Larry_A_DiMatteo_-_International_Sales_Law_A_Global_Challenge-Cambridge_University_Press_2014

A. Price Reduction

Austrian case law on the remedy of price reduction is sparse, but interesting. There are three cases available; two of which deal with the specific issue of whether a price can be reduced to zero where the goods delivered are literally without any value. The first case, decided by the Supreme Court,83 concerned coffee machines with such severe defects that they could not be resold and had no value at the time of delivery. The Supreme Court referred to the diverging opinions on the matter of “price reduction to zero” in the literature and opted for the predominant view that such reduction is possible, applying the calculation method provided in Article 50. It stated that Article 50 is in no way subsidiary to the remedy of avoidance in Article 49, and that reducing the price to zero without any restrictions as to time or an ultima ratio test is consistent with the CISG’s remedial scheme. Rather, a buyer of goods without any value should not be worse off than a buyer of defective goods that still have some value.84 In the present case, the seller had not demanded the defective goods to be returned. The Supreme Court noted that if such a return was claimed, the buyer’s claim under Article 50 for recovery of the full price already paid could be dependent on the return of the goods to the seller.

A court of first instance also held that a price reduction to zero was compatible with CISG rules. However, in the particular case, the buyer’s argument that the price should be reduced to zero “because there is no market for poppy seed of the delivered quality in Austria, and the market in Eastern Europe is of no interest for the buyer” was rejected because the buyer disregarded the possibility of reselling the goods to the Eastern Europe market or cleaning the contaminated seed and subsequently selling it in Austria.85

The third case concerned the interpretation of an agreement reached between the parties about the consequences of nonconformity on an earlier delivery. The parties had agreed on a price reduction of fifty percent and on delivery of the remaining number of items of (still nonconforming) stair panels. Later, the buyer’s customer refused to pay the price. The buyer sought to recover the loss resulting from its customer’s nonpayment as damages under Article 74. The Supreme Court began with an analysis of Article 45(2) and clarified that claims for damages raised in addition to another remedy are excluded to the extent that the aggrieved party’s loss has already been covered by means of that other remedy. The court considered the fact that the seller had not succeeded in producing conforming panels over a considerable period of time, and that the parties, based on this fact, came to an agreement to reduce the price by fifty percent. The Supreme Court concluded that the issue had been settled between the parties and no further price reduction was justified. In the Court’s opinion, the settlement covered all damage claims for foreseeable consequential losses, including remedies for nonconformity invoked by the buyer’s customer. Ultimately, the agreement prevented the buyer from claiming further damages.86

83OGH, May 23, 2005, 3 Ob 193/04k, CISG-online 1041 = JBl 2005, 787 (coffee machines case), available at http://cisgw3.law.pace.edu/cases/050523a3.html.

84Cf. Schnyder and Straub in Honsell, Kommentar zum UN-Kaufrecht, Article 50, paras. 45f.

85HG Wien, May 3, 2007, 43 Cg 34/05f, CISG-online 1783 (poppy seed case), available at http://cisgw3. law.pace.edu/cases/070503a3.html (price was reduced by 10 percent).

86OGH, April 22, 2010, 8 Ob 30/10k, IHR 20011, 38 (stair-panels case).

B. Avoidance of the Contract

The CISG provisions on avoidance (Articles 49 and 64) are cited in a number of Austrian cases, but these cases make only small contributions, if any, to the interpretation and development of these rules. A number of courts noted that avoidance does not take effect ipso facto but requires a unilateral declaration by the entitled party.87 A declaration addressed to a third party (e.g., another company in the seller’s distribution network), of which the breaching party obtains knowledge indirectly and by coincidence, has been held insufficient.88 A declaration of avoidance does not require any specific form.89 The courts, however, have not yet developed a uniform view as to whether a declaration of avoidance should only be valid when made explicitly90 or whether an implied declaration may also suffice. The Supreme Court left this issue open, but added that if implied declarations are accepted, they must meet high standards as to clarity of intent to avoid.91 Where avoidance depends on the passing of an additional period for performance fixed under Articles 49(1)(b) or 64(1)(b), the standard view is that a party may declare an avoidance immediately after the expiration of the time extension. Courts have also recognized an anticipatory declaration of avoidance in the course of fixing the Nachfrist period.92 On the other hand, avoidance can also be declared at the time the action is filed in court,93 which is of practical relevance where the time limitations under Articles 49(2) and 64(2) do not apply.

