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Switzerland 27 April 2007 Canton Appellate Court Valais (Oven case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/070427s1.html]
DATE OF DECISION: 20070427 (27 April 2007)
JUDGE(S): Jean-Pierre Derivaz (président); Fran�oise Beimer Fitoussi, Stéphane Spahr (juges)
CASE NUMBER/DOCKET NUMBER: C1 06 95
GOODS INVOLVED: Kitchen equipment
SWITZERLAND: Cantonal Court of the Canton of Valais, 27 April 2007 (Oven case)
CLOUT abstract no. 934
The case under consideration concerned legal proceedings brought by an Italian seller of cooking accessories against a hotel business in Valais. The seller sought payment of the sale price of an oven, while the defendant asserted warranty claims.
The court determined the sale price on the basis of the following argument: When a buyer placed an order for goods of a kind that the buyer had never purchased and without any reference to the price, the order constituted an invitation to make an offer and the seller made a proposal to enter into a supply contract. The buyer assented to the offer by accepting the goods, either using them or reselling them. If the seller did not indicate the price of the goods supplied, it was presumed to refer to the price normally charged.
In the present case, the court concluded that the amount claimed by the plaintiff was almost 30 per cent lower than the list price and hence of the market price, so that the sale was deemed to have been concluded at the price thus requested.
The court held that the CISG did not contain any rules on the currency in which payment had to be made or on lawful methods of payment. In the absence of any contractual provisions specifying the currency, that question was governed by national law as determined by the conflict rules. In the light of those considerations, the claim submitted in Swiss francs was granted in euros.
With regard to the warranty claims asserted by the defendant, the court commented on the CISG rules applicable to defect warranties. Its deliberations included a brief analysis of judicial practice on determination of the question of the time limit for giving notice within the meaning of article 39 (1) CISG. However, that analysis was of no specific significance since the court concluded that the defendant had in any event forfeited any defect warranty rights owing to expiry of the two-year period specified in article 39 (2) CISG.
The plaintiff obtained payment of interest on arrears, pursuant to articles 78 and 59 CISG. The amount was fixed in accordance with national law as determined by Swiss private international law.
Key CISG provisions at issue: Articles 4 ; 8 ; 18 ; 25 ; 35 ; 38 ; 39 ; 46 ; 48 ; 49 ; 55 ; 78 [Also cited or relevant: Articles 7 ; 14 ; 37 ; 40 ; 47 ; 50 ; 51 ; 52 ; 53 ; 54 ; 58 ]
4A ; 4B [Scope of Convention (issues covered): burden of proof; Scope of Convention (issues excluded): agency, capacity, currency of payment];
18A2 [Criteria for acceptance of offer: conduct indicating assent];
46B ; 46C [Buyer's right to require performance: requiring delivery of substitute goods; Right to require repair of non-conforming goods];
48A [Seller's right to remedy any failure to perform: cure by seller after date for delivery];
Descriptors: Scope of Convention ; Agency ; Currency issues ; Burden of proof ; Intent ; Offers ; Acceptance of offer ; Fundamental breach ; Avoidance ; Conformity of goods ; Examination of goods ; Lack of conformity notice, timeliness ; Lack of conformity notice, specificity ; Specific performance ; Cure ; Substitute goods ; Open-price contracts ; Interest
Original language (French): CISG-online.ch website <http://www.globalsaleslaw.com/content/api/cisg/urteile/1721.pdf>; SZIER (2008) 184-187
Tribunal cantonal Valais, Second Civil Court
27 April 2007 [C1 06 95]
By statement of claim dated 5 October 2004, Plaintiff of Italy [Seller] brought an action against Defendant of Switzerland [Buyer], claiming payment of 10,151.50 Sf [*] plus interest of 5% running from 8 May 2002. In its response dated 21 January 2005, [Buyer] requested the rejection of the claim, including costs and expenses.
During the preliminary hearing of 6 April 2005, the parties introduced the means of evidence. In addition to the deposit of documents, the taking of evidence consisted in witness examinations and the interrogation of the parties.
Closing the hearing of evidence, the district judge of Sierre referred the records of the case to the Tribunal cantonal on 9 June 2006.
REASONING OF THE TRIBUNAL CANTONAL
I. Ruling on the facts
1. a) [Seller]'s business consists of manufacturing, repairing, acquiring and selling kitchen equipment.
[Buyer] manages Public Utility E in ___. F presides over the board of directors of the company as sole signatory. Mrs. F also manages the company Hotel G, which operates a hotel of the same name. Mrs. F's husband, H, is the manager of this hotel. At the time in which the facts of this case are placed, Mr. H was also the commercial manager of Public Utility E. He was authorized to give orders to the personnel of both companies. Between 2001 and 2003, I worked as executive chef in Hotel G. He was, among other things, responsible for the facilities, the materials and the purchases for the kitchen of Public Utility E.
