Source: http://cisgw3.law.pace.edu/cases/960125g1.html
Timestamp: 2019-04-19 15:16:25+00:00

Document:
In the beginning of 1994, Defendant No. 2 [Buyer No. 2], owner of a trading company, and the Plaintiff [Seller] agreed on the delivery of in total 201,600 bottles of vodka by the [Seller].
The first installment was delivered to the customers of [Buyer No. 2] in Riga/Latvia in spring 1994, as agreed. The [Seller] submitted to [Buyer No. 2] seven bills for the delivery, each for Italian lire [Lit.] 17,808,000. [Buyer No. 2] sent three checks comprising a total of Lit. 124,656,000 to the [Seller]. However, he stopped payment on the checks afterwards. In May 2004, he paid Lit. 20,000,000 upon the charge for the contract price.
The [Seller] requests the payment of the bills in the amount not yet paid by [Buyer No. 2]. [Seller] alleges that Defendant No. 1 [Buyer's replacement] has at least apparently continued the business including the firm name of [Buyer No. 2]).
The [Seller] seeks to have [Buyer No. 2] and [Buyer's replacement] held liable jointly and severally to pay Lit. 104,656,000 as well as interest thereon in the amount of 2 % above the official discount rate of the Italian state bank as from 21 February 1994, and in addition to pay bank charges in the amount of Lit. 134,934 as well as interest thereon in the amount of 2 % above the official discount rate of the Italian state bank as from the pendency of the proceedings.
[Buyer No. 2] and [Buyer's replacement] request that the [Seller]'s claim be dismissed.
[Buyer's replacement] denies continuing the business of [Buyer No. 2] or having appeared to do so. [Buyer No. 2] alleges that the goods lacked conformity, which had amounted to a fundamental breach of contract. Furthermore, it purports that the vodka has only been of "industrial standard" and therefore has not been fit for human consumption.
[Buyer No. 2] filed a counterclaim for the repayment of the Lit. 20,000,000 already paid.
[Buyer No. 2] requests that the [Seller] be held to pay to [Buyer No. 2] Lit. 20,000,000 as well as interest thereon in the amount of 12 % as from the service of the counterclaim.
The [Seller] requests that the counterclaim be dismissed.
As to further arguments by the parties, it is referred to their memoranda including the enclosures.
The [Seller]'s admissible action is well founded as to the main claim; as to the collateral claims it is mainly well founded. [Buyer No. 2]'s counterclaim is not founded.
It need not be discussed whether the goods lacked conformity. It need not be discussed whether the [Buyer No. 2] has notified the [Seller] of the alleged non-conformity within a reasonable period of time (Art. 38(3), Art. 39(1) CISG) either. [Buyer No. 2] has not declared the avoidance of the contract, which the non-conformity would have entitled it to, within a reasonable period of time after the discovery of the alleged non-conformity (Art. 49(2)(b) CISG).
By letter dated 24 March 1994, [Buyer No. 2] had an assistant translate a letter containing the notification of the non-conformity (incomplete conditioning of the vodka). By a letter dated 29 March 1994, that assistant of [Buyer No. 2] notified the [Seller] of the non-conformity. By a facsimile dated 29 March 1994, [Buyer No. 2] submitted the translation of the letter dated 24 March 1994 to the [Seller]. By a facsimile dated 8 April 1994, [Buyer No. 2] submitted an expert's opinion on the goods. This was not denied by the [Seller].
[Buyer No. 2] therefore knew about all the facts relevant for the avoidance in the beginning of April 1994 at the latest and consequently could then have declared the avoidance of the contract. [Buyer No. 2] itself purported that the expert's opinion declared the vodka unfit for human consumption. However, [Buyer No. 2] only declared the avoidance of the contract in the memorandum containing the claim dated 12 September 1995. In [Buyer No. 2]'s letter dated 11 April 1994, it explained the stopping of payment on the checks not mentioning the avoidance, but promising early payment. In May 1994, it made the payment of Lit. 20,000,000 upon the charge for the goods.
