Source: http://cisgw3.law.pace.edu/cases/960326g1.html
Timestamp: 2019-04-22 18:50:35+00:00

Document:
An Italian seller, plaintiff, delivered and installed furnishings for an ice-cream parlour of a German buyer, defendant. After delivery, the parties had agreed on a total purchase price taking into account a partial payment already made by the buyer. The buyer accepted and signed seven bills of exchange in respect of the outstanding purchase price. Subsequently, the buyer complained of failure by the seller to deliver parts of the work and objected to the quality of the furnishings. The seller sued the buyer for the payment of the outstanding purchase price. The court awarded the claim in summary proceedings for the enforcement of the bills of exchange.
The court upheld its decision in the ancillary proceedings.
The court held that the CISG was applicable according to article 1(1)(a) CISG, as the parties' places of business were in Italy and Germany, which are Contracting States of the CISG. The court classified the contract between the parties as a sale of goods to be manufactured under article 3(1) CISG.
The court found that the buyer had accepted the conformity of the furnishings when it agreed with the seller on the outstanding purchase price and had granted the bills of exchange. As neither a lack of conformity nor the alleged missing parts of the furnishings had been raised by the buyer at that time, the court interpreted this as an acknowledgement by the buyer that the delivered furniture was free from defects. The court further found that the buyer had to examine the goods pursuant to article 38 CISG. By accepting explicitly the furniture, the buyer had recognized the conformity of such furniture and had renounced to its right to rely on a lack of conformity under article 39 CISG. As such, the buyer was no longer in a position to complain that the furniture was defective, as such defects should have been discovered during examination. Otherwise, its behaviour would be contradictory and would constitute a violation of the principle of good faith (article 7(1) CISG).
The court held that the buyer, at best, could rely on a lack of conformity, which appeared after the date of the parties' agreement on the outstanding purchase price, within the two-year period provided by article 39(2) CISG. However, even here, the buyer failed to specify the nature of the defects of the furniture as required by article 39(1) CISG. The buyer's notice regarding the defects was not sufficiently detailed and substantiated. Moreover, such notice was delayed. The court elaborated that the purpose of giving notice to the seller specifying the nature of the lack of conformity as soon as it is discovered was to give it the opportunity to determine how to react, for example, to inspect the goods, to remedy or to redeliver.
- on DM 10,000 since 21 April 1995.
The sum awarded by that judgment of DM 108,796.91 consists of DM 107,850 being the primary value of the bills of exchange, expenses of DM 587.38 and exchange brokerage of DM 359.53.
The transaction underlying the issuing of the bills of exchange was the delivery and installation by [Seller] of furnishings for an ice-cream parlor of [Buyer] in Saarlouis, Germany. The total volume of the order amounted to DM 525,700.
to order [Buyer] to pay [Seller] another DM 487.34 plus 2% interest above the respective Federal Bank discount rate, but at least 6%, on DM 101.50 since 1 October 1994, on DM 190.67 since 31 October 1994, and on DM 195.17 since 1 December 1994.
With its new procedural request no. 2 [Seller] claims further expenses incurred in relation to the bills of exchange.
[Buyer] requests the Court to repeal the provisional judgment of 31 August 1995 and to dismiss [Seller]'s action.
[Buyer] had reminded [Seller] to effect these performances, which however did not happen thus far. They formed a considerable part of the total delivery and had a value of at least DM 100,000. [Buyer] gave notice to [Seller] about a number of defects. The compressors of the cooling cabinet were defective. Wood treatment on the tables was not in conformity. The application of glue was improper on almost all edges. The upholstery of all chairs was defective. Further, the wooden enclosures were poorly glued and burst at various spots. [Seller] had been informed about these lacks of conformity and it indicated in its letter dated 16 December 1994 that it would make repairs. However, this has not occurred. The total value of the defects -- in order to reduce the counter-performance -- was at least DM 50,000.
Reference is made to the exchanged memoranda and their exhibits for further details of the parties' submissions.
The provisional judgment rendered in the proceedings based on bills of exchange is to be declared as being without reservation because [Buyer]'s objections are unfounded. [Seller] could rely on further expenses arising out of the bills of exchange of DM 291.34 on the basis of its extended procedural request of 5 January 1996. [Seller]'s further claim for expenses in relation to the bills of exchange is unfounded. Under the act governing bills of exchange, the expenses incurred may not be subjected to a corresponding interest claim.
[Buyer] has not sufficiently demonstrated that it may rely on a legal defense against the bills of exchange arising out of the main transaction.
The burden of proof and substantiation for the existence of a defense in relation to the main transaction must be borne by the debtor of the bills due to the abstract character of the claim arising out of the bill of exchange (Baumbach/Hefermehl, Wechselgesetz und Scheckgesetz, 17th ed. Art. 17 WG paras. 67 et seq.). This is [Buyer] at hand. It was thus [Buyer]'s duty to demonstrate that it was entitled to rely on either the defense of unjustified enrichment, the defense of misuse of legal rights or a defense or the defense of purposive limitation of the bill's use (Baumbach/Hefermehl, Art. 17 WG paras. 67-67c).