At a time not documented in the records of this case, but in any case prior to March 2002, [Seller] maintained contractual relations with Hotel G, and even with [Buyer]. On the occasion of works having been carried out at the Hotel G, Executive Chef I had, in particular, invited [Seller] to make offers regarding kitchen equipment. Hotel G accepted these offers by returning them to the offeror, signed and stamped by the company. The price of the material delivered by [Seller] amounted to about 60,000 to 80,000 Sf.
b) On Friday, 8 March 2002, the oven in the kitchen of Public Utility E had a breakdown. In the afternoon, Executive Chef I asked [Seller] to repair the defective equipment or to replace it. This was one day before the weekend, in the middle of the high season; urgent action was required. Under circumstances not documented in the records of the case, Executive Chef I rejected the repair of the oven. K, representative of [Seller], contacted its oven supplier, Company L in ___. Talking to the sales manager M, K indicated the reasons why it was necessary to deliver a replacement oven to Switzerland the next day (M, file 4, p. 166: "... I remember that the oven of the end customer did not work anymore and that it had to be replaced urgently."). Company L only had one oven available, displayed in its exhibition hall. K proposed this oven -- of the brand and type Lainox ME 110 P, to Executive Chef I. As the person responsible for the kitchen facilities at Public Utility E, after consulting with Mr. H, the manager of Hotel G -- who authorized him to proceed -- Executive Chef I accepted K's proposal.
On Saturday, 9 March 2002, at 7 h 50, [Seller]'s representative K took possession of the oven in dispute from Manufacturer L. The manufacturer handed out the transport document. It specified that the article had been sold (document 5, p. 17: "causale del trasporto: Vendita" ["reason for transportation: Sold"). Afterwards, K headed to Public Utility E. There, K discovered that, due to its volume, the equipment could not fit through the kitchen door. The parties agreed to postpone the installation. In the meanwhile, Executive Chef I placed the oven in the localities of Hotel G. The day before Easter -- 31 March 2002 -- the employees of that company broke the embrasure of the kitchen door at Public Utility E and could thus install the oven. During transport they damaged the handle bar of the oven. A few days later, [Seller]'s representative K repaired the oven and put it into operation.
For about 15 to 30 days the oven worked well. Then, the users were confronted with a breakdown caused by the relay. [Buyer] asked [Seller] to repair the defect; the technician proceeded with the repair. Thereafter, Executive Chef I "finished the season" without being aware of any further breakdowns.
In January 2003, personnel of Hotel G dismantled the oven. On 4 February 2004, Company O Professional Kitchens S.A. estimated the repair costs to be 2,152 Sf for the "combi-steamer" which "contains one main motor (...), 1 supporting motor (...), 1 supporting internal motor (...), 1 joint motor (...), 1 turbine of 300 mm diameter, 1 fan (...)". The company also made an offer to [Buyer] with regards to a second-hand steam and hot air oven of the brand Lainex. According to P, who is the manager of O Professional Kitchen S.A., the oven in dispute was inside the premises when the company's technician made the estimate of the costs. After that, [Buyer] did not mandate O Professional Kitchens S.A. to repair the oven.
c) [Seller] had paid Manufacturer L the price of the oven Lainox ME 110P, which according to the catalogue amounts to 9,813 €.
On 8 March 2002, [Seller] sent [Buyer] the bill for the oven in dispute, with an amount of 6,972.17 €, payable within 60 days. By courier of 23 May and 9 July 2002, [Seller] addressed reminders to [Buyer]; referring to a request from Grand Hotel Q by Mrs. F, [Seller] confirmed that the oven was subject to a guarantee of 12 months, starting from 8 March 2002. On 4 December 2002, [Seller] ordered [Buyer] to pay the amount of 6,972.17 € within 15 days, failing which [Seller] would take legal action. Following this, [Seller] mandated Company R to proceed with the debt collection. On 21 January 2003, R thus claimed from [Buyer] the payment of 6,972.17 € plus default interest and compensation for the "monetary re-evaluation" -- = 246.41 € -- and also "agency fees" -- 1,949.65 €.
S, acting on behalf of [Buyer] answered on 23 January that the [Seller]'s claims are contested. In accordance with what had been agreed, in S' view, S requested the [Seller] to take back the oven and to repair the damage caused during the delivery.
On 19 February 2004, [Seller] had [Buyer] notified of a summons to pay, issued in the debt collection procedure No. 86309 at the Office des Poursuites [*] in Y, about a sum of 10,151.50 Sf, with interest of 5% running from 8 May 2002. [Buyer] filed an objection.
d) H, the manager of Hotel G, did not participate in the precontractual negotiations. He did not know the "exact discussions" between Executive Chef I and [Seller]'s representative K. Under these circumstances, he was not even able to tell whether [Buyer] [Translator's note:[Seller] must have been intended here.], "given the good commercial relations", delivered the oven in dispute "without obligation". Mr. H, nevertheless, stated that, if he had bought an oven, he would have solicited offers from other companies. H stated that [Buyer] had not authorized Executive Chef I to buy a new oven.
