Source: http://cisgw3.law.pace.edu/cases/991130g1.html
Timestamp: 2019-04-22 18:05:59+00:00

Document:
A German buyer, the defendant, ordered stones for facades from X, who agreed in the name of an Italian seller, the plaintiff. After delivery, the buyer gave notice of several defects in the stones to X. It asserted that the goods were not labelled as agreed, that borings that had been agreed had not been made or were incorrectly placed, that the sills and stones were not the agreed size and that the glue provided to mount the stones was defective. Consequently, it refused to pay the purchase price. The seller recognised only the missing borings and reduced the purchase price. It sued the buyer for the outstanding purchase price. The buyer contested that the purchase price was due, because the seller did not establish a final account.
The Court allowed the claim. It applied CISG, because the parties had their places of business in different Contracting States. As CISG does not require a specific form of account or invoice, no final account was required. Therefore the Court held the claim to be due.
The Court found that the buyer was not entitled to claim damages under article 74 et seq. CISG. The buyer failed to specify the nature of the lack of conformity. Concerning the labelling the buyer did not allege that it gave notice about specific unlabelled plates. The complaint that the stones were wrongly labelled in general was held to be insufficient. As to the sills, the buyer did not specify how many and which sills did not conform to the agreed size. Also the buyer did not assert that it gave notice about the quantity of stones diverging from the agreed size and in which manner they diverged. As to the defective glue, the buyer failed to allege the exact quantity of stones treated with the defective glue. Moreover, the buyer failed to examine the goods within as short a period as is practicable in the circumstances (article 38(1) CISG) and also failed to give notice within a reasonable period of time (article 39(1) CISG).
The Court held that the buyer had therefore failed to give a proper notice to X. In the Court�s opinion, the CISG does not contain any rule about the addressee of the notice. Therefore it held that this question was governed by domestic law, more specifically German law. According to German law, as X had been the seller�s agent, effect had to be given to the notice addressed to X.
The [seller] demands payment of the purchase price for a delivery of facade stone.
On 5 November 1997, [seller's representative] sent the [buyer]'s employee an offer for the sale of facade stone, which reads "(...) below please find the desired proposal, subject to confirmation and in the name of my Italian supplier. The price is ex works (...)"
Delivery was made in five installments (initially the [seller] only conceded four installments, now it agrees to the five installments). The [seller] then issued five invoices (the [buyer] initially spoke of only four invoices, but now concedes that it received five).
Before litigation, the [buyer] voiced several complaints concerning the goods, some of which the [seller] conceded. Regarding invoice no. 224, it now demands payment of (converted) roughly 20,000 DM [Deutsche Mark].
The [seller] submits that the United Nations Convention on Contracts for the International Sale of Goods (CISG) governs the contract. [Seller] further submits that the contract was formed between itself and the [buyer] upon procurement of [seller's representative]. In this regard it refers to the wording of the offer "in the name of my Italian supplier". Consequently, the [buyer] had also paid the first three invoices to the [seller].
[Seller] submits that it conceded to the [buyer]'s notices of non-conformity before litigation that 209 pieces of stone had been drilled incorrectly. Since the [buyer] had only been charged DM 2.00 for the drilling of each anchor hole, the [seller] acknowledged DM 2.00 for 209 incorrectly drilled holes and DM 2.00 for 209 newly drilled holes, that is two times DM 418.00. For this reason, the [seller] had already granted the [buyer] a reduction in the amount of DM 3,283.31 by not requesting settlement of an unjustified discount for cash that the [buyer] had been given. According to the [seller], all other notices of non-conformity by the [buyer] had been unjustified. The goods had not been defective and all stones had been manufactured according to the [buyer]'s instructions. The parties had not agreed on stainless steel for the gluing of the corners.
[Seller] further submits that none of [buyer]'s notices of non-conformity were given within reasonable time as required under the CISG.
The [seller] demands interest at the rate of 10% under Art. 74 CISG in connection with Art. 1183, 1284 cc [*].
The [seller] requests the Court to order the [buyer] to pay it DM 20,000.- with interest of 10% from 4 June 1998.
On 18 June 1999, the Court declared a judgment by default in accordance with [seller]'s pleading, against which the [buyer] declared its objection by fax of 5 July 1999 and a following brief which the Court received on 7 July 1999.
The [seller] requests the Court to uphold the judgment by default. The [buyer] requests the Court to reverse the judgment by default and dismiss the claim.
The [buyer] submits that German law applies to the contract. The contract over the facade stone was formed between [buyer] and [seller's representative] in Germany, while Germany was also the place of performance. The [buyer] requests that a jurisprudent expertise be obtained, which would prove that the [seller]'s claim was also unfounded under the CISG or Italian law. The [buyer] bases its opinion that the contract was concluded between its and [seller's representative] upon the fact that [the representative] had been the one who made the offer. [Buyer] further submits that the claims made by the [seller] are not due, as [buyer] was not presented with a final invoice.
