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Part XI Remedies for Breach of Contract, 49 Concurrent Remedies

From: Global Sales and Contract Law

Ingeborg Schwenzer, Pascal Hachem, Christopher Kee

Content type:
Book content
Product:
International Commercial Law [ICML]
Published in print:
26 January 2012
ISBN:
9780199572984

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2023. All Rights Reserved. Subscriber: null; date: 06 June 2023

Subject(s):
Remedies for breach of contract — Concurrent claims and choice of law

(p. 766) 49  Concurrent Remedies

  1. A.  General 49.01

    1. I.  Typical Scenarios 49.01

    2. II.  Relevance of Concurrent Remedies 49.06

    3. III.  Possible Approaches 49.11

  2. B.  Remedies for Breach v Mistake 49.15

    1. I.  Domestic Approaches 49.15

    2. II.  International Level 49.20

      1. 1.  CISG 49.21

      2. 2.  PICC 49.23

      3. 3.  PECL and DCFR 49.24

  3. C.  Remedies for Breach v Remedies for Misrepresentation 49.25

    1. I.  General 49.25

    2. II.  Common Law 49.26

    3. III.  Civil Law 49.28

    4. IV.  CISG 49.30

  4. D.  Remedies for Breach v Tort Remedies for Damage to Property 49.33

    1. I.  General 49.33

    2. II.  Damage to Property 49.35

      1. 1.  Domestic level 49.35

        1. (a)  Damage to the Chattel Itself 49.35

        2. (b)  Damage to Other Property 49.40

      2. 2.  International Level 49.46

A.  General

I.  Typical Scenarios

49.01  It is easily conceivable that a breach of contract may not only touch upon provisions of the set of rules applying to the sales contract but may at the same time meet the requirements of other provisions containing remedies outside of the applicable sales law. For example, where the goods are non-conforming and were so from the very beginning, the buyer could argue that it was mistaken when concluding the contract as it had expected to buy conforming goods. In a similar vein the seller may have made wrong representations concerning the goods. This could even amount to fraudulent behaviour, if the seller did so intentionally. Furthermore, where defective goods are delivered, they might do all sorts of damage. First of all, the defect could cause all of the goods to deteriorate. In other instances the defective goods might cause damage to other items, for example by exploding. Finally, separate items might be damaged when combined or mingled with the defective goods.

49.02  In all these situations the buyer may launch a veritable barrage of remedies against the seller hoping that, by taking several shots, the goal of compensation will be achieved. The notion that a legal system protects buyers at various stages is in and of itself not particularly troubling. It is, however, troubling, that these protective devices often are subject to different requirements.

49.03  For example, while under many legal systems1 the buyer must notify the seller of any non-conformity of the goods, as it would otherwise lose its sales remedies for breach of contract, usually there is no such requirement either for relying on mistake or when bringing a claim in tort law. Thus, although the buyer may no longer be able to assert its sales law remedies, it would still be able to resort to tort remedies. The obvious issue is that in these situations sales (p. 767) law provisions protecting the seller—such as the notification requirement—would be circumvented and to this extent be rendered meaningless.

49.04  Likewise, the buyer may be barred from bringing claims based on the breach of the contract by the applicable limitation periods whereas it might still be possible to rely on mistake or on any remedy based on tort law for a longer period of time. Again, the protective purpose of the limitation periods for remedies for breach of a sales contract is countered.

49.05  Differences between the various rights and remedies may also exist when it comes to damages. Thus, moral damages in most legal systems are only available in tort but generally not in contract. Furthermore, calculation of damages may depend on the right or remedy that is exercised, be it damages for expectation loss or for reliance loss only. Exemption clauses may be valid for contractual claims but not for a tort claim.2 Finally, the burden of proof may be different for contractual claims on the one hand and for tort claims on the other.

II.  Relevance of Concurrent Remedies

49.06  Having regard to the above-mentioned consequences of concurrent remedies it is not surprising that domestic legal systems have repeatedly struggled with clarifying the hierarchy of claims brought and the question whether they may be asserted concurrently.