Mrs. F, manager of the company Hotel G, also did not intervene during the contract conclusion. Executive Chef I certainly did not affirm to her that [Seller] was unwilling to replace the oven free of charge; on the other hand, he also did not indicate a purchase price or rental fee. With regards to the previous contractual relations and the works Mrs. F wanted to mandate [Seller] with, she thought that "it was normal" that [Seller] "would bail them out for free". Mrs. F took notice of [Seller]'s claims when she received the courier of 23 May 2002.
e) It has to be determined, on the basis of the circumstances of the case, whether the parties agreed to a complimentary concession, from [Seller] to [Buyer], of the right to use the oven or rather to a transfer of the property in the oven against payment. The following indicators (aa to ee) are sufficient to convince the court that [Seller] intended to obtain payment for the oven Lainox ME 110P, against title to the oven, and that this intention was well understood by [Buyer]. The common and real intention of the parties can therefore be inferred from the facts of the case.
aa) Executive Chef I asked [Seller] to repair the defective object or to replace it. These were the two alternatives. Notably, the person responsible for installations of the kitchen did not express the wish to benefit from the use of another oven in the meantime, in case [Seller], or an instructed third party, was not able to repair the oven.
bb) [Seller] did not have an oven, the right to use of which it could provide for a certain length of time. [Seller] had to buy the object in dispute from oven manufacturer L. After satisfying itself of the availability of the item, [Seller] informed Executive Chef I of its characteristics. The prospect accepted the offer; beforehand, he had consulted H, the manager of hotel G, who authorized him to accept the offer. If it had been a complimentary service, this authorization would not have seemed necessary.
cc) The married couple Mrs. F, manager of the company Hotel G, and Mr. H, manager of the hotel G, participated neither in the precontractual negotiations nor in the contract conclusion. Neither to Executive Chef I nor to [Seller] did they declare their intention to benefit free of charge of the use of the replacement oven during the period of repair of the defective oven; by the way, they did not establish to have any repairs undertaken.
dd) The behavior of [Buyer] after the delivery of the oven Lainox ME 110P also permits one to draw conclusions on the subject of the parties' common will which motivated the parties to conclude the contract. [Seller] sent its bill on 8 March 2002, reminders were sent by courier on 23 May and 9 July 2002. After receipt of the reminder of 23 March, Mrs. F asked for a copy of the bill. She neither contested the price in principle, nor its amount; she did not express any surprise. In October 2002, she further requested [Seller] to send her a letter of guarantee. This behavior of [Buyer], over several months, explains itself if one admits that an agreement about the price was entered into by the parties before the contract conclusion. Not until several months after the delivery of the Lainox oven, on 23 January 2003, did [Buyer] assert a contrary understanding. Mrs. F declared that, errors excepted, in summer 2002, she tried to find out why [Seller] did not retrieve the oven in dispute. This declaration is not supported by any document in the records. To the contrary, the fact that the personnel of Hotel G dismantled the oven in January 2003 and asked [Seller] to take it back at that time, contradicts the assertion of Mrs. F.
ee) The behavior of the parties, after 8 March 2002, also helps the court to reveal their intentions.
[Seller] paid the transport costs and custom duties. [Buyer] never offered to reimburse [Seller] for these costs. [Buyer] neither alleged nor, a fortiori, established the existence of any agreement to that effect. If the parties had agreed on a rental, [Buyer] would have had to bear these costs (cf., with regards to national law, Higi, Commentaire zurichois, at Art. 305 CO [*], para. 92). In the following, [Buyer] did not restitute the oven at the place where it was at the moment of the contract conclusion, although for rental contracts, if the parties did not specify anything, the obligation of restitution is a dette portable [*] (Higi, at Art. 305 CO, para. 48 et seq.).
II. Ruling on the law
2. a) Art. 1(2) LDIP [*] provides for the application of international treaties in the field of international jurisdiction, in particular, the Lugano Convention of 16 September 1988, concerning jurisdiction and the enforcement of judgments in civil and commercial matters (hereafter: the "Lugano Convention" or "CL"), entered into force on 1 December 1992 between Switzerland and Italy (Art. 61 (3) CL). Given that [Seller], whose residence is in Z [Italy], filed the claim against [Buyer], whose residence is in Y [Switzerland], the Lugano Convention is applicable (Art. 54(1) CL; ATF [*] 119 II 391 consid. 2; RVJ [*] 1995 p. 164 consid. [*] 1a).
Persons who are resident in a Contracting State, subject to contrary provisions, may be sued before the courts of that State, regardless of their nationality (Art. 2(1) CL).
b) In the case at hand, [Buyer]'s registered office is in Y [Switzerland], thus the ordinary courts of the Canton Valais are territorially competent.