The first delivery consisted of 22 pallets which had not been marked according to the schedule of items. The [seller] had been aware of the schedule of items. In a different section of its brief, the [buyer] maintains that the stones were not marked according to the schedule of items. The [buyer] explains that an exact marking of the stones was necessary and customary, as the measurements of the various pieces sometimes deviated by only millimeters and a subsequent measuring by hand was too difficult and costly, seeing that there were roughly 200 different sizes.
With respect to 209 stones, the anchor holes were non-existent, not deep enough or drilled at the wrong spot. The delivered window sills did not possessed a length of 1.55 m as required, but only of 1.25 m. Some of the stones had not been cut correctly and the measurements did not correspond to the ones ordered. The majority of the so-called gluing were also non-conforming, consisting of silicone and wire instead of stainless steel. These stones had to be dismantled, cleaned of the gluing and glued again.
The [buyer] maintains that it gave the [seller] adequate notice of the non-conformities. Immediately after it had received the defective delivery, it called the [seller's representative] and queried each defect. In addition, one of its Italian speaking employees called the [seller] and gave notice of the non-conformity. All defects were furthermore complained of in writing to both the [seller] and [its representative].
The [buyer] submits that the second delivery contained the same defects as the first. Again, it gave immediate notice of the non-conformity in both verbal and written form to the [seller] and [its representative]. Some of the complaints were translated into English by [seller's representative] and brought to the attention of the [seller]. The [seller] then demanded return of the goods, which the [buyer] refused because of the delay. Instead, the [buyer] requested that the [seller] drill and glue the stones again at the construction site. Upon the [seller]'s refusal, the [buyer] announced that it would do the drilling and gluing itself, and followed suit. Following the [buyer]'s complaint, the [seller's representative] visited the construction site and confirmed and acknowledged the defects.
[Buyer] claims that it immediately gave notice of the defects to the [seller] and [seller's representative] both by phone and in writing.
With respect to its costs, the [buyer] submits that a total of 380 items in the four installments were defective. Each of these defects had to be individually inspected and followed-up. The [buyer] suffered considerable damage firstly, through the delay and secondly, through the substantial defects of each delivery. [Buyer]'s overall costs amounted to DM 22,306.47. As an alternative relief the [buyer] declares set-off with this claim against the [seller]'s demands.
The [buyer]'s objection is unsuccessful. The Court affirms the judgment by default.
I. The United Nations Convention on Contracts for the International Sale of Goods (CISG) applies to the legal relations between the parties.
The contract was formed between the Italian [seller] and the German [buyer]. Both Italy and Germany have ratified the Convention. There is no need to obtain an expertise as desired by the [buyer], for the CISG constitutes German law.
" (...) attached please find the desired offer, non-binding and in the name of my Italian supplier".
The remark "in the name of my Italian supplier" clearly indicates the intent of [seller's representative] to act not in its own interest, but with authority of the [seller]. This is further supported by the fact that - according to the undisputed submission of the [seller] - the [buyer] effected those payments that it did make to the [seller].
III. The [buyer]'s submission that it is not obliged to pay the purchase price as the [seller] has not yet provided [buyer] with a final invoice is incorrect. The individual invoices were sufficient. The CISG does not provide for a "final invoice" as a prerequisite for the maturity of the purchase price.
IV. The [buyer] is not entitled to rely on any non-conformity of the goods. [Buyer] is in particular not entitled to claim damages under Art. 74 and following CISG provisions.
The [buyer] failed to show that it specified the nature of the non-conformity within reasonable time as required under Arts. 38, 39 CISG.
a) The [buyer]'s submission fails to show that it specified particular defects with respect to particular parts of the delivery.
aa) Insofar as the [buyer] explains that the first delivery contained 22 pallets which had not been marked according to the schedule of items (in a different section of its brief it notes that the stones had not been marked accordingly), the Court finds that a marking of the stones was indeed necessary. After all, the delivery consisted of 200 sizes, which sometimes deviated from each other only by millimeters (in part only roughly 3 mm). Even in the absence of a respective agreement, the nature of the goods therefore required a certain sorting of the stone.
