Source: http://cisgw3.law.pace.edu/cases/010529g1.html
Timestamp: 2019-04-19 22:24:28+00:00

Document:
[Seller], a Swedish furniture company claims the purchase price deriving from a delivery on 6 January 1999. The parties have been engaged in a long-time business relationship. [Seller] delivered disassembled furniture to [Buyer] who distributed them further to construction markets. [Buyer] once requested [Seller] to provide partial delivery concerning certain pieces of furniture and he was obliged to pay [Seller] in advance. On 6 January 1999, [Seller] delivered to [Buyer] 122 bookshelves from model "Chris" and 40 "Vertikos" (special German cupboards) from model "Simone Natur". On 27 January 1998, [Seller] had charged Deutsche Mark [DM] 26,964.00 for the delivery of 6 January 1998. The invoice was due within 30 days after delivery. [Seller] extended the deadline until 6 February 1999. On 3 March 1999, [Buyer] sent [Seller] a list of complaints, in which he complained about several defects concerning deliveries between 1 January 1999 and 1 March 1999.
[Seller] states that he did not receive any letter of complaint before 3 March 1999 and that the furniture supplied for the delivery in dispute was not defective.
[Seller] requests the court to find that [Buyer] is obliged to pay DM 26,964.00 plus 7.25% interest from 6 February 1999. [Buyer] requests that the claim be dismissed.
[Buyer] claims that [Seller] delivered defective furniture in 1998, too. There were some defective or damaged pieces of furniture in nearly all of the deliveries. Therefore, [Buyer] and his son, Markus B. (also an employee of [Buyer]'s business) and responsible designer Lars P., met the management of [Seller] in Sweden between 29 and 31 May 1998. They discussed the deficiencies concerning each and every delivery and [Buyer]'s damages deriving from the latter. The parties agreed that [Buyer] is entitled to the right to withhold the goods and the right to a price reduction concerning claims deriving from current and possible future deliveries. As a result of the defective deliveries, [Buyer] lost his business partners, the leading construction markets who used to take over the goods. Therefore, [Buyer] accepted the delivery of 6 January 1999 under reservations. In a fax dated 10 January 1999, [Buyer] immediately complained about the defects of the delivery of 6 January 1999. The construction markets re-charged [Buyer] the price of the defective pieces of furniture. [Buyer] immediately sent the latter documents to [Seller]. Based on the defects of the furniture, besides claiming the latter costs, [Buyer] was entitled to reduce the price as well, at an amount of DM 16,890.32 which should be considered as a set-off against [Seller]'s claim for the purchase price.
At the oral hearing on 19 December 2000, the court ordered [Buyer] to determine precisely how the exact amounts of price reduction are calculated one by one and to prove which exact counterclaims would be the basis for [Buyer]'s set-off. The court set a deadline for the latter until 31 January 2001, which, on [Buyer]'s request, was extended twice, finally until 7 March 2001.
[Seller] requests [Buyer] to pay the purchase price of the goods. According to Article 2(2) of the EuGVÜ [*], the court has international jurisdiction to hear the instant case, because [Buyer] has its residence in Germany. [Seller] requests [Buyer] to pay the purchase price deriving from the disputed delivery, based on Art. 53 CISG. The CISG is applicable because both Sweden and Germany are signatories to the Convention and the parties to the sale of goods contract have their places of business in different States (CISG Art. 1(1)(a)).
It is not disputed that [Seller] delivered the furniture to [Buyer]. [Buyer] is not entitled to withhold the purchase price. This is provided for in Art. 71 CISG. According to Art. 71(1) CISG, a party may suspend the performance of his obligations if, after the conclusion of the contract, it becomes apparent that the other party will not perform a substantial part of his obligations. Yet, the conditions set in this provision are not met in the instant case because on the due date of the purchase price (namely, 27 December 1998) [Buyer] was not yet aware of the deficiencies concerning the delivery of 6 January 1999. The extension of the deadline for payment simply meant that a date after the original due date was given (namely, 27 December 1998, thirty days after completion of the invoice). In contrast to this, what the parties discussed in 1998 concerning the deficiencies deriving from deliveries in previous years, happened before the conclusion of the contract, therefore no objection can be made based on Art. 71 CISG.
This objection fails for another reason too: according to Art. 71(3) CISG, a party suspending performance, whether before or after dispatch of the goods, must immediately give notice of the suspension to the other party. In the opinion of the court, this obligation has not been fulfilled. At this point, the question is not whether [Seller] received [Buyer]'s complaint on the deficiencies dated 10 January 1999. [Buyer] who was obliged to pay in advance, should have informed [Seller] on the suspension of delivery immediately after the completion of the invoice of 27 November 1998. [Buyer] did not state that this had been done before 10 January 1999. [Buyer] cannot refer to a possible avoidance of the contract either (Art. 73 CISG) because he has never declared such an intention to [Seller]. The fact that the agreement between the parties in May 1998 would mean that [Buyer] would be entitled to the right to withhold the goods involved in all future deliveries, does not constitute a contractual claim. In spite of this, [Buyer] has not yet communicated for which time period would the right to withhold the goods (allegedly agreed upon in May 1998) apply, nor had [Buyer] determined the exact level of the right to withhold or the exact amount of price-reduction concerning prior deliveries.