Thus, [Buyer No. 2] has not declared the avoidance of the contract within a reasonable period of time. This period of time is not shortened by the fact that a German expert opinion on the goods was given on 31 January 1995. [Buyer No. 2] could have already commissioned such an opinion in mid-1994 at the latest by demanding the samples taken by its customers. Moreover, [Buyer No. 2] has not declared the avoidance of the contract within a reasonable period of time after the opinion of the German expert either. As a consequence, [Buyer No. 2] did not purport to be willing and prepared to return the goods or to refund the price of the sale to the [Seller] (Art. 84(2) CISG).
The [Buyer No. 2] owes the [Seller] interest as of 22 March 1994; it has not paid the contract price in arrears from that date on (Arts. 59, 78 CISG). It alleged that the goods were not delivered before 22 March 1994; the [Seller] did not allege an earlier point in time.
The interest amounts to 5 % (Art. 1284(1) of the Italian Civil Code (Cc)). To be entitled to the interest due to a credit (Art. 74 CISG), the [Seller] would have to fulfil further prerequisites. It would either have to be forced by the delay to incur a credit in the amount requested by the claim, or a credit would have to be the only way of ensuring the ongoing business. This credit, however, would have to have exceeded the amount of the claim during the delay and - which is substantial - it would have to be paid back by all payments received by the [Seller], unless these payments must also be used for business expenses. In the sense of Art. 74 CISG, it is only in this case that such damages are caused which exceed the legal interest due to a delay pursuant to Art. 78 CISG. The [Seller] did not present any facts as to support such damages. The [Seller] can, however, recover the bank charges pursuant to Art. 74 CISG; [Buyer No. 2] owes the interest for the lawsuit thereon.
The [Buyer's replacement] is liable jointly and severally for the claim of the [Seller]. This liability follows from Art. 25 of the German Commercial Code (HGB) and Art. 7(2) CISG; the parties have insofar agreed on the application of German law by referring to provisions of German law. The [Buyer's replacement] has apparently continued the business of [Buyer No. 2]. The [Seller] alleged that the enterprise of [Buyer No. 2] was not a registered business, which was not denied by [Buyer No. 2] or [Buyer's replacement]. Consequently, the [Seller] received only information about the registration of the business of the [Buyer's replacement] when it requested information about the business of [Buyer No. 2] from the relevant authority before filing the claim. Moreover, the sign for the enterprise of [Buyer No. 2], which is mounted to the enterprise of the [Buyer's replacement] according to the uncontested submission of the [Seller], does not support a clear distinction between these two enterprises; the business objective ("bathrooms and flagstones") which is declared on the sign for the business of [Buyer No. 2] also fits the registered business objectives of the [Buyer's replacement]. Due to these circumstances, the [Buyer's replacement] appears to have continued the business of [Buyer No. 2]; its appendix which gives a hint at a firm name (MBM) is also contained in the firm name of the [Buyer's replacement]. The fact that the correspondence as to the transaction that is the subject of this lawsuit has been conducted under the name of [Buyer No. 2] does not change the apparent situation of the continued business and firm name (� 25 HGB). This is underlined by the fact that the enterprise of [Buyer No. 2] does not have a legal firm name (� 18 HGB) either; its business name contains of the annotation "c/o" after the appendix to the firm name (MBM).
As a result, the [Seller]'s action was well founded as to the main claim and mainly well founded as to the collateral claims. [Buyer No. 2] and [Buyer's replacement] are held liable jointly and severally to pay the contract price of the goods delivered as well as interest and bank charges to the [Seller]. The counterclaim was unfounded; [Buyer No. 2] is not entitled to the repayment of its partial payment.
* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff of Italy is referred to as [Seller] and Defendants of Germany are referred to as [Buyer No. 2] and [Buyer's replacement]. Amounts in the currency of Italy (Italian lire) are indicated as [Lit].
** Jennifer Bryant, University of Cologne, Faculty of Law since 2003.

References: Art. 39
 Art. 74
 Art. 78
 Art. 74
 Art. 25
 Art. 7