However, it is not clear to which extent the [seller] is supposed to have breached its corresponding duty and whether the [buyer]'s complaint regarding the breach was specified enough. This does not follow from the submission in [buyer]'s brief. It can also not be inferred from the fax sent by the [seller's representative] on 5 May 1998. The fax solely notes (in English) that "many of the plates" had not been sufficiently marked. This notice again leaves open which parts lacked satisfactionary markings to which extent.
bb) Insofar as the [buyer] complains that 209 stones lacked anchor holes completely or contained holes that were either not deep enough or drilled at the wrong place, the [seller] acknowledged the non-conformity. However, the [seller] credited the [buyer] an amount of DM 2.00 for two times 209 anchor holes, that is a total of 836.00 DM. [Seller] subtracted that amount from the unjustified discount for cash in the amount of 3,283.31 DM that the [buyer] had been given. The [buyer] does not submit that it suffered a higher loss than DM 2.00 per anchor hole. [Buyer] does not dispute the [seller]'s submission that the [seller] had only charged [buyer] DM 2.00 for each anchor hole.
cc) The [buyer] complained that the delivered window sills had been 1.25 m in length instead of the 1.55 m ordered. It is not apparent which window sills the [buyer] refers to, as the schedule of items does not contain window sills with a length of 1.55 m. There is furthermore no indication how many window sills did not possess the correct length.
dd) With respect to the [buyer]'s submission that "some" stones had not been cut "correctly" and had not conformed to the ordered sizes, it is unclear how many stones it refers to, what characterized the incorrect cutting and how the [buyer] gave notice specifying these defects to the [seller].
ee) As regards the [buyer]'s claim that a majority of the gluing had been defective (silicone and wire instead of stainless steel), it is not apparent which specified amount the [buyer] notified the [seller] of.
b) Furthermore, the [buyer]'s submission does not show whether the [buyer] examined the goods "within as short a period as is practicable in the circumstances" as required by Art. 38(1) CISG and whether it gave notice of the defect "within a reasonable time" under Art. 39(1) CISG.
aa) While the [buyer] submits that it called the [seller's representative] "immediately after receipt of the defective delivery" and queried all non-conformities, the Court finds that this submission is not sufficient.
The recipient of a notice of non-conformity is not expressly settled in the CISG. The question thus has to be settled according to national law.
It was explained above that [seller's representative] acted as an representative for the [seller]. In the opinion of the Court, the [seller] therefore has to account for notices of non-conformity given to [its representative] (it would be different had [seller's representative] solely acted as an agent, cf. Baumbach, 29th ed., � 377 HGB [*] n. 28).
However, [buyer]'s submission does not show whether the notice given to [seller's representative] was given within reasonable time as required under Art. 39(1) CISG.
Even if the Court followed the [buyer]'s argument that not all defects of the delivery could have been discovered immediately after receipt and that it was impossible or unacceptable to unpack all the goods at the same time, the [buyer]'s submission was insufficient. At a minimum, it was held to specify at what time it discovered or could reasonably have discovered the defective parts, naming the extent of the non-conformity and the installment in which those parts had been delivered. [Buyer] would furthermore have needed to submit specifically with respect to which of these defective parts it gave a notice of non-conformity to the [seller's representative].
bb) With respect to the [buyer]'s submission that it asked one of its Italian-speaking employees to call the [seller] and inform it of the non-conformity, it is not clear when the [buyer] received the respective goods and at what time notice of the non-conformity could have been given (i.e., the date of receipt or at least the date of use). The [buyer] furthermore does not submit which of its employees called the [seller] to notify it of the defect in the goods.
cc) As for [buyer]'s further submission that it sent both the [seller] and [his representative] written notices regarding all mentioned non-conformities, again it is not clear at what time the [buyer] received the goods, when the first use allowed a full discovery of the defects, at which date the written notices were sent, and what their positive content was.
a) The [buyer] holds that the second delivery contained the same defects as the first. For reasons already expounded above, this submission does not show whether a sufficiently specific notice of non-conformity was given to the [seller] and [his representative].
b) Again the [buyer] submits that it immediately brought oral and written complaints to both recipients and again its arguments do not show whether an examination took place within as short a period as possible according to Art. 38(1) CISG and whether a notice of non-conformity was given within reasonable time in the meaning of Art. 39(1) CISG. In addition, the [buyer] explains that some of the complaints were translated into English by the [seller's representative] and brought to the attention of the [seller]. However, this fax simply states that the delivery was incomplete and that many of the stones either did not contain numbers or that the numbers were illegible and that from now on the slabs were to be signed. The word "incomplete" alone does not describe a specific defect. With respect to the lacking numbers, the fax does not mention which quantities are affected and whether simply the lacking numbers on pallets (or packets) were queried or whether the packets contained random pieces.
According to the [buyer]'s submission, these deliveries contained the same defects as the first two deliveries. The Court refers to the explanations above under 1. The submission does not show that the [buyer] gave a sufficiently specific notice of non-conformity to the [seller] and [his representative]. As regards the [buyer]'s contention that it gave immediate written and oral notices of non-conformity, it is again unclear whether it examined the goods within the short period of Art. 38(1) CISG and gave notice within reasonable time as required by Art. 39(1) CISG.
Translator's note on other abbreviations: cc = Codice Civile [Italian Civil Code]; HGB = Handelsgesetzbuch [German Commercial Code].

References: Art. 74
 Art. 1183
 Art. 74
 Art. 38
 Art. 39
 Art. 39
 Art. 38
 Art. 39
 Art. 38
 Art. 39