Source: http://cisgw3.law.pace.edu/cases/000000h1.html
Timestamp: 2017-07-25 02:45:45
Document Index: 445967931

Matched Legal Cases: ['art. 49', 'Art. 39', 'Art. 1', 'Art. 53', 'Art. 62', 'Art. 38', 'Art. 39', 'Art. 26', 'Art. 49']

[Cite as: http://cisgw3.law.pace.edu/cases/000000h1.html] Primary source(s) of information for case presentation: Case text
DATE OF DECISION: 20000000 (2000) JURISDICTION: Arbitration ; Hungary TRIBUNAL: Arbitration Court of the Chamber of Commerce and Industry of Budapest JUDGE(S): Unavailable CASE NUMBER/DOCKET NUMBER: Vb 99144 CASE NAME: Unavailable CASE HISTORY: Unavailable
SELLER'S COUNTRY: Hungary (claimant) BUYER'S COUNTRY: Another Contracting State (respondent) GOODS INVOLVED: Sticks used in the planting of grapes Classification of issues present
APPLICATION OF CISG: Yes [Article 1(1)(a)] APPLICABLE CISG PROVISIONS AND ISSUES Key CISG provisions at issue: Articles 39 ; 49 [Also cited: Articles 26 ; 38 ; 53 ; 62 ] Classification of issues using UNCITRAL classification code
49B [Buyer's loss of right to declare avoidance after delivery: failure to avoid within period specified in art. 49(2)(b)] Descriptors: Lack of conformity notice, timeliness ; Avoidance Go to Case Table of Contents Editorial remarks
Attached to the Hungarian Chamber of Commerce & Industry Decision No. Vb 99144
The published award is not dated. For reference purposes it is dated 2000]
Edited by Tamás Szabados [***]
(1)	Pursuant to Art. 39 CISG, the buyer loses the right to object to quality defect of the
goods if the buyer fails to notify the seller about that within a reasonable time after
it discovered or should have discovered such defect. Under the contract, the buyer
was obliged to notify seller about any eventual objections within 36 hours after
receipt of the goods. As buyer failed to do so, neither its claim to reduce the purchase
price, nor its intent to avoid the contract is founded. (2)	A request to supplier to take back defective goods more than a year after performance cannot be considered as a valid avoidance within reasonable time.
The parties concluded a contract on 5 February 1999, in which Claimant [Seller] agreed to
deliver to Respondent [Buyer] eight truckloads of grape sticks between February 1999 and
April 1999. The number, sizes, individual purchase price and shipment date of each delivery
were detailed in the contract. The parties agreed that the purchase price must be paid by
[Buyer] to [Seller]'s bank account, against [Seller]'s invoice, within 30 days after the invoice
date, by wire transfer.
Concerning receipt of the goods the parties agreed that: "Receipt and qualification of the goods shall be performed by buyer immediately after
the goods are loaded off. In case of any complaints, buyer must send a notification to
seller within 36 hours. The goods subject to the complaint must be stored until an
agreement is made concerning settlement of the complaint."
In the contract, parties agreed to submit eventual legal disputes to the "unbiased Court of
Arbitration attached to the Hungarian Chamber of Commerce and Industry."
On 2 March, 4 March and 14 March 1999, [Seller] dispatched three truckloads of grape sticks with
33,600 pieces of 800 x 30 x 30 mm in each truckload.
[Buyer] did not pay the invoices, and, according to the documents, nor did [Buyer] present
any written quality complaints. [Buyer] did, however, note in general that, in its opinion, the
three truckloads of delivery do not correspond with the contractual requirements, therefore,
[Buyer] suggested a reduction of the item price, but did not pay even the reduced amount [Buyer] himself suggested. The exact complaint presented was that, due to the fact that certain lots
collapsed, this made offloading more expensive. But, in spite of several requests, [Buyer] did
not even pay the purchase price reduced by the extra offloading costs acknowledged by
After these events, [Seller] submitted its claim to the arbitral tribunal. [Buyer] did not make
any declaration after receipt of the [Seller]'s claim: no counterclaim was filed and [Buyer]
failed to appoint an arbitrator. In addition, [Buyer] was not represented at the hearing. In its
French letter sent after receipt of the minutes of the hearing, [Buyer] reiterated its complaint
that the goods delivered did not conform to the contract, and offered to have [Seller] take the
[Seller]'s claim is mostly founded.
With regard to the fact that places of business of the two contracting parties are in different
countries, namely in countries which are signatories of the UN Convention on Contracts for
the International Sale of Goods concluded in Vienna on 11 April 1980 (hereinafter: CISG), enacted in Hungary by Legal Decree No. 20 of 1987; therefore, the CISG shall govern the
contract as set out in Art. 1(1) CISG.
Pursuant to Art. 53, the buyer must pay the price for the goods and take delivery of them as
required by the contract and this Convention. [Buyer] took delivery of the goods but failed
to pay the contract price. In case of failure to pay the purchase price, the seller may require
payment of the purchase price pursuant to Art. 62 CISG, unless the seller has resorted to a
remedy which is inconsistent with this requirement. As evidenced by the exchange of letters of the parties, [Buyer] raised two claims against the
purchase price claim of the [Seller]: First, [Buyer] claimed that the goods were non-conforming, consequently, requested a
price reduction, and, in its letter sent to the arbitral tribunal, indicated that it does not wish
performance of the contract concerning the disputed goods, which may indicate an eventual
intent of avoidance; Second, it was also mentioned that extra offloading costs were incurred due to the fact
that some lots collapsed, which would entail a claim for damages on the part of the [Buyer].
During the proceedings, [Buyer] referred solely to its claim concerning defective
performance, therefore, the arbitral tribunal examined this claim in particular and found that
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, and pursuant to Art. 39, 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. In accordance with these provisions, the
contract stated that the buyer shall qualify the shipments immediately after offloading, and
notify the seller about any complaint within 36 hours after delivery of the goods. According
to the available data, [Buyer] failed to perform this obligation. Up to this date, [Buyer] failed
to send a notification which could serve as a factual basis for a quality complaint. Therefore,
[Buyer] may not enforce its complaints arising out of defective performance: neither the price
reduction, nor the avoidance claim can be substantiated. Concerning the avoidance claim, the arbitral tribunal refers to Art. 26 CISG which
provides that a declaration of avoidance of the contract is effective only if made by notice
to the other party, and Art. 49(2)(b) provides that the buyer loses the right to declare the
contract avoided unless he does so in respect of any breach other than late delivery, within
a reasonable time after he knew or ought to have known of the breach. The arbitral tribunal
finds that the notification did not take place for more than a year after performance, therefore,
it cannot be considered as a valid and timely avoidance.
* All translations should be verified by cross-checking against the original text. In this
presentation, Claimant is referred to as [Seller] and Respondent is referred to as [Buyer].
*** Tamás Szabados is a Ph.D. candidate at Eötvös Lóránd University, Hungary. Currently, he is an LL.M. student at University College, London.
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