be older than Cobra-type containers. Accordingly, the [Buyer] paid a lower price for them, which suggests the conclusion, too, that a later year of construction had not been agreed upon. Otherwise, there would not have been given a reason for the [Seller] to offer a lower price.
The [Buyer]'s allegation that the prototype would have had the year of construction 1998, and for this reason would be relevant for the re-order, too, is not persuasive. On the one hand, there is only some question about the new re-ordered containers having the same standard as the one delivered in advance, in particular without any alterations to the underbody; the year of construction is not mentioned. On the other hand, the [Buyer] asserts a price reduction for all ten and not of only nine containers; i.e., that the one delivered in advance did not have the - at her own option - agreed upon year of construction, too.
The claim for interest follows from Art. 78 CISG. The amount of interest has to be taken from the law applicable to the contract. According to Art. 28 EGBGB (Introduction Law to the German Civil Code) this is the Norwegian Law because the [Seller] effected the contract-characteristic performance. According to the Norwegian Sales Law, 12% interest can be charged.
The procedural by-rulings are based on �� 91 ZPO (charges), 709 ZPO (provisional enforceability) [ZPO = German Civil Procedure Act].
* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Plaintiff of Norway is referred to as [Seller] and the Defendant of Germany is referred to as [Buyer].
** Stefan Dietrich, Dipl. iur University of Bochum, took part in the University of London LL.M. program (2004/2005). His fields of law are International Commercial Law and Corporate Law. Articled clerk with the Higher Regional Court (OLG) Hamm (effective January 2006).

References: Art. 53
 Art. 35
 Art. 38
 Art. 39
 Art. 39
 Art. 39
 Art. 47
 Art. 50
 Art. 78
 Art. 28