## Facts

- A Swiss buyer contracted with an Austrian seller for delivery and implementation of an integrated IT system involving hardware, standard software, software configuration and adaptation, and user training.
- The parties did not include an express choice-of-law clause.
- The seller’s overall performance was treated as a single composite contract with multiple elements (delivery of hardware/software, installation/implementation work, and training).
- The court quantified the contract components as approximately: 45% procurement and installation of a database and standard software, 35% adaptation of software to the buyer’s needs, and 20% training.
- A dispute arose over the seller’s performance, and the buyer brought an action in the Zurich Commercial Court.
- A threshold question was whether the CISG governed the contract, given the parties’ places of business in different CISG Contracting States (Switzerland and Austria).

## Issues

1. Whether computer software qualifies as “goods” for purposes of the CISG.
2. Whether a mixed contract for hardware, standard software, adaptation, installation, and training is governed by the CISG or excluded because services are the preponderant part of the seller’s obligations under CISG Article 3(2).
3. If the CISG applies, whether the buyer satisfied CISG Article 39(1)’s notice requirement for alleged nonconformity and how the buyer’s payment/acceptance duties under CISG Article 53 bear on the dispute.

## Decision

- The court held that computer software qualifies as “goods” within the meaning of the CISG.
- The court classified the transaction as a single composite contract and applied CISG Article 3’s predominance test.
- Based on the quantified breakdown of obligations, the court concluded that goods-related obligations predominated and the CISG therefore applied, rather than being excluded under Article 3(2).
- After determining CISG applicability, the court addressed CISG notice and performance obligations, including Article 39(1) (timely notice of nonconformity) and Article 53 (buyer’s obligation to pay the price and take delivery).

## Legal Principles

- Software may be treated as “goods” under the CISG when supplied commercially as part of a transaction for an IT system.
- For mixed goods-and-services arrangements, CISG Article 3(2) excludes the CISG only when the preponderant part of the supplier’s obligations consists of labor or other services.
- Courts may evaluate predominance by reference to the relative economic or functional weight of contract components; services closely connected to supplying goods do not necessarily displace CISG governance.
- If the CISG governs, the buyer must give timely notice of alleged nonconformity under CISG Article 39(1), and remains subject to core buyer obligations under CISG Article 53 absent a valid excuse.

## Conclusion

The court applied the CISG to a cross-border IT implementation agreement by treating software as “goods” and holding that the contract’s predominant obligations were goods-related despite substantial adaptation and training components, then analyzed the parties’ ensuing CISG notice and payment/acceptance duties.


Swiss Buyer v. Austrian Seller, No. HG 980472 (Handelsgericht des Kantons Zürich Feb. 17, 2000)