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CISG CASE PRESENTATION

Belgium 26 April 2000 Appellate Court Gent (BV BA. J.P. v. S. Ltd.) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/000426b1.html]

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

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Case identification

DATE OF DECISION: 20000426 (26 April 2000)

JURISDICTION: Belgium

TRIBUNAL: Hof van Beroep [Appellate Court] Gent

JUDGE(S): J. Delbeke, D. Vandorpe, P. Vanherpe

CASE NUMBER/DOCKET NUMBER: 1997/AR/2235

CASE NAME: BV BA. J.P. v. S. Ltd.

CASE HISTORY: 1st instance Rb van Koophandel Gent 12 December 1996

SELLER'S COUNTRY: Singapore (plaintiff)

BUYER'S COUNTRY: Belgium (defendant)

GOODS INVOLVED: Plastic bags


Case abstract

CISG-Belgium database of Katholieke Universiteit Leuven

A Singapore seller sold plastic bags to a Belgian buyer. The parties had had business relations since 1990, though sometimes through Dutch or German agents. The seller sued the buyer for payment of the price in the Rechtbank van Koophandel (Commercial Court) of Ghent. The buyer stated that the goods were defective and instituted a counterclaim for the avoidance of the contract and damages. In a judgment of 12 December 1996 the court found that the buyer had not given notice of avoidance in sufficient time according to article 71 CISG so that that remedy was not available to the buyer and ordered the buyer to pay the price. The buyer appealed to the Hof van Beroep (Court of Appeal) of Ghent. That court found that the contract for which the buyer claimed the exceptio non adempleti contractus (art. 71 CISG) and damages was a different one [than] the one for which the price was claimed and that the buyer failed to indicate a link between those contracts. According to article 71 CISG, avoidance had to relate to the defective delivery. The court further found that the buyer had not given notice of avoidance immediately to the seller, as was required by article 71 CISG, but respectively five and fourteen months later. Some of the claims concerned deliveries to the sister company of the buyer. However, that was a different company and those claims could not be included by the buyer. Furthermore the buyer had not given notice of the non-conformity to the seller within a reasonable period according to article [39] CISG. The appeal was dismissed and the judgment of the commercial court confirmed.

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Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 38 ; 39 ; 71 ; 73

Classification of issues using UNCITRAL classification code numbers:

38A [Buyer's obligation to examine goods];

39A [Requirement to notify seller of lack of conformity: buyer must notify seller within reasonable time];

71C [Obligations of party suspending performance: immediately notify other party];

73A [Avoidance in installment contracts: fundamental breach with respect to installment]

Descriptors: Examination of goods ; Lack of conformity notice, timeliness ; Suspension of performance ; Avoidance ; Installment contracts

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Editorial remarks

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Citations to other abstracts, case texts and commentaries

CITATIONS TO OTHER ABSTRACTS OF DECISION

(a) UNCITRAL abstract: Unavailable

(b) Other abstracts

Unavailable

CITATIONS TO TEXT OF DECISION

Original language (Dutch): CISG Belgium database of Katholieke Universiteit Leuven <http://www.law.kuleuven.ac.be/ipr/eng/cases/2000-04-26.html>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

English: Larry A. DiMatteo et al., 34 Northwestern Journal of International Law & Business (Winter 2004) 299-440 at 417 ("notification is an absolutely necessary prerequisite for exercising the right of suspension for anticipatory breach"); CISG-AC advisory opinion on Examination of the Goods and Notice of Non-Conformity [7 June 2004] (this case and related cases cited in addendum to opinion)

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Case text (English translation)

Queen Mary Case Translation Programme

Appellate Court (Hof van Beroep) of Gent

B.V.B.A. J.P. v. S. Ltd.

26 April 2000

Translation [*] by Benoit Samyn [**]

Translation edited by Sieg Eiselen [***]

PARTIES: COUNSEL. B.V.B.A. J.P. [buyer], with registered office in Ghent 9041 (Oostakker) [...], Belgium, registered in the commercial register of Ghent [...], Appellant, having as counsel Mr. Mario Lippens, lawyer at 9000 Ghent, [...] versus S. Ltd. [seller], a company under the law of Singapore, with seat at Singapore 1231 [...], having chosen as domicile the office of its counsel, Respondent, having as counsel Mr. Paul Aerts, lawyer at 9000 Ghent, [...].