In some cases, the courts particularly scrutinize whether a specific statement amounts to a declaration of avoidance.94 For example, a seller declared that if the performance was not completed at the time the Nachfrist extension expires, “we will claim damages for non-performance or avoid the contract.” The court rightly held that – due to the word “or” – avoidance had not yet been declared. However, because the buyer, in its reply, made reference to this statement and asked for a cancellation of the contract, the court held that no further declaration of avoidance was necessary.95 In another case, the seller failed to fix a Nachfrist period, but declared the contract to be avoided immediately although the requirements of Article 64(1)(a) were not met. The contract was avoided

87See, e.g., OGH, February 6, 1996, 10 Ob 518/95, CISG-online 224 = SZ 69/26 (propane case), available at http://cisgw3.law.pace.edu/cases/960206a3.html (Article 49); OLG Graz, July 29, 2004, 5 R 93/04t, CISGonline 1627 (construction equipment case), available at http://cisgw3.law.pace.edu/cases/040729a3.html (Article 64).

88OLG Linz, January 23, 2006, 6 R 160/05z, CISG-online 1377 (auto case), available at http://cisgw3.law. pace.edu/cases/060123a3.html.

89OGH, April 28, 2000, 1 Ob 292/99v, CISG-online 581 = SZ 73/75 (jewelry case), available at http:// cisgw3.law.pace.edu/cases/000428a3.html.

90In this direction: OLG Graz, July 29, 2004, 5 R 93/04t, CISG-online 1627 (construction equipment case), available at http://cisgw3.law.pace.edu/cases/040729a3.html.

91OGH, February 6, 1996, 10 Ob 518/95, CISG-online 224 = SZ 69/26 (propane case), available at http:// cisgw3.law.pace.edu/cases/960206a3.html (no doubt may remain).

92OLG Graz, July 29, 2004, 5 R 93/04t, CISG-online 1627 (construction equipment case), available at http://cisgw3.law.pace.edu/cases/040729a3.html.

93OGH, April 28, 2000, 1 Ob 292/99v, CISG-online 581 = SZ 73/75 (jewelry case), available at http:// cisgw3.law.pace.edu/cases/000428a3.html.

94See OLG Graz, January 24, 2002, 4 R 219/01k, CISG-online 801 (excavator case), available at http:// cisgw3.law.pace.edu/cases/020124a3.html and the subsequent text.

95OLG Graz, July 29, 2004, 5 R 93/04t, CISG-online 1627 (construction equipment case), available at http://cisgw3.law.pace.edu/cases/040729a3.html.

nevertheless, because the court found that the buyer implicitly consented to the declared avoidance by sending back a portion of the goods.96

Where the right to avoid the contract is governed by contract terms agreed on by the parties, these terms control.97 However, the right of avoidance cannot, in principle, be contracted out of completely. If the right to avoidance is limited the right to claim damages must be maintained.98

Article 82 also played a role in one case, where the buyer lost its right to avoid the contract by continuing to use a defective automobile after the defects had become apparent.99 In another case, involving delivery of goods by installments, the right of avoidance was lost with regard to only the first installment, but not as to future installments.100 Austrian courts have not ruled on how to determine reasonable time periods for Nachfrist extensions under Articles 49(2) and 64(2).101

C. Damages

The CISG provisions on damages, including Articles 45, 61, and 74, have been applied in a number of Austrian cases. The damage scheme, primarily based upon strict liability,102 differs from the culpa-based principle found in domestic Austrian law. Nonetheless, Austrian courts have had little difficulty in applying CISG damage rules.

