ABSTRACT
A German seller and an Austrian buyer concluded a contract for the sale of a cooling system to be specifically manufactured by the seller. According to the seller’s standard terms, inter alia, consequential damages were excluded. The seller failed to meet the date for delivery; when the cooling system was delivered, it showed some manifest defects (corrosion, poor finish) which the buyer immediately notified to the seller. Nevertheless, it installed the system in order to avoid the penalty provided by its contract with the intermediary. Subsequently additional technical defects appeared (lower capacity, noise level too high, and others) of which the buyer gave notice to the seller as soon as they were discovered. When the seller’s attempts to repair proved to be unsuccessful, the buyer and the intermediary asked for the delivery of a substitute system, but the seller refused to do so. After another unsuccessful attempt to repair the system, the buyer and the constructor agreed to install temporarily the defective on the understanding that the buyer would later provide a substitute system. The seller was not involved in, nor informed about, this agreement. At the agreed date the system was remoulded by the buyer and newly installed. Since then, it has functioned properly. When the seller brought an action for payment of the invoices relating to other transactions between the two parties, the buyer refused to pay, and set-off against the obligation to pay those invoices the seller′s obligation of reimbursement of the losses the buyer had suffered as a consequence of the delivery of the defective cooling system.