49.07  While this issue has caused significant debate in both doctrine and court practice at the domestic level, especially in civil law jurisdictions,3 the issue is relatively harmless insofar as all remedies stem from the same legal system and once the position is settled, it is foreseeable what will happen under that system. The situation is much more dangerous at the international level if a set of rules does not cover all issues and must be supplemented by the otherwise applicable domestic law. In particular, the question arises whether domestic remedies—whether based on mistake or tort—may be asserted concurrently with the remedies for breach of contract established by the CISG.

49.08  It cannot be denied that the CISG is an incomplete set of rules which does not address each and every question possibly arising in the context of a sales contract. At times the Convention itself calls upon domestic law. This applies to questions of validity,4 personal injury, and death5 and in all other cases where gaps cannot be settled by the general principles on which the Convention is based6. It could be argued that if the CISG does not bother with certain remedies, this is left for the domestic law to decide.

49.09  On the other hand, if this were the case, then the remedies of a legal system might be available although never envisaged by the parties. This appears particularly disturbing, since the requirements for these remedies may be different depending on which legal systems are involved. Furthermore, domestic legislatures might be tempted to protect their parties from the policies of the CISG by establishing specific protection mechanisms in domestic law which effectively circumvent the CISG.

49.10  The debate on concurrent remedies at both the domestic and international levels primarily focuses on two areas: the relationship of sales law remedies with the concept of mistake and the relationship of sales law remedies with remedies based in tort triggered by misrepresentation as well as damage to property.

(p. 768) III.  Possible Approaches

49.11  Three possible approaches to this problem can be discerned on the domestic level.

49.12  The first approach is to allow concurring actions wherever the prerequisites for a concurrent right or remedy are met. This, however, does not mean that an obligee is allowed double recovery; it only means that it may rely on the remedy that is most favourable to it, even if it were not to succeed under its sales law remedy. To some extent or another this approach can be found in almost all legal systems;7 its extensive application is usually encountered in legal systems where severe restrictions on sales law remedies exist—such as very short limitation periods—and courts are eager to circumvent these wherever possible.8

49.13  The opposite approach is that of excluding all concurrent remedies in order not to disturb the functioning of the sales law regime. A prominent example of this approach can be found in France where according to the principle of non cumul contract law generally excludes all tort law remedies.9

49.14  Finally, a middle ground can be taken between allowing concurrent remedies and excluding them altogether. A legal system may allow concurrent remedies but still subject them to the same requirements as the sales law remedies—that is, for example, requiring notice of defects or applying the sales law limitation period.10 Although the sales law regime thus remains undisturbed, the concurrent remedies may still be decisive for questions of jurisdiction or—most important at the international level—for determining the applicable law under conflict-of-laws rules.

B.  Remedies for Breach v Mistake

I.  Domestic Approaches

49.15  The question whether a buyer may rely on mistake in addition to its sales law remedies even if these are barred for any reason only arises if the buyer has a choice on which right or remedy it wants to rely—that is, where a non-conformity triggers sales law remedies as well as rights and remedies for mistake at the same time. If a legal system in case of mistake treats a contract as void ab initio, concurrence of actions is not an issue as there is no contract at all and sales law remedies do not arise. In this respect, these legal systems decide already at the level of ascertaining the relevance of a mistake whether and when rights and remedies for mistake take priority over sales law remedies and vice versa. This is especially the case in common law in cases of a mistake as to the quality of the goods.11 It has to be remembered that a mistake as to quality is (p. 769) not easily found to have existed, at least under English law.12 In the well-known case of Bell v Lever Bros Ltd 13 it was held that a common mistake only exists when relating ‘to the existence of some quality which makes the thing without the quality essentially different from the thing as it was believed to be’.14 Case law acknowledging such a ‘fundamental’ mistake is very scarce.15 In applying such a restrictive approach towards the relevance of mistake16 common law displays its preference for sales law remedies in these cases already on this level without having to decide on a possible concurrence of actions.

49.16  In civil law legal systems there usually is an overlap between sales law remedies and mistake. The systems are split on the issue of whether rescission for mistake should be allowed alongside remedies for breach of contract.

