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Matched Legal Cases: ['Art. 40', 'Art. 49', 'Art. 39', 'Art. 16', 'Art. 29', 'Art. 6', 'Art 40', 'Art. 20', 'Art. 3', 'Art. 3', '§ 4', 'Art. 6', 'Art. 8', 'Art. 39', 'Art. 74', 'Art. 38', 'Art. 39', 'Art. 40', 'Art. 44', 'Art. 39', 'Art. 38']

Germany 25 November 1998 Supreme Court (Surface protective film case) [translation available] [Cite as: http://cisgw3.law.pace.edu/cases/981125g1.html] Primary source(s) of information for case presentation: Case text
- English translation Guide to links contained in case presentations
DATE OF DECISIONS: 19981125 (25 November 1998) JURISDICTION: Germany TRIBUNAL: Bundesgerichtshof [Federal Supreme Court] JUDGE(S): Unavailable CASE NUMBER/DOCKET NUMBER: VIII ZR 259/97 CASE NAME: German case citations do not identify parties to proceedings
CASE HISTORY: 1st instance LG Heidelberg 2 October 1996; 2d instance OLG Karlsruhe 25 June 1997 [reversing] SELLER'S COUNTRY: Germany (defendant)
GOODS INVOLVED: Surface protective film Case abstracts
A German seller, defendant, delivered surface-protective film to an Austrian buyer, plaintiff, for use by
the buyer's business partner. The buyer did not test the film, which had to be self-adhesive and
removable. When the film was removed from polished high-grade steel products by the buyer's
business partner, it left residues of glue on the surface. Upon being so advised, the buyer notified the
seller the next day. However, this notice was given 24 days after the film had been delivered. The
buyer paid the expenses of removing the glue residue and brought a claim for reimbursement of these
expenses against the seller. The appellate court had dismissed the buyer's claim (see Case No. 230)
and the buyer appealed further.
The Supreme Court reversed the appellate court's decision and allowed the buyer's claim. It confirmed that the CISG is applicable if the parties have chosen, even by means of standard
contractual provisions, the law of a Contracting State to govern their contract (article 1(1)). The court found that the seller had waived its right to rely on articles 38 and 39 of the CISG. It stated
that a seller can waive its rights not only expressly but also in an implied manner. The preconditions
for an implied waiver are specific indications that would cause the buyer to understand the seller's
action as a waiver. The fact that a seller enters into negotiations over the lack of conformity of the
goods need not necessarily be regarded as a waiver, but should be considered in conjunction with the
circumstances of each case. In this case, negotiations as to the amount of damages and the manner in
which damages should be paid had taken place between the parties over a period of 15 months, during
which time period the seller had not reserved the right to rely on articles 38 and 39 of the CISG. Furthermore, at the buyer's request, the seller had paid the expenses of an expert. Moreover, the
seller had offered damages amounting to seven times the price which the seller had received for the
surface-protective film. The court held that, from the buyer's point of view (article 8(2) and (3)
CISG), it could only be understood that the seller would not, at a later point of time, rely on articles
38 and 39 of the CISG.
The court left open the issues of whether examination under article 38 of the CISG should have
included a test treatment by the buyer and whether the buyer had had a reasonable excuse for failure
to give notice within the required period of time (article 44 CISG). It also left open the issue of
whether the seller had lost the right to rely on the provisions of articles 38 and 39 by means of article
40 of the CISG.
