Source: http://cisgw3.law.pace.edu/cases/920427s1.html
Timestamp: 2018-08-18 11:54:33
Document Index: 361179006

Matched Legal Cases: ['art. 38', 'art. 50', 'Art. 38', 'Art. 48', 'Art. 50', 'Art. 38', '§ 6', '§ 6', '§ 6', 'art. 1', 'art. 100', 'Art. 39', 'Art. 39', 'Art. 48', 'Art. 50', 'Art. 50', 'art. 78', 'art. 147']

[Cite as: http://cisgw3.law.pace.edu/cases/920427s1.html]
DATE OF DECISION: 19920427 (27 April 1992)
CASE NUMBER/DOCKET NUMBER: 6252
SELLER'S COUNTRY: Italian (plaintiff)
SWITZERLAND: Pretore della giurisdizione di Locarno 27 April 1992
Case law on UNCITRAL texts (CLOUT) abstract no. 56
The [seller], an Italian wholesaler of furniture, claimed the purchase price, which the [buyer], a Swiss retailer, refused to pay alleging lack of conformity of the goods.
The court, applying Swiss private international law, found that CISG was applicable as the law of Italy. It was held that as the [buyer] had resold some of the defective furniture without notifying the [seller] in time about the resale, the [buyer] had lost its right to rely on non-conformity of the goods (art. 38 and 39 CISG). With regard to other goods, the [buyer] was granted a reduction of price, since it had promptly notified the [seller] about the defects and the [seller] had refused to remedy the defects (art. 50 CISG). The court rejected an offer made by the [seller] during the proceedings to pay the repair cost, holding that article 50 CISG was not intended to provide for restitution of the repair cost but a reduction of the purchase price in the same proportion as the value that the goods actually delivered had at the time of delivery bore to the value that conforming goods would have had at that time.
Reproduced with permission of 17 Journal of Law and Commerce (1998) 263 at 274
In a Swiss-Italian sale of furniture at a price of 9,994,800 LIT, equal to 11,0435.60 Swiss Francs, CISG was applicable by way of Article 1(l)(b) and Swiss private international law. The parties had agreed upon Italian law, which was, in the opinion of the court, CISG, because of Article l(l)(b). The Italian seller claimed the price plus 5% interest. The court said simply: "5% interest is justified."
Key CISG provisions at issue: Articles 38(1) ; 39(1) ; 48 ; 50 ; 78 [Also cited: Articles 36(1) ; 100 ] [Also possibly relevant: Article 7 ]
39A2 [Buyer must notify seller of lack of conformity within reasonable time];
50A ; 50B1 [Buyer's right to reduce price for non-conforming goods; Formula for price reduction];
78A ; 78B [Interest on delay in receiving price, accrual of interest ; rate of interest]
Descriptors: Examination of Goods ; Lack of conformity notice, timeliness ; Cure ; Reduction of price, remedy of ; Burden of proof ; Interest
English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=41&step=Abstract>
German: Schweizerische Zeitschrift für Internationales und Europäisches Recht (SZIER) / Revue suisse de droit international et de droit européen 1993, 665-667
Italian: Diritto del Commercio Internazionale (1994) 853 No. 35
Polish: Hermanowski/Jastrzebski, Konwencja Narodow Zjednoczonych o umowach miedzynarodowej sprzedazy towarow (Konwencja wiedenska) - Komentarz (1997) 248
Original language (Italian): Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=41&step=FullText>; Spanogle/Winship, International Sales Law: A Problem Oriented Coursebook (West 2000) 316-317; [1993] Revue suisse de droit international et de droit européen (RSDIE) 665
