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CISG CASE PRESENTATION

Hungary 2000 Supreme Court (Mixing machine case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/000000h2.html]

Primary source(s) of information for case presentation: Case text

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Case identification

DATE OF DECISION: 20000000 (2000)

JURISDICTION: Hungary

TRIBUNAL: Supreme Court of Hungary [Legfelsöbb Biróság]

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: Legf. Bir. Gf1.30.299/2000

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Seller (plaintiff)

BUYER'S COUNTRY: [-]

GOODS INVOLVED: Mixing machine


Classification of issues present

APPLICATION OF CISG: Yes [Article 1(1)(a)]

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 18 ; 33 ; 74

Classification of issues using UNCITRAL classification code numbers:

18A [Criteria for acceptance of an offer];

33A [Time for delivery: on date fixed from or determinable from contract]

74A ; 74B [General rules for measuring damages: loss suffered as consequence of breach; Outer limits of damages: foreseeability of loss]

Descriptors: Offers ; Delivery ; Damages ; Foreseeability of damages

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Editorial remarks

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Citations to case abstracts, texts, and commentaries

CITATIONS TO ABSTRACTS OF DECISION

(a) UNCITRAL abstract: Unavailable

(b) Other abstracts

Unavailable

CITATIONS TO TEXT OF DECISION

Original language (Hungarian): Unavailable

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation)

Queen Mary Case Translation Programme

Supreme Court ( Legfelsõ bb Biróság) of Hungary

2000 [no exact date provided] [Legf. Bir. Gfl.30.299/2000]

Translation [*] by Tamás Szabados [**]

Edited by Andrea Vincze [***]

In its judgment, the Court of First Instance obliged the Defendant [Buyer] to pay to the Plaintiff [Seller], within fifteen days, Deutsche Mark [DM] 171,926 with 6% interest for the period between 1 November 1995 and the actual payment, as well as the costs of the proceedings. According to the facts of the case, after the [Seller]'s offer was made on 15 July 1994, the modified offer of 1 August 1995 was accepted by the [Buyer]. Consequently, a delivery contract in foreign commerce was concluded between the parties. The parties did not determine the exact time of delivery, but the offer of 15 July 1994 indicates a six-month delivery period calculated from clarification of technical and price issues. The price in the [Seller]'s offer of 1 August 1995, which was accepted by the [Buyer] without a formal confirmation, was DM 804,828 with a deadline for payment determined in the invoice. On 24 February 1995, the [Seller] delivered the ordered machine for the [Buyer] who took it over but did not pay DM 124,707 from the purchase price. Moreover, neither was DM 11,692.98 as the price of the mixing machine paid off. Additionally, the [Seller] obtained by assignment a receivable of another company aounting to DM 47,218.73 against the [Buyer]. The total amount of the latter is DM 171,926.

The Court of First Instance rejected the [Buyer]'s arguments, according to which a delay on the part of the [Seller] resulted in significant damage because of the devaluation of the Hungarian forint [HuF] in March 1995. The [Buyer] concluded the contract with the [Seller] on behalf of a third party, and it is not established that the [Buyer] did not receive the consideration specified in the invoice from its principal. Furthermore, a claim for damages cannot be enforced also because in February 1994 when the machines were taken over, the [Buyer] did not did not make a statement for reservation of its rights.

The [Buyer] appealed against the judgment asking for its partial alteration and rejection of the [Seller] claim with respect to the purchase price of DM 124,707. The [Buyer] alleged that, compared to the offer of 15 July 1994, the [Seller] performed its obligation with delay, because having accepted the six-month deadline, the performance on 24 February 1995 was late. That is, the [Seller]'s performance did not conform to the contract. Therefore, the change of the exchange rate in March 1995 affected the [Buyer] unfavorably, since the purchase price provided was insufficient to pay off the purchase price agreed upon with the [Seller].

In its cross-appeal, the [Seller] asked for the approval of the judgment of the First Instance.

HOLDING

The [Buyer]'s appeal is unfounded.

The Court of First Instance ruled correctly that, based on Section 25 of the Private International Law Act (Law Decree 13 of 1979), the seller's law is applicable, that is, in the instant case the UN Convention on Contracts for the International Sale of Goods of 1980 (CISG) promulgated in Hungary by Law Decree 20 of 1987.

Pursuant to Article 33 CISG, the seller must deliver the goods, if a date is fixed by or determinable from the contract, on that date; if a period of time is fixed by or determinable from the contract, at any time within that period unless circumstances indicate that the buyer is to choose a date; or in any other case, within a reasonable time after the conclusion of the contract. The default of the [Seller], i.e., non-conforming and late performance by [Seller], should have been proved by the [Buyer] [Section 164(1) Civil Procedure Act].

Based on the available documents, it can be established that the performance of the contract was undertaken by the [Seller] until "approx." the end of 1995 in the order confirmation of 1 August 1994 which was accepted by the [Buyer] through implied conduct (Article 18 CISG). Within the meaning of Article 33 CISG, such an indication can be considered neither as a fixed date nor a fixed period of time from which the seller could not depart in a way to be still able to perform within a reasonable time after such date of period of time. The [Seller] performed its contractual obligation on 22 February 1995, when the [Buyer] took over the machines without any objection or reservation of any right. The fact that the [Buyer] did not refer to delay on delivery (see delivery minutes of 22 February 1995) and that it did not demand performance in writing in January 1995, shows that the [Seller]'s performance on 22 February 1995 was considered by the [Buyer] as having been carried out within a reasonable time and conforming to the contract, based on the order confirmation of 1 August 1994. In contrast with the [Buyer]'s view, commencement of the approximately six-month period indicated in the offer made on 15 July 1994 depended on the date of the clarifying of all techical and price issues. The parties agreed on the price according to the order confirmation of 1 August 1994; thus the approx. six months can by no means be calculated from 15 July 1994.

Pursuant to Article 74 CISG, damages may not exceed the loss which the party in breach foresaw or ought to have foreseen at the time of the conclusion of the contract, in the light of the facts and matters of which he then knew or ought to have known, as a possible consequence of the breach of contract. The parties determined the purchase price in DM. Unless otherwise agreed/provided for, the [Seller] did not have to expect that the DM exchange rate might develop unfavorably for the [Buyer], therefore, the [Buyer] could not claim damages deriving from the latter even if late performance is proved. In addition, the [Buyer] also failed to show the exact amount of the alleged damage in detail.

The [Buyer] did not dispute that the [Seller] had issued its invoices on the dates indicated in the lawsuit and that those had been taken over by the [Buyer]. If the [Buyer] suffered damages due to fluctuation of the exchange rate, the [Buyer] must settle this with its principal provided that the conditions for such settlement are fulfilled. Consequently, as shown in detail above, the [Buyer] was not entitled to retain DM 124,707 from the purchase price against the [Seller].

With regard to the merits above, the unchallenged part of the judgment of the Court of First Instance remains unaffected, and its challenged part was approved by the Court of Second Instance based on section 253(2) of the Civil Procedure Act.


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff-Appellee is referred to as [Seller] and Defendant-Appellant is generally referred to as [Buyer]

** Tamás Szabados is a Ph.D. candidate at Eötvös Lóránd University, Hungary. Currently, he is an LL.M. student at University College, London.

*** Andrea Vincze is a Fellow of the Institute of International Commercial Law of the Pace University School of Law. She received her law degree from the University of Miskolc, Hungary, in 2002. Currently, she is a Ph.D. candidate at the same university, working on her research project on international commercial arbitration and ICSID arbitration.

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Pace Law School Institute of International Commercial Law - Last updated June 24, 2008
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