German Federal Supreme Court, 24 March 1999

An Austrian owner of a vine nursery (the buyer) (plaintiff) used a special wax on the nursery’s vines for protection from dryness and infection. For years, the buyer purchased the wax from another vine-nursery owner (the seller) (defendant). The buyer would resell some of the wax it purchased. The seller obtained the wax from the F.W. Company, which obtained it from the manufacturer, S. Werke GmbH (Werke). In January 1994, consistent with years past, the seller offered to sell 5,000 kilograms of “black vine wax” at a specified price to the buyer. The buyer agreed to the terms. Via the F.W. Company, the seller requested a new type of wax from Werke, which was then delivered directly to the buyer. The buyer used the wax on its nursery vines and resold some wax, which was applied on other vines. In June 1994, the buyer notified the seller that the wax was defective and had caused major damage. The wax had been manufactured using an improper raw material. The buyer sued the seller for damages. The seller primarily argued that it was not liable because it was an intermediary pursuant to Article 79 of the Convention on Contracts for the International Sale of Goods (CISG) and the damages were outside of the seller’s control. The trial court agreed with the seller and dismissed the buyer’s complaint. The appellate court reversed and remanded for a determination of damages. The German Federal Court of Justice reviewed the matter.