Source: http://cisgw3.law.pace.edu/cases/951011g1.html
Timestamp: 2019-04-23 14:07:40+00:00

Document:
The [buyer] is a Danish citizen and the owner of a sailing yacht on which he stayed at the Caribbean in late summer 1993. Due to the prevailing high temperatures there, the [buyer] decided to install a cooling system. Since such cooling systems cannot be operated with the batteries on board due to the high consumption of electricity, the [buyer] turned to the [seller] for the purchase of a generator. The [buyer] stated that he needed a generator in order to run a cooling system with a power rating of approximately 0.75 hp and a battery charger of 3 amperes.
The generator arrived in [...] on 29 November 1993, but without the spare parts ordered by the [buyer]. By mistake, the [seller] had not sent the spare parts together with the generator. By fax of 6 December 1993, the [buyer] asked the [seller] to deliver the spare parts immediately. By fax of 8 December 1993, the [seller] apologized for the mistake and announced that shipment would be made within the next two days. But in the aftermath, no supplementary delivery of the spare parts was effected.
The [buyer] had the generator installed on his ship. The firm commissioned with the installation and the hook-up of the generator did not manage to run the cooling system of the [buyer] with the generator. A brisk correspondence in English developed between the parties, consisting mainly in the exchange of technical data, serving the purpose to start the cooling system with the generator. The correspondence and the attempts to start the cooling system dragged on from 7 until 22 December 1993. By letter of 22 December 1993, the [buyer] informed the [seller] that [the buyer] would return the generator as useless, should the last experiment to start a 0.5 hp compressor fail. By letter of 7 January 1994, the [buyer] stated that the generator would be returned, which then actually took place.
The [buyer] requests repayment of the invoiced amount of DM 11,633 paid to the [seller]. Furthermore, the [buyer] requests reimbursement of the freight costs for the return shipment of the generator from [...] to [...], as well as reimbursement of costs for the other transports, which the [buyer] states to be DM 420 and DM 558.40. The [buyer] also requests reimbursement of the costs for the installation and the disassembly of the generator amounting to DM 1,150.
The [buyer] contends that the generator returned to the [seller] was useless for the promised range of use. The generator was able to start neither a 0.75 hp strong cooling compressor nor a 0.5 hp cooling compressor. After the disassembly of the [seller]'s generator, an American generator of [...] with similar technical data was installed and the system has worked since then without problem. The [buyer] contends that it requested the dispatch of the spare parts several times. The [buyer] is of the opinion that the case has to be decided by applying the CISG.
The [buyer] pleads that the [seller] be ordered to pay DM 14,111.40 plus 12% interest since 10 October 1993.
The [seller] seeks to have the [buyer]'s claim dismissed.
The [seller] contends that the generator sold to the [buyer] produces a power rating of 3 kw and is suited to run a commercial motor for a cooling system with a power rating of 0.5 to 0.75 hp, as well as a battery charger of 3 amperes. Also, that the cooling system could not be run can only be attributed to the fact that the [buyer] had used a compressor unsuitable for the installation in a ship's cooling system of firm [...]. Contrary to the statements of the [buyer], the compressor did not have a power rating of 0.75 hp, but almost a quadruple power rating instead.
The [seller] furthermore contends that the range of spare parts was not supplemented because the parties had agreed in the beginning of January 1994 to wait for the delivery until the question of the utility of the motor was solved. Furthermore, the [seller] disputes the costs of the [buyer] for the freight as well as the costs for the installation and the disassembly.
In addition, the [seller] raises the question of the statute of limitations. The [seller] is of the opinion that the sales law of the BGB [*] applies to the present case and that [buyer]'s remedies are time-barred under that statute. The [seller] alleges that along with the invoice of 6 September 1993 and the letter of the confirmation of the order, a copy of the [seller]'s standard terms had been sent to the [buyer] in which it is stated, under XC: "To the legal relationship between [the seller] and the purchaser, the law of the Federal Republic of Germany applies. The ... ULIS [*] is not applicable". Prior to the conclusion of the contract, the [buyer] was expressly instructed on the phone that the [seller]'s standard terms form the basis for the contractual relationship between the parties.
The [buyer]'s claim is dismissed.
The [seller] is not liable to repay the purchase price to the [buyer] nor to reimburse the costs of the installation and the disassembly, nor for the return transportation of the generator requested by the [buyer].
To the sales contract concluded between the parties, regarding the generator of the type [...] and the range of spare parts, the CISG, which came into force in Germany on 1 January 1991 and in Denmark on 1 March 1990, is applicable in connection with VertragsG [*] of 5 July 1989 [BGBl [*] 1989 II, pp. 586 et seq.]. Both parties have their places of business in Contracting States and the time of the conclusion of the contract does not date before 1 January 1991 (Art. 1(1)(a) CISG).