English: Honnold, Uniform Law for International Sales (1999) 274 [Art. 38 (timeliness of examination)], 322 [Art. 48], 341 [Art. 50]; Behr, 17 Journal of Law and Commerce (1998) 266-288 [abstracts and comments on 29 interest rulings from 10 countries]; Schwenzer in Schlechtriem, Commentary on the UN Convention on the International Sale of Goods (Oxford 1998) [Art. 38] 303 n.20; for a survey of close to 100 judicial and arbitral rulings on Article 39(1), go to the 1998 Pace essay on this subject by Camilla Baasch Andersen; Kazimierska, Pace Review of the Convention on Contracts for the International Sale of Goods (1999-2000) n.197; Bernstein & Lookofsky, Understanding the CISG in Europe, 2d ed., Kluwer (2003) § 6-8 n.59; § 6-9 n.88; § 6-13 n.127; Larry A. DiMatteo et al., 34 Northwestern Journal of International Law & Business (Winter 2004) 299-440 at nn.664, 666; CISG-AC advisory opinion on Examination of the Goods and Notice of Non-Conformity [7 June 2004] (cases cited in addendum to opinion)
French: Guilbeault, Les Cahiers de Droit (Québec 1997) 315 [357 n.198]
German: Schlechtriem, Internationales UN-Kaufrecht (1996) 113 n.139-140
Pretore di Locarno-Campagna 27 April 1992
Translation [*] by Alex Turina
A. In 1989 [buyer] purchased a conference table, three sofas with four, three, and two seats, and a pouf at [�]. For this furniture, [seller] issued the following invoices:
- 19 February 1988 Lit. 4,928,000--(equal to Fr. 5,420.80) [Lit. = Italian Lira]
- 17 June 1988	 Lit. 2,470,000--(equal to Fr. 2,730.25) [Fr. = Swiss Francs]
- 1 July 1988 Lit. 2,596,000--(equal to Fr. 2,894.55)
for a total credit of Lit. 9,994,800--(equal to Fr. 11,045.60).
Notwithstanding several requests for payment that have been sent [exhibits C and D], these invoices are still unpaid, and [seller] was forced to file the present lawsuit.
B. [Buyer] counterclaims the following sums to set-off its debt towards [seller]:
-	Fr. 5,420.80 relative to an invoice issued for sitting room furniture delivered by [buyer] to a customer and then returned by the customer because is not conforming;
-	Fr. 2,700 relative to an estimate for repairing a non-conforming sofa;
-	Fr. 550 relative to a discount granted to a customer for another delivery of non-conforming furniture;
-	Fr. 450 equal to an estimate relating to another non-conforming delivery to the customer.
1. The parties clearly entered into international sales agreements, since [seller] has its relevant place of business in Italy and [buyer] in Switzerland. It is then preliminarily necessary to assess whether the present Court has jurisdiction and which law would be ultimately applicable. Pursuant to article 112 LDIP, Swiss Courts, located in the [buyer's] domicile, have jurisdiction to decide on controversies arising out of contracts. Therefore, the present Court (i.e., Pretore) has jurisdiction, since [buyer] has its relevant place of business in Tenero, Switzerland.
With regard to the applicable law, Article 118 LDIP, defers to the Hague Convention of June 15, 1955 concerning the law applicable to international contracts for the sale of goods. Pursuant to Article 3 of this Convention (v. RS 0.211.211.4), should the parties fail to specify which substantive law they intended to choose, the sale would be regulated by the internal law of the country in which the buyer has its regular domicile at the time [buyer] received the order.
In the case at bar, plaintiff [seller] having its principal place of business in Italy, substantive Italian law applies, as also stated by the parties in their written enclosures.
On 11 December 1986, Italy ratified the United Nations Convention on Contracts for the International Sale of Goods, signed in Vienna on 11 April 1980, and enacted on 1 January 1988 (hereinafter "CISG").
Applying the Convention, international law provisions lead to the application of the law of a Contracting State (CISG art. 1(1)(b)) at the time the contract was entered into (art. 100).
2. Pursuant to Article 36 of the CISG, the seller is liable for any lack of conformity which exists at the time when the risk passes to the buyer, even though the lack of conformity becomes apparent only after that time.
