German court rules that 1 day less shelf life of perishable goods can amount to fundamental breach
A German pasta producer had sold fresh pasta to a Czech buyer. In their contract, the parties had agreed that the goods (1) must be delivered to the buyer's warehouse by 15 November 2017, (2) must have a minimum shelf life of 21 days and (3) must have an expiration date ("use by" date, Mindesthaltbarkeitsdatum) of 9/10 December 2017. The Austrian transportation company hired by the seller to transport the goods subsequently informed the seller that it could only deliver on Friday, 17 November 2017. The seller in turn informed the buyer, who agreed to this new delivery date. However, as this day happened to be a public holiday in the Czech Republic, a handing-over of the goods was only attempted on Monday, 20 November 2017. On this day, the Czech buyer refused to take delivery of the goods, which accordingly remained with the transportation company and eventually had to be destroyed.
The Court of Appeal Stuttgart's decision dealt mainly with the breach of the CMR contract of carriage committed by the Austrian carrier and its Czech subcontractors, and the resulting liability towards the German seller/sender (and its insurer). However, the Court of Appeal in this context also held that the 3-day delay in delivery (Monday, 20 November instead of Friday, 17 November) constituted a fundamental breach of contract (Art. 25 CISG) of the German seller regarding its CISG contract with the Czech buyer, because it resulted in the goods no longer having the agreed minimum shelf life of 21 days, but only 19 respectively 20 days. The buyer therefore had acted rightfully in rejecting the goods, and was entitled to declare the sales contract avoided (Art. 49(1)(a) in conjunction with Art. 25 CISG).
The decision shows that it is primarily up to the parties to agree in their sales contract on the importance of certain obligations, and that they e.g. have the freedom to agree that even the slightest delay in delivery amounts to a fundamental breach by the seller (see Art. 25 CISG: "... is fundamental if it results in such detriment to the other party as substantially to deprive him of what he is entitled to expect under the contract, ..."). In its reasoning, the Court of Appeal focused on the agreed 21 day shelf life for the pasta, but arguably could also have based its decision on the non-compliance with the (modified) delivery date of 17 November. If the parties are sufficiently clear in their contract, they can spare themselves the uncertainty inherent in the courts' otherwise necessary recourse to the circumstances of the case in applying Art. 25 CISG, e.g. the importance of timely delivery in case of perishable goods, the relevance (if any) of the agreed delivery date being a public holiday etc.
Oberlandesgericht Stuttgart (Court of Appeal Stuttgart)
Germany, 27 November 2019 – 3 U 239/18, CISG-online 5410