Many cases, especially those decided by the Supreme Court, broadly summarize principles established in academic writing, thereby introducing these principles into national jurisprudence. In one such case, the Supreme Court stated that the CISG is based on the principle of full compensation, protecting “not only the obligee’s interest to not suffer any loss to his goods due to breach of contract (indemnity interest), but also and especially . . . the interest of receiving the benefits of proper performance of the contract (expectation interest).” This includes the nonbreaching buyer’s right, subject to the obligor’s right to cure under Article 48, to undertake reasonable measures to procure a substituted performance equivalent to what it expected from the breached contract, and then invoice the obligor the costs as damages. Article 74 also protects the aggrieved party’s interest that expenses caused by the contract do not become worthless (reliance interest). Expenses incurred because of the contract itself can be recoverable if it is determined that they would not have been incurred were it not for the obligee’s reliance

96OGH, September 11, 1997, 6 Ob 187/97m, CISG-online 340 = ZfRV 1997, 245 (carpets case), available at http://cisgw3.law.pace.edu/cases/970911a3.html. See also OGH, June 29, 1999, 1 Ob 74/99k, CISGonline 483 = TranspR-IHR 1999, 48 with a gloss by Clemens Thiele (dividing wall panels case), available at http://cisgw3.law.pace.edu/cases/990629a3.html.

97Cf. Schiedsgericht der Borse¨ fur¨ landwirtschaftliche Produkte in Wien, December 10, 1997, S 2/97, CISG-online 351 (barley case), available at http://cisgw3.law.pace.edu/cases/971210a3.html.

98Obiter dictum in OGH, September 7, 2000, 8 Ob 22/00v, CISG-online 642 = IHR 2001, 42 (tombstones case), available at http://cisgw3.law.pace.edu/cases/000907a3.html.

99OLG Linz, January 23, 2006, 6 R 160/05z, CISG-online 1377 (auto case), available at http://cisgw3.law. pace.edu/cases/060123a3.html.

100OGH, August 31, 2010, 4 Ob 98/10f, JBl 2011, 49 (old wood parquet floor case) (parquet assembled and destroyed upon removal).

101Article 49(2)(b) was touched in OGH, May 23, 2005, 3 Ob 193/04k, CISG-online 1041 = JBl 2005, 787 (coffee machines case), available at http://cisgw3.law.pace.edu/cases/050523a3.html.

102See, e.g., OGH, January 14, 2002, 7 Ob 301/01t, CISG-online 643 = JBl 2002, 592 (cooling system case), available at http://cisgw3.law.pace.edu/cases/020114a3.html; OLG Linz, January 23, 2006, 6 R 160/05z, CISG-online 1377 (auto case), available at http://cisgw3.law.pace.edu/cases/060123a3.html.

on contract performance. However, from the “viewpoint of a reasonable person under the same circumstances . . . , such expenses must have been appropriate and reasonable for the performance of the contract.”103 Where defective goods are delivered and the contract is not avoided, the buyer is entitled to claim as damages the differential between the value of goods as delivered versus the value of conforming goods.104 Contractual arrangements always prevail.105

The Supreme Court also summarized main principles of the foreseeability test established in Article 74, under which damages may not exceed the loss that the party in breach foresaw or should have foreseen at the time of the conclusion of the contract. In particular, the Court stated that:

[Article 74] does not require precise and detailed foreseeability of losses, and certainly not a numbered sum on the extent of loss. On the other hand, the invariably foreseeable possibility that a breach of contract will produce some type of loss is not sufficient. However, a (typical) loss due to non-performance is under prevailing opinion generally foreseeable. It is necessary that the obligor could recognize that a breach of contract would produce a loss essentially of the type and extent that actually occurred. Generally an objective standard is applied for foreseeability. The obligor must reckon with the consequences that a reasonable person in his situation . . . would have foreseen considering the particular circumstances of the case. Whether he actually did foresee this is as insignificant as whether there was fault. Yet, subjective risk evaluation cannot be completely ignored: if the obligor knows that a breach of contract would produce unusual or unusually high losses, then these consequences are imputable to him.106

The courts also noted that loss of profit, in the sense of the typical sales margin of a seller, is to be regarded as foreseeable by the buyer.107

A few cases deal with the provisions on the calculation of damages under Articles 75 and 76. Courts have held that Articles 75 and 76 apply only where the contract has been avoided.108 However, a later case recognized an exception, which is now shared by many courts and authors in different countries, namely that avoidance is not required prior to a substitute transaction if the party in breach refuses to

103OGH, January 14, 2002, 7 Ob 301/01t, CISG-online 643 = JBl 2002, 592 (cooling system case), available at http://cisgw3.law.pace.edu/cases/020114a3.html.