49.17  The majority of civil law legal systems are in favour of allowing remedies for mistake alongside sales law remedies.17 In the Netherlands there is an explicit statutory provision as part of the sales law to this effect.18 In other legal systems the same results are reached by case law.19 However, insofar as courts in these latter systems have dealt with the CISG, they were not prepared to apply the same principles to cases falling within the scope of the Convention.20 At least in Switzerland there is a reasonable suspicion that the Swiss Federal Supreme Court might be prepared to abandon its practice should the remedies regime for breach of contract be structured differently, in particular a less strict notification requirement and less strict limitation periods. The concurrent application of rescission for mistake thus seems to be a means to circumvent unreasonable results created by an outdated sales law. Apparently, the Swiss Federal Supreme Court seems to believe that, although the concurrent rescission for mistake may also produce strange results, taking the risk of producing such results is worthwhile nevertheless.

49.18  There are, however, a number of civil law legal systems that exclude the possibility of concurrent rights and remedies based on breach of contract on the one hand and mistake on the other. Among them are Germany21 and France.22

49.19  In many legal systems, however, the question is not discussed at all.23

(p. 770) II.  International Level

49.20  At the international level the relationship of remedies for breach with rescission for mistake is a constant matter of debate which at least as regards the uniform projects stands yet to be clarified.

1.  CISG

49.21  With regard to the CISG the issue seems to have arisen primarily in the context of Germanic legal systems as Austria and Switzerland both allow rescission for mistake alongside remedies for breach of contract. Although in Italy an accumulation of remedies is presumably acknowledged, Italian authors—as far as can be seen—have not argued that domestic remedies for mistake could also be applied to CISG contracts in case of breach of contract.

49.22  Earlier opinions voiced by German-speaking authors from Austria and Switzerland have occasionally stated that rescission for mistake should be available alongside remedies for breach of contract.24 This position is based on the notion that rescission for mistake effectively invalidates the contract and that the Convention leaves questions of validity to the applicable domestic law (Article 4, sentence 2(a) CISG). However, this position has neither been adopted by the Austrian Supreme Court25 nor is it any longer the position of Swiss commentators26 who in fact have rejected this position. Nowadays, this is also the clearly prevailing view in doctrine.27

2.  PICC

49.23  The PICC contain a remarkably clear statement on the relationship of mistake to remedies for non-performance. Article 3.2.4 PICC states: ‘A party is not entitled to avoid the contract on the ground of mistake if the circumstances on which that party relies afford, or could have afforded, a remedy for non-performance.’ The clarity of the rule is somewhat surprising given that domestic legal systems heavily disagree on the approach to be taken to this issue. However, the clear phrasing used by the PICC to some extent confirms the suspicion voiced earlier28 that the availability of rescission for mistake alongside remedies for breach of contract is accepted primarily because the structure of the remedies for breach—particularly as regards notification and limitation periods—are perceived to be one-sided and unsuitable in today’s commerce.

3.  PECL and DCFR

49.24  The PECL29 and DCFR30 take the contrary position to the PICC. Both uniform projects contain an equally clear statement to the effect that a party which is entitled to a remedy under the validity chapter in circumstances which afford that party a remedy for non-performance may pursue either remedy. The chapter on validity contains provisions on both mistake as well as fraud. While it is acceptable and correct to avail a party of remedies triggered by fraud alongside those triggered by breach of contract, the availability of rescission for mistake seems out of place.

(p. 771) C.  Remedies for Breach v Remedies for Misrepresentation

I.  General

49.25  Misrepresentation may occur in different forms and is treated differently in legal systems. According to the knowledge of facts by the other party, misrepresentation may be innocent, negligent, or fraudulent.31 Whereas innocent misrepresentation under all legal systems is generally akin to the topic of mistake, in common law legal systems remedies for negligent and fraudulent misrepresentation are perceived as being tortious in character.32 In civil law legal systems remedies for negligent misrepresentation again either stem from mistake or they are regarded as being grounded upon culpa in contrahendo.33 Fraudulent misrepresentation in these systems is dealt with as a specific case of defective consent leading to a separate cause of action; in those system where the contract is consequently voidable, the threshold is lower than that for rescission for mistake.34 Pecuniary losses, however, may furthermore be recoverable under either culpa in contrahendo or tort law.

