Source: http://cisgw3.law.pace.edu/cases/930108g1.html
Timestamp: 2019-04-23 14:04:45+00:00

Document:
The German buyer of fresh cucumbers appealed against the decision of the court of first instance, which ordered the German buyer to pay to the Turkish seller the balance of the price due under the contract. The court of first instance had dismissed the application of the buyer for a reduction of the price of the goods for non-conformity with contract specifications on the ground that the buyer had inspected the goods at the place of delivery in Turkey and had found them to be in good order.
The appellate court found that the parties, during the oral hearing before the court of first instance, had agreed to submit their dispute to German law and held that CISG was applicable as part of German law. The judgement of the court of first instance was upheld on the ground that the buyer lost the right to rely on non-conformity of goods and to reduce the price proportionally, since it gave notice of the non-conformity only when the goods arrived in Germany, i.e. seven days after the buyer had the opportunity to examine them at the place of delivery in Turkey (art. 38, 39(1) and 50 CISG).
Time limit for right to rely on lack of conformity, CISG, Articles 38, 39. Any possible warranty claims of the [buyer] are precluded pursuant to CISG, Article 39(1). Under this article, the buyer has a warranty claim only if he gives notice of the lack of conformity to the seller within a reasonable period of time. This time period starts when the buyer ought to have discovered the lack of conformity. The starting point [for the notice period] follows from CISG Article 38(1). Pursuant to this [provision], the buyer has to examine the goods or cause them to be examined within as short a period as is practicable in the circumstances. The [buyer] did not comply with the period of time [for giving notice]. She complained only when the goods arrived in Germany. This was, at the earliest, seven days after the loading in Turkey. However, she ought to have had the goods examined at the time of loading in Turkey. Thus the complaints that she made, at the earliest, seven days after the loading were belated.
Translation by Alston & Bird LL.P.
Plaintiff [seller] is an enterprise with its place of business in Torbali, Turkey; its legal capacity and representation is in dispute between the parties. Defendant [buyer] is a commercial enterprise with its place of business in Germany.
By contract dated May 29, 1991, [buyer] purchased from [seller] approximately 1,000 tons of freshly harvested Turkish cucumbers for pickling of the sizes 3/6 and 6/9. According to the contract, the goods were to be delivered "free on refrigerated truck Turkish loading berth (Torbali)." The place of loading was also to be the place of performance. [Buyer] intended to entrust a German freight forwarder with the shipment. Subsequently, the parties agreed, by contract amendment, that [seller] hire Turkish shippers in return for reimbursement of the costs, the amount of which is in dispute.
Between June 16 and July 16, 1991, [seller] had goods loaded in Torbali for a total amount of DM 925,336.30. One Mr. T., who was hired by [buyer] to supervise the loading, was present at the loading. [Buyer] paid only an amount of DM 838,364.14 of the purchase price. The balance of DM [Deutsche Mark] 86,972.16 is the subject of this action. In addition, [seller] claimed DM 14,100 in freightage.
Regarding the claim for the balance, [buyer] argued that, when the goods arrived in Germany, a portion of the goods was spoiled, some of the shipments contained smaller quantities than indicated and, finally, the size of a portion of the cucumbers delivered was bigger than agreed upon. In particular, the parties disagreed as to whether the court had to look to the time of loading in Turkey or the time of arrival in Germany when determining whether the goods fit the standard set by the contract.
The record of the proceedings dated January 17, 1992, which will be referred to herein, shows that the Trial Court (here the Landgericht) heard evidence with respect to the contractual agreements and T.'s activities in Turkey. In its judgment [LG Krefeld 18 March 1992], which is appealed here, the Trial Court dismissed the claim and ordered [buyer] to pay [seller] the remainder of the purchase price in the amount of DM 86,972.16 plus interest. The Court reasoned as follows: The questions whether the cucumbers were spoiled when the trucks were unloaded in Germany or whether partial quantities were missing may remain unanswered. According to the written contract and the evidence before the Court, the time of loading in Turkey was determinative with respect to the question whether the goods fit the standard set by the contract. At that location, however, witness T. had examined and approved the goods. Thus, one could assume that the goods loaded by [seller] in Torbali fit the standard set by the contract. Finally, regarding the allegedly wrong sizes, [buyer's] contentions were not found to be sufficiently precise.
