Source: http://cisgw3.law.pace.edu/cases/940826g1.html
Timestamp: 2019-04-19 14:34:11+00:00

Document:
The [seller], a Swiss market research institute, had elaborated and delivered a market analysis, which had been ordered by the [buyer], a German company. The [buyer] refused to pay the price alleging that the report did not comply with the conditions agreed upon by the parties.
The court held that the CISG was not applicable, since the underlying contract was neither a contract for the sale of goods (article 1(1) CISG) nor a contract for the production of goods (article 3(1) CISG). Noting that the sale of goods is characterized by the transfer of property in a object, the court found that, although a report is fixed on a piece of paper, the main concern of the parties is not the handing over of the paper but the transfer of the right to use the ideas written down on such paper. Therefore, the court held that the agreement to prepare a market analysis is not a sale of goods within the meaning of articles 1 or 3 CISG.
Contrary to the opinion of the Court of First Instance and the legal views of the Claimant, the United Nations Convention on Contracts for the International Sale of Goods of 11 April 1980 (CISG), which entered into force in Germany on 1 January 1991, does not apply to the present case.
It is true that the contract at hand is an international contract under Art. 1(1) CISG, as it was concluded between parties whose places of business are in different Contracting States. This is because the scientific study was commissioned at the Claimant's headquarters in B. and not at the Claimant's branch office in Germany. However, the CISG is not applicable as the contractual agreement between the parties is neither a contract for the sale of goods under Art. 1(1) CISG, nor can it be considered a sales contract [governed by the Convention] by virtue of Art. 3(1) CISG.
According to Art. 3(1) CISG, the Convention applies to contracts for the supply of goods to be manufactured or produced, that is, to contracts for work and materials (cf. Herber, in: v.Caemmerer/Schlechtriem, Kommentar zum Einheitlichen UN-Kaufrecht, 1990. Art. 3 n. 3; Reinhart, UN-Kaufrecht, Heidelberg 1991, Art. 3 n. 1; Karollus, UN Kaufrecht, Vienna 1991, p. 22 et seq.). However, the Claimant's obligation to conduct a scientific study regarding a specific segment of the German express-services market is not a contract for work and materials in the meaning of Art. 3(1) CISG. The Claimant was not obliged to deliver a "Ware" [Translator's note: "Ware" is the German term for "good"]. Only movable things that are typically the object of a commercial sale can be considered a "Ware" (cf. Herber, in: v.Caemmerer/Schlechtriem, op. cit., Art. 1 n. 2 et seq.). This interpretation corresponds to, and is confirmed by, the English text of the Convention - "supply of goods" - and the French wording - "fourniture de merchandises". While the scientific study in the case at hand may find a final embodiment in the form of a written report, it is not a typical object of a commercial sale - at least not under the decisive prevalent view in commercial circles. The purpose of a commercial sale is first and foremost the transfer of property and possession of the good sold. In the present case, however, the right to utilize an intellectual product of work is in the foreground; the work is embodied in a written form solely to make it intellectually graspable, and the form of the embodiment is of secondary importance to the commissioner of the study.
The Court does not follow the Claimant's argument that the sale of software is accepted as a sale of goods under the CISG (cf. Herber, in v.Caemmerer/Schlechtriem, op. cit., Art. 1 n. 21; Herber/Czerwenka, Internationales Kaufrecht, München 1991, p. 148), and that therefore the scientific study owed by the Claimant in the present case also constitutes "goods" in the meaning of the Convention.
At the most, it is standard software that can be viewed as a movable object and therefore be considered to be "goods" in the terms of the Convention (cf. BGH [*] MDR [*] 1991, 950 et. seq. = CR [*] 1993, 681 et. seq.; see the comment by Jaeger, Die Chronik der Rechtsentwicklung des Computerrechts [Chronic of the development of computer law], in : Rheinische Justiz, Geschichte und Gegenwart: 175 Jahre Oberlandesgericht Köln, p. 97, 100, according to whom the BGH has not made a final determination on that matter and has not considered standard software movable goods, but solely applied the relevant provisions by analogy). Software can certainly not be viewed as tangible goods where the contract concerns the development of individual software; such a contract is a contract for services (cf. OLG [*] Köln, VersR [*] 1993, 452 et seq. = MDR [*] 1992, 1126). In this light, the Claimant's comparison with computer software confirms the Court's opinion that the law for service contracts applies to the production of the scientific study in the case at hand.
Translator's note on abbreviations: BGH = Bundesgerichtshof [Federal Court of Justice, the highest German Court in civil and criminal matters]; CR = Computer und Recht [German law journal]; MDR = Monatszeitschrift des deutschen Rechts [German law journal].

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