HAAGA-HELIA International Law CASES

Satu Pitkänen CISG/Trade

Analyse under the CISG the following cases:

1.

An Italian manufacturer sold leather shoes to a Danish company. After receiving the delivery the buyer learned that instead of being full leather shoes, the soles of the shoes were of artificial material. Also some of the shoes had scratches on them.

The buyer gave notice claiming that the goods were defective. The seller contends that it is the general way shoes are made nowadays and these shoes were in perfect condition when they were loaded into the truck. Now the buyer is wondering what to do, can you help?

2.

Oups Co. based in New Mexico agreed to purchase 750 mobile phones from Swedish Crazy Phone Ab. The terms of the contract were embodied in a one-page invoice prepared by Crazy Phone. A notation printed at the bottom of the invoice read:” Please send the merchandise in cardboard boxes duly strapped with metal bands via air parcel post to Albuquerque, New Mexico. Documents to Banco de Commercio De Quintano Albuquerque.

There were no provisions in the contract that specifically allocated risk of loss on the goods while in the possession of the carrier. Further, no standard trade terms were mentioned in the agreement. After Crazy Phone arranged to transport the phones from Stockholm to Albuquerque, NM, Oups Co. paid the full purchase price. When the cartons arrived in Albuquerque without any phones in them, Crazy Phone refused to refund Oups Co.’s money or to supply new phones at no charge. Who bears the risk of the lost phones?

3.

Dealer in The United States owned a cargo of 10,000 barrels of oil that had been shipped from Mexico on January 1 for arrival in the United States on February 1. On January 15, Dealer informed Buyer that the oil was en route and they concluded a contract. On arrival, inspection showed that the oil had been contaminated by seawater at some indeterminate time during the voyage. Assuming CISG applies, who bears the risk?

4.

Shoe Seller’s Case

(Germany, Court of Appeals, Frankfurt am Main, 1994, Case 5 U 15/93)

The plaintiff, an Italian business, contracted in January 1991 to sell women's shoes to the defendant, a German businesswoman. The plaintiff-seller was late in making its delivery and the shoes did not completely conform to the original sample that had been shown to the defendant-buyer. Although the defendant accepted delivery, she refused to pay on two of the plaintiff's invoices. The plaintiff then brought suit in a German court to recover the amounts it had billed the defendant on its invoices. In the defendant's answer to the plaintiff's complaint, the defendant relied on the remedy of avoidance, maintaining that she was entitled to avoid the contract and be excused from any liability on the unpaid invoices because of (a) the plaintiff's late delivery and (b) the nonconformity of the goods. The court found in favour of the plaintiff and the defendant appealed. What should the Court of Appeals rule as regards the case, and why? (Source: Ray August. International Business Law)

5.

Tai Wahl, a Hong Kong manufacturer of ladies’ wear, ordered fabric From Naomi Ltd. for the production of its fall season models. The time of delivery was agreed to be March 15. However, by the due date there was no delivery.

When enquired, Naomi Ltd. informed that they had received another, much better order from France and they would give priority to that. Tai Wahl replied that March 30 would be their absolute deadline and after that they would order the fabric from another supplier since their manufacturing process would otherwise be interrupted. Naomi did not reply to Tai Wahl but delivered the fabrics on April 15. By then Tai Wahl had ordered the fabrics from another manufacturer, and refused to receive Naomi’s delivery. Your comments?

6.

Oups Co. agreed to deliver three software programs to Hulabaloo Ab that are specially designed for Hulabaloo's business. The first was to be delivered in January, the second in February, the third in March. The program delivered in January worked fine, but the one delivered in February was defective. It not only failed to function properly, it also made the other two programs effectively worthless. Oups Co. was unable to correct the defect, and no suitable replacement could be found from another supplier. What CISG remedies are available to Hulabaloo Ab?

7.

A Canadian company received a big order from Austria. The time of delivery was very short and the seller had to use subcontractors. To make sure the delivery would be in time the Austrian company demanded an unusually hard contractual penalty clause be included in the contract. The seller used a smaller local company as a subcontractor. Soon the subcontractor encountered problems in its manufacturing process and it became obvious that the delivery would be late for 3 weeks. The seller informed the Austrian buyer about this. The buyer immediately announced that it will avoid the contract and claim for damages. Your opinion?

Satu Pitkänen 2007