APPLICABLE CISG PROVISIONS AND ISSUES Key CISG provisions at issue: Articles 6 ; 8(2) and 8(3) ; 38(1) ; 39(1) [Also cited: Articles 7(1) ; 35 ; 36 ; 40 ; 44 ; 74 ; 80 ] Classification of issues using UNCITRAL classification code
8B ; 8C [Interpretation of intent based on objective standards; Interpretation in light of surrounding
circumstances: negotiations between parties to contract and conduct subsequent to agreement];
39A2 [Requirement to notify seller of lack of conformity: buyer must notify seller within reasonable
time (waiver)]
Descriptors: Applicability ; Choice of law ; Good faith ; Examination of goods ; Lack of conformity notice, timeliness ; Waiver ; Estoppel ; Intent Go to Case Table of Contents Editorial remarks
Waiver ; Intent ; Lack of conformity notice, timeliness . "The margin of discretion left to the courts through the use of terms open to interpretation can ... be insufficient to attain that which is felt to be the just, and
therefore desirable, result in a particular case. Understandably, the court will then seek
solutions that allow the circumvention of the legal rules and their perceived as harsh
consequences. In cases dealing with the failure to give proper notice, it was therefore
often claimed under ULIS that the seller could not rely on that failure because he either
knew of the lack of conformity or could not have been unaware of it.92 What was
conceived as an extreme exception became practically a regular corrective measure in
practice.93 The Bundesgerichtshof also had to repeatedly deal with this phenomenon. In a
case decided in 1989,94 the German buyer bought machines for the processing of wood
from an Italian supplier. The machines were to be partially resold in the USA but
evidently were not suitable for the voltage tension there. The issue was whether timely
and substantiated notice was given. The appellate court rejected the application of Art. 40
ULIS. The Bundesgerichtshof reversed because the seller's grossly negligent
unawareness would already be enough to exclude a claim of failure to give notice. That
was most likely the case and the action was sent back for further facts. The period of
notice for lack of conformity of the goods, which runs from the time of delivery -- under
Art. 49(1) ULIS one year, under Art. 39(2) CISG two years -- can, like the time period
for giving notice, also be perceived as being too harsh in a particular case. In such a case
the determination of whether the seller knew or could not have been unaware provides a
means of extrication.95 "Unfortunately, the Convention does not give any answers to the question, whether and when negotiations, etc. between the parties have an influence on the statutory time
periods, particularly the time period for giving notice and the statute of limitations.96 Should one desire to not let party negotiations over the buyer's claim of non-conformity
go completely without influence on these time periods, then various solutions come into consideration. In my opinion, recourse to national law is unavailable because this question
concerns a matter clearly governed by the Convention and therefore one must first attempt
to close internal gaps in conformity with the general principles of the Convention. One
principle suitable for gap-filling could be that of estoppel due to conflicting conduct, a
principle that has found expression in Art. 16(2)(b) CISG and Art. 29(2) CISG. However,
this approach, which was applied by the Arbitration Tribunal of the Federal Chamber of
Commerce in Austria,97 would not only considerably increase the uncertainties associated
with the application of the examination and notice provisions, but would also have the
unwanted side-effect of preventing negotiations.98 Preferable is therefore the solution
favored by the Bundesgerichtshof: to examine whether the seller made an
acknowledgement of proper notice or legally waived the right to claim lack of notice.99 A
basic principle of the Convention that allows a corresponding rule for gap-filling is the
principle of party autonomy found in Art. 6 CISG and in numerous other provisions. The
seller's statement that it will 'answer for and properly deal with' legitimate complaints can
therefore be interpreted as the seller's offer to waive its right to claim untimely or
improper notice, or as its acceptance of a corresponding offer by the buyer.100 Interpreting
such a reaction by the seller to a buyer's complaint about the goods as a waiver also
releases the court from the need to examine whether the buyer's objection fulfilled the
requirements of giving proper and timely notice. Naturally, the threshold for such a
waiver must not be set too low. Although primarily a question of interpretation, and
therefore a task for the trier of fact, the Bundesgerichtshof confirmed in a 1998 decision [this case] 101 the possibility of an implied waiver by the seller (while leaving open the question of
forfeiture) but insisted on clear substantiation. In the Court's view, the mere entering into
negotiations is not enough, since that might only express the seller's wish to first attempt
an amicable settlement of the dispute over the lack of conformity. Moreover, the
assumption of an implied waiver is also ruled out when it concerns rights unknown to the
other party and with whose existence that party did not reckon. In this particular case, the
long duration of the negotiations (15 months) and the fact that the seller had legal counsel,
was interpreted (from the buyer's point of view) to show an implied intention to waive by
the seller. If the seller wished to avoid such a consequence, then it could have reserved its
right, 'expressly or at least discernibly for the buyer,' to still object to the delay despite
the negotiations. With this reasoning, the Bundesgerichtshof took into consideration the
concern, also noted by the appellate court, that too generous an assumption of waiver in
negotiations could hinder the public policy goal of keeping sellers willing to negotiate.102 This decision deserves unreserved approval, and the appropriation of corresponding
solutions and formulas from internal German law is inoffensive since they ultimately are
founded on the principle of broad party autonomy common to the BGB/HGB and the
CISG."