II.  Common Law

49.26  Under most common law legal systems, remedies for misrepresentation apply to sale of goods as to any other contract.35 However, in common law jurisdictions there seems to be little practical significance in such concurrent actions since the misrepresenting statements must be clearly separated from the main contract in order to give rise to the remedy of misrepresentation.36 As with regard to mistake, the crucial demarcation line between remedies for breach of contract and remedies for misrepresentation was traditionally drawn when deciding whether a statement constituted a contractual term or a representation.37 However a number of jurisdictions have statutorily amended the law so that any misrepresentation is still available even where the misrepresented fact has now become a term of the contract.38

49.27  An interesting solution can be found in the Contractual Remedies Act 1979 of New Zealand. Although any misrepresentation in principle gives rise to cancellation of the contract,39 damages are to be had in the same manner and to the same extent as if the representation were a term of the contract that has been broken and not as would be the case under tort law.40 Thus the contract law regime in essence remains intact.41

III.  Civil Law

49.28  Because in civil law legal systems innocent and negligent misrepresentation form part of the rules on mistake there are no differences to the approach described above concerning the availability of concurrent actions based on misrepresentation. The same holds true for the uniform (p. 772) projects that follow the civil law in this respect and do not recognize a separate category of innocent or negligent misrepresentation.42

49.29  Fraudulent misrepresentation, however, is treated differently. Even under those legal systems that exclude concurrent remedies based upon mistake only, if there is fraud the aggrieved party is not confined to its remedies for breach of contract but may rely on the remedies for fraud even if contractual claims for breach are barred.43

IV.  CISG

49.30  As has been stated above civil law jurisdictions now almost unanimously hold that, whatever may be the domestic approach to concurrent remedies for mistake and breach of contract, the CISG takes priority to any domestic rules on mistake. The same applies to culpa in contrahendo.44

49.31  The situation is more complicated in common law jurisdictions, especially the USA. Here, an unfortunately long line of decisions has held that the CISG is not concerned with questions relating to negligent misrepresentation and have consequently allowed the buyer to rely on this remedy independent of the situation of the buyer’s claim under the CISG.45 These decisions occasionally have received support also in doctrine.46 However, while this position may be perceived as the currently prevailing one in the USA, it is not undisputed. Honnold47 famously stated that the Convention displaces all domestic remedies which invoke the same set of facts. Authors from other regions of the world welcome this position and argue that the particular value of this position lies in the preservation of the core areas of the CISG which must not be undermined by domestic policy considerations.48 Recently, a US District Court49 also followed this approach and held that where the facts of the case trigger remedies of the CISG, the same facts cannot trigger domestic remedies. Further development of the situation in the USA will have to be awaited.

49.32  Again, the situation in case of fraud is easily explained. At the international level, too, it is undisputed that the CISG does not preclude the aggrieved party from relying on domestic remedies available in case of fraud.50

D.  Remedies for Breach v Tort Remedies for Damage to Property

I.  General

49.33  Except for France and the legal systems drawing heavily on the French solutions where according to the principle of non cumul contractual remedies pre-empt any remedies based on tort, all legal systems agree that, in case of damage to property, alongside the sales law remedies the (p. 773) buyer has a concurrent tort claim if the respective prerequisites are met. Such a tort claim may be based on negligence or on product liability, which generally not only protects life and limb but also covers physical damage to property.51 Whereas under some legal systems52 any seller in the chain of distribution of the goods can be held liable, in the context of product liability principles other legal systems in essence restrict this kind of strict tort liability to the manufacturer.53

49.34  If concurrent tort actions for damage to property are recognized, it is vital that regard be had to the manner in which ‘property damage’ as a legal concept is defined.

II.  Damage to Property

1.  Domestic level

(a)  Damage to the Chattel Itself

49.35  The defect in the goods may ultimately lead to the destruction of the goods themselves. For example, where a thermostat is defective in a machine which self-regulates its temperature, that machine is obviously non-conforming. The situation envisaged here is that where the defective thermostat causes the machine to overheat and finally burn out. From a legal perspective the machine at the time of its destruction was already the property of the buyer and consequently the ultimate destruction of the machine could be viewed as damage to the property of the buyer. The question arises whether tort remedies triggered by damage to property are also available to the buyer in these situations.

49.36  This issue has been the subject of extensive discussion in the USA under the topic of ‘damage to the chattel itself’54 as well as in Germany under the heading of ‘Weiterfresserschaden’55 which loosely translates to ‘defect gobbling up the goods’.

