Equapack, Inc. v. Medi-Machines S.A. Memorandum for Medi ...

egarding the type of goods and defect, as well as the necessities and time expenditure required,
as for instance with technical test procedures, test runs, etc.” [OGH, 14 Jan. 2002 (Austria)].
Courts have found that the buyer is obligated to conduct a test run or other diligent inspection
within one to two weeks of delivery. [Id.; OLG Koblenz, 11 Sept. 1998 (Germany); OLG
Oldenburg, 5 Dec. 2000 (Germany) (tiller machine)]. Moreover, “disorganisation on the part of
the buyer was not an aspect to be considered in determining the period practicable in the
circumstances” under Article 38(1) CISG. [OLG Koblenz, 11 Sept. 1998 (Germany)].
41. In the instant case, the machines were delivered on 21 August 2002. [Notice of Arbitration
8]. CLAIMANT admits that the machines were not installed until 30 August 2002. [Id.]. This
implies that CLAIMANT could not have conducted a test run until after 30 August 2002, nine
days after delivery—a period that has been held to be too late. [OLG Koblenz, 11 Sept. 1998
(Germany)]. Nor is there evidence that CLAIMANT performed a diligent inspection, [see supra
33-36], within the two week window provided by OLG Oldenburg, 5 Dec. 2000 (Germany).
Thus, under existing case law, CLAIMANT did not comply with the examination requirements
of Article 38 CISG. As a result, CLAIMANT is not entitled to rely on any alleged lack of
conformity.
B. CLAIMANT failed to mitigate damages.
42. The CISG states that “a party who relies on a breach of contract must take such measures as
are reasonable in the circumstances to mitigate the loss.” [Art. 77 CISG]. The UNIDROIT also
imposes a duty to mitigate damages, establishing that “the non-conforming party not liable for
harm suffered by the aggrieved party to the extent that the harm could have been reduced by the
latter party’s taking reasonable steps.” [Art. 7.4.8 UNIDROIT].
43. Here, The machines were placed in service by the end of August. [Notice of Arbitration
8]. CLAIMANT states that by the end of September the machines were so seriously corroded
that they could no longer be used. [Id.]. It can be inferred that mild corrosion must have been
present long before the end of September. This is further strengthened by CLAIMANT’s own
statement that, before the corrosion had reached its most serious stage, “the corrosion made it
impossible to clean the feeding surfaces properly.” [Claimant’s Ex. 6]. In spite of the
progressive corrosion, CLAIMANT continued to use the machines until the product paths were
so damaged that they could no longer be repaired or replaced. [Proc. Order 3, Clarification 29].
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