Source: http://cisgw3.law.pace.edu/cases/030815g1.html
Timestamp: 2019-04-19 14:58:43+00:00

Document:
In Spring 2001, the Defendant [Buyer] ordered a strapping machine from the Plaintiff [Seller]. On 9 April 2001, the [Seller] sent an order confirmation to the [Buyer] in which the machine was specified. The parties agreed on an overall purchase price of 135,000.00 DM [Deutsche Mark = German Mark (former German currency)] composed of 12,000.00 DM for a project survey, 108,000.00 DM for the "actual" machine, and 15,000.00 DM for squared timber (Kantholzaufnahme).
Company (O) of Italy had manufactured the machine. The [Buyer] required the strapping machine to use as a component of a packaging machine, which the [Buyer] had undertaken to deliver to Dutch Company (M). The packaging machine, in turn, was part of an aggregated facility to produce plastic tubes established by Company (M) in the Netherlands.
The [Seller] delivered the strapping machine, as provided, first to the [Buyer]'s place of business in Bielefeld, Germany; thereafter, the machine was integrated into the aggregated facility of Dutch Company (M) and put into operation. On 16 October 2001, the [Seller], sent to the [Buyer] an invoice for the strapping machine in the amount of 123,000.00 DM (135,000.00 minus 12,000.00 DM already paid for the project survey), which equals �62,888.90 [Euros]. In 2002, the [Buyer] paid a total of 35,000.00 DM (in two partial payments) on this invoice. The remainder of �27,888.90, which has remained due despite a demand for payment by 10 July 2002 by the [Seller]'s counsel, is the subject matter of this complaint.
Since the claim for squared timber was undisputedly "taken out" of the contract, the [Seller] reduced its claim in that amount (15,000.00 DM = �7,699.38) before the oral proceedings.
The [Seller] filed for the remainder of its claim. The [Buyer] applied for dismissal of the action.
The [Buyer] also seeks a set-off with its own claims amounting to �30,186.00 as well as �8,436.60 related thereto. [Buyer] claims that production interruptions caused heat-deformations in the sealing unit of the plastic packaging assembly line which resulted in business disruptions requiring manual interventions. The [Buyer] claims this resulted in 780 hours in which Company M's staff could not work, with total costs of �30,186.00 (hourly wage rate: �38.70).
Moreover, [Buyer] alleges that the repair of three construction defects caused costs of a total of �8,436.60 (218 hours at �38.70 per hour). The defects predominantly emerged when the machine was initiated at Company (M)'s facility. The [Buyer] gave notice of the defects directly to Manufacturer (O)'s branch located in Wuppertal. For instance, the [Buyer] alleges that it given notice in June 2002 when its electronics engineer Fuhrmann repeatedly contacted Company O, who then sent technicians to Company M without charging the [Buyer] for these services. Moreover, [Buyer] alleges that during the machine's set up at Company M in the Netherlands, Messrs. B and F ([Seller]'s personnel) were repeatedly present and were informed about the defects. The problems with the heat-deformations still exist. Therefore, the [Buyer] additionally asserts a reservation.
In contrast, the [Seller] denies the existence of defects and claims that, in any case, under Art. 39 CISG the [Buyer] is barred from relying on a lack of conformity of the goods because notice was not given to the Plaintiff [Seller] (underscored in original).
Concerning further details of the parties' submissions, the ruling defers to the pleadings that were exchanged together with their attachments.
The [Seller] is eligible for payment of �20,219.52 from the [Buyer] (remaining purchase price for the strapping machine). Since the project survey (12,000.00 DM) was already paid and the amount for the squared timber (15,000.00 DM) was removed from the case, 108,000.00 DM = �55,219.52 remain, minus �35,000.00 already paid prior to the litigation.
This claim follows from Arts. 53, 62 CISG. Both Belgium and Germany are Contracting States of the CISG; the CISG is therefore applicable to the parties' contractual relationship pursuant to Art. 1(1)(a) CISG.
The [Buyer] is unsuccessful in its counterclaim based on alleged defects of the strapping machine, independent of whether the delivered machine was or still is contrary to the contract as alleged by the [Buyer]. Pursuant to Art. 39 CISG, the [Buyer] has lost the right to rely on a possible lack of conformity of the strapping machine. According to this provision, the buyer loses the right to rely on a lack of conformity of the goods if he does not give notice to the seller within a reasonable time after the buyer has discovered it (or after the point in time in which he ought to have discovered it within the scope of the short examination period required under Art. 38 CISG). It cannot be established that the [Buyer] met this obligation. The burden of proof is on the [Buyer] to show all circumstances out of which the timely notice of lack of conformity may result. According to [Buyer]'s own submission, it did not notify the [Seller] of the defects. Pursuant to Art. 39 CISG, the seller is to be the addressee of the notice of lack of conformity in order to enable him to make appropriate determinations and, if necessary, make the required arrangements. A notice of lack of conformity given to the manufacturer, which is not identical to the [Seller], upon which the [Buyer] here relies, is not sufficient. The manufacturer is not included in the contractual relationship and does not fall within the category of persons authorized to accept statements (with immediate effect on the seller's rights). Accordingly, a timely notice of lack of conformity to the seller through the manufacturer (quasi as a messenger) is only possible if the manufacturer would have referred the complaint to the seller within the reasonable time of Art. 39 CISG (see the following ruling on agency law, LG Kassel NJW-RR [*] 96, 1146 f.). Therefore, the [Buyer]'s submission that [Seller]'s Messrs. B and F were repeatedly present during the machine's set up at Company M and were informed about the defects is not sufficient. It cannot be determined from the [Buyer]'s submission exactly when and from which examination the defects in the present case were first discovered. It is likewise not apparent exactly when the [Seller]'s Messrs. B and F were allegedly informed about the defects. Moreover, nothing has been shown to establish that notice of the alleged lack of conformity was given with the required specificity.
The [Buyer] is accordingly barred from any remedies based on conformity of the goods; there is no plea for a "reasonable excuse" (Art. 44 CISG) for omission of the necessary notice.
The decision on interest is based on Art. 78 CISG. The question of which jurisdiction is to provide the interest rate (Belgian or German) may be left open, since within the European Community the Directive 2000/35/EC of the European Parliament and of the Council of 29 June 2000 to Combat Late Payment in Commercial Transactions sets the interest rate on arrears as at least 7%-points above the reference interest rate (Bezugszinssatz). Thus, the [Seller]'s demand for 5% interest is justified.
The procedural incidental rulings are based on �� 91,269 (3), 708 No. 11, 709, 711 ZPO [*].
* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Plaintiff of Belgium is referred to as [Seller] and the Defendant of Germany is referred to as [Buyer].
Translator's note on abbrevations: NJW-RR = Neue Juristische Wochenschrift, Rechtsprechungsreport [German law journal (New weekly journal of law, decisional report)]; ZPO = Zivilprozessordnung [German Code of Civil Procedure].
** Stefan Dietrich, Dipl. iur. University of Bochum, took part in the University of London LL.M. program (2004/2005). His fields of law are International Commercial Law and Corporate Law. Articled clerk with the Higher Regional Court (OLG) Hamm (effective January 2006).

References: Art. 39
 Art. 1
 Art. 39
 Art. 38
 Art. 39
 Art. 39
 Art. 78