Insofar as the [seller] submits that the [buyer] had received the standard terms of the [seller] and that they had thus become part of the contract, this does not lead to a different result. According to Art. 6 CISG, the parties may exclude the application of the Convention; in principle, that may also be done by standard terms as far as these terms have been validly agreed upon (cf. von Caemmerer / Schlechtriem / Herber, Kommentar zum Einheitlichen UN-Kaufrecht, 2nd ed., Art. 6 CISG, Annotation 8). But the application of the CISG is not excluded by the standard terms of the [seller] in the present case. According to provision XC of the [seller]'s standard terms, the laws of the Federal Republic of Germany exclusively apply to the legal relationship between the [seller] and the [buyer]. Such a clause alone does not lead to the exclusion - but to the application - of the CISG, which is part of the national legal order as a special regulation for international sales (cf. von Caemmerer / Schlechtriem/Herber, Art. 6 CISG, Annotation 16; Staudinger/Magnus, Kommentar zum BGB, Wiener UN-Kaufrecht, 13th ed., Art. 6 CISG, annotation 24).
Furthermore, clause XC of the [seller]'s standard terms just states that the [...] ULIS of 17 July 1973 should not apply. This law has been substituted anyway by the CISG, effective since 1 January 1991. The application of the CISG is thus not excluded by the standard terms of the [seller].
Contrary to the opinion of the [buyer], the claim is nevertheless altogether unfounded.
Due to the raised objection of limitation, the [seller] is not obligated to repay the purchase price for the [...] generator under Art. 81(2) CISG in connection with Arts. 45(1), 49 CISG.
An obligation of the [seller] for the repayment of the purchase price exists under Art. 81(2) CISG only after an avoidance of the sales contract by the [buyer], the preconditions of which [avoidance] are regulated by Art. 49 CISG. The avoidance of the contract is thus a constitutive right of the [buyer], which changes the contractual relationship into a restitutional [winding-up] relationship (Arts. 81-84 CISG). Whether the [buyer] was entitled in the present case to declare an avoidance of the contract under Art. 49 CISG and has given proper notification of this to the [seller] does not have to be decided. To such an extent, it does not have to be decided whether the generator sold to the [buyer] by the [seller] had the warranted characteristics of 3 kw and was suited to run a compressor for a cooling system with a power rating of 0.5 - 0.75 hp, as well as a battery charger of 3 amperes. A possible right of the [buyer] to declare the contract avoided on account of the contended non-conformity of the generator under Art. 49 CISG would be time-barred according to Art. 3 VertragsG [*] of 5 July 1989 (BGBl [*] 1989 II page 586) in connection with � 477 BGB [*].
The CISG does not contain any provisions on the limitation period. The limitation of the claims resulting from the Convention is determined by the national law applicable by virtue of the rules of private international law (cf. von Caemmerer / Schlechtriem, Art. 3 VertragsG, Annotation 2 and 4; Staudinger/Magnus, Art. 3 VertragsG, Annotation 2 et seq., Art. 4 CISG, Annotation 38 et seq.). Recourse to the national law to that extent is not excluded by the CISG (cf. Herber/Czerwenka, Art. 3 VertragsG, Annotation 2). In the present case, the limitation provision to be applied has to be taken from the contractual statute determined by EGBGB [*] Art. 32(1)(4) in connection with EGBGB Art. 27 et seq. The consequence is that in the present case, according to EGBGB Art. 28(1) and (2), the limitation of the claims asserted by the [buyer] is to be considered under German law. This is because the characteristic performance of the sales contract - formed by the [seller] with the [buyer] as part of its commercial activities - is the [seller]'s performance as seller; therefore, the law at the [seller]'s place of business is relevant (cf. Palandt/ Heldrich, Art. 28 EGBGB, Annotation 8; Herber/Czerwenka, Art. 3 VertragsG, Annotation 4; Staudinger/Magnus, Art. 4 CISG Annotation 39). Thus, it does not have to be decided whether the parties have agreed on German law by a valid incorporation of the [seller]'s standard terms and whether German law applies already by virtue of EGBGB [*] Art. 27 [agreement of the parties].
The relevancy of German law leads to the result that the limitation of the right of avoidance claimed by the [buyer] is judged in accordance with Art. 3 VertragsG [*] in connection with BGB [*] � 477. Art. 3 VertragsG contains a special prescription provision of the German law for [buyer]'s claims of non-conformity of the goods under CISG Art. 45 (cf. von Caemmerer / Schlechtriem, Art. 3 VertragsG, Annotation 3; Staudinger/Magnus, Art. 3 VertragsG, Annotation 1). According to Art. 3 sent. 1 VertragsG, BGB � 477 is to be applied by analogy to the limitation of the [buyer]'s claims under Art. 45 CISG for the non-conformity of the goods, unless the non-conformity is based on facts which the seller knew or should have known and which the [seller] did not disclose to the buyer, provided that the deadline stated in BGB � 477 starts on the day on which the buyer notifies the seller about the non-conformity in accordance with Art. 39 CISG.