104OLG Linz, January 23, 2006, 6 R 160/05z, CISG-online 1377 (auto case), available at http://cisgw3.law. pace.edu/cases/060123a3.html.

105Cf. OGH, January 14, 2002, 7 Ob 301/01t, CISG-online 643 = JBl 2002, 592 (cooling system case), available at http://cisgw3.law.pace.edu/cases/020114a3.html (exclusion of liability for consequential damages); Schiedsgericht der Borse¨ fur¨ landwirtschaftliche Produkte in Wien, December 10, 1997, S 2/97, CISG-online 351 (barley case), available at http://cisgw3.law.pace.edu/cases/971210a3.html.

106OGH, January 14, 2002, 7 Ob 301/01t, CISG-online 643 = JBl 2002, 592 (cooling system case), available at http://cisgw3.law.pace.edu/cases/020114a3.html.

107OGH, April 28, 2000, 1 Ob 292/99v, CISG-online 581 = SZ 73/75 (jewelry case), available at http:// cisgw3.law.pace.edu/cases/000428a3.html; OLG Graz, January 24, 2002, 4 R 219/01k, CISG-online 801 (excavator case), available at http://cisgw3.law.pace.edu/cases/020124a3.html. See also OGH, February 6, 1996, 10 Ob 518/95, CISG-online 224 = SZ 69/26 (propane case), available at http://cisgw3.law.pace. edu/cases/960206a3.html.

108OGH, February 6, 1996, 10 Ob 518/95, CISG-online 224 = SZ 69/26 (propane case), available at http:// cisgw3.law.pace.edu/cases/960206a3.html; OLG Graz, January 24, 2002, 4 R 219/01k, CISG-online 801 (excavator case), available at http://cisgw3.law.pace.edu/cases/020124a3.html.

perform.109 The method established in Article 75 is characterized as a “concrete” calculation by reference to the price agreed in a substitute transaction entered into by the aggrieved party.110 Where, after collecting several offers, no better price can be achieved than in the substitute transaction, the substitute transaction was held to be made “in a reasonable manner” for the purposes of Article 75.111 On the other hand, the method of calculating damages by reference to the market price (Article 76) is characterized as an “abstract” calculation.112 In accordance with the prevailing opinion, Austrian courts hold that Article 76 can only be applied where no substitute transaction had been made.113 However, neither Article 75 nor Article 76 prevent the aggrieved party, after avoidance of the contract, from calculating damages for nonperformance “concretely” according to the general rule of Article 74.114

Finally, a handful of specific issues relating to damages have been addressed by Austrian courts. The Court of Appeal in Vienna decided that costs incurred to have a lawyer make a formal demand for payment before filing an action at court were recoverable under Article 74, subject to national rules of civil procedure. In applying Austrian law (which requires recoverable costs to be both appropriate and necessary), by analogy, the court stated that asking a lawyer to send a reminder is certainly appropriate, but it would have been cheaper and more appropriate to hire an Austrian lawyer instead of a German lawyer.115 In an obiter dictum, another court of appeal took a somewhat different approach and stated that the recovery of prejudicial costs – such as costs incurred by hiring a debt collecting agency – is exclusively governed by national rules of civil procedure.116 An Austrian arbitration court, dealing with the controversial matter of whether the rate of interest payable under Article 78 is to be calculated by way of reference to domestic law or by way of gap-filling under CISG, took the latter approach and ruled that the principle of full compensation established in Article 74 allows fixing an interest rate that corresponds to ordinary commercial bank interest.117 In another case, the Supreme

109OLG Graz, July 29, 2004, 5 R 93/04t, CISG-online 1627 (construction equipment case), available at http://cisgw3.law.pace.edu/cases/040729a3.html. The court cites Karollus, UN-Kaufrecht, 155f.; see also Schwenzer in Schlechtriem and Schwenzer, Commentary, Article 75, para. 5, and Article 76, para. 3.

110Cf. OGH, April 28, 2000, 1 Ob 292/99v, CISG-online 581 = SZ 73/75 (jewelry case), available at http:// cisgw3.law.pace.edu/cases/000428a3.html; OLG Graz, January 24, 2002, 4 R 219/01k, CISG-online 801 (excavator case), available at http://cisgw3.law.pace.edu/cases/020124a3.html.