Furthermore, [Buyer] is not entitled to price-reduction according to Art. 50 CISG. This Article provides that the buyer may reduce the price in the same proportion as the value that the goods actually delivered had at the time of the delivery bears to the value that conforming goods would have had at that time. The question at this place is not whether the deficiencies claimed by [Buyer] concerning the delivery of 6 January 1999 really existed or not and therefore he would be entitled to price reduction. As, according to Arts. 38 and 39 CISG, [Buyer] had not complained about the deficiencies in time, he lost the right to make an objection against the fact that the goods did not conform with the contract. CISG sets a deadline for the buyer to examine the goods after delivery and to object to the lack of conformity.
The goods must be examined within as short a period as is practicable in the circumstances. When determining this period, special circumstances of the case at hand and reasonable possibilities of the parties have to be taken into account (Schlechtriem, Commentary to Uniform UN Sales Law. 3rd ed., München 2000, Art. 38). In the opinion of the court, examination of the delivery within 10 days was reasonably expected from [Buyer], during the normal course of its business. This is especially so because, as [Buyer] stated, there have been problems with the conformity of the goods previously as well, so it would have been reasonable to carry out immediate examination of the goods by this delivery. After 10 days, i.e., from 16 January 1999 a further deadline of one month was set by the court for [Buyer] to make a complaint about the deficiencies. Regarding the question which deadline was set according to Art. 39(1) CISG, diverse opinions can be found. The court found that a period of one month would be sufficient for the buyer to submit the complaint. [Buyer] should have made his complaint at the latest by 16 February 1999.
The complaint of 3 March 1999, which has undisputedly been received by [Seller], arrived too late. [Buyer] did not receive the proof about the fact that the fax of 10 January 1999 was sent to [Seller]. Witness B. could not remember whether the document had been sent to [Seller] on 10 January 1999. However, Witness G. confirmed that she had sent [Seller] the document in question on 10 January 1999. In spite of this, [Buyer] has not yet confirmed the receipt of the fax sent to [Seller]. By fax communication, proof of dispatch certifies not only the fact that the document seems to have been sent (BGH [*], NJW [*] 1995, 665 et seq., 666). The OK-note on the sending report proves only the fact that the connection was made between the sending and the receiving device, but it does not prove whether the data had been successfully transmitted; the OK-note is not a reliable proof of receipt (BGH [*], NJW [*] 1995, 665 et seq., 666). [Buyer]'s subsequent statement (that Mr. Lars P. had received the list of complaints on 10 January 1999 and he immediately handed it over to Witness E.) and the proposal on the oral hearing of Witness P., which supports the latter, arrived too late, therefore the court has to dismiss them according to Art. 296(1) ZPO [*]. [Buyer] first referred to this statement in his written pleading of 7 March 2001, after all the evidence had been taken.
The court ordered that [Buyer] unambiguously clarify and substantiate the claim to price reduction and set-off by 31 January 2001. This deadline was extended by the court twice, finally until 7 March 2001. At the latest until the oral hearing of 19 December 2000, [Buyer] should have made another statement on the disputed sending of the fax, concerning not the amount of the set-off but the reason for it (complaints about deficiencies at the time). This latter statement and the proposal to hear Witness P. had been considered being not late only if [Buyer] had summoned Witness P. on time. As [Buyer] had a further possibility after the original deadline to clarify his claim for set-off and that finally it was decided upon only in the written stage of the proceedings, [Buyer]'s position must not be considered as more advantageous and [Seller]'s as less advantageous than they would have been if the court had set a deadline for making a judgment right at the beginning. The reason for the fact that [Buyer] was unable to prove the complaints of the deficiencies must be that they substantially met the requirements of Art. 39 CISG. As the complaint could not be proved, [Buyer]'s claim for set-off failed as well.
Notwithstanding [Seller]'s opinion, a set-off concerning the counterclaim is admissible in this process. Art. 6(3) of the EuGVÜ [*] applies only to cases where [Buyer]'s claim has to be decided upon separately (counterclaim), but it does not apply to cases where [Buyer] sets a claim as a mere means of defense (set-off) (EuGH [*], NJW [*] 1996, 42 et seq.). Therefore, the question is not whether the court has international jurisdiction upon the claim for set-off. Instead, the same principles are to be applied here as in cases where [Buyer] resides in a third country (Schlosser, EuGVÜ [*], München 1996, page 37). Consequently, [Buyer]'s claim for set-off is admissible if, according to Art. 33 ZPO [*], the claim for set-off is connected to the claim subject to the legal dispute and at the same time it could be enforced in the course of the counterclaim as well (Schlosser, a.a. 0.). Since [Buyer]'s claim is in factual connection with [Seller]'s claim, set-off is admissible in the instant case. However, it fails for the reasons above.
* All translations should be verified by cross-checking against the original text. For the purposes of this translation, the Plaintiff, a Swedish furniture company, is referred to as [Seller]; and the German Defendant is referred to as [Buyer]. Amounts in German currency (Deutsche Mark) are indicated as [DM].

References: Art. 53
 Art. 1
 Art. 71
 Art. 71
 Art. 71
 Art. 71
 Art. 50
 Art. 38
 Art. 39
 Art. 296
 Art. 39
 Art. 6
 Art. 33