49.37  Until 1986, case law in the USA was divided on the question of whether damage to the chattel itself is actionable in tort.56 Then in 1986 in East River SS Corp v Transamerica Delaval, Inc, the US Supreme Court held that the plaintiff could not recover in tort for damage to the chattel itself.57

(p. 774) 49.38  Unlike the USA, in its now famous court practice the German Supreme Court58 has consistently allowed the buyer to rely on tort remedies for damage to property in these situations as well. This is especially useful for buyers who have missed the relevant time for notification of defects, insofar as this period is applicable. In other Germanic legal systems the German practice has not found support.59 In Switzerland the clear majority view expressly rejects this position.60 However, also in Germany the approach of the Supreme Court has been subject to severe criticism. The main argument advanced against the practice of the Supreme Court is that remedies for property damage are intended to protect the integrity of the buyer’s assets, not its interest in receiving conforming goods, and that for this reason the buyer should only be able to bring remedies for breach of contract where the defect destroys the goods entirely.61 Furthermore, in the wake of the modernization of the German law of obligations, doubts were raised as to the necessity for the Supreme Court’s practice which many perceived as having its basis in the formerly very short limitation period for remedies for breach. These have been—at least in German terms—considerably prolonged by the modernization.

49.39  On the European level, the EU Directive on Products Liability being cognizant of this problematic case law explicitly excludes liability for damage to the chattel itself.62

(b)  Damage to Other Property

49.40  A defect in the goods delivered may of course cause damage to other property. From the perspective of tort law this is the core area for tort remedies triggered by property damage. In these situations, remedies for property damage do not protect the interest of the buyer in receiving conforming goods but protect the integrity of its assets.

49.41  However, from the perspective of contract law, protection of the buyer against damage to its assets is not the exclusive domain of tort law. Rather, property damage is the typical scenario of consequential loss caused by the defect in the goods and these may also be recovered via contract damages. Again, the buyer may nevertheless be barred from recovery via contract damages because either it has neglected to give timely notification to the seller of the defect or because of short limitation periods.

49.42  The basic question of whether the buyer is able to circumvent the restrictions of contract law via tort law is thus the same. In the context of this subsection it arises in two scenarios.

49.43  First, the goods may inflict damage on separate assets. In the above example63 of the defective machine burning out, this may occur if the fire not only destroys the machine but also the buyer’s entire factory.

49.44  Secondly, assets of the buyer may be destroyed because they are commingled or combined with defective goods, or they are processed by them and this is the very purpose of the contract. For example, the raw materials delivered by the seller may be defective and when commingled with other raw materials may lead to the destruction of the end product. Another example is a saw that destroys the timber because it is wrongly calibrated. It has been argued that in the latter cases tort remedies should be excluded because only the typical expectations of the buyer stemming (p. 775) from the sales contract are disappointed which ultimately should be dealt with by sales law exclusively.64

49.45  A similar problem arises where the goods are specially designed to protect certain property such as pesticides or herbicides and alarm systems. Again, there is a sharp divide between the USA and the German approach. Whereas the majority of USA courts deny tort remedies in these cases,65 the German Supreme Court approved of buyers’ claims in tort against the manufacturer of non-conforming fungicides.66

2.  International Level

49.46  As has been mentioned at the domestic level most legal systems typically envisage concurrent claims based in tort in situations where property of the buyer is damaged.

49.47  At the international level the situation is less clear. Here the question of whether sales law provisions can be circumvented by relying on tort law is of particular significance. If concurrent domestic tort remedies are available it is clear that these may undermine the uniformity reached by such international instruments and consequently make the outcome of a case at best unpredictable.

49.48  With regard to the CISG, opinions are divided and considerable controversy has arisen. One view holds that domestic remedies for damage to property apply without restrictions.67 This notion is based on the argument that Contracting States when signing the CISG did not give up the protection of the integrity of the buyer’s assets by tort law. The opposing view holds that domestic remedies are excluded altogether.68 The argument is similar to that advanced in the context of mistake, namely that the same facts—damage to property as consequential loss—were the same both with regard to Article 74 CISG as well as with regard to domestic tort remedies. A third approach distinguishes the scenarios in which property damage has occurred.69 According to this view the CISG is exclusively applicable where the property damage is the typical result of the non-conformity. Where, however, general safety duties have been breached, and it is only by coincidence that the buyer sustained damage to its property, domestic remedies triggered by the violation of general safety duties are available. This leads to the result that there is a concurrent domestic tort claim for damage to property unrelated to the goods but not for damage to the chattel itself or to property that, according to the purpose of the contract, is commingled with or processed by the goods. The same applies where goods are to protect other property and do not live up to these expectations.