[Buyer] has not demonstrated the existence of any of these defenses.
The main transaction -- delivery and installation by [Seller] of furnishings for [Buyer]'s ice-cream parlor in Saarlouis, Germany -- is to be considered under the CISG.
According to Art. 1(1)(a) CISG, the Convention applies to contracts of sale of goods between parties whose places of business are in different States when the States are Contracting States. In the case at hand, [Seller] has its place of business in Italy and [Buyer] has its place of business in Germany. The Federal Republic of Germany is a Contracting State since 1 January 1991 and Italy is a Contracting State since 1 January 1988 (cf. Staudinger/Magnus, BGB, 13th ed., Einleitung zum CISG para. 18). The nationality of the parties to the contract is irrelevant (Art. 1(3) CISG). In general, contracts for the supply of goods to be manufactured or produced are to be considered sales. In the present case, a contract for the supply of goods to be manufactured or produced has been concluded as underlying the issuing of the bills of exchange.
Pursuant to Art. 38 CISG, the buyer must examine the goods, or cause them to be examined, within as short a period as is practicable in the circumstances. Under Art. 39(1) CISG, the buyer loses the right to rely on a lack of conformity of the goods if he does not give notice to the seller specifying the nature of the lack of conformity within a reasonable time after he has discovered it or ought to have discovered it. The term "lack of conformity" embraces in particular material and qualitative defects (Staudinger/Magnus, Art. 39 CISG para. 10). If the buyer has examined the goods and if it expressly accepts the goods from the seller as being in conformity with the contract, the buyer also loses its right to complain within reasonable time about such defects which were determinable during the examination. Otherwise, the buyer would act in contradiction to its own conduct and thus violate the duty under Art. 7(1) CISG to act in accordance with good faith (Staudinger/Magnus, Art. 39 CISG para. 20).
have not been referred to in the agreement of 21 February 1994. If it had been the case that these deliveries had still not been made until that date, [Buyer] would have had to be aware of it. In case these partial deliveries had not been made, [Buyer] would surely not have agreed to settle the residual price of DM 325,700 by way of 19 individually designated bills of exchange. Thus, the Court considers the agreement of 21 February 1994 as an implied acknowledgement on the part of [Buyer] that [Seller]'s performances have been in conformity with the contract.
[Buyer] could have been entitled only to rely on lacks of conformity which arose after 21 February 1994 within the two-year period of Art. 39(2) CISG. [Buyer]'s submissions in its memorandum of 18 December 1995, p. 2 are insufficient to comply with the requirements of a proper notification of non-conformity.
The buyer must specify the nature of the lack of conformity. The purpose of this requirement is to inform the seller in such a way that he can readily ascertain how he should react, e.g., to effect repairs, make additional substitute delivery or conduct an examination of the goods on his own. The lack of conformity must be specified in its character and extent so as to enable the seller to take the corresponding decision. Flat statements about the lack of conformity do not suffice. [Buyer]'s complaints and notifications as a whole are flat and lack substantiation. It has not been substantiated that there was improper wood treatment concerning the tables. The same holds true for [Buyer]'s further assertion that glue was improperly applied and that this caused almost all edges to burst. [Buyer]'s further submission that all chairs had a defective upholstery is unintelligible, as well. It has not been communicated which wooden enclosure was allegedly poorly glued and burst at various spots. Apparently, [Buyer]'s notifications about the lacks of conformity were also given too late. [Buyer] had to notify [Seller] immediately upon the first appearance of such defects in order for the latter to examine and remedy any lacks of conformity.
[Buyer] would have had to demonstrate why compressors of the cooling cabinet formed part of [Seller]'s obligation to deliver. According to the wording of the contract, [Seller] was not obliged to deliver compressors.
Moreover, [Seller] has not promised to remedy the lacks of conformity in its letter dated 16 December 1994. This letter merely refers to the bills of exchange which became mature on 30 October 1994 and on 30 November 1994 over DM 20,000 each. It is further mentioned in the letter that the two withdrawn bills of exchange worth DM 10,000 and DM 20,000, and which became mature on 30 September 1994, were still to be renewed. The letter is not concerned with the remedy of lacks of conformity.
ses against the bills of exchange arising out of the main transaction, the provisional judgment from the proceedings based on bills of exchange is to be upheld. The reservation to that judgment is to be dispensed with.
* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff of Italy is referred to as [Seller] and Defendant of Germany is referred to as [Buyer]. Amounts in the former currency of Germany (Deutsche Mark) are indicated as [DM].

References: Art. 17
 Art. 17
 Art. 1
 Art. 38
 Art. 39
 Art. 39
 Art. 7
 Art. 39
 Art. 39