111OLG Graz, July 29, 2004, 5 R 93/04t, CISG-online 1627 (construction equipment case), available at http://cisgw3.law.pace.edu/cases/040729a3.html.

112OGH, April 28, 2000, 1 Ob 292/99v, CISG-online 581 = SZ 73/75 (jewelry case), available at http:// cisgw3.law.pace.edu/cases/000428a3.html.

113OLG Graz, July 29, 2004, 5 R 93/04t, CISG-online 1627 (construction equipment case), available at http:// cisgw3.law.pace.edu/cases/040729a3.html. Cf. also OGH, April 28, 2000, 1 Ob 292/99v, CISG-online 581 = SZ 73/75 (jewelry case), available at http://cisgw3.law.pace.edu/cases/000428a3.html.

114OGH, April 28, 2000, 1 Ob 292/99v, CISG-online 581 = SZ 73/75 (jewelry case), available at http:// cisgw3.law.pace.edu/cases/000428a3.html.

115HG Wien, January 28, 1994, 1 R 408/93, WR 640. On the disputed matter of whether extrajudicial costs incurred in pursuing rights are recoverable under the CISG, see Schwenzer in Schlechtriem and Schwenzer, Commentary, Article 74, paras. 30 and 33; see also John Gotanda in Kroll¨ et al., Commentary, Article 74, para. 73.

116LG Leoben, October 21, 1997, 1 R 189/97d (goods not named; seller sought to apply a provision of the German Civil Code but also referred to Article 74 CISG).

117Internationales Schiedsgericht der Bundeskammer der gewerblichen Wirtschaft (Wien), June 15, 1994, SCH-4366, CISG-online 121 and 691 (metal sheet case). On this issue, see Bacher in Schlechtriem and Schwenzer, Commentary, Article 78, paras. 26–43.

Court had to identify the place of performance of the buyer’s obligation to pay damages. The Supreme Court, in ruling that damages for nonperformance of the obligation to pay the price are to be paid at the seller’s place of business,118 advanced two arguments. First, it stated that the place of performance of the secondary obligation shall be the place of performance of the primary obligation, which, in the present case, means that the rule in Article 57 applies (place of performance is seller’s place of business). Second, the Supreme Court referred to an earlier case119 where it had held that Article 57 could generally be applied by way of analogy to monetary obligations other than payment of the price. However, this leaves open the question of how the Supreme Court would decide where the two tests lead to diverging results. It is assumed here that the first test (primary obligation’s place of performance) would be applied. This solution is also the one adopted by the two CISG commentaries consulted by the Austrian Supreme Court.120

D. Mitigation of Loss

Alleging that the aggrieved party failed to comply with its duty to mitigate the loss under Article 77 seems to be a standard excuse given by parties in breach when confronted with a claim for damages. Again, however, the development of this area by Austrian jurisprudence is not particularly rich.121

A typical statement to be found in case law is that a potential measure to mitigate loss is “reasonable” in the sense of Article 77, “if in good faith it could be expected under the circumstances. This is to be determined according to the actions of a reasonable person in the same circumstances.”122 This starting point obviously invites a more detailed discussion of the principle of good faith in general, and its use in concretizing the duty to mitigate damages. But such discussion has not taken place in Austrian CISG cases. This corresponds with the finding referred to earlier, namely that Austrian courts are reluctant

118OGH, March 29, 2004, 5 Ob 313/03w, CISG-online 926 (paint mist vacuuming machine case), abstract available at http://cisgw3.law.pace.edu/cases/040329a3.html.

119OGH, December 18, 2002, 3 Nd 509/02, CISG-online 1279, available at http://cisgw3.law.pace.edu/cases/ 021218a3.html.

120Cf. Magnus in Staudinger, CISG Article 74, para. 57; Schwenzer in Schlechtriem and Schwenzer, Commentary, Article 74, para. 61 (noting that applying Article 57 by way of analogy would mean a further extension of place of jurisdiction in favor of the plaintiff).