According to the statement of claim, the value in dispute amounts to 10,151.50 Sf . Therefore the seized court is competent to rule on the present claim as first and sole cantonal instance (Art. 23 (1)(b) CPC) [*].
3. [Seller] alleges to have sold the oven of the brand and type Lainox ME 110P to [Buyer], for which the issued bill remains unpaid. [Seller] thus bases its action on the conclusion of a contract with the [Buyer] for the international sale of goods.
a) According to Art. 1(1)(a) of the United Nations Convention on the International Sale of Goods of 11 April 1980 (hereinafter: CISG), the Convention applies to sales contracts between parties having their places of business in different States, if these States are Contracting States. The CISG, which entered into force on 1 January 1988 for Italy and on 1 March 1991 for Switzerland, exclusively governs the formation of the contract of sale and the rights and obligations of the buyer and the seller which arise from such a contract (Art. 4 sentence 1 CISG). In contrast, subject to a express contrary provision, the CISG does not govern the validity of the contract (Art. 4(a) CISG). The representation of natural and legal persons and the capacity to contract are also excluded from the CISG's field of application (RVJ 2006 p. 189 consid. 4a; Brunner, UN-Kaufrecht-CISG, 2004, para. 6 and 33 at Art. 4 CISG; Neumayer / Ming, Convention de Vienne sur les contrats de vente internationale de merchandises: commentaire, 1993, para. 10 at Art. 4 CISG). These questions remain subject to the national law designated by the rules on the conflict of laws (RVJ 2006 p. 189 consid. 4a; Neumayer / Ming, para. 1 at Art. 4 CISG).
According to Art. 154(1) LDIP, companies are governed by the law of the State according to which they are organized, if, as in this case, they follow the rules on publication and registration prescribed by that law. The power of representation of persons acting on behalf of the company, in conformity with its organization, depends on the applicable law, subject to Arts. 156 to 161 LDIP (Art. 155(i) LDIP).
b) According to Art. 718(1) sentence 1 CO, the board of directors represents the company towards third parties. The board of directors can delegate the power of representation to one or more of its members (delegates) or to others (directors, Art. 718(2) CO).
Apparent authority (Anscheinsvollmacht) or agency by estoppel (Duldungsvollmacht) are conceivable with regards to the matter of representation of the company by its organs (RVJ 2006 p. 189 consid. 4a; Watter, Commentaire bâlois, para. 26 et seq. at Art. 718 CO; Ditesheim, La representation de la societé anonyme, thèse, Lausanne 2001, p. 76). The notion of a company organ can in fact be derived from external circumstances, applying the principle of reliance (ATF 117 II 570 consid. 3). Therefore, if a third party in good faith, an honest and reasonable business partner, follows from the appearances that the person acting on behalf of the company has the position of an organ, the person is deemed to have that status (RVJ 2006 p. 189 consid 4a; Ditesheim, op cit., p. 76). If the company does not object to the fact that one of its auxiliaries acts on its behalf in appearing like an organ, despite knowledge of this fact, the company bears the risk that the acts of representation are imputed to it as if they were the company's own acts, in the company's name and for the company's own account (ATF 96 II 439 consid. 2, and the references cited therein; RVJ 2006 p. 189 consid. 4a; Böckli, Schweizer Aktienrecht, 3rd ed., 2004, � 13 para. 410; Homburger, Commentaire zurichois, para. 1150 at Art. 718 CO; Ditesheim, op. cit., p. 77 et seq.). An organ by appearance should not be confounded with a factual organ. While the company may have an action in tort against the second, it does not, in contrast, have an action under Art. 754(1) CO against the first, since the company knows the real extent of its auxiliaries' competences (RVJ 2006 p. 189 consid. 4a; Ditesheim, op cit., p. 74 et. seq.; on the notion of a factual organ, cf. ATF 128 III 29 consid. 3).
c) In the present case, [Buyer] knew that Executive Chef I acted in its name towards [Seller]. The person responsible for the kitchen facilities at Public Utility E had in fact consulted the married couple Mrs. F, manager of the company Hotel G, and Mr. H, manager of the hotel G, during the negotiations. Mr. H, who had authority to give orders to the personnel, allowed Executive Chef I to order the oven. [Buyer] had not indicated to [Seller] its opposition to the fact that I acted on its behalf, be it that the concession was not free of charge.
Certainly, Hotel G, and even [Buyer], had accepted [Seller]'s offers by retuning them signed and stamped by the company during the previous commercial relations. However, the order of the oven was made in a situation of urgency which is sufficient to justify the renunciation of the usual procedure. Under these circumstance, [Seller] could in good faith believe that Executive Chef I had the necessary authority. Moreover, the behavior of [Buyer] before 23 January 2003, in particular with regards to the reception of the courier of 23 May 2002 -- requesting a copy of the bill and a letter of guarantee and inviting [Seller] to proceed with the repairs -- amounts to approval of the contract of sale of 8 March 2002. Therefore, [Buyer] is a party to this contract.