49.49  The situation is unclear as regards the uniform projects. Neither PICC nor PECL deal with damage to property. Insofar, the question how remedies for non-performance and remedies for property damages relate to each other is open. It is in fact pretty much confusing when it comes to the DCFR. The DCFR in its introductory provisions to non-contractual liability states that the rules on non-contractual liability for damage caused to another do not apply (p. 776) where this would contradict the purpose of other private law rules.70 It could be argued that the purpose of provisions requiring notification of defects (which the DCFR contains in the chapter on sales contracts) would indeed be contradicted by the concurrent application of tort remedies for property damage. On the other hand, it is subsequently stated that the producer of defective goods is always liable for damage caused by the defective goods. Thus a manufacturing seller would also be liable for damage to property caused by the defective goods.

Footnotes:

1  See Ch 34.

2  See para 44.316.

3  See especially for the context of mistake para 49.28.

4  See Art 4, sentence 2(a) CISG.

5  See Art 5 CISG.

6  See Art 7(2) CISG.

7  Eastern Europe/Central Asia Lapiashvili, p 328; Sub-Saharan Africa Penda Matipé, p 451; Arg Arts 1107, 1109 CC; Lorenzetti, p 591; Aus (Vic) s 4(2) SGA; Aut OGH, 8 November 1995, 7Ob541/95, OGH, 22 November 1995, 1Ob49/95; Bol Art 984 CC; Can (BC) s 73(1) SGA; Bra Arts 186, 187, 927 CC; Chl Arts 2314, 1437 CC; Chn Art 112 CL; Col Arts 2341, 1494 CC; Deu MünchKommBGB/Grothe, § 195, para 44; Eng s 62(2) SGA; Ecu Arts 1480, 2241 CC; Gtm Arts 1645, 1646 CC; Hkg s 62(2) SGO; Irl s 61(2) SGA; Mex Arts 1910, 1915 CC; Nzl s 60(2) SGA; Per Arts 1969, 1970, 1985 CC; Prt Arts 483, 483 CC; Pry Art 1833 CC; Rus Osakwe, 24 Loy LA Int & Comp L Rev, (2002) 113, 241; Sco s 62(2) SGA; Sgp s 62(2) SGA; Slv Arts 2065, 1308 CC; Ven Art 1.185 CC; Wal s 62(2) SGA.

8  See para 49.17 for Che.

9  See para 49.33.

10  See for Aus Williams v Milotin (1957) 97 CLR 465 (contract limitation period controls); Fra Cass civ 1re, 4 January 1960, Bull civ 1960 I, no 1960 I, no 4, Cass civ 1re, 19 July 1960, Bull civ 1960 I, no 408 (this case law has been superseded by more recent decisions).

11  Eng s 62(2) SGA expressly preserves the rules of the common law relating to the effect of mistake on contracts for the sale of goods; see also Aus (Vic) s 4(2) SGA; Can (BC) s 73(1) SGA; Hkg s 62(2) SGO; Irl s 61(2) SGA; Nzl s 60(2) SGA; Sco s 62(2) SGA; Sgp s 62(2) SGA; Wal s 62(2) SGA.

12  But see para 17.31 noting that not all common law jursidictions have abandoned the categories of equitable mistake.

13  UK Bell v Lever Brothers Ltd [1932] AC 161.

14  UK ibid, at 218.

15  Common Law (UK) Benjamin’s Sale of Goods, para 3-021 citing references.

16  See paras 17.12 et seq.

17  Eastern Europe/Central Asia Lapiashvili, p 331; Aut OGH, 23 April 2003, 9Ob247/02t, Koziol et al/Bollenberger, § 871, para 21; DeuMünchKommBGB/Westermann, § 437, paras 53 et seq (remedies for mistake regarding the qualities of the goods are however excluded); Jpn SJ Yang, p 381; Twn Hafez, p 381

18  Art 7:22 CC.

19  See Aut OGH, 23 April 2003, 9Ob247/02t; Che BGer, 7 June 1988, BGE 114 II 131, pp 133ff; for Bel, Esp, Grc, Lux, Pol, Svn, and the Nordic systems, see Art II.-7:216 DCFR, note 1; in Ita the question seems to be unsettled, see Ferrari, p 252.

