## Facts

- An Italian seller supplied coffee machines to an Austrian buyer for resale to the buyer’s customers.
- The seller knew the buyer expected to profit primarily from selling coffee for use in the machines rather than from resale margins on the machines.
- About one month after installation, customers reported defects, mainly short circuits and water leakages.
- The defects were known to the seller from the outset and were repeatedly complained of by the buyer; repair attempts did not produce a lasting fix.
- The seller sued for the purchase price (approximately EUR 10,173 plus interest).
- The buyer refused to pay, asserting the machines were so defective that they had no commercial value, and sought to avoid the contract or, alternatively, to reduce the price to zero.
- Lower courts held the buyer’s avoidance remedy under CISG article 49 was unavailable because avoidance was not declared within a reasonable time.

## Issues

1. Whether a buyer that has lost the right to avoid the contract under CISG article 49(2) may still invoke CISG article 50 to reduce the price.
2. Whether CISG article 50 permits a reduction of the purchase price to zero when the delivered goods have no commercial value.
3. Whether the buyer’s right to price reduction under CISG article 50 is subject to a specific time limit not stated in the Convention.

## Decision

- The Supreme Court dismissed the seller’s revision and left the lower courts’ outcome undisturbed.
- The Court held that CISG article 50 may be applied even when the buyer’s avoidance remedy under CISG article 49 is time-barred.
- The Court held that CISG article 50 may reduce the price to zero if, at the time of delivery, the goods have no value.
- The Court held the CISG provides no separate, express time limit for asserting a price-reduction claim under article 50.

## Legal Principles

- CISG article 50 is an independent remedy for non-conforming goods and is not extinguished merely because avoidance under CISG article 49 is unavailable due to untimely declaration.
- Under CISG article 50’s proportional formula, if the value of the goods as delivered at the time of delivery is zero, the contract price may be reduced to zero.
- The CISG does not impose a distinct, Convention-based deadline for invoking article 50 beyond the Convention’s own remedial structure and notice framework.
- For article 50 valuation, the relevant time reference is the time of delivery (not the time of contract formation).

## Conclusion

The Austrian Supreme Court confirmed that a buyer may seek a price reduction under CISG article 50 even after losing the right to avoid under article 49 for untimeliness, and that the price may be reduced to zero when defects render the goods commercially valueless at delivery; the Court also rejected importing a domestic-style time limit for article 50 into the CISG.


G. S.r.l. v. M. GmbH, 3 Ob 193/04k (Austrian Sup. Ct. May 23, 2005)