4. [Seller] requests payment of 10,151.20 Sf . [Buyer], by way of pleading in the alternative, relies on the provisions on non-conforming goods.
a) Art. 53 CISG provides that the buyer must pay the price for the goods and take delivery of them as required by the contract and the CISG. The CISG comprises the rule of concurrent performance ("trait pour trait" [*]) (Venturi Commentaire romand, para. 63 at Art. 184 CO, cf. also Neumayer / Ming, para. 2 at Art. 58 CISG). Subject to a contrary provision, payment therefore has to be made at the time when the goods are made available to the buyer (Art. 58(1) CISG). If the buyer passes an order of generic goods which he never acquired before and without any reference to a price, for example in case of urgency, this order constitutes an invitation to bid and the seller makes an offer to contract by delivering the goods: the buyer then accepts this offer by accepting the delivered goods, by using them or by reselling them. If the seller does not indicate the price of the delivered goods, the price is deemed to be the price currently practiced for such goods: the buyer thus bears the risk to pay more than foreseen if he accepts the delivered goods (Neumayer / Ming, para. 9 at Art. 14 CISG). Furthermore, a sales contract can be validly concluded without any reference to the price (express or implicit) by the parties; the price is then objectively determined by reference to a medium price: this is the price generally charged at the time of the conclusion of the contract for such goods sold under comparable circumstances in the country of the seller. This provision protects the buyer from paying too much; and it does not permit the buyer to benefit from a very advantageous price (Neumayer / Ming, para. 2 at Art. 55 CISG; cf. Brunner, para. 3 at Art. 55 CISG; Venturi, para. 64 at Art. 184 CO).
The CISG does not contain any provision concerning the currency or the statutory means of payment. In the absence of contractual conditions specifying the currency of the payment, it is determined by the national law, designated by the rules of conflict of laws (RVJ 2006 p. 188 consid. 6a; RVJ 1999, p. 227 consid. 3c; Neumayer / Ming, op. cit., para. 4 at Art. 54 CISG).
It is therefore necessary to refer to Art. 118 LDIP (RSDIE [*] 2005 p. 119; 2004 p. 106; RVJ 1999 p. 227 consid. 3c). According to this provision sales of movable objects are governed by the Hague Convention of 15 June 1955 on the Law Applicable to International Sales of Goods. From Art. 3(1) of this convention follows that, in default of a derogation -- which does not come into consideration in the present case -- a sales contract is governed by the national law of the country where the seller has his habitual residence at the moment of the receipt of the offer.
b) According to Art. 35(2)(a) and (b) CISG, subject to contrary stipulations in the contract, goods are not in conformity with the contract if they are not fit for the purposes for which goods of the same description would ordinarily be used or, principally, if they are not fit for any particular purpose expressly or impliedly made known to the seller at the time of the conclusion of the contract.
According to uniform law, the seller is responsible for non-conformity. Non-conformity is given if the quality or quantity of the goods (Arts. 35(1), 51 and 52 CISG), their type, condition or packaging does not correspond with was required by the contract. Non-conformity is thus a legal notion which depends on the content, whether express or implicit, of the contract (Brunner, para. 2 at Art. 35 CISG; Neumayer / Ming, para. 2 at Art. 35 CISG; Venturi, para. 24 at Art. 198 CO).
The buyer must examine the goods, or cause them to be examined, within as short a period as is practicable in the circumstances. (Art. 38(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. (Art. 39(1) CISG). Whether a time is reasonable depends on the circumstances of the particular case, notably of the usages in the trade concerned, the type of the goods and the extent of the non-conformity (Brunner, para. 12 et seq. at Art 39 CISG, Venturi, para. 20 at Art. 201 CO). For example, delays of one month in a case of the sale of blood transfusion devices (RSJ [*] 1998 p. 515) and of two weeks in a case concerning fur coats (RSDIE 1999 p. 186) have been considered reasonable, while delays of three months in a case regarding the sale of blood transfusion devices (RSJ 1998 p. 515), of one year in case of a sale, with delivery and installation, of slides (RSDIE 1999 p. 197) and seven to eight months with regards to objects made from gold (RSDIE 1999 p. 193) have been considered as too long. In any event, the buyer loses the right to rely on a lack of conformity of the goods if he does not give the seller notice thereof at the latest within a period of two years from the date on which the goods were actually handed over to the buyer, unless this time-limit is inconsistent with a contractual period of guarantee. (Art. 39(2) CISG). By handing over of the goods one understands their physical transfer and not the receipt of the documents relating to the goods; this is a peremptory time limit which does not recommence to run after the repair of defects affecting the goods (Neumayer / Ming, para. 6 at Art. 39 CISG; cf. also Brunner, para. 16 at Art. 39 CISG; Venturi, para. 21 at Art. 201 CO).
