Data

Date:
03-11-2023
Country:
Switzerland
Number:
HG.2020.148-HGK, HG.2021.30 HGK
Court:
Handelsgericht des Kantons St. Gallen
Parties:
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Keywords

FUNDAMENTAL BREACH BY SELLER ART. 25 CISG) - BUYER ENTITLED TO TERMINATE CONTRACT (ART. 49 CISG)

AVOIDANCE OF CONTRACT - FORM AND CONTENT OF NOTICE OF DECLARATION OF AVOIDANCE (ART. 26 CISG)

EFFECTS OF CONTRACT TERMINATION (AVOIDANCE) (ART. 81 CISG) - SELLER'S DUTY TO REFUND THE PRICE PAID AND PAY INTEREST (ART. 84 CISG)

Abstract

A German company providing “e-sharing” services entered into negotiations with a Swiss seller to purchase 4,000 e-scooters, complete with replacement batteries. During extensive negotiations, the parties agreed that the e-scooters needed to be approved for use on public roads in Germany, be suitable for a sharing model, and be delivered no later than June 2019. The buyer made an advance payment of 50% of the contract price to the seller.

In May 2019, the seller delivered a prototype of the e-scooter, which turned out to be technically flawed. As a result, the buyer demanded that three prototype e-scooters, approved for use in Germany, be delivered by July 18, 2019, or else it would consider the contract terminated. The seller agreed to deliver by this deadline. However, when the three e-scooters arrived on that date were not approved for use on German roads, the buyer declared the contract terminated and commenced a lawsuit against the seller.

The Court ruled in favor of the buyer and allowed it to recover the partially contract price already paid. In its decision, the Court found that the seller had committed a fundamental breach of contract (Art. 25 CISG) because it was a fundamental requirement of the agreement that the goods be delivered to the buyer, approved for circulation in Germany, by July 18, 2019. Since the goods were not approved for use in Germany by that date, the seller had fundamentally breached the contract, which entitled the buyer to terminate the contract under Art. 49(1)(a) CISG.

Also, the Court considered that although Art. 26 CISG states that a declaration of contract termination (avoidance) is effective only when made through notice to the other party, same provision does not required the explicit use of the term “contract avoidance,” and that a buyer's notice demanding the repayment of the contract price from the seller was sufficiently clear to constitute a declaration of avoidance.

Additionally, under Art. 84(1) CISG, a seller required to refund the contract price after the contract has been terminated (Article 81(2) CISG) must also pay interest on the refunded amount, starting from the date the price was paid. The court clarified that, in the context of Art. 84(1) CISG, the date on which the price “was paid” refers to the date the seller received the payment.

Fulltext

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Source

Original in German:
- available at www.cisg-online.org}}