The Appellate Court makes the following decision.

1. [Admissibility of action]

The Appellate Court heard the parties in their arguments and conclusions in an open court session and considered the case documents.

[Buyer], in a timely and legally valid manner, has given notice of appeal against the decision of 12 December 1996, judged in adversarial proceedings by the 6th chamber of the Commercial Court of Ghent [Court of First Instance].

The incidental appeal of [seller] is also admissible.

2. [Facts and positions at First Instance]

     2.1 [Facts of the case]

The facts that gave rise to this dispute can be summarized as followed.

[Seller] is a manufacturer of plastic bags which he sold to [buyer]. The parties maintained commercial relations since 1990.

According to [buyer], trade was not always carried on directly; some deliveries and invoices went through intermediaries, such as the Dutch agent of [seller], East-West, and the German agent, GmbH B.

[Buyer] has a sister company in France, S.A. Secopa, which also sold plastic bags to [buyer].

On 16 May 1991, [seller] invoiced [buyer] in the amount of US $25,811 for plastic bags delivered in May. The invoice was neither objected to nor paid by [buyer].

On 19 August 1991, [buyer] transmitted in writing to [seller] [buyer]ís complaints concerning two deliveries that were invoiced by S.A. Secopa on 31 May 1990 and 21 June 1990. Moreover, [buyer] formulated a complaint concerning the delivery by [seller] in March 1991. [Buyer] formulated a total damage claim of US $30,515.40 and informed [seller] that no more payments would be made until such time as the loss suffered had been compensated.

No settlement could be reached between the parties. [Seller] sued [buyer].

     2.2 [Position of parties at First Instance]

-  [Sellerís claim]

Before the Court of First Instance, [seller] claimed from [buyer] payment of US $25,811, to be paid in Belgian francs at the highest exchange rate chosen by [seller] between June 1991 and the date of the judgment, to be augmented with arrears interest from 18 December 1991, legal interest and costs.

-  [Buyerís counterclaim]

Buyer lodged a counterclaim for:

- Avoidance of the sales contracts concluded between the parties;
- Assignment of the main claim to the extent that compensation was made with [buyer]ís counterclaim and set-off against the main claim to the extent that compensation is awarded in terms of [buyer]ís counterclaim;
- Judgment against [seller] for payment of compensation in the amount of US $30,515.40 in Belgian francs at the highest exchange rate on the day of the payment, to be augmented with arrears interest from 19 August 1991, legal interest and costs.

3. Decision of Court of First Instance

The Court of First Instance decided in the first place that the parties had agreed that the sale contracts between them were governed by the Vienna Convention for Sale of Goods of 11 April 1980 (hereinafter CISG).

The Court of First Instance decided that, taking into consideration the length of time between the deliveries and taking into account the invoicing of the disputed goods to [buyer] by corporate bodies not parties to this dispute, [buyer] had not complied with the obligation to give the other party immediate notice of the suspension of the performance of [buyer]ís obligations (the so-called exceptio non adimpleti contractus), as required under Art. 71(3) CISG.

Since [buyer] had disputed neither the receipt of the goods invoiced on 16 May 1991, nor their conformity, the Court of First Instance concluded that the claim of [seller] was well founded.

[Seller]ís claim of interest for arrears from 18 December 1991 was rejected by the Court of First Instance because no proof of default was submitted.

Regarding [seller]ís claim for the conversion of the foreign currency (US dollars) to Belgian francs at the highest rate chosen by [seller] between June 1991 and the date of the judgment, the Court of First Instance decided that the conversion had to be made at the highest rate on the day of payment, pursuant to the rule that in all contracts concerning a foreign currency, it is the foreign currency that is due and only that.

The counterclaim of [buyer] was rejected as unfounded by the Court of First Instance, due to lack of evidence of contractual non-performance or mal-practice by [seller].

