Source: http://cisgw3.law.pace.edu/cases/980916s1.html
Timestamp: 2019-04-18 11:00:55+00:00

Document:
CASE NAME: D. GmbH v. W.P.
A German bank, plaintiff, acquired by assignment a claim from a German seller against a Swiss buyer, defendant, arising from the delivery of furniture. When the buyer refused to pay, based on an alleged lack of conformity, the bank commenced legal proceedings.
The court held that the notice of lack of conformity, which was given over one year after delivery of the goods, was given far too late (article 39(1) CISG).
This is a dispute between Plaintiff D.D., hereafter referred to as [Seller's Assignee], represented by Dr. Peter T. Isler, Kronenstraße 9, 8712 Stäfa vs. Defendant W.P., hereafter referred to as [Buyer], concerning a demand for payment.
[Seller's Assignee] requests the Court to oblige [Buyer] to pay 15,683.00 DM [*] plus interest of 5% since 14 March 1997 and moreover, to impose the costs and compensation on [Buyer].
[Buyer] requests the Court to dismiss the claim entirely.
Please reply by fax when the delivery of the goods may be expected. We are moving to ____ and our office at A____ is not permanently staffed.
6 February 1997	Regards, W.P."
On 12 February 1997, [Seller] P.W.M. invoiced [Buyer] T.S. W.P. for the ordered and delivered upholstery suites and swivel armchairs (Plaintiff's Exhibit No. 7-9).
2. By reason of a factoring contract between [Seller] P.W.M. and [Seller's Assignee] already concluded on 20 May 1994 and 6 June 1994, respectively, [Seller] P.W.M. assigned its claim out of the sale of upholstery suites to [Seller's Assignee] (Plaintiff's Exhibit No. 10).
By letter of 4 June 1997, [Seller's Assignee] informed [Buyer] of the assignment of the claim and requested payment of the outstanding amount of 15,683.00 DM plus interest for delay as well as damages caused by the delay (Plaintiff's Exhibit No. 11). In its written reply of 14 June 1997, [Buyer] informed [Seller's Assignee] that it did not receive a delivery from [Seller] P.W.M. and that there was no furniture store existent at its address (Plaintiff's Exhibits No. 11 and 12).
On 18 February 1998, [Seller's Assignee] again contacted [Buyer] and pointed out that [Buyer] had personally placed the order and thus is also personally liable for the payment (Plaintiff's Exhibit No. 14). [Buyer] replied by letter of 27 February 1998 that the goods had been delivered to P.P.P. (Plaintiff 's Exhibits No. 14 and 15).
By letter of 5 March 1998, [Seller's Assignee] stated that the order on behalf of the one-man company T.S. W.P. had been placed at a time when the company P.P.P. did not even exist (Plaintiff's Exhibit No. 16).
In its reply dated 7 March 1998, [Buyer] explained that, indeed, it had originally placed the order on behalf of its company [T.S. W.P.]. However, [Seller] P.W.M. had subsequently been informed by telephone about the liquidation of the company T.S. W.P. and that the order could only be sustained if the goods were delivered to P.P.P. [Seller] P.W.M. had explicitly agreed to this alteration. For this reason, P.P.P. was to be held liable. Apart from that, one of the upholstery suites was -- by reason of a justified complaint and in consultation with [Seller] P.W.M.-- resold at a discount. Therefore, [Seller] P.W.M. had to bear the granted discount.
3. After unsuccessful conciliation proceedings, [Seller's Assignee] filed the lawsuit at hand on 2 June 1998. For substantiation, [Seller's Assignee] referred to the fax messages which obviously showed that [Buyer] itself had ordered the upholstery suites. If no objection had been raised and if [Seller] P.W.M. had not agreed to the change of the contractual party, [Buyer] was obliged to pay the requested and invoiced amount.
In the [Buyer]'s plea of 2 July 1998, [Buyer] submitted that it had initially ordered by telephone in November 1997 and that -- after an immediate delivery had been promised - [Buyer] confirmed the order by fax. However, the goods were not delivered as promised in the beginning of December, and [Buyer] since closed its office in A____ and founded the company P.P.P. On the occasion of a telephone call concerning a customer complaint in the beginning of January, [Buyer] also informed [Seller] P.W.M about the liquidation of the company T.S. W.P. in A____. During that telephone conversation, it was not only agreed that there would be a considerable discount for the defective upholstery suite but it was also stipulated that the contract concerning the order personally placed by [Buyer] would be adopted by P.P.P.. Consequently, it was certain that debtor of the claim in question could only be P.P.P. which, however, became insolvent in April 1998.
To the extent necessary, further submissions of the parties will be referred to in the following considerations.
1. As to the question of the law applicable to the instant case, the dispute is based on a claim arising from the sale of furniture by [Seller] P.W.M. seated in Germany to [Buyer] who is domiciled in Switzerland. Thus, the case at hand involves a sales contract concerning goods not designated for personal use which was concluded between two parties seated in two different countries. The United Nations Convention on Contracts for the International Sale of Goods of 11 April 1980 (CISG) applies to such a contract.
