memorandum for respondent - CISG Database

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- 20 - CONTROLS Only the installation of the control system that was not finished until Claimant declared avoidance of the contract on 9 October 1996. 97 3. Claimant Cannot Reasonably Assert that His Right to Avoid the Contract is Extended Pursuant to Art. 51 (2) CISG Even if Claimant should argue that his right to avoid the contract is extended pursuant to Art. 51 (2) CISG, since the missing installation amounted to a fundamental breach of contract, this argumentation would be unfounded. Pursuant to Art. 51 (2) CISG the buyer may in situations as described by Art. 51 (1) CISG 98 declare the contract avoided in its entirety if the failure to make delivery completely or in conformity with the contract amounts to a fundamental breach of contract. Whether a breach of contract is fundamental or not depends on Art. 25 CISG. According to Art. 25 CISG a breach of contract committed by the seller is fundamental if it results in such a detriment to the buyer as substantially to deprive him of what he is entitled to expect under the contract. Thus, the existence of a fundamental breach depends on buyer’s objective interest. 99 The major part in value is the control system itself. The installation is less valuable than the control system as the contractually agreed payment by installation shows. Both parties have agreed that $400,000 of the total purchase price amounting to $500,000 should have to be paid after delivery of the control system, but only $100,000 should have to be paid after the installation. 100 Consequently, Claimant had predominant interest in the delivery of the control system. Furthermore, CONTROLS respectfully draws the attention of this Tribunal to the case decided by the State Court Heidelberg (Germany) 03.07.1992 – No. O 42/92. 101 In this case an US seller only delivered partially to a German buyer in contrast to the contractually agreement. The Court decided that such a breach of contract is not fundamental when the buyer can obtain substitute goods. In the instant case, the control system had been at the disposal of Claimant within the contractually demanded time, only the installation was missing. There were three other firms available for the installation in Mediterraneo. 102 97 Claimant’s Ex. No. 6. 98 Anton K. Schnyder & Ralf Michael Straub, in Honsell, supra note 5, at 598. 99 Fritz Enderlein, in Enderlein/Maskow, supra note 9, at 112; Ulrich Magnus, in Staudinger, supra note 43, at 216; Herber/ Czerwenka, supra note 42, at 131. 100 Statement of Claim I.4 and Claimant Ex. No.1. 101 Judgement of 03 July 1992, Landgericht Heidelberg, No. O 42/92, reprinted in UNILEX D.1992-14. 102 Procedural Order No.2, Factual Question No.14.
- 21 - CONTROLS Issue III: Claimant Was Not Authorized to Sell the Control System Pursuant to Art. 88 CISG Claimant was not authorized to sell the control system pursuant to Art. 88 CISG. Claimant neither had a right to sell the control system according to Art. 88 (2) CISG [A.] nor a right to do so according to Art. 88 (1) CISG [B.]. A. Claimant Had No Right to Sell the Control System According to Art. 88 (2) CISG Contrary to Claimant’s submissions 103 , Claimant had no right to sell the control system according to Art. 88 (2) CISG. Pursuant to Art. 88 (2) CISG a party who is bound to preserve goods in accordance with Arts. 85 or 86 CISG can take reasonable measures to sell them, only if the goods are subject to rapid deterioration or their preservation would involve unreasonable expenses. First, the control system was not subject to rapid deterioration and second, the preservation of the control system in the facilities of Claimant would not have incurred unreasonable expenses. 1. The Control System Was Not Subject to Rapid Deterioration Claimant submits to the Tribunal that the control system rapidly deteriorated in his facilities. 104 This assertion is interesting, but not supported by law or fact. First, Claimant alleges erroneously that rapid deterioration due to innovative technology was specific to the items of the agreed contract. 105 For the purpose of Art. 88 (2) CISG, rapid deterioration is physical deterioration of goods in a short period of time. 106 Furthermore the onus of proof bears the party that call to it, i.e. the seller. 107 Physical deterioration is given if goods deteriorate to such an extent in their nature and quality that they can be sold only at a greatly reduced price, e.g. food. 108 Claimant as a producer of paper and paper products surely knew how to preserve a control system reasonably. Therefore, physical deterioration like rust and soil of the control system could not be realized. Five months, from 9 October 1996 until 13 March 1997, are not enough time for such a development at a reasonable 103 Memorandum for Claimant, at 24-26. 104 Memorandum for Claimant, at 24-25. 105 Id. 106 Hans Hermann Eberstein, in Schlechtriem/Commentary on the CISG, supra note 7, at 683; Ulrich Magnus, in Staudinger, supra note 43, at 679; Karollus/UN-Kaufrecht, supra note 42, at 98; Reinhart/UN-Kaufrecht, supra note 43, at 199; Herber/Czerwenka, supra note 42, at 386; Schlechtriem/UN-Kaufrecht, supra note 42, at 192. 107 See Reinhard Jung, Die Beweislastverteilung im UN-Kaufrecht 280 (1996). 108 Hans Hermann Eberstein, in Schlechtriem/Commentary on the CISG, supra note 7, at 683; Ulrich Magnus, in Staudinger, supra note 43, at 679; Rolf H. Weber, in Honsell, supra note 5, at 1054; Albert H. Kritzer, Guide to Practical Applications of the United Nations Convention on Contracts for the International Sale of Goods 696 (A.H. Kritzer ed., 1994), [hereinafter Guide to Practical Applications].
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