366 precontractual liability in european private law

about the capacity, the contract will by statute contain an implied condition that the machine will be fit for its purpose, since B has made clear the purpose for which he requires it. However, other remedies which were available to B based on A’s misrepresentation about the harvester’s capacity will not apply because A makes no statement unless the court, on investigation of the facts, discovers that A said or did something in response to B’s own statement about the capacity which could be held to be a confirmatory misrepresentation by A on which B relied. So there would be no express promise about the machine’s capacity in the contract to found a claim for damages for breach of contract, and no claim under Misrepresentation Act 1967, section 2(1), which requires proof that a misrepresentation has been ‘made’, and therefore silence is not sufficient. Even if A knows that B is mistaken as to the capacity of the harvesting machine, A has no liability based on that mistake unless either he realises that B intends the capacity to be guaranteed, or A has caused the misunderstanding:

even if the vendor was aware that the purchaser thought that the article possessed that quality, and would not have entered into the contract unless he had so thought, still the purchaser is bound, unless the vendor was guilty of some fraud or deceit upon him, and that a mere abstinence from disabusing the purchaser of that impression is not fraud or deceit; for, whatever may be the case in a court of morals, there is no legal obligation on the vendor to inform the purchaser that he is under a mistake, not induced by the act of the vendor.9

Finland

A is liable to B in contract for B’s positive interest. Under the Finnish Sale of Goods Act,10 goods not conforming with the information given by the seller in precontractual negotiations are considered to be defective in terms of contract law. This means that all the losses B has suffered for the non-conformity of the goods have to be compensated, or he has to be put in the same economic position as if the contract had been properly performed.

9Smith v. Hughes (1871) LR 6 QB 597, 607 (Blackburn J); Cartwright, Misrepresentation, Mistake, and Non-Disclosure, Pt III.

101987, s. 18: ‘(1) The goods are also defective if (i) they do not conform with information relating to their properties or use which was given by the seller when marketing the goods or otherwise before the conclusion of the contract and (ii) the information can be presumed to have had an effect on the contract . . . (3) The provisions of paragraphs (1) and (2) shall not be applied if the information has been corrected clearly and in time’.

This is a case of breach of contractual duties of information by the seller. Of course, the buyer’s duty of inspection can affect the legal result. Any omission by the buyer to examine the goods, as well as his awareness of the defect, can deprive the buyer of claims based on the defect.11 The result is the same where A makes no statement about the capacity of the machine. The seller’s contractual duties of information result in the goods being considered to be defective in terms of contract law.12 Here, the seller knew of the buyer’s purpose at the time of the conclusion of the contract because B told A about his expectations concerning the harvesting capacity of the machine. The seller’s failure to react is considered equal to a positive statement confirming the

buyer’s expression of his expectations.

France

Two different means of protection for B are theoretically conceivable under French law: either annulment of the contract or remedies for breach of contract. Whether B has an option between these two types of protection is hard to determine.

Annulment of the contract: B has contracted under the belief that the machine could fulfil his needs and thus makes a mistake. This mistaken belief can lead to the annulment of the contract for mistake13 or fraud (dol).14 B has an option between these two actions. Fraud is, however, regarded as more advantageous for B since annulment of the contract can then be combined with a claim for damages. These damages cover the entire harm suffered by B: loss of half of the crop, and loss of the opportunity to conclude a satisfactory contract with a third party earlier (assuming, for example, that the price of a suitable machine increased while the first contract of sale was on foot).

11Sale of Goods Act, s. 20: ‘The buyer may not rely on a defect which he cannot have been unaware of at the time of the conclusion of the contract. If the buyer, before the conclusion of the contract, has examined the goods or, without acceptable reason, has failed to comply with the seller’s exhortation to examine the goods, he may not rely on a defect that he ought to have discovered in the examination unless the seller’s conduct was incompatible with honour and good faith.’

12Sale of Goods Act, s. 17: ‘(2) Except where the parties have agreed otherwise, the goods must: (1) be fit for the purpose for which similar goods are ordinarily used; (2) be fit for any particular purpose for which the goods were intended if the seller knew or must have known of this purpose at the time of the conclusion of the contract and it was reasonable for the buyer to rely on the seller’s skill and judgement; . . . (3) If the goods do not conform with the provisions of paragraph (1) or (2), they are defective’.

13Article 1110 C.civ. 14 Article 1116 C.civ.