2. Only the party entitled to or obliged by a law or by a legal relationship which is susceptible to the issue of a judgment has the right to sue or to be answerable as the proper party. The right to sue requires the claimed right to entitle the plaintiff whereas answerability as the proper party requires the claimed right to be directed against the defendant (Guldner, Schweizerisches Zivilprozessrecht, 3rd ed., Zurich 1979, p. 139 f.).
a) As to the [Seller's Assignee]'s right to sue, [Buyer] does not dispute that the claim resulting from the sale of furniture had been assigned by [Seller] P.W.M. to [Seller's Assignee]. If the assignment of that claim is also proven by the contract between [Seller] P.W.M. and [Seller's Assignee] and the notice of the assignment -- which were both provided by [Seller's Assignee] (Plaintiff's Exhibits No. 10 and 11) -- [Seller's Assignee] is to be considered as entitled to the claim and thus, [Seller's Assignee]'s right to sue is assumed.
b) As to [Buyer]'s answerability as a proper party, [Buyer] purports that P.P.P. instead of [Buyer] itself was party to the contract. This allegation conflicts with the fax sent by [Seller] on 4 December 1996 due to which the order was placed as order of [Buyer] "T.S. W.P., A____, Switzerland". Nothing else follows from the fax of 6 January 1997 by which [Buyer] -- without changing the name of the orderer in the headline -- affirmed the order and only asked to send the fax concerning the estimated delivery date to the address in ____. If the company P.P.P. which was declared as a contractual party by [Buyer] had only been recorded in the commercial register on 8 January 1997, it would be beyond doubt that the sales contract concerning the furniture already ordered on 4 December 1996 could only have been concluded with the company T.S. instead of P.P.P. because the latter gained the legal entity only with the listing in the commercial register on 8 January 1997 (cf. Art. 783 OR [*]).
[Buyer] argues that it, as representative of P.P.P., agreed with [Seller] P.W.M. by telephone that the order would be adopted by P.P.P. [Buyer] initially only replied to [Seller's Assignee]'s payment demand of 4 June 1997 to the effect that it did not receive a delivery of [Seller] P.W.M. and that there was no furniture store existent at its address. Furthermore, [Buyer] dismissed the subsequent reference to the order personally placed by [Buyer] only on the grounds that the goods had been delivered to P.P.P.
Only during the proceedings, did [Buyer] assert that there had been an agreement with [Seller] P.W.M. by which the contractual relationship had been assigned from [Buyer] to the company P.P.P. Due to this contradictory behavior, this allegation is to be considered as implausible.
As [Buyer] has neither submitted documents to prove the alleged assignment nor filed substantiated motions to take evidence, [Buyer]'s allegation is to be considered as a mere defensive lie. This conclusion is neither changed by the notice "New address: ____" added to the fax of 6 January 1997 nor by the invoice sent to this address by [Seller] P.W.M.. This is true as the notice in the fax of 6 January 1997 -- interpreted according to the principle of good faith -- could only mean a new contact address. Furthermore, the invoice was indeed sent to this adress but was still issued on the name "T.S.". If [Buyer] wants to derive rights from the alleged assignment of the contractual relationship, it has to prove that assignment (Art. 8 ZGB [*]). As [Buyer] did not provide evidence of this, it is to be assumed that the contract had been concluded between [Seller] P.W.M. and [Buyer]. Thus, [Buyer]'s answerability as a proper party is affirmed.
3. On the merits, it is not disputed between the parties that a sales contract concerning the furniture ordered by the faxes of 4 December 1996 and 6 January 1997 had been concluded and that the amount invoiced by letter of 12 February 1997 was the purchase price for the goods in terms of Art. 55 CISG. It is certain that [Buyer] is obliged to pay the purchase price to [Seller's Assignee], if it can be assumed in accord with the abovementioned considerations (see above 2.) that this sales contract had been concluded between [Seller] P.W.M. and [Buyer] and that the claim out if this contract had subsequently been assigned to [Seller's Assignee]. The existence of the debt can only be disproven if [Buyer] submits objections to that effect.
a)	In its letter addressed to [Seller's Assignee]'s legal representative dated 7 March 1998 as well as in the [Buyer]'s plea of 2 July 1998, [Buyer] took the view that [Seller] P.W.M. had agreed on a considerable discount after a defect of one upholstery suite had caused a customer complaint. However, even if one or more upholstery suites had been defective, [Buyer] could only rely on a decrease in value of the goods if it gave notice of the defects within a reasonable time or if [Buyer] had a reasonable excuse in terms of Art. 44 CISG for failure to give the required notice. And Art. 39 CISG specifies that the buyer loses the right to rely on lack of conformity of the goods if the buyer does not give notice to the seller specifying the nature of the lack of conformity within a reasonable time after the buyer has discovered it or ought to have discovered it. Assuming that the goods were delivered on 12./13. February 1997 (Plaintiff's Exhibit No. 17) and that the earliest proven notice was given on 7 March 1998 (cf. Plaintiff's Exhibit No. 17), this notice must be considered as clearly late since [Buyer] admits a much earlier discovery of the lack of conformity in its letter of 7 March 1998. In this letter, [Buyer] also maintains an earlier notice of the lack of conformity which, however, is disputed by [Seller's Assignee] and was not proven by [Buyer].
b) In the proceedings, [Buyer] submitted further records to prove its allegations. However, these records do not prove a timely notice of the lack of conformity of the goods. These new records indicate that an upholstery suite had been delivered to a customer named B. on 16 December 1996 and that this suite had been replaced for being defective on 28 February 1997. They further indicate that this customer again complained on 3 July 1997 and again demanded replacement of the upholstery suite delivered on 28 February for being defective.
