Consider the following extract from Case 10 - 6 The Shoe Seller's Case,

"The CISG expects a buyer to accept deliveries of nonconforming goods [unless they are fundamentally nonconforming] and to invoke remedies other than avoidance (such as reduction of the price and damages) as compensation for the defects. For example, there would be no fundamental breach of contract [and no right to avoid the contract] in cases where the buyer is able to use some of the goods."

Using your knowledge from Week 10 - Sales and Logistics and with reference to the case above, explain the CISG "Avoidance" provisions for both the buyer and seller.

The shoes seller's case

Germany, Court of Appeals, Frankfurt am Main, 1994

Case 5 U 15/93

Journal of Law and Commerce, vol. 14, p

. 201 (1995)

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 (1) the plaintiff's late delivery and (2) the nonconformity of the goods. The court

found in favor of the plaintiff and the defendant appealed.

Judgment

The sales contract entered into by the parties in January 1991 is governed by the United Nations

Convention on Contracts for the International Sale of Goods (Convention or CISG) pursuant to

Articles 1 and 100(2) of that Convention. Both Italy and Germany were then, and are now, parties to the CISG, the CISG having come into force in Germany on January 1, 1991, and in Italy on January 1, 1988.

The plaintiff's claim in this case is based upon two unpaid invoices . . . relating to the sale of women's shoes. The plaintiff seeks to recover from the defendant . . . the unpaid balance due on those invoices. The defendant does not contest the making of the contract, her acceptance of delivery of the shoes, or the amount of the purchase price.

A buyer is excused from paying the purchase price for goods if the buyer can avoid the Contract and, except for the obligation to pay any damages that may be due, the avoidance of a contract releases both parties from their contractual obligations.

The defendant's contention that she may avoid the contract because the plaintiff was late in delivering the goods is not by itself a sufficient basis for her to avoid the contract. Avoidance in such a case is only allowed after a buyer [gives a seller a Nachfrist notice and] defines an additional fixed period of time in which the seller may make delivery Because the defendant did not do so, she may not avoid the contract on this basis.

The defendant's contention that she may avoid the contract because the goods were predominantly nonconforming is also lacking in merit. According to the Convention, the tender of nonconforming goods does not amount to a failure to make delivery; it is only a breach of contract. Such a breach, moreover, may or may not be fundamental, and only in those cases in which the seller commits a fundamental breach of contract is the buyer entitled to use the remedy of avoidance.

Germany's national sales law allows a buyer (with minor exceptions) to avoid a contract if the goods the seller delivers are defective. This is not so under the CISG. The CISG expects a buyer to accept deliveries of nonconforming goods [unless they are fundamentally nonconforming] and to invoke remedies other than avoidance (such as reduction of the price and damages) as compensation for the defects. For example, there would be no fundamental breach of contract [and no right to avoid the contract] in cases where the buyer is able to use some of the goods.

Thus, if a buyer contends that there is a fundamental breach of contract because the goods

delivered do not conform to the original sample the parties relied on in making their contract, the

buyer must introduce evidence that (1) describes the exact nature of the defects and (2) shows

that the goods cannot be used in any way. If a buyer does not followthe court will be unable

to determine if there was a fundamental breach.

In this case, the defendant only testified that . . . "[the shoes] were defectively made."She said that the materials had "defects,"that the manufacture was "not uniform,"that some of the shoes were "stitched together"while others were merely "folded,"and overall that the shoes did not correspond to the original sample she had been shown. From this testimony it is not possible to determine the precise nature of the defects. More importantly, the defendant's evidence about how the shoes were different from the sample does not help us ascertain whether or not she could reasonably be expected to use the shoes.

In her allegations, the defendant . . . also complained that the shoes were made from a

material called "S. Oro"rather than "Metallic Gold Leather"and that this caused the shoes to

have heavy wrinkles rather than a smooth finish. Again, however, these allegations do not allow

us to determine if the shoesapart from their being made of different material and having a different appearancewere defective or unfit for use.

The Court of Appeals affirmed the decision in favor of the plaintiff.

Casepoint

Here the parties had a contract for a delivery of shoes from an Italian seller to a German buyer. Claiming that some of the shoes were defective, the buyer did not pay for two invoices, and the seller sued. The legal question was whether, under the CISG, the buyer had grounds to avoid the contract. The court stated that in order to use the CISG avoidance remedy, either (1) the buyer must have sent a Nachfrist notice giving the seller more time to perform or (2) the seller must have committed a fundamental breach of contract. Since neither of these tests were met here, the court ruled in favor of the plaintiff.