On appeal, [buyer] objects to the Trial Court's interpretation of the contract. In addition, [buyer] claims that the goods had already been defective at the time of loading in Turkey.
[Buyer] requests that the challenged decision be partially amended and that the claim be fully dismissed.
[Seller] requests a dismissal of the appeal.
[Buyer's] appeal is unsuccessful. The Trial Court correctly granted [seller's] claim in the of DM 86,972.16 plus interest.
The claim meets the formal requirements.
[Seller] is capable of being a party to a law suit and is legally represented by its management. According to ZPO [*] '' 50(1) & 51(1) in connection with EGBGB [*] Art. 7(1), the law of the country in which the legal entity has its place of business is determinative (BGH [*] NJW [*] 1981, 522, 525; Kegel, Internationales Privatrecht (International Conflict of Laws) ' 17 II (6th ed. 1987)). Here, that is Turkey.
According to Turkish law, seller, because it is a corporation entered into the commercial register, is capable of being a party and is legally represented by its managers S.C. and B.Y. This is established by the extract from the Turkish commercial register, provided by [seller] together with a translation. [Buyer] did not oppose this in substance. She merely denied knowledge or information regarding the correctness of the translation provided. According to ZPO ' 138(2) & (4), however, that is not sufficient. Because [buyer] made a considerable deal with [seller] with a total value of almost DM 1 million and because it had witness T., who was proficient in the Turkish language, as an employee or consultant at its disposal, [buyer] could not flatly deny knowledge or information with respect to the translation of the extract from the commercial register. Rather, she should have explained any problems in detail. Furthermore, this Court does not see any reason to question [seller's] ability to be a party and its legal representation under Turkish law and to inquire sua sponte to this end. In particular, contrary to [buyer's] opinion, a financial collapse possibly resulting in a loss of [seller's] ability to be a party, is out of the question. [Seller] has assets, that is at least the claim granted by this judgment.
[Seller's] counsel on appeal are, contrary to [buyer's] view, duly authorized. The question whether the power of attorney provided by counsel had been signed by one of [seller's] managers may remain unanswered. [Seller's] counsel on appeal were in any case -- and this is undisputed among the parties -- additionally authorized by [seller's] trial counsel, and their authority has not been questioned by [buyer].
The claim is meritorious to the extent granted by the Trial Court.
Pursuant to Art. 53 of the U.N. Convention on the International Sale of Goods (CISG) dated April 11, 1980 in connection with the law dated July 5, 1989 (BGBl.[*] II 586 et seq.), [seller] has a claim against [buyer] in the amount of DM 86,972.16 as the balance of the purchase price. Because the parties, in a statement to the Trial Court, agreed, pursuant to EGBGB Art. 27, that German law shall apply, the provisions of the CISG are applicable to the parties' contract, as German domestic law, pursuant to CISG Art. 1(1)(b). During the hearing, this Court pointed this out.
The amount of the purchase price balance is undisputed. [Buyer's] allegation that it had not been provided with individual invoices for each delivery is irrelevant with respect to the maturity of the purchase price claim. As far as a retention right is argued in the written pleading dated November 19, 1992, one day before the hearing, this contention is untimely as defined by ZPO �� 527 & 296(1).
The purchase price claim is not reduced according to CISG Art. 50 (1st sentence) in connection with Art. 35(1) & (2), Arts. 45, & 51(1). The question whether [buyer's] allegations that one part of the goods had been spoiled and that the invoiced quantities had not been delivered are correct, may remain unanswered. In any event, [buyer's] possible warranty rights are excluded under CISG Art. 39(1).
According to this provision, the buyer only has warranty rights if he gives notice of the goods' lack of conformity with the contract to the seller within a reasonable period of time. This period commences at the time the buyer should have discovered the lack of conformity with the contract. This time, in turn, is defined by CISG Art. 38(1). According to this provision, the buyer must examine the goods or have them examined within as short a period as practicable under the circumstances.