According to Art. 3 sent. 2 VertragsG, the right of the buyer to declare the avoidance of the contract is a claim for rescission or price reduction under Art. 3 sent. 1 VertragsG. Thus, Art. 3 sent. 2 VertragsG stipulates explicitly that the right to declare the avoidance of the contract (CISG Art. 49) - being a unilateral constitutive declaration and, as such, normally not subject to limitation under BGB � 194 - has to be treated as if it were a claim for avoidance (cf. Herber/Czerwenka, Art. 3 VertragsG, Annotation 8; Staudinger/Magnus, Art. 3 VertragsG, Annotation 6; von Caemmerer / Schlechtriem, Art. 3 VertragsG, Annotation 4).
According to Art. 3(1) VertragsG in connection with BGB � 477, a possible right of the [buyer] to declare the contract avoided for a lack of conformity of the generator is barred, as more than six months have elapsed since the notification of the non-conformity of the generator claimed by the [buyer] in December 1993 and the filing of the claim with the Court on 21 November 1994. The [buyer] has neither submitted nor rendered proof that the [seller] knew or could not have been aware of the defect alleged by the [buyer], respectively the absence of warranted characteristics. Thus, the [buyer] cannot request a repayment of the purchase price paid to the [seller], since a possible right for an avoidance of the contract under Art. 49 CISG would be time-barred.
Also there is no enforceable claim of the [buyer] for reimbursement of the costs for the installation of the [�] generator and its disassembly as well as its return transport to the [seller] under Articles 45(1)(b) and 74 CISG. Possible claims for damages of the [buyer] in this regard are barred in accordance with the given reasoning under Art. 3 VertragsG in connection with BGB � 477.
Finally, the [buyer] has no claim against the [seller] for a part repayment of the purchase price pertaining to the spare parts not delivered by the [seller] under Articles 81(2), 51 and 49(1) CISG. Admittedly, the [buyer] declared in his statement of claim of 21 November 1994 also "in this regard (again) the rescission of the sales contract" and, thus, also the avoidance of the contract under Art. 49 CISG. But the [buyer] already failed to conclusively submit that he fixed a reasonable additional time for the [seller]'s delivery of the parts bought together with the generator (Art. 51 CISG in connection with Articles 49(1)(b), 47(1) CISG). Insofar as the [buyer] has contended that [buyer] had reminded the [seller] several times about the delivery, it cannot be gathered from this general statement that the [buyer] has also fixed a deadline for the [seller]. A right of avoidance does not exist already for this reason. Thus, it does not have to be decided whether the spare parts were not delivered to the [buyer] because the parties had agreed in the beginning of January 1994 that delivery should wait until the issue of the utility of the generator had been resolved, as the [seller] contends. Also, taking of evidence to that extent is not necessary.
* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Plaintiff of Denmark is referred to as [buyer] and the Defendant of Germany is referred to as [seller]. Monetary amounts in German currency (Deutsche Mark) are indicated as [DM].
Translator's notes on other abbreviations: BGB = Bürgerliches Gesetzbuch [German Civil Code; BGBl = Bundesgesetzblatt [German Federal Law Gazette]; EGBGB = Einführungsgesetzbuch zum Bürgerlichen Gesetzbuche [German Code on the Conflict of Laws]; ULIS = 1964 Hague Uniform Law on International Sales; VertragsG = Gesetz zu dem Übereinkommen der Vereinten Nationen vom 11. April 1980 über Verträge über den internationalen Warenkauf sowie zur Änderung des Gesetzes zu dem Übereinkommen vom 19. Mai 1956 über den Beförderungsvertrag im internationalen Strassengüterverkehr (CMR) vom 5. Juli 1989 [German Ratification Law for the CISG].
** Peter Feuerstein is an International Legal Consultant. He conducted his post graduate research at Cambridge University, England, where he studied at Clare College in preparation of his Doctoral Dissertation. He received his Dr. jur. From Phillips University of Marburg, Hessia, Germany, in 1977. The second-iteration redaction of this translation was by Dr. John Felemegas of Australia.
*** Ruth M. Janal, LL.M. (UNSW) is a PhD candidate at Albert-Ludwigs-Universität Freiburg. She has been an active participant in the CISG-online website of the University of Freiburg.

References: Art. 6
 Art. 6
 Art. 6
 Art. 6
 Art. 81
 Art. 81
 Art. 49
 Art. 49
 Art. 49
 Art. 3
 Art. 3
 Art. 3
 Art. 4
 Art. 3
 Art. 32
 Art. 27
 Art. 28
 Art. 28
 Art. 3
 Art. 4
 Art. 27
 Art. 3
 Art. 3
 Art. 45
 Art. 3
 Art. 3
 Art. 3
 Art. 45
 Art. 39
 Art. 3
 Art. 3
 Art. 3
 Art. 49
 Art. 3
 Art. 3
 Art. 3
 Art. 3
 Art. 49
 Art. 3
 Art. 49