## Facts

- A German buyer ordered an industrial furnace from a Swiss seller located in the Canton of Jura.
- The transaction concerned a horizontal retort furnace (model referenced in the court materials) supplied under the seller’s written offer with technical documentation and general terms.
- The purchase price was CHF 208,810, and the buyer made an advance payment (reported as CHF 78,000).
- After delivery and several test runs, the buyer asserted the furnace was defective in multiple respects, including alleged performance, dimensional, and safety-related shortcomings, and claimed it failed to meet promised characteristics and European safety norms.
- The buyer declared the contract avoided by letters in 2002 and later sued the seller in Jura seeking restitution of the advance payment and damages based on avoidance.
- In the appellate proceedings, the Tribunal cantonal du Jura accepted only one non-conformity as proven: a safety issue involving contact with heated surfaces (risk of burns) and non-compliance with European safety standards.
- The court found that the proven safety defect could be corrected by adding protective metal sheeting and that the cost of the correction was low.

## Issues

1. Whether the furnace was non-conforming under CISG art. 35 based on the buyer’s allegations, and which alleged defects were proven.
2. Whether the proven safety-related non-conformity constituted a fundamental breach under CISG art. 25.
3. If there was no fundamental breach, whether the buyer could avoid the contract under CISG art. 49(1)(a) and obtain restitution of the advance payment and damages premised on avoidance.

## Decision

- The court found that only one defect was established: non-compliance with European safety standards regarding contact with hot surfaces (risk of burns).
- The court held that this defect could be remedied through a simple modification (installation of protective metal sheeting) at minor expense.
- Because the defect was minor and readily curable at low cost, the court concluded it did not substantially deprive the buyer of what it was entitled to expect and therefore did not amount to a fundamental breach under CISG art. 25.
- As a result, the buyer was not entitled to avoid the contract under CISG art. 49(1)(a), and the buyer’s claims for restitution of the advance payment and avoidance-based damages were rejected to the extent they depended on avoidance.

## Legal Principles

- Under CISG art. 49(1)(a), a buyer may avoid the contract only if the seller’s failure to perform amounts to a fundamental breach as defined in CISG art. 25.
- A breach is “fundamental” under CISG art. 25 only when it substantially deprives the buyer of what it was entitled to expect under the contract, assessed in light of the contract’s economic purpose and the seriousness of the detriment.
- Non-conformity under CISG art. 35 can include failure to meet promised regulatory or safety requirements; however, even a safety-related non-conformity may fall short of fundamental breach where it can be cured quickly and at low cost.
- In evaluating fundamental breach for non-conforming goods, courts may consider the feasibility, speed, and cost of repair; a defect that can be corrected by an inexpensive and straightforward modification will generally not justify avoidance.

## Conclusion

UNCITRAL CLOUT Case 937 concerns a German buyer’s attempt to avoid a furnace contract with a Swiss seller based on alleged defects. The Tribunal cantonal du Jura accepted only a safety-related non-conformity (risk of burns from contact with hot surfaces) but held that it was easily corrected by adding protective metal sheeting at minor expense. Because that defect did not substantially deprive the buyer of the expected contractual benefit, it was not a fundamental breach under CISG art. 25, and the buyer could not avoid the contract under CISG art. 49(1)(a) or recover restitution and damages premised on avoidance.


UNCITRAL CLOUT Case 937, I.37/04 (2007)