121Apart from the issues discussed in the text, a lower court stated that Article 77 applies the concept of Obliegenheit (i.e., a duty that, if breached, does not oblige the “debtor” to pay damages, but only causes the loss of own rights); see OLG Graz, January 24, 2002, 4 R 219/01k, CISG-online 801 (excavator case), available at http://cisgw3.law.pace.edu/cases/020124a3.html (the concept is explained by Schwenzer in Schlechtriem and Schwenzer, Commentary, Article 77, para. 2). Also, it has been stated that the second sentence of Article 77 adopts the ancient concept of Culpakompensation (contributory negligence leads to a complete loss of the right to damages); see OLG Graz, September 16, 2002, 2 R 62/02h, CISG-online 1198 (garments case), available at http://cisgw3.law.pace.edu/cases/020916a3.html. Critical: Helmut Koziol, “Rechtsfolgen der Verletzung einer Schadensminderungspflicht – Ruckkehr¨ der archaishen Culpakompensation,” 6 Zeitschrift fur¨ Europaisches¨ Privatrecht 593, 594f. (1998).

122See OGH, February 6, 1996, 10 Ob 518/95, CISG-online 224 = SZ 69/26 (propane case), available at http://cisgw3.law.pace.edu/cases/960206a3.html; OGH, January 14, 2002, 7 Ob 301/01t, CISG-online 643 = JBl 2002, 592 (cooling system case), available at http://cisgw3.law.pace.edu/cases/020114a3.html. The principle of good faith is also referred to in OLG Graz, January 24, 2002, 4 R 219/01k, CISG-online 801 (excavator case), available at http://cisgw3.law.pace.edu/cases/020124a3.html.

to make the decision of cases dependent on the application of flexible concepts to which they are not accustomed.

Part of the reason for the courts’ lack of discussion on the duty to mitigate is their finding that the burden of proof is on the nonperforming party. The courts required it “to put forward detailed facts and the supporting evidence showing why the [other party] has breached its duty to mitigate damages, the possibilities of alternative conduct and which part of the damages would have been prevented by this alternative conduct.”123 Often, defenses put forward under Article 77 are unsubstantiated and consequently fail, without discussion, to meet the standards applied by the courts. In the cases where Austrian courts had to “substantively” apply Article 77, they have shown the ability to do so without difficulty. In one case, it was held that where a seller resells the goods (which the buyer neither paid for nor collected) for the same price as the seller paid to its supplier, there was no breach of a duty of mitigation.124

E. Preservation of Goods

CISG Articles 85 to 88 on the parties’ obligations to preserve the goods have rarely been applied in Austrian case law. One case decided by a lower court dealt with a “self-help sale” of the goods by the seller under Article 88. The court stated that the seller’s notice of its intention to sell was “reasonable” for the purposes of Article 88(1) if it leaves the other party enough time to prevent the sale. In accordance with Article 27, the court noted that “giving” the notice properly is sufficient (delay or arrival of the notice are not material). The party entitled to a sale under Article 88 may execute that sale itself.125 In another case, the Supreme Court referred to Articles 85 and 86, and to the principle of a right of retention to construe, by way of analogy under Article 7(2), a right of the buyer to withhold performance (payment of the price) in the case of the delivery of nonconforming goods.126

VIII. Excuse in Case of Impediment

Article 79 on the breaching party’s excuse in the case of an impediment beyond its control has played practically no role in Austrian case law so far.127 In one case the court

123OGH, February 6, 1996, 10 Ob 518/95, CISG-online 224 = SZ 69/26 (propane case), available at http:// cisgw3.law.pace.edu/cases/960206a3.html. Cf. also OLG Graz, January 24, 2002, 4 R 219/01k, CISGonline 801 (excavator case), available at http://cisgw3.law.pace.edu/cases/020124a3.html (responsibility of nonperforming buyer to demonstrate the seller’s failure to enter into a specific substitute transaction); OGH, April 28, 2000, 1 Ob 292/99v, CISG-online 581 = SZ 73/75 (jewelry case), available at http:// cisgw3.law.pace.edu/cases/000428a3.html (defense was completely unsubstantiated). On the issue of the burden of proof, see Gotanda in Kroll¨ et al., Commentary, Article 77, paras. 11–14.

