CISG CASE

Germany 31 March 2008 Appellate Court

Stuttgart
(Automobile case)

Group Members
1. Hoang Thi Nhung
2. Pham Thi Thuy Trang
3. Doan Thi Hong Chinh
4. Nguyen Thi Thuy
5. Nguyen Thuy Hanh
6. Ngo Nhat Linh
FACTS SUMMARIZATION
 #@%$!$%&@#!

PLAINTIFF DEFENDANT
LATVIAN CORPORATION GERMAN CAR DEALER
(the Buyer) (the Seller)
 A Latvian corporation and a German commercial car dealer concluded a
contract for the sale of a used car from without any prior inspection and
without giving notice to the seller that the buyer intended to use the car.
 The contract contained a note of the seller stating "no repainting". During
the first inspection of the car on 7 July 2006, the buyer noticed that the car
had been repainted.
 20/7 25/8
7/7 the buyer 11/8
maintained the buyer
the buyer initial reduced
claimed the position the claim
payment of claimed to EUR
EUR 2500 EUR 2500 1500

the buyer the seller the seller the buyer

noticed claimed that offered declared
that the was a minor reverse avoidance
car had damage transaction of contract
been caused by but refused
repainted vandalism 9/8 to pay
15/7 damage.
15/8
LEGAL ISSUES
 Whether Is
Is it
it
Whether or
or not possible
possible
not CISG is
CISG is for
for the
the
applied in buyer to
applied buyer
this
in this avoid the
the
avoid
dispute?
dispute? contract?
contract?
APPLICABLE LAW
 ARTICLE 49 (2) (b)
ARTICLE 2(a)
 

 
ARTICLE 6;7
CISG ARTICLE 8

 

ARTICLE 40
ARTICLE 74
ARGUMENT
 the Seller gave notice of appeal and
requested that the judgment of the
Court of First Instance has to be
changed.

The Buyer requests the dismissal of

the Seller's appeal. The Buyer
additionally cross-appeals for the
payment of a further EUR 1,090.51
plus 5% interest
• the Seller alleged that the parties had excluded
the application of the CISG
• the Buyer would not be entitled to rely on any
warranty rights, as the repainting would be
included in the (undisputed) exclusion of any
warranty.

• The Buyer defends the judgment of the Court of

First Instance.
• The Buyer additionally (for the first time)
contests that the Seller had not been aware of
the repainting prior to the Buyer's notice.
• the Buyer would not be
entitled to rely on a breach of
contract which had not been
present or at least had not
been fundamental - as Buyer
had failed to give timely
notice.
• the Buyer - as well for the first
time - alleges that it had
already given notice of the
repainting on 7 July 2006 via
telephone.
• It was impossible for Buyer to
avoid the contract as the
avoidance had not been
declared within a reasonable
period of time.
• The Buyer alleges that the
Seller had refused to believe
that this defect had been
present and had not been
willing to correct it and the
Buyer's declaration of
avoidance
had to be
qualified as
timely.
FINDINGS
IN TERMS OF LEGAL
ISSUE 1

IN TERMS OF LEGAL
ISSUE 2
The court declared that the contract between the parties was governed by
the CISG.
• Both Germany and Latvia are Contracting States of the CISG. The
parties did not exclude the application of the CISG.
• When the parties stipulated the contract,
the seller was entitled to believe that the buyer was
purchasing the car for professional purposes because
it was obvious that the Buyer acted as a business
company.
• The CISG is incorporated into German law thus,
if the parties assume that German law will be
applied, this will include the CISG as well.
IN TERMS OF LEGAL
ISSUE 1

IN TERMS OF LEGAL
ISSUE 2
• The court rejected the plaintiff’s claim for restitution of the purchase price
under article 81(2) CISG and the reimbursement of the transfer and the
parking costs under articles 74 CISG

• The plaintiff lost its right to declare the contract avoided because it failed to
declare avoidance within a reasonable time according to article 49(2)(b)
CISG. The court declared that the notion of reasonable time under such
article has to be determined according to all circumstances
of the case:
1, within a short time.
2, how to re-utilize the goods delivered.
COMMENTS ON
JUGEMENTS
 1 2
We disagree with the court on the explanation of
the application of CISG. As “Jurisdiction”, according
to our view, actually has two rather significant
meanings
 One pertains directly to the authority for
someone to hear a case.
 “Jurisdiction” is also predicated on the nature of
the crime or transgression as it applies to what
sort of relevant entity may hear the case and pass
adequate sentence.
 We consider that the court should interpret the
application of CISG on the merit of the meaning
of jurisdiction, not based on the previous cases of
certain states’ expression and usage of
jurisdiction.
We agree with the court that there has not been an
effective avoidance of the contract as the buyer
failed to give notice thereof within "reasonable
time" (Article 49(2)(b) CISG)
• The buyer took too much time to declare the
contract avoided
• There were truly no special reasons which could
justify an extension of the period to over two and
a half months.
 However, the court did not put that fact into
consideration when resolving the case but merely
focused on interpreting the Article 49(2)(b) CISG
and based on which to come to the conclusion
that the buyer was not entitled to rely on breach
of contract.