20  See para 49.21.

21  Deu only with regard to mistakes regarding the quality of the goods (§ 119(2) CC), see BGH, 8 June 1988, NJW (1988), 2598, Staudinger/Matusche-Beckmann, § 437, para 21. It is disputed whether the exclusion only starts when risk of loss has passed to the buyer or right from the conclusion of the contract, see MünchKommBGB/Westermann, § 437, para 53, Staudinger/Matusche-Beckmann, § 437, para 25.

22  Fra Cass civ 1re, 7 June 2000, Bull civ 2000 I, no 159.

23  Arab/Middle East Hafez, p 378.

24  Bydlinsky, Allgemeines Vertragsrecht, p 86, Lessiak, östJBl (1989), 487ff; Karollus, östJBl (1993), 31, n 49, Ebenroth, östJBl (1986), 688, Stoffel, Droit applicable, pp 37, 38, Neumayer, RIW (1994), 102, Neumayer/Ming, Art 39, para 4, but see Loewe, Art 45, p 66, a conciliatory approach—rescission for mistake subject to the requirements of the CISG—is suggested by Karollus, pp 41, 42.

25  OGH, 13 April 2000, CISG-online 576.

26  Benedick, paras 171 et seq; Honsell, plädoyer (1990), 39; Schwenzer, Recht (1991), 115.

28  See para 49.17.

29  See Art 4:119.

30  See Art II.-7:216.

31  See para 17.08.

32  Can Waddams, para 431; UK Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465; USA Farnsworth, § 4.12.

33  See Chs 23–5.

34  See Ch 19.

35  Common Law (UK) Benjamin’s Sale of Goods, para 10-008 with further references; USA § 2-721 UCC, Ed Fine Oldsmobile, Inc v Knisley, 15 April 1974, 319 A 2d 33 (De Super Ct).

37  See for the relationship of mistake to misrepresentation paras 17.07 et seq.

38  See Aus (SA) s 6(1)(a) Misrepresentation Act (1972); Eng s 1(a) Misrepresentation Act (1967), Chitty on Contracts, paras 6-004 et seq; Sgp s 1(a) Misrepresentation Act (1993); Wal s 1(a) Misrepresentation Act (1967).

39  See s 7 Contractual Remedies Act (1979).

40  See Nzl s 6(1) Contractual Remedies Act 1979.

41  But see Nzl Hawes, para 10.4 implying that in Nzl sale of goods remedies would displace the Contract Remedies Act remedies, citing Moodie v Agricultural Ventures Ltd [1998] 3 NZLR 129.

42  See for misrepresentation para 17.08.

45  USA Miami Valley Paper, LLC v Lebbing Engineering & Consulting GmbH, US Dist Ct (SD Oh), 10 October 2006, 2006 WL 2924779, 3; Sky Cast, Inc v Global Direct Distribution, LLC, US Dist Ct (ED Ky) 18 March 2008, 2008 WL 754734, 7.

48  Schlechtriem/Schwenzer/Schwenzer, Art 35, para 47; Niggemann, RDAI (1994), 412; comprehensively Huber, Irrtumsanfechtung, pp 275ff, who in particular refers to the ultima ratio remedy of contract avoidance; Huber, IPRax (2004), 360; Schwenzer, 101 ASIL Proc (2007), 421; Schwenzer/Hachem, 57 Am J Comp L (2009), 471; Schlechtriem, 21 Cornell Int LJ (1988), 474; see also Art 3.2.4 PICC.

49  USA Electrocraft Arkansas, Inc v Super Electric Motors, Ltd, US Dist Ct (ED Ark) 23 December 2009, 2009 WL 5181854, 6.