124OLG Graz, January 24, 2002, 4 R 219/01k, CISG-online 801 (excavator case), available at http://cisgw3. law.pace.edu/cases/020124a3.html. See also OLG Graz, September 16, 2002, 2 R 62/02h, CISG-online 1198 (garments case), available at http://cisgw3.law.pace.edu/cases/020916a3.html (sale under Article 88).

125OLG Graz, September 16, 2002, 2 R 62/02h, CISG-online 1198 (garments case), available at http://cisgw3. law.pace.edu/cases/020916a3.html.

126OGH, November 8, 2005, 4 Ob 179/05k, CISG-online 1156 = SZ 2005/162 (recycling machine case), available at http://cisgw3.law.pace.edu/cases/051108a3.html.

127Domestic law basically applies a fault-based system of liability for damages, cf. Sections 1295 and 1298 of the Austrian Civil Code (which, however, certainly is no reason for the lack of case law in this area). On the differences, see Karollus, UN-Kaufrecht, 205ff; Willibald Posch, “Pflichten des Kaufers,¨ Rechtsbehelfe

of appeal dealt with the question of whether the seller’s supplier should be regarded as a “third person” for the purposes of Article 79(2); but the Supreme Court considered this question irrelevant and ruled that the seller is liable for nonconformity under a contractual guarantee contracted for by the parties.128

IX. Concluding Remarks

Regarding the future development of Austrian CISG case law, it is to be hoped that the courts will be more open to reviewing foreign case law in order to promote a uniform interpretation of the convention. Also, it is time for Austrian courts to overcome their traditional reluctance in applying the “flexible” concepts found in the CISG, such as “good faith” and “reasonableness,” for a number of reasons. First, there are now a deep literature and rich foreign case law that have sufficiently concretized these concepts for purposes of practical application. Second, the Austrian courts have in fact demonstrated their ability to develop substantive criteria for applying standards and principles (such as in the case of concretizing the concepts of offer and acceptance for ruling when foreign-language standard terms are incorporated into a contract).

Relating to the general acceptance of CISG by Austrian lawyers and businesses, it is evident that the enormous amount of scholarly writings and case law has improved legal certainty in CISG matters considerably. Because much depends on getting accustomed to CISG concepts in legal education, CISG may indirectly benefit from the efforts to adopt a “Common European Sales Law” (CESL),129 on which the CISG had a strong influence.130 It is therefore submitted that, at least from the perspective of the present situation in Austria, the future relationship between the CISG and CESL (if ultimately adopted) will be synergistic in nature, because lawyers forced to get to know the latter will automatically improve their understanding of the former. When it comes to choosing the right instrument for future contracts, the CESL will have the advantage of being more comprehensive.131 However, applying CESL will also create certain risks, which may, inversely, support opting into the CISG. First, given the large amount of case law and scholarship on the CISG, it provides greater certainty, at least initially, than the CESL. Second, there is a specific EU law risk in that issues of interpretation relating to the CESL will be subject to the jurisdiction of the European Court of Justice (ECJ) and the quality of the ECJ’s judgments in contract law matters is rather poor.132

des Verkaufers,¨ Gefahrenubergang¨ und Schadenersatz,” in Das UNCITRAL-Kaufrecht im Vergleich zum osterreichischen¨ Recht (ed. P. Doralt) (Vienna: Manz Verlag, 1985), 153, 174ff.

128OGH, April 21, 2004, 7 Ob 32/04p, CISG-online 1048 (omnibus case), available at http://cisgw3.law. pace.edu/cases/040421a3.html. Article 79 mentioned, but not applied: OGH, December 15, 1998, 1 Ob 289/98a (construction materials case), available at http://cisgw3.law.pace.edu/cases/981215a3.html (Article 79 briefly mentioned in summary of court of appeal’s decision); OGH, June 29, 1999, 1 Ob 74/99k, CISG-online 483 = TranspR-IHR 1999, 48 (dividing wall panels case), available at http://cisgw3. law.pace.edu/cases/990629a3.html (Article 79 held to be irrelevant).

129See Commission’s Proposal for a Regulation of the European Parliament and of the Council on a Common European Sales Law, COM(2011) 635 final (October 11, 2011).

130See Part IV (Articles 87 et seq.) of the CESL draft, supra note 129 (obligations and remedies).

