Question
Assuming CISG is applicable, would RS be able to claim non-conformity due to the low performance issues? Yes or no and why To the following
Assuming CISG is applicable, would RS be able to claim non-conformity due to the low performance issues? Yes or no and why To the following case:
ACME is a computer hardware manufacturer incorporated in China. ACME manufactures a wide range of computer hardware, but is best-known for its graphics processing units (GPUs). GPUs, also known as "video cards", are typically used as components in personal computers and video gaming consoles. While ACME manufactures GPUs on its own, it collaborates closely with MVidia, an American company which designs some of the industry-leading GPUs. Against a payment of an undisclosed fee, MVidia sends ACME its blueprints and technical plansfor GPU design, as well as about 100 of its own GPUs ("reference cards"). Under the contract, ACME is then allowed to manufacture GPUs using MVidia's design - and is allowed to use MVidia's branding, as long as the cards that ACME manufactures do not perform worse than the reference cards. 2 In September 2020, MVidia released a new series of GPUs - "3000-series". Its press release touted the cards as the "greatest generational leap ever". The press release contained performance numbers comparing 3090 - the best GPU model in the series - with the previous-generation models. Peformance of a GPU is most commonly evaluated in "frames per second" - the amount of still pictures it can output per one second. Where the top model of the previous generation could output approximately 50 frames per second, the 3090 managed to output 95, indicating a nearly 100% increase in performance. MVidia provided a few independent journalists with their GPUs, and all the reviews were exceedingly positive, confirming the increase in performance. Immediately following the press release, ACME entered into a contract with MVidia for manufacturing ACME 3090 GPUs, based on MVidia's designs. As done previously, MVidia provided ACME with the blueprints and a 100 reference GPUs, and ACME immediately started the manufacturing process, using its own materials and factories. "ACME 3090" GPUs were released for sale by ACME in October 2020. They were marketed as "the fastest GPU we ever made". RaskData (RD) is a Norwegian company specializing in sale of computer components to consumers across Scandinavia. On November 1st 2020, RS placed an order for 1000 ACME 3090 GPUs, each priced at 1.200 USD. During the negotiations, RS explained to ACME that it was vital that the GPUs arrive prior to the holiday season of 2020, which is why the contract stipulated that they would be delivered to Oslo "no later than December 5th, 2020". The contract included an entire agreement clause, but it did not include any provisions on choice of law. In the mid-November of 2020, a global shortage of semiconductor components hit several industries hard. Caused in part by the worldwide pandemic - and, in part, by the political sanctions between the key countries - the shortage meant that ACME could not produce its GPUs on time. On November 20th, they notified RS that "due to the global shortage of semiconductors, which are a key component in our GPUs, we will only be able to deliver 300 GPUs on the agreed date. The rest of the GPUs will be delivered by July 2021." RS immediately contacted ACME. The phone conversation was documented in writing: RS: Hello, we have received your email on the delay in our GPU order. As we made it clear during the negotiations, we really need to receive the GPUs prior to the holiday season; receiving them any latter would seriously hurt our profits. ACME: Thanks for reaching out! Sadly, we have to postpone your order due to the global semiconductor shortage. There is nothing we can do. RS: We understand that semiconductors are needed to make GPUs, but we have recently read that you used most of your semiconductors to make new semiconductor factories, not for your GPU manufacturing. ACME: That is right - it takes semiconductors to make semiconductors. We are now investing in our semiconductor business in order to avoid such GPU crisis in the future. However, that does mean your order will be among those waiting. 3 Seeing no way out, RS accepted the shipment of 200 GPUs, which arrived in Oslo on time. However, once they started selling them to their customers, they received disturbing reports of low performance. The GPUs could only output 55 frames per second, which was significantly under what MVidia's press release stated. RS contacted ACME again: RS: Hello, we are receiving disturbing customer reports about performance of ACME 3090 GPUs. They are outputting only 55 frames per second, but you claimed a 100% leap from last year! ACME: Hi! We never made any claim that our card could reach such numbers. Those claims were made by MVidia, about their own GPUs. RS: But you advertise this GPU using MVidia's 3090 brand! And you claim it is the fastest GPU you ever made! ACME: We advertise purely based on the technical specifications, such as amount of memory and shader units, not the actual performance. And yes, even at 55 fps, this is faster than previous GPUs we've made, which could output 50 fps. That is still a 10% performance increase. If we are in breach of agreement with MVidia, that is not of concern to you. ACME therefore refused to refund RS for any of the GPUs sold. In fact, on December 15th, they sent an invoice for 1000 GPUs, although only 200 were delivered. RS barely managed to resell more than 40 GPUs, after the rumours of their poor performance spread.
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