The seller is not entitled to rely on the provisions of articles 38 and 39 if the lack of conformity relates to facts of which he knew or could not have been unaware and which he did not disclose to the buyer (Art. 40 CISG).
c) The CISG recognizes the buyer's right to specific performance which consists, for example, in the repair of the goods or their replacement (Neumayer / Ming, para. 5 at Art. 46 CISG, Venturi, para. 29 at Art. 206 CO). According to Art. 46(3) CISG, if the goods do not conform with the contract, the buyer may require the seller to remedy the lack of conformity by repair, unless this is unreasonable having regard to all the circumstances. A request for repair must be made either in conjunction with notice given under article 39 or within a reasonable time thereafter. If the repair is ineffective, the breach is considered fundamental: this permits the buyer to request delivery of substitute goods (Art. 46(2) CISG) or to avoid the contract, as long as the non-conformity is not insignificant (Neumayer / Ming, para. 5 at Art. 46 CISG; Brunner, para. 21 at Art. 46 CISG).
The buyer may declare the contract avoided if the failure by the seller to perform any of his obligations under the contract or the CISG amounts to a fundamental breach of contract. (Art. 49(1)(a) CISG). The notion of a fundamental breach must be interpreted restrictively: the breach must concern the essential content of the contract and result in such detriment to the economic aim pursued by the parties as to completely deprive the buyer of the interest in the contract (Venturi, para. 30 at Art. 206 CO, cf. also Neumayer / Ming, para. 2 et seq. at Art. 25 CISG). Avoidance is an ultima ratio. (Brunner, para. 2 at Art. 49 CISG). If the seller repaired the defects before the declaration of avoidance, for example, where he discovered the fault and remedied it without delay, the buyer has received what he was entitled to according to the contract. The initial non-conformity of the goods does not constitute a fundamental breach anymore and the buyer has no longer the right to avoid the contract. On the other hand, if the buyer first renounced the avoidance of the contract by requesting the replacement of the goods or their repair and if the new delivery did not occur within the additional time fixed or if the repair was unsatisfying, the right to avoid the sales contract is resurrected (Neumayer / Ming, para. 5 at Art. 49 CISG). The right to avoidance must be exercised within a reasonable time (Art. 49(2) CISG).
If the goods do not conform with the contract and whether or not the price has already been paid, the buyer may, according to Art. 50 CISG, reduce the price in the same proportion as the value that the goods actually delivered had at the time of the delivery bears to the value that conforming goods would have had at that time. The 2nd sentence of Art. 50 CISG reserves the seller's right to a new delivery or to remedy the non-conformity according to Arts. 37 and 48 CISG; it excludes a price reduction if the seller makes use of these means. According to Art. 48(1) CISG, subject to Art. 49, the seller may, even after the date for delivery, remedy at his own expense any failure to perform his obligations, if he can do so without unreasonable delay and without causing the buyer unreasonable inconvenience or uncertainty of reimbursement by the seller of expenses advanced by the buyer. However, the buyer retains any right to claim damages as provided for in the CISG.
d) Although the CISG does not contain any express rule regarding the burden of proof, the seized judge may not base his reasoning on the national law since, indirectly, the Convention contributes to the allocation of the burden of proof by way of the terms which are used or by establishing a connection between a rule and an exception. As a general matter, the party who claims a right based on a rule has the burden to prove that the rule's conditions are met; in contrast, the other party has to prove the facts that exclude or are opposed to the application of the rule. (ATF 130 II 258 consid. 5.3; Decision 4C.105/2000 of 15 September 2000, consid. 5a in: SJ [*] 2001 I p. 304 et seq.; RVJ 2006 p. 188 consid. 5b). If the buyer rejects the goods by invoking their non-conformity the seller must prove that the goods are in conformity with the contract; if the buyer already accepted the goods the buyer would have to prove their non-conformity (Decision 4C.245/2003 of 13 January 2004 consid. 3.1). However, if necessary, the buyer also has to establish that he gave notice of the defects within a reasonable time; therefore he must prove when he became aware of the defects and to whom and how he gave notice (Brunner, para, 27 at Art. 39 CISG). A buyer who claims price reduction bears the burden of proof (Brunner, para. 10 at Art. 50 CISG).
e) In the present case, [Seller] delivered the oven Lainox ME 110P to [Buyer] on 9 March 2002. After the putting the oven into operation, the [Buyer] requested [Seller] to repair a defect related to a breakdown of the relay. After the repairs were undertaken by the technician, [Buyer] did not give notice of any further non-conformities until the filing of the [Seller]'s claim. In [Buyer]'s communication of 23 January 2003, [Buyer] certainly asked [Seller] to take the oven back, but without invoking any breach of contract, and notably not a fundamental one as required by Arts. 25 and 49 CISG.