93. See the numerous cases on Art 40 ULIS cited in Schlechtriem/Magnus, Internationale
Rechtsprechung zu EKG und EAG, 1987.
96. The UNCITRAL Convention on the Limitation Period in the International Sale of Goods of June 14,
1974 in the protocol version of April 11, 1980 recognizes the interruption of the statute of limitations
through acknowledgement of the claim, but not the tolling of the statue due to negotiations. See Art. 20
Convention on the Limitation Period. With the subsidiary application of German law, � 639(2) BGB
would presumably apply with respect to negotiations for the statute of limitations period in � 477 BGB,
which, in accordance with Art. 3 of the Contract Act, does not begin to run until notice is given. See
Schlechtriem/Schlechtriem, supra note 12, at Art. 3 VertragsG, para. 11.
99. On ULIS see BGH of 2 June 1982, NJW 1982, 2730-2732 sub II. 3 (on the seller's acknowledgement of
the buyer's claim to a substitute delivery).
German: [1999] Eildienst: Bundesgerichtliche Entscheidungen (EBE/BGH) 105; [1999] Entscheidungen zum Wirtschaftsrecht (EWiR) 257 CITATIONS TO TEXT OF DECISION Original language (German): Click here for this text (sourced from <http://www.rws-verlag.de/bgh-free/volltex/1999/vo47380.htm>) see also cisg-online.ch <http://www.cisg-online.ch/cisg/urteile/353.htm>; [1999] Aussenwirtschafliche Praxis 176; [1999] Der Betrieb (DB) 687; [1999] Praxis des Internationalen Privat- und Verfahrensrechts (IPRax) 377; [1999] Lindenmaier-Möhring: Nachschlagewerk des Bundesgerichtshofs in Zivilsachen (LM CISG) CISG no. 5; [1999] Monatsschrift für Deutsches Recht (MDR) 408-409; Neue Juristsche Wochenschrift (NJW) 1259-1261; Recht der Internationalen Wirtschaft (RIW) 385; [1999] Transportrecht, Beilage "Internationales Handelsrecht" (TranspR-IHR) 18-20; [1999] Wertpapier-Mitteilungen (WM) 868; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=356&step=FullText>
CITATIONS TO COMMENTS ON DECISION English: Witz, ICC International Court of Arbitration Bulletin, Vol. 11/No. 2 (Fall 2000) 16 n.19; Kuoppala, Examination of the Goods under the CISG and the Finnish Sale of Goods Act (2000) � 4.9 [analysis of related articles 38, 39, 40 and 44 (includes digests of relevant material in many CISG cases; also digests cases under a domestic sales code that is patterned, for the most part, after the CISG)]; Schlechtriem, in: Uniform Sales Law in the Decisions of the Bundesgerichtshof (2001), at nn.69, 101; Bernstein & Lookofsky, Understanding the CISG in Europe, 2d ed., Kluwer (2003) § 4-9 n.141; CISG-AC advisory opinion on Examination of the Goods and Notice of Non-Conformity [7 June 2004] (this case and related cases cited in addendum to opinion); [2004] S.A. Kruisinga, (Non-)conformity in the 1980 UN Convention on Contracts for the International Sale of Goods: a uniform concept?, Intersentia at 68, 106, 108; [2005] Schlechtriem & Schwenzer ed., Commentary on UN Convention on International Sale of Goods, 2d (English) ed., Oxford University Press, Art. 6 para. 14 Art. 8 para. 37 Art. 39 para. 33 Art. 74 para. 21; CISG-AC advisory opinion on Calculation of Damages under CISG Article 74 [Spring 2006] n. 100 (related cases cited in addendum to opinion)
German: Escher, [1999] Recht der Internationalen Wirtschaft (RIW) 495; Magnus, Lindenmaier-Möhring: Nachschlagewerk des Bundesgerichtshofs in Zivilsachen (LM CISG) CISG no. 5; Otte,