368 precontractual liability in european private law

Remedies for breach of contract: it is also arguable that B contracted a perfectly valid contract which the seller has failed to perform correctly. Since the parties agreed on the capacity that the machine was supposed to have, the absence of such a quality can be seen as a breach of contract. On the facts, there would not be a guarantee against latent defects15 (because the reduced harvesting capacity is not the consequence of a defect of the machine) but a breach of the obligation to deliver goods in conformity with the contractual terms (obligation de de´livrance conforme) under article 1604 of the Civil Code.16 There are two remedies offered to the buyer in such a case: re´solution, which is a termination that has a retroactive effect under French law, and specific performance, as mentioned in article 1184 of the Civil Code. B has the choice between these two remedies.

Specific performance theoretically enables B to force A to provide him with a suitable machine at A’s cost (replacement of the first machine or upgrade of the first machine). Is specific performance conceivable here? Not if A has no means of providing B with a suitable machine. Article 1144 of the Civil Code offers, however, an interesting possibility of indirect specific performance: the wronged party can be authorised by the judge to obtain performance himself at the other party’s cost. This remedy, if given by the judge,17 is combined with contractual liability when the party, as in our case, commits a fault (the mere fact that A has not fulfilled his contractual obligations), allowing B to be compensated for the loss suffered from the defective performance.

B can also ask for termination combined with damages. Termination has to be pronounced by the judge and will not be allowed if the judge finds that the weight of the incorrectly performed obligation is not sufficient to justify terminating the contract. Termination will entitle

15Article 1641: la garantie contre les vices cache´s.

16The distinction between guarantee against latent defects and obligation to deliver goods that are in conformity with the terms of the contract could have disappeared with the implementation of Directive 1999/44/EC (25 May 1999), which imposes one single broad guarantee in the contracts of sale between professionals and consumers. But the French government decided to add the new guarantee to the existing law: Ordonnance 17 Feb. 2005, comment O. Tournafond, D.2005, 1557. Consequently, the old distinction remains.

17Courts let the dissatisfied party act without authorisation in two cases: emergency and contracts of a commercial nature. Since the contract under consideration appears to be concluded between two professionals for the purpose of their business, it seems theoretically possible for B to buy a new machine without judicial pre-approval and ask A to pay the price. On the question see, e.g., Ph. Simler, JCL-Civil, arts. 1136–1145, fasc. 10, no. 135ff.

B to give back the machine and recover its price, together with damages since A’s fault is here shown (the mere fact that he has not fulfilled his contractual obligations). These damages will compensate B for the loss suffered from the breach of the contract, amounting here to the loss of half of the crop or to the loss of the chance to conclude a satisfactory contract earlier if, for example, the price of the machine has risen during performance of the first contract of sale. If B chooses this remedy, he will have to buy a new machine himself but will not automatically receive sufficient damages to cover the cost. There is, therefore, probably a slight difference between specific performance and termination with damages.

Choice between annulment and remedies for breach of contract: there is one further question: does B have a choice between the two remedies for annulment and breach of contract? In the absence of a legal text, French courts used to solve this conflict by giving the dissatisfied buyer the choice. But a recent decision of the Cour de cassation18 contradicts the earlier case law. According to this decision, dealing with an overlap between annulment for mistake and guarantee against latent defects, the only remedy available to the buyer is for breach of contract. Does this mean that there is no longer a choice between remedies for breach and annulment? The answer might be negative. In fact, the particularity of the rules governing the guarantee against latent defects (especially the very short time limit)19 certainly played an important role in the decision. The Cour de cassation did not want the buyer to bypass the legal time limit rules governing latent defects by bringing a claim under the head of annulment. This is why the choice between the remedies was rejected. Since the rules applicable to the two types of remedies under consideration in our case (annulment and breach of the obligation to deliver goods in conformity with the contract) are quite similar, the Cour de cassation might find it appropriate to maintain a choice in favour of the buyer. As a result, it seems that B will have the choice here to bring a claim under either head.

Where A is silent: in the case where A is silent but B states his expectation about the harvester’s capacity, the result is the same. First, B made a mistake about what he was buying and can, thus, ask for annulment.

18Civ 1, 14 May 1996, JCP 1997, I, 4009; Ch. Rade´, ‘L’autonomie de l’action en garantie des vices cache´s’ D.1997, SC 345, obs O. Tournafond; D.1998, 305, note Jault-Seseke.

19Which has disappeared since the modification of art. 1648 of the Civil Code by art. 3 of the Ordonnance no. 2005–136.