[Buyer] asserted during the proceedings that the oven did not work anymore. It did not provide any more precise indications with regards to the discovery and notice of the defects. [Buyer] neither asked to arrange for an expert's opinion, nor, at least, for a hearing of the cooks of Public Utility E as witnesses. [Buyer] did produce a cost estimate by O Professional Kitchens S.A. of 4 February 2004. However, this document neither reveals anything about the exact nature of the defect, which probably affects the motor, nor does it show the cause of the defect or the time at which it occurred. If the oven did not work since summer 2002, or even if we consider the time from January 2003 only, it cannot be explained why [Buyer] did not undertake any repairs or make a replacement purchase until February 2004. At this time, the oven was, again, inside the Public Utility. The cost estimate of O Professional Kitchens S.A. is also insufficient to establish the reduced value of the object in dispute; the company's technician, who was not heard during these proceedings, stated different amounts without any explication whatsoever. This cost estimate is not a well-prepared and convincing document (cf. RVJ 1994 p. 307 consid. 4b). Furthermore, [Buyer] neither alleged nor a fortiori established that [Seller] was given a copy of the document before [Buyer] introduced it in these proceedings on 6 April 2005; [Buyer] also did not provide to [Seller] a sufficiently precise declaration on the nature of the alleged non-conformity, which would have been necessary in order to permit [Seller] to react by examining the oven and curing the non-conformity (cf. Ferrari, Contrat de vente internationale, 2nd ed., 2005, p. 173). On 6 April 2005, [Buyer]'s warranty rights ceased to exist because of the peremption.
When questioned on 12 September, Mr. H, the manager of hotel G, alleged that the oven of the kitchen at Public Utility E functioned defectively. This severe qualitative non-conformity is not proven. It is contrary to the records since [Buyer] used the oven in dispute. Moreover, [Buyer] did not submit that [Seller] knew the facts which caused the alleged non-conformity or could not have been unaware of them. [Buyer]'s warranty rights, invoked more than two years after the delivery, are thus irremediably expired; therefore, [Buyer] has to pay the price of the oven Lainox ME 110 P.
f) The contract of sale had been concluded urgently. Under these circumstances, even though [Seller]'s representative K did not indicate the oven's price to Executive Chef I on 8 March 2002, he is deemed to have referred to the price currently practiced, the same would apply if the contract had been concluded without fixing any price. The amount claimed by [Seller] is 30% below the catalogue price and thus the market price; therefore, the sales contract is deemed to have been concluded with a price of 6,972,17 €.
The orders were received at [Seller]'s registered office in Z [Italy]. Italian law, and therefore the currency of that country, is applicable. The [Seller]'s invoice and reminders also state Euro as the currency. The payment of the debt therefore has to be made in Euro. Principally, [Buyer] would have to be ordered to pay [Seller] the amount of 6,972.12 €. Nevertheless, subject to contrary statutory provisions, the judge is bound by the parties' claims. He can reduce them but not increase them, nor can he order something different from what has been requested or less than what has been admitted (Art. 66(5) CPC; RVJ 1991 p. 323 consid. 3d; Hohl, Procédure civile, Tome II, 2002, para. 3013 et seq.; for an example conversion of the currency of the debt, cf. ATF 72 III 100 consid. 6). In the present case, [Seller] claimed 10,151.50 Sf , after having converted this from 6,972.17 € into Swiss currency at the due date, which was 9 May 2002 (exchange rate: 1.456). Since then, the purchasing power of the Euro increased (on the notion of purchasing power cf. Spahr, Valeur et valorsime en matière de liquidations succesorales, thèse Fribourg 1994, p. 68). The court cannot go beyond the claim, therefore, commensurate with [Seller]'s claim, the amount owed by [Buyer], expressed in Euro, at the average exchange rate during the pronouncement of the judgment, has to be limited to 6,189.90 € [(6,972.17 €: 164) x 1.456].
g) The buyer who is in default of payment owes interest from the due date of the payment of the price without any request of the seller (Arts. 59 and 78 CISG; RVJ 2006 p. 188, RSDIE 2004 p. 107, and cited references; Neumayer / Ming, para. 24 at Art. 59 CISG).
Art. 78 CISG provides for the payment of interest for default without specifying the rate of interest (RVJ 2006 p. 188 consid. 6c; 1998 p. 140 consid.5b; 1995 p. 164 consid. 2c; Brunner, para. 7 at Art 78 CISG). The interest rate thus has to be determined by the law applicable according to the rules of conflict of laws (Art. 7(2) CISG; decision 4C.179/1998 from 28 October 1998, in: RSDIE 1999 p. 181; RSDIE 2005 p. 120; 2004 p. 108; RVJ 2006 p. 188 consid. 6c). In line with the articles 118 LDIP and 3 (1) of the 1955 Hague Convention on the Law Applicable to International Sales of Goods (concerning the application of these provisions, cf. RSDIE 2005 p. 120; 2004 p. 108; RVJ 2006 p. 188 consid. 6c; RVJ 1998 p. 140 consid. 5b; 1995, p. 164 consid. 2c), this is once more the national law of the country in which the seller has his habitual residence at the time of receipt of the order, hence Italian law.
