9th Commercial Court Istanbul rules on contract avoidance and notice of defect

On 16 April 2019, the 9th Commercial Court Istanbul decided the Capsule filling machine case. The decision’s full text, originally written in Turkish, has now been translated into English by Kutlu Tarıman, who has an LLB from Istanbul Bilgi University (Turkey) and an LLM from Tilburg University (The Netherlands). We are very grateful for his translation that can now be accessed via the case presentation about CISG-online 5144 (see below).

The dispute underlying the decision arose from an international sales contract for the sale of an automatic capsule filling machine, concluded on 6 July 2011. After delivery of the machine and payment of the purchase price, the buyer was not able use the machine due to defects. A so-called “Site Acceptance Test” confirmed that the machine was not in conformity with the sales contract. After some communication between the parties and the seller not taking any action, the buyer declared the contract avoided and claimed for repayment of the purchase price and damages.

During the proceedings there were several expert reports regarding various questions, such as the deficiency of the machine, which were repeatedly challenged by the parties. After all, the Court considered it to be proven that the machine was manufactured defectively. It then held that the CISG is to be applied since both parties were located in Contracting States (Italy and Switzerland), supplemented by Turkish law. The Court further stated that the machine's defect constitutes a fundamental breach of the contract. It added that the buyer’s inspection of the machine and notice to the seller was made timely – in response to seller’s argument that the buyer lost its rights based on Art. 39 CISG and Art. 23 of the Turkish Commercial Code. Therefore, the Court decided that the buyer was entitled to make use of its right to avoid the contract.