[1999] Praxis des Internationalen Privat-und Verfahrensrechts (IPRax) 352-356; Piltz, [1999] Transportrecht, Beilage "Internationales Handelsrecht" (TranspR-IHR) 13 [17 n.49]; Schlechtriem, [1999]
Entscheidungen zum Wirtschaftsrecht (EWiR) 257-258 Go to Case Table of Contents Case text (English translation)
The plaintiff [buyer] is domiciled in Vienna, Austria. [Buyer] produces stainless-steel sheet metal, which it then delivers to its customers for further processing. For protection against damage during transport and processing the metal is covered with self-adhesive foil that must be fully removed after processing. The [buyer] has had a business relationship for several years with the defendant [seller], who is based in Heidelberg, Germany. The [buyer] had in the past repeatedly obtained this type of protective foil from the [seller] without complaint. In March 1995, the [buyer] again ordered 7,500 square meters of foil from the [seller], which was delivered on 28 March 1995. The [buyer] inspected the delivery for completeness and exterior imperfections but did not test it. Thereafter the [buyer] used the foil for, among other things, a section of polished stainless steel sheet metal, which it then delivered to its customer, Company B. GmbH. On 20 April 1995 Company B. informed the [buyer] that after stripping off the foil "the complete adhesive residue stuck like an adhesive film on the polished surface." As a result, the [buyer] notified the [seller] on 21 April 1995 of the contract non-conformity.
Company B. cleaned the stainless-steel surface at a total expense of 492,240.- sA [Austrian shillings], which the [buyer] then reimbursed. Thereafter, the [buyer] and the [seller] sought in vain to come to an agreement concerning the settlement of damages. During these negotiations, the [seller] did not complain that it was not notified of the foil defect until 21 April 1995. In the present proceedings, the [buyer] demands reimbursement from the [seller] for the 492,240.- sA [buyer] paid as compensation to Company B. The [buyer] alleges that it gave timely notice of the defect according to the United Nations Convention on International Sales of Goods of 11 April 1980 (hereafter CISG). The [buyer] claims that the [seller]'s general terms and conditions, which provide for an eight-day notification limit, were not part of the contract. [Buyer] also maintains that the defect was not manifest until the destruction of the adhesive film was ongoing. Furthermore, the [buyer] alleges that the [seller] willfully deceived the [buyer] since the [seller] used a different adhesive than the usual, faultless, rubber adhesive. The [seller] alleges that the notice of defect was too late. [Seller] further alleges that it had previously used the type of acrylic adhesive that was used in this delivery. According to the [seller], it was not the type of adhesive, but rather it was the adhesive-charge that was used that was unforeseeably defective. In its partial judgment of 2 October 1996, the Landgericht [Regional Court] reasoned that the [buyer]'s claim was justified and ordered the [seller] to pay 35,160.- sA. Upon appeal by the [seller], the Oberlandesgericht [Court of Appeals] reversed the first judgment and dismissed the suit. The [buyer] appeals on points of law.
