Data

Date:: 29-03-2006
Country:: Czech Republic
Number:: 32 Odo 725/2004
Court:: Supreme Court of the Czech Republic
Parties:: --

Keywords

CONFORMITY OF GOODS - ACCORDING TO THE CONTRACT

Abstract

[CLOUT Case 1452. Abstracts prepared by Petr Dobiáš and Šárka Bittenglová]

A Slovak seller (plaintiff) and a Czech buyer (defendant) concluded a contract of
sale on the basis of the buyer’s order for carpets. The order specified the price, the
quantity, and the purpose for which the carpets were to be used (in hotel rooms,
corridors, stairways). The goods were delivered by the seller and taken over by the
buyer who, however, did not pay the invoiced price of the goods. After the delivery
the plaintiff reduced the price due to irreparable defects of the goods detected by the
buyer. In addition, after the carpets were laid down, the defendant identified
additional defects which were making the goods less durable and increasingly worn
out. After the buyer’s report to the seller regarding the additional defects of the
goods and the claim of a 30 percent discount from the purchase price, the buyer
decided to reduce the price of the carpets unilaterally. The seller sued for payment
of the purchase price and interest.

Based on the expert statement on the carpets’ quality, the Court of First Instance
held that the quality of the goods did not comply with the standards set for a similar
typology of carpets, therefore, the defendant had reasonably applied the price’s
reduction provided for in Article 50 CISG, which enables the buyer to reduce the
purchase 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 Appellate Court reversed the decision. The court held that, in accordance with
Article 18(3) CISG, there was a valid contract of sale between the parties and that
the delivered goods should conform to the requirements specified in the buyer’s
order as provided in Article 35(1) CISG. The court found that the buyer’s request for “ADOS type carpets” implied that the buyer ordered the goods whose quality was
identified in the contract by the reference to their exact (business) name. If ADOS
carpets were not “durable” carpets by their own typology, then the seller could not
be deemed to have delivered defective goods and it cannot be concluded that the
goods should meet the standards required for “durable” type of carpets. According
to the court’s ruling, the specifications provided by the buyer were to be referred to
the size of locations where the carpets would be placed and not to their suitability
for a particular purpose. For these reasons the court ruled in favour of the seller and
ordered the buyer to pay the purchase price and interest.

The defendant appealed to the Supreme Court. Citing Article 8 CISG, the defendant
argued that after the delivery of the carpets it immediately sent notification about
the goods’ defects to the plaintiff which never objected that the carpets were
unsuitable for the purpose specified by the buyer in its order. The defendant further
stressed, with reference to Article 35(2)(b) CISG, that the plaintiff was aware of the
particular purpose of the carpets’ usage and, therefore, it had an obligation to prove
that the goods delivered were fit for this particular purpose as stated in the buyer’s
order.

The Supreme Court agreed with the decision of the Appellate Court and dismissed
the appeal by the buyer. It stressed that, in accordance with Article 18(3) CISG, the
contract between the parties was concluded when the requested goods were
provided to the buyer. and that the quality of the goods was expressly agreed by the
parties in the sense of Article 35(1) CISG by reference to the “ADOS type of
carpets”. The court came to conclusion that the application of Article 35(2) CISG
was not possible since the seller could not be liable for the defects of the goods
whose typology or parameters had been determined by the buyer. For this reason,
the buyer was not entitled to reduce the price under Article 50 CISG.

Fulltext

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Source

Original in Czech:
- available at the University of Pace Law website, http://cisgw3.law.pace.edu

Case law on UNCITRAL texts (http://www.uncitral.org/uncitral/en/case_law.html) A/CN.9/SER.C/ABSTRACTS/168}}}}