Reasons

A. I. In its letter of 28 August 1962 dealing with the complaints made by the defendant in earlier correspondence regarding the engine delivered at M. on 15 June 1961, the claimant (the seller) states that the defendant is entitled to claim delivery of a new engine and requests the buyer to accept delivery of such new engine before 11 September 1961. Accordingly the claimant, in the course of the proceedings, has demanded payment against concurrent delivery of a new automatic ice machine. Thus, the seller demands payment as consideration for a delivery which is yet to be made, in this case delivery of a new ice machine. This claim could only succeed if the claimant is entitled to fulfil the contract for sale by delivering a substitute engine for the automatic dispenser delivered at M. This is, however, not the case.

On 15 June 1961 the parties' obligations were restricted to the machine delivered at M. at that date, so long as the automatic dispenser was of an average kind and quality and also corresponded to any other contractual conditions (para. 243 BGB). Where this was not the case, the parties' obligations were thereby not automatically focussed on that specific item, since in cases of a sale of generic goods such as this one the seller has only discharged his contractual obligations where the goods selected and delivered by him comply with the legal and contractual requirements (see RGZ 69, 407, 409; RG JW 13, 130; BGB-RGRK , 11. ed, para. 243 , n. 20; Staudinger, BGB, 11. ed. , para. 480 Nr. 7; HGB-RGRK, 2. ed., para. 377 , n. 91).However, this does not have the effect that the seller of generic goods, when delivering defective goods, can deprive the purchaser of his other warranty claims (repudiation of contract, diminution of the purchase price or damages) by alleging that the contractual obligations were not yet limited to the goods provided (Staudinger, BGB, 11. ed., para. 480, Nos. 5 and 11; BGB-RGRK, 11. ed., para. 480, n. 5; HGB-RGRK, 2. ed., para. 377, n. 54 a, 99). Where the buyer treats the goods received as performance of the contract and where he then brings claims for warranty, the parties' obligations are restricted to those particular goods delivered ( Lehmann Schuldrecht, para. 113 I, 1).

No other result can apply to the facts here under consideration. Although it is true that according to the claimant's general conditions of sale, in cases where deliveries do not comply with the contract, the defendant's rights are limited to claims for repair and substitute delivery; but even in such cases the buyer need not, as a matter of principle, agree to the seller's offer to deliver substitute goods which are free from defects. Where a delivery is made in breach of contract, it is his decision whether or not to make use of his legal or contractual rights. Here, the buyer claims to contest and to rescind the contract and he furthermore claims damages. In view of the delivery made, it must now be examined whether the buyer will succeed in his claims. Where he fails in this respect, he will loose the case. But the seller cannot prevent the scrutiny of the disputed claims in the light of the legal points asserted by the buyer by offering a substitute delivery against the expressed wishes of the buyer. Where the buyer refuses to accept the substitution, thus sticking to the delivery which he alleges to be in breach of contract, the parties' obligations are, at least under these conditions, restricted to the specific goods delivered.

This legal interpretation is not contradicted by the decision of the Reichsgericht (RGZ 91, 110) which, applying the principle of good faith, denied the buyer the right to refuse an offer for substitute delivery (in view of the doubts in respect of this decision see BGB-RGRK, ibid. para. . 480, note 5). This decision was based on facts which were fundamentally different: the goods delivered conformed to the contractually agreed specifications and had only been taken back by the vendor as a favour. In the case here under consideration, the engine delivered by the claimant on 26 May 1961 was, however, undoubtedly second-hand and the one delivered on 15 June 1961 defective according to the appeal court's assumptions. By contrast , in the case decided by the Reichsgericht, the offer to deliver substitute goods was preceded by only one delivery which the buyer objected to and a substitute delivery had immediately been offered.

There is no need to decide whether or not the principle of good faith can be used at all as a basis for a vendor's right to make a substitute delivery. Contrary to the appeal court's opinion, it cannot be derived from this principle that the defendant had been obliged to accept a further substitute delivery. Where, as the further appeal must assume, the claimant had already twice unsuccessfully attempted to perform the contract, it does not constitute a breach of good faith if the claimant refuses to accept an offer for a further substitute delivery. (There follow further deliberations on other legal points.)