[Buyer] did not comply with this requirement. She gave notice of the alleged lack of conformity with the contract only upon the goods' arrival in Germany. That was, at the earliest, seven days after the loading of the goods in Turkey. [Buyer] should have, however, examined the goods at the time of loading in Turkey. Thus, the notice given at the earliest seven days after the loading was untimely.
The question whether the contractual relationship between the parties met the requirements of CISG Art. 38(2) and whether, therefore, an examination could have been deferred until after the goods had arrived at their point of destination, may remain unanswered. That is because CISG Art. 38(2) is not mandatory (Stumpf, in von Caemmerer/Schlechtriem, Kommentar zum Einheitlichen UN Kaufrecht (Commentary on the Uniform U.N. Law of Sales) Art. 38 6 6 (1990)), and the parties have definitely excluded this provision in their written contract dated May 29, 1991. This contract provides not only that the place of performance for the delivery was the place of loading and that the goods were to be delivered free on refrigerated trucks to the Turkish loading station. But also, the purchase price was payable "upon dispatch and approval by Mr. T." Thus, it becomes clear that the examination of the goods by witness T. as [buyer's] representative at the place of loading was not merely an internal matter of [buyer], but was to have, according to the parties' agreement, a fundamental meaning for the performance of the contract. This also accorded with the parties' respective interests. That is so because [buyer] herself intended to be responsible for the transportation of the goods. Only because of practicability reasons, [seller] later acted on behalf of [buyer], pursuant to an additional agreement, in selecting the carrier. This interpretation of the contract is substantiated by the fact that witness T., according to his own credible testimony, not only examined the quantities, but also the cucumbers' sizes and quality at the loading. The testimony of [buyer's] procurist, witness L., was comparatively unhelpful. This witness had drafted the written contract and, when doing so, assumed, according to his testimony, that only the goods' physical acceptance was to take place in Turkey, while the qualitative acceptance was to take place in Germany. That may be so. However, decisive is not what the witness assumed, but what [seller] could understand the text of the contract drafted by [buyer] to mean.
As a legal consequence of the untimely notice, [buyer] is obligated to pay the purchase price in the amount contractually agreed upon, in spite of any possible lack of conformity with the contract. In the legal literature, however, the opinion is advocated that in case of a failure to make complete delivery, the buyer, in spite of not having given timely notice, is only obligated to pay a purchase price reduced accordingly (Stumpf, supra, Art. 39 6 11). This Court does not agree with this opinion. It does not accord with the meaning of CISG Art. 39. With respect to the comparable provisions of HGB [*] �� 377 et seq., it is generally recognized that the buyer, in case of an untimely notice, is obligated to pay the full purchase price (BGH NJW 1984, 1964, 1966). The only disputed question is whether this also applies if the failure to make a complete delivery is evident from the invoice or the delivery papers, i.e., in case of a so-called "open" failure to make a complete delivery (BGH, supra). This, however, is not the case here. Regarding the instant -- not "open" -- failure to make a complete delivery, the legal consequence of CISG Art. 39 cannot be different from that of HGB �� 377 et seq. The purpose of the obligation is to quickly give the seller clarity concerning the question whether any objections can be made to his claim for the purchase price. Thus, the seller, if no notice has been given within a reasonable period of time, must be able to assume that there are no legal doubts with respect to his claim for the purchase price. Yet, that would exactly be the case where, despite the failure to give timely notice, a reduction of the purchase price due to failure to make complete delivery were permissible.
With respect to the claim for interest, the judgment of the Trial Court has not been challenged.
* Translator's notes: BGBl. = Bundesgesetzblatt [German Federal Law Gazette]; BGH = Bundesgerichtshof [German Federal Supreme Court]; EGBGB = Einführungsgesetz zum Bürgerlichen Gesetzbuch [Introductory Law to the German Federal Civil Code]; HGB = Handelsgesetzbuch [German Federal Commercial Code]; NJW = Neue Juristische Wochenschrift [Germany's foremost weekly law journal]; ZPO = Zivilprozeßordnung [German federal code of civil procedure].

References: Art. 7
 Art. 53
 Art. 27
 Art. 1
 Art. 50
 Art. 35
 Art. 39
 Art. 38
 Art. 38
 Art. 38
 Art. 38
 Art. 39
 Art. 39
 Art. 39