II. The Court of Appeals explains that the CISG applies to the legal relationship between the parties since Germany and Austria are Contracting States to the this Convention. The choice of law provision in No. 13 of the [seller]'s general terms and conditions ("German law applies") does not contradict this finding. The delivered foil did not conform to the contract under Arts. 35 and 36 CISG. The [buyer], however, did not meet its duty under Art. 38 CISG to examine the goods "within as short a period as is practicable." For the examination of the goods, it was advisable that the [buyer] undertake a trial-processing, which it should have begun within three to four days after delivery. The [buyer] would have then been able to discover the defect within a time period of at most ten to eleven days after delivery since, as noted in the expert's report from the Austrian Synthetics Institute that [buyer] submitted, the build-up of adhesive residue is visible after seven days at the latest. Consequently, the notice period of Art. 39 CISG began to run ten to eleven days after the 28 March 1995 delivery-that is to say on the 7th or 8th of April 1995. For the present case concerning non-perishable goods, a notice period of approximately eight days is reasonable. The notice of defect on 21 April 1995 was therefore several days late. Art. 40 CISG does not bar the [seller] from relying on the delay of notice since the [buyer] has not produced any proof that the [seller] knew or "could not have been unaware" of the lack of conformity of the adhesive coating. Moreover, the [buyer] was not able to refute the [seller]'s assertion that [buyer] had already repeatedly used transparent acrylic adhesive on its foil without it having built any adhesive residue. This assertion of the [seller] would indicate a defective adhesive, but not the general unsuitability of the type of adhesive. The [buyer] was not able to produce a "reasonable excuse," as available under Art. 44 CISG for failing to give timely notice. Article 44 CISG only concerns the notice period of Art. 39(1) CISG, thus it does not apply when, as here, the notice is late solely because the buyer did not conduct an orderly examination the goods as provided in Art. 38 CISG. Finally, the [seller] did not forfeit its right to object to the lateness of the notice. Even though according to Arts. 7(1) and 80 CISG, the principles of good faith apply, in this perspective it is not an impermissible exercise of rights for the [seller] to presently object to the untimely notice. This is so, notwithstanding the fact that the [seller] did not object before these proceedings, but merely negotiated over the alleged defect and settlement of damages. It is accepted under � 377 HGB [*] that holding negotiations over an alleged defect does not mean that the seller waives the objection to delay. Any other decision would mean that any willingness to negotiate, even to oblige the buyer, would put the seller in danger of losing its right to object to the delay; this would not be appropriate. Here the [buyer] did not present special circumstances, which (exceptionally) would show a clear waiver by the [seller]. Such circumstances are also not to be found in the submitted written exchanges of the parties.
It is recognized in the judgments of the Federal Supreme Court that a seller can also impliedly waive the right to object to an untimely notice of defect. The possibility of this type of waiver is especially fitting within the scope of � 377 HGB when the seller unconditionally takes back the complained-about goods, or without reservation promises to remedy the goods, or does not raise objection to the delay. Nonetheless, the mere entering into negotiations over defects asserted by the buyer is usually not to be seen as this type of waiver since the seller may thereby wish first of all to attempt to arrive at an amicable settlement of the dispute. Even the fact that the seller does not raise the objection to the delay until trial, or under circumstances not even until appeal, does not alone establish an implied waiver (see generally panel [Senat = panel of the Federal Supreme Court] judgment of 19 June 1991, VIII ZR 149/90 = BGHR HGB � 377, objection to delay 1 m.w.Nachw.). Since a general waiver of rights is not to be presumed, clear supporting facts must be presented which the buyer could understand as a waiver of rights; here the right in question is the objection to the delay by the contract partner. Accordingly, the acceptance of an implied waiver is ruled out when dealing with rights of which the other party is unaware and with which it has not reckoned (BGH [Bundesgerichtshof (Federal Supreme Court)], judgment of 16 November 1993, XI ZR 70/93 = BGHR BGB � 397, Disagio 1; judgment of 21 November 1996, IX ZR 159/95 = WM 1997, 330 under III).
V. To the extent that the case has reached the appellate level, it is ripe for a final decision. The panel has therefore itself pronounced that the [seller]'s appeal against the 2 October 1996 judgment of the Heidelberg Regional Court will be refused (� 565 section 3 n. 1 ZPO). FOOTNOTES