Even if the upholstery suites mentioned in these records were those obtained from [Seller] P.W.M., it is not proven that [Buyer] gave notice of the lack of conformity of the goods within reasonable time. Apart from that, this upholstery suite had been delivered on 16 December 1996 und thus prior to the order relevant in the instant case. For this reason, it cannot be assumed that [Seller] P.W.M. was obliged to replace the upholstery suite in question or -- what [Buyer] seems to allege -- to have agreed to a replacement free of charge. Even if that had been the case, it would still be possible that two of the upholstery suites were considered as settled by way of offset with the claimed decrease in value because [Buyer] ordered nineteen upholstery suites and five swivel armchairs but only got invoiced for sixteen upholstery suites and five swivel armchairs.
However, all these possibilities are irrelevant as [Buyer] would still have to prove timely notice of the lack of conformity of the goods which it did not. In this case, [Buyer] cannot claim a decrease in value in terms of Art. 50 CISG as it did not prove having given notice of the lack of conformity within a reasonable time.
As the purchase price was due on 14 March 1997, [Buyer] has to pay interest on this amount since that date in accord with Art. 78 CISG (cf. Caemmerer / Schlechtriem, Kommentar zum Einheitlichen UN-Kaufrecht, München 1990, Art. 78 para. 9). The amount of debits is rightly claimed in the currency contractually agreed upon (cf. Guldener, Schweizerischens Zivilprozessrecht, Zurich 1979, p. 149) and thus, [Buyer] is to be obliged to pay [Seller's Assignee] the purchase price of 15,683.00 DM plus -- according to � 352(2) HBG [*] (cf. Art. 117(1)(a) IPRG [*]) -- interest at 5 % on late payments since 14 March 1997 (cf. Caemmerer / Schlechtriem, loc. cit., Art. 78 paras. 7 and 11).
4. According to Art. 264(1) ZPO, the legal costs are to be paid by the party who loses the case unless the law determines otherwise. In the instant case, the lawsuit filed by [Seller's Assignee] is fully justified. Therefore, [Buyer] is obliged to pay the legal costs.
The legal costs comprise the court fees as well as the costs generated by each party, Art. 260(1) ZPO.
a) The court fees comprise only the costs for the decision (Art. 261 ZPO) which are determined as 1,200.00 Sfr. by applying No. 311.2 of the scale for court fees of 21 October 1997. [Seller's Assignee]'s advance payment on court fees in the amount of 500.00 Sfr. will be refunded.
b) As to the costs generated by each party, [Seller's Assignee] did not submit a note of fees until the rendition of judgment. Thus, the compensation is to be determined at the discretion of the Court. The value in dispute amounts to 15,683.00 DM or approximately 13,000.00 Sfr.. According to Art. 14(b) HonO [*], an average attorney's fee is about 3,230.00 Sfr. For this reason, the Court considers -- with regard to the value added tax and cash expenditures -- a compensation in the amount of 3,600.00 Sfr. as appropriate. Consequently, [Buyer] is to be obliged to pay [Seller's Assignee] a compensation in the amount of 3,600.00 Sfr.
1.	 [Buyer] is obliged to pay [Seller's Assignee] 15,683.00 DM plus interest at 5 % since 14 March 1997.
2.	 The court fees of 1,200.00 Sfr. are imposed on [Buyer].
3.	 [Buyer] has to compensate [Seller's Assignee] for costs generated by the latter party in the amount of 3,600.00 Sfr.
* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff of Germany is referred to as [Seller's Assignee] and Defendant of Switzerland is referred to as [Buyer]. Amounts in the former currency of Germany (Deutsche Mark) are indicated as [DM]; amounts in the currency of Switzerland (Swiss francs) are indicated as [Sfr].
Translator's note on other abbreviations: HGB = Handelgesetzbuch [Swiss Commercial Code]; HonO = Honorarordnung [Official Scale of Attorneys' Fees in Switzerland]; IPRG = Bundesgesetz über das internationale Privatrecht [International Private Law of Switzerland]; OR = Obligationenrecht [Swiss Law of Obligations]; ZGB = Schweizerisches Zivigesetzbuch [Swiss Civil Code]; ZPO = Zivilprozeßordnung [Swiss Civil Procedure Code].

References: v. 
 Art. 783
 Art. 55
 Art. 44
 Art. 39
 Art. 50
 Art. 78
 Art. 78
 Art. 117
 Art. 78
 Art. 264
 Art. 260
 Art. 14