131E.g., the CESL draft, supra note 129, includes rules on defects in consent (Articles 48–57) and on the effects of unfair contract terms (Articles 79–86).

132See, e.g., ECJ, June 16, 2011, joined cases C-65/09 (Gebr. Weber GmbH v. Jurgen¨ Wittmer) and C-87/09 (Ingrid Putz v. Medianess Electronics GmbH), available at http://curia.europa.eu (ECJ foiled parts of the system of remedies for nonconformity in consumer sales contracts).

an anomaly in this regard; most countries that separated from the Soviet Union, such as the Ukraine, were not considered to be occupied territories, but constituent parts of the Soviet Union, and thus could adopt the CISG by succession.

Thus, in order for the CISG to come into effect in Lithuania, it had to be independently acceded to. Accordingly, on January 19, 1993, Lithuania’s parliament voted to ratify the CISG.3 Interestingly, the official UNCITRAL website identifies January 18, 1995, as the date of Lithuania’s accession.4 But this date again appears not to be supported by the evidence, as a translation of the CISG was published in the official record of the Republic of Lithuania on December 15, 1995, and the same official Lithuanian source describes it as coming into effect on February 1, 1996.5

In acceding to the CISG, Lithuania made an Article 96 Reservation opting out of the “no writing” requirement of CISG Article 11. Thus, the formality requirements found in Lithuanian national law applied to international sale of goods contracts covered by the CISG.6 However, in response to an initiative of UNCITRAL, legislation was adopted in 2013 that removed the reservation.7

The Republic of Latvia reestablished its independence from Soviet occupation on August 21, 1991.8 It does not consider itself as having formerly been the “Soviet Socialist Republic of Latvia.”9 The CISG came into force in Latvia in 1998. Just as in the case of Lithuania, it registered an Article 96 Declaration regarding contract formalities.10 Also like Lithuania, it cannot be viewed as a successor state because Latvia established its independence prior to the CISG coming into force in the Soviet Union.11

3Del˙ LR prisijungimo prie JTO 1980 m. bal. 11 d. Konvencijos del˙ tarptautinio prekių pirkimo pardavimo sutarciˇų [Regarding the Accession of the Republic of Lithuania to the 1980 UN Convention on the International Sale of Goods] (I-51) (1993), English translation available at http://www3.lrs.lt/pls/inter3/ dokpaieska.showdoc l?p id=93950.

4United Nations Commission on International Trade Law (hereinafter UNCITRAL), Status, available at http://www.uncitral.org/uncitral/en/uncitral texts/sale goods/1980CISG status.html (accessed October 12, 2011).

2283); UNCITRAL, Status, http://www.uncitral.org/uncitral/en/uncitral texts/sale goods/1980CISG status.html (accessed October 12, 2011).

6Del˙ LR prisijungimo prie JTO 1980 m. bal. 11 d. Konvencijos del˙ tarptautinio prekių pirkimo pardavimo sutarciˇų [Regarding the Accession of the Republic of Lithuania to the 1980 UN Convention on the International Sale of Goods] (I-51) (1993), English transl. available at http://www3.lrs.lt/pls/inter3/dokpaieska. showdoc l?p id=93950.

7Letter of the Ministry of Justice of Lithuania, dated April 15, 2011, Nr. 111 7-R-3157, available at www.

chamber.lt/LT/content/download/13426/456198/file/DOC.pdf (regarding the UNCITRAL initiative); LR Istatymo˛ projektas: Del LR Seimo nutarimo “Del˙ LR prisijungimo prie Jungtinių tautų organizacijos 1980 m. balandzioˇ 11 d. konvencijos del˙ tarptautinio prekių pirkimo pardavimo sutarciˇų” 1 punkto pakeitimo (2013 m. balandzioˇ 23 d. Nr. XII-235).”

8 Latvian Institute, Latvia in the 20th Century, available at http://www.li.lv/index.php?option=com content&task=view&id=27&Itemid=1096 (accessed October 13, 2011). (According to its Web site, the Latvian Institute was established by the government of Latvia.)

9See id. (all references are to “occupied Latvia”).

10Albert H. Kritzer CISG Database (Pace), Latvia, January 22, 1998, available at http://www.cisg.law.pace. edu/cisg/countries/cntries-Latvia.html.

11Id.