51  EU according to Art 9(1)(b) EU Council Directive 85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products, damage to property is only covered as far as it is sustained by a consumer and as far as it exceeds 500 ECU (= 500 Euro, see Art 2(1) Council Regulation (EC) no 1103/97 of 17 June 1997 on certain provisions relating to the introduction of the euro). Eastern Europe/Central Asia Lapiashvili, p 330; Arg Art 40, part 1 CPL; Arm Art 1089 CC; Aut §§ 1, 2 Law on Product Liability (lower threshold of 500 Euro); Aze Art 1129 CC; Blr Art 965 CC; Bra Arts 18, 12, 13 CPL; Chl Arts 20, 21 CPL; Col Arts 23, 29 CPL; Cri Art 35 CPL; Deu §§ 1, 11 Law on Product Liability (lower threshold of 500 Euro); Ecu Art 2256 (5) CC; Art 28 CPL; Est § 1061 CO (lower threshold of 500 Euro); Gtm Arts 45, 46 CPL; Kaz Art 948 CC; Kgz Art 1024 CC; Mex Arts 79, 82 CPL; Per Art 32 CPL; Rus Art 1096 CC; Tjk Art 1112 CC; Ukr Art 1210 CC; USA see § 1 Restatement (3d) on Torts: Products Liability; Uzb Art 1018 CC.

52  See Hrv Art 423 CO; USA § 1 Restatement (3d) on Torts: Products Liability.

53  EU Art 7 EU Council Directive 85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products. Under certain circumstances the liability is extended to the importer or to a mere distributor, see Art 3, no 2 EU Council Directive 85/374/EEC of 25 July. Alb Art 632 CC; Arg Art 40, part 1 CPL; Aut § 1 Law on Product Liability; Bra Arts 18, 12, 13 CPL; Chl Arts 20, 21 CPL; Col Arts 23, 29 CPL; Cri Art 35 CPL; Deu §§ 1, 4 Law on Product Liability; Ecu Art 2256(5) CC; Art 28 CPL; Est §§ 1061 et seq CO; Geo Art 1011 CC; Gtm Arts 45, 46 CPL; Mex Arts 79, 82 CPL; Per Art 32 CPL; Tkm Art 1046 CC.

55  Deu BGH, 12 February 2002, NJW (1992), 1225; BGH, 3 February 1998, NJW (1998), 2282; BGH, 24 November 1976, NJW (1977), 379, 381; MünchKommBGB/Wagner, § 823, paras 127 et seq.

57  East River SS Corp v Transamerica Delaval, Inc, US Sup Ct, 16 June 1986, 476 US 858, 106 S Ct 2295.

58  BGH, 11 February 2004, NJW (2004), 1033; BGH, 14 May 1996, NJW (1996), 2225; BGH, 24 March 1992, NJW (1992), 1678 et seq; BGH, 14 May 1985, NJW (1985), 2420 et seq; BGH, 24 November 1976, NJW (1977), 380 et seq.

59  Aut OGH, 3 February 1994, 8Ob536/93.

61  See Schwenzer, JZ (1987), 1059; MünchKommBGB/Wagner, § 823, para 132.

62  Art 9(1)(b) EU Council Directive 85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products.

63  See para 49.35.

64  See Schwenzer, JZ (1987), 1060, but see Deu BGH, 31 March 1998, NJW (1998), 1942.

66  See BGH, 17 March 1981, NJW (1981), 1603; BGH 17 March 1981, NJW (1981), 1606. See also BGH, 16 September 1987, NJW (1988), 52 (defective wine corks led to deterioration of wine); BGH, 2 February 1999, 1028 (contaminated flower soil impeded growth of flowers); OLG Oldenburg, 11 October 2000, NJW-RR (2001), 459 (unfit varnish caused wetness damage to furniture).

67  See Miami Valley Paper, LLC v Lebbing Engineering and Consulting GmbH, US Dist Ct (SD Ohio), 10 October 2006, CISG-online 1362; Staudinger/Magnus, Art 5, para 14; MünchKommHGB/Benicke, Art 5 CISG, para 8; Lookofsky, pp 25ff, 71ff; Lookofsky, 13 Duke J Comp & Int L (2003), 285.

68  Honnold/Flechtner, para 73; Herber/Czerwenka, Art 5 CISG, para 5; Herber, FS Schlechtriem, p 212; OLG Thüringen, 26 May 1998, CISG-online 513; HGer Zürich, 26 April 1995, CISG-online 248; Bianca/Bonell/Khoo, Art 5, note 3.2; Schneider, pp 232ff; Heuzé, para 90; Mather, 20 J L & Com (2001), 161.

70  Art VI.-1:103(c) DCFR.