With regard to the delivery of the sitting room furniture [exhibit H], [buyer] claims that the goods were not conforming, in order not to pay the relevant invoice, and to avoid the contract with the seller.
The sitting room furniture was sold by [buyer] to a customer [hereinafter, the "Customer"] in Geneva. The Customer subsequently returned this furniture because it was deemed not to be conforming: in fact, the Customer claimed that the pillows were excessively big and when people sitting on their brim, the pillows would slide causing a person to fall.
From documents 1-16, relative to the correspondence in place between the parties and the Customer, it appears that [seller], after being informed of the problem, sent one of its representatives to Geneva, who even though not acknowledging the presence of defects in the delivered goods, was willing to have the stuffing replaced in order to amicably settle the controversy.
Despite this attempt, the Customer did not accept that solution and returned the sofa to [buyer].
During the inspection performed on 11 December 1991, it actually appeared that when sitting on the pillows' edge, the same slide occurred; it also occurred that the pillows placed on the sides are limp.
With regard to the defects' notification process, the CISG mostly follows the same principles already adopted under Swiss laws, so that a glance to our commentators and case law is pertinent. Under Swiss law, lack of conformity is deemed to be present even when a characteristic -- reasonably expected to be present in goods pertaining to a certain category -- is lacking; any purchased goods must be suitable to their usual intended use (TERCIER. La partie speciale du CO, page 41).
It is reasonable to expect that a sofa, of a certain quality and price, would have comfortably seated pillows that do not slide, and that it should not be necessary to continuously rearrange them in order to avoid having the sitting room appear careless. Thus, it could be concluded that the sofa is not conforming.
Pursuant to Article 38 of the CISG, however, the buyer must examine the goods, or cause them to be examined, within as short a period as is practicable under the circumstances; the buyer, also, loses the right to rely on the lack of conformity of the goods if [buyer] does not give notice to the seller specifying the nature of the lack of conformity within a reasonable time after [buyer] has discovered it or ought to have discovered it. (Art. 39 of the CISG).
In this case, an implied acceptance of the defective goods could be deemed to have occurred. Moreover, considering that the [buyer] resold the goods to a third party without examining them first (TERCIER page 42 and DTF 105 II 90). Additionally, in the case at bar the parties are both merchants and thus the duty of examination is even stricter. (see, BUCHER, Obligationenrecht, Besonderer Teil, 3rd edition, page 93 and DTF 99 II 365). Therefore, it was reasonable to expect that [buyer] at the time of the acceptance of the goods would examine them in order to verify that the goods conformed to their intended use, before reselling them to a customer.
It is not even possible to qualify the defects as "not evident", and thus not discoverable through a simple examination, yet in a second time. In fact, sitting on the sofa could have been sufficient, to account for the defect. If [buyer] failed to perform this incumbent control, [buyer] should now bear the consequences. Moreover, this is in the absence of either objective or claimed impossibility to perform.
Considering also that as this defect was deemed so substantial by [buyer], to require the avoidance of the contract, it should have been evident at the time of delivery. Therefore, the communication of the defects by [buyer], performed only after Customer complained about the presence of these defects, appears pursuant to the provisions of Art. 39 of the CISG, clearly untimely: the communication was sent on 13 June 1988 [exhibit 2] whereas the invoice -- and presumably the delivery -- is dated 19 February 1988 [exhibit H].
In addition, it must be noted that [seller] offered to repair the defect: [buyer] should have accepted this proposal, instead of seeking avoidance of its contract with the [seller] (Art. 48 of the CISG).
3. [Buyer] seeks also to have the expenses set-off relative to the repair of a different sitting room and estimated in the amount of Fr. 2,700, since it claims that the feathers, too rough for the quality of the covering, were coming out of the pillows.
Pursuant to the provisions of Art. 50 of the CISG, If the goods do not conform with the contract and whether or not the price has already been paid, the buyer may reduce the price in the same proportion as the value of the goods actually delivered at the time of the delivery bears to the value that conforming goods would have had at that time. However, if the seller remedies any failure to perform its obligations, or if the buyer refuses to accept performance by the seller, the buyer may not reduce the price.