According to Art. 1284(1) of the Italian civil code, the legal interest rate amounts to 5%. The treasury minister can, by decree, modify this rate every year. This way, the rate was fixed at 5% from 21 April 1942 to 15 November 1990, at 10% from 16 December 1990 to 31 January 1996, at 5% from 1 January 1997 to 31 December 1998, at 2.5% from 1 January 1999 to 31 December 2000, at 3.5% from 1 January to 31 December 2001, at 3% from 1 January 2002 to 31 December 2003 and at 2.5% since 1 January 2004 (www.studioripa.it).
h) In the case at hand, the bill was payable within 60 days. Under these circumstances, [Buyer] has to pay [Seller] the amount of 6,189.90 € with plus interest at 3% from 9 May 2002 until 31 December 2003 and at 2.5% from 1 January 2004.
5. Since [Buyer] essentially lost the case, the costs and expenses are its burden (Art. 252 (1) CPC).
a) Determined with regards to the sum in dispute, the court fees vary between 1,000 Sf and 3,000 Sf (Art. 14 (1) LTar [*]). The difficulty of the case has to be qualified as average. Also taking into account the principle of cost recovery with regards to the work performed (Art. 11 (2) LTar), the charges are fixed at 2,000 Sf which includes both the court fees of 1,271 Sf and 729 Sf for expenses in the sense of Arts. 5 et seq. LTar (being 385 Sf witnesses compensation, 244 Sf interpreter fees and [...]).
b) The attorneys' fees vary between 2,100 Sf and 3,000 Sf for the complete proceedings (Art. 32(1) Ltar). [Seller]'s lawyer essentially drafted a statement of claim, a replication and final written submissions and participated in the preliminary hearing, two instruction hearings and the final hearing. Taking into account the average difficulty of the case, the expenses owed to [Seller] are fixed at 2,400 Sf (attorneys' fees and expenditures included).
1. [buyer] has to pay the amount of 6,189.90 € to [Seller], plus interest at 3% from 9 May 2002 until 31 December 2003 and at 2.5% from 1 January 2004.
2. The legal charges have to be borne by [Buyer].
3. [Buyer] has to pay 1,000 Sf as reimbursement for the advances made and 2,400 Sf as compensation for expenses to [Seller].
As judged in Sion on 27 April 2007
An appeal in the sense of Art. 72 et seq. LTF [*] may be filed against this judgment within thirty days from the notification of the executed copy of the judgment (Art. 100(1) LTF).
* All translations should be cross-checked against the original text. For purposes of this translation, Plaintiff of Italy is referred to as [Seller] and Defendant of Switzerland is referred to as [Buyer]. Monetary amounts in the currency of Switzerland (Swiss francs) are indicated as [Sf].
Translator's note as to other terms and abbreviations: ATF = Recueil officiel des Arrêts du Tribunal fédéral [Official collection of the decisions of the Swiss Federal Supreme Court]; CO = Code des Obligations [Code of Swiss Tort and Contract Law]; consid = considérant [Reasons for the decision, refers to paragraph in the cited decision]; CPC = Code de procedure civile [Code of Civil Procedure of the Canton Valais]; Dette portable = Debt to be discharged at the creditor's place of business (however, in the case of a rental agreement, this common English translation of the phrase is inexact as there the debt is to be discharged at the place where the object was at the time of the conclusion of the contract; LDIP = Loi fédérale sur le droit international privé [Federal law on private international law]; LTar = Loi valaisanne fixant le tarif des frais et dépens devant les autorités judiciaries ou administratives du 14 mai 1998 [Law of the Canton Valais fixing the rate of costs and expenses before judicial and administrative authorities]; LTF = Loi du 17 juin sur le Tribunal fédéral [Law on the Swiss Federal Supreme Court]; Office des Poursuites = Swiss administrative authority responsible for debt collection procedures; RSDIE = Revue Suisse de droit international et européen [Swiss journal of international and European law]; RSJ = Revue Suisse de Jurisprudence [Swiss law journal]; RVJ = Revue valaisanne de jurisprudence [Swiss law journal]; SJ = Semaine Judicaire [Swiss law journal]; trait pur trait = Matching payment with delivery, concurrent performance
** Nathalie Hofmann is a law student at Humboldt University Berlin. She studied at the University of Geneva during the academic year 2007-2008 and obtained the "Certificat du droit transnational". She participated in the 15th Willem C. Vis International Commercial Arbitration Moot as a member of the Geneva team. In 2008, she won the Clive M Schmitthoff Essay Competition.