From [exhibit E], it is clear that [buyer] urged [seller] to repossess the sofas in order to repair them. On the other hand, [buyer] failed to show any intention to remedy the claimed defect. Anyway, it was discovered in the depositions that the feathers were actually coming out from the sofas' pillows (see, deposition of witness Sutter, page 4); therefore, [buyer] may trigger the application of Article 50 of the CISG to have the price of the goods reduced.
[Seller] challenges the estimate of the repairing expenses charged to [buyer], alleging that there is no evidence of any repair.
It has to be noted that a reduction of the price pursuant to the provisions of Art. 50 of the CISG, does not represent a refund for the repairing expenses, yet would be an adjustment of the price to the actual value of the goods. Pursuant to well-settled case law, reduction of the price is performed in accordance with the following formula: reduced price: convened price = objective value of the non-conforming goods: value of conforming goods.
The objective value of the conforming goods is presumed to correspond to the agreed upon price. The difference between the value of the conforming goods and the value of the non-conforming goods does not necessarily coincide with the cost to repair, but most of the time it does. (DTF 111 II 162 = JdT 1985 I 588).
Witness [�] (interior designer) estimated the cost to repair in the amount of Fr. 2,700, equal to Fr. 900 per pillow. [Buyer] did not seek an expert's examination, but simply filed the opinion of the interior designer [�]. In accordance with well-settled case law, an appraisal report filed by one of the parties has the legal value of a mere allegation and can not be considered as evidence even if the person drafting the report is a witness in court (Rep. 1984,389). This rationale may be applied, under different circumstances, to make an estimate upon a party's request. Therefore, the estimated sum of Fr. 2,700 cannot be taken into account, considering also that it has not been explained which method of computation has been adopted. In addition, the amount of Fr. 900 for stuffing in a a pillow appears clearly excessive.
In light of the absence of other factors useful to assess the cost to repair the sofa, and of the fact that [buyer] was carrying the burden of proof, it can be equitably determined that [buyer] is entitled to the amount of Fr. 1,000.
4. With regard to the delivery made to other customers, it appears from their depositions that the furniture was not conforming: in fact, the table's and chairs' paint could be easily removed simply by attempting to clean them. In light of this last inconvenience, [buyer] granted to those customers a reduction on the price in a purely arbitrary manner.
This reduction cannot be considered equal to the diminished value of the furniture, which would justify a reduction in price of the same. Also, in this event, an expert's appraisal would have been useful, since this court cannot base its opinion on subjective standards in order to assess the actual price of the non-conforming goods. Therefore, this claim can also be assessed in the sole amount of Fr. 500.
In conclusion, [buyer] in order to have its debt, toward [seller], completely set off, claims having suffered damages as a consequence to its loss of reputation arose from the delivery of defective goods.
CPC (art. 78) provides that a court may take into account in its decision only those facts brought to its attention by [seller's] claim and [buyer's] response, whereas an allegation solely included in a conclusive pleading cannot be used as a basis for the decision (Rep. 1989, 109). It follows that [buyer] cannot introduce in the final part of the trial an allegation that has the sole purpose to add up to a total, which fully sets off the claim advanced by the opposing party.
In light of the above, [buyer's] counterclaim shall be limited to the amount of Fr. 9,500 (rounded), plus interest equal to 5% accruing from September 28, 1988 [exhibit 10].
also pursuant to art. 147 CPC and LTG,
1.	In partial grant of [seller's] claim, [buyer] shall pay to [seller] the amount of Fr. 9,500 plus interest equal to 5%, accruing from 28 September 1988.
2.	Fee and taxes equal to Fr. 700, to be anticipated by [seller], shall be paid for 1/5 by the latter and for the rest by [buyer], who shall refund Fr. 800 to [seller].