Accordingly, the Court of First Instance held [buyer] liable to pay to [seller] US $25,811 converted to Belgian francs at the highest rate on the day of payment, plus legal interest and costs.

4. [Arguments raised on appeal]

     4.1 [Buyerís arguments]

The complaints of [buyer] are mainly a reiteration of arguments also raised before the Court of First Instance.

[Buyer] states that the Court of First Instance misunderstood the contractual relationship between the parties, that it wrongly considered that [buyer] did not satisfy the requirements of Articles 71(1)(a) and 71(3) CISG and that it wrongly concluded that, under the CISG, the parties themselves, not the court, may declare the contract avoided.

Furthermore, the Court of First Instance decided incorrectly that the first complaint of [buyer] did not refer to a specific delivery, that the payment of the invoice had not been refused and that [buyer] had failed to give notice of the lack of conformity of the goods within a reasonable time.

Finally, [buyer] states that the Court of First Instance erred in concluding that [buyer] did not prove that the Respondent is the seller of the defective goods.

[Buyer] requests that the appeal be allowed and declared justified, that the decision of First Instance be annulled and that the original main claim of [seller] be rejected and the original counterclaim of [buyer] be allowed.

     4.2 [Sellerís response]

[Seller] argues that the principal appellate claim of [buyer] should not be allowed, or that it should at least be declared unfounded and that [buyer] should be held liable to pay costs.

By incidental appeal, [seller] requests that arrears interest on the assigned principal sum should also be awarded, as from the moment of the notification of default on 15 December 1991.

DECISION OF THE APPELLATE COURT

5. [The contested claims]

The original main claim of [seller] was concerned with invoice no. 0054/91 of 16 May 1991 for an amount of US $25,511, which was sent by [seller] and not disputed by [buyer]. That invoice was concerned with the sale and delivery of 2,435,000 plastic bags (see item 13 in the [buyer]ís file).

On the other hand, [buyer] with its original counterclaim, aimed to obtain compensation of (US $23,401 + US $7,114.40 =) US $30,515.40 for the alleged defective delivery of plastic bags. This is partly concerned with a loss of US $23,401 resulting from alleged defective deliveries invoiced on 31 May 1990 and 21 June 1990 by [buyer]ís sister company S.A. Secopa and partly with a loss of US $7,114.40 resulting from a defective delivery in March 1991 by [seller] himself (see item 17, ibid. and item 1 in [seller]ís file).

6. [Sellerís original main claim]

[Buyer] did not dispute, either at First Instance or in appeal, the conformity of the delivery in respect of invoice no. 0045/91 of [seller] and which was performed in May 1991. [Buyer] did not dispute the concerned invoice in any way.

Therefore, the reliance by [buyer] on an exceptio non adimpleti contractus is out of the question, unless [buyer] could prove a legal connection between the suspended agreement and the agreement in relation to which a claim could be made by [buyer]; in other words, a sufficient mutual interdependence of the agreements.† However [buyer] did not provide such evidence.

-  Firstly [buyer] does not prove or make convincing argument that there may be a question of a framework agreement with [seller], or that all performances have to be seen within a global agreement to deliver plastic bags.

-  [Buyer] without justification relies on the exceptio non adimpleti contractus of Article 71(1) CISG. The conditions for the operation of Article 71(1) CISG have not been fulfilled. [Seller] has delivered the agreed goods and by this has complied fully with all the obligations under the agreement in respect of which invoice 0054/91 had been issued. The defects for which the [buyer] blames the [seller] are all in respect of deliveries made partly by a third party (S.A. Secopa) in May and June 1990 and partly by [seller] in March 1991, which have no connection at all with invoice 0054/91.

Besides, [buyer] cannot reasonably allege that by its written notice of 19 August 1991 [buyer] complied with its obligation under Art. 71(3) CISG, to "immediately" inform the other party of the suspension of performance, since the complaints of [buyer] concerned deliveries which had been performed respectively more than fourteen months, and five months earlier. In so far as it may be necessary, the Appellate Court observes that in the case of possible defects with respect to an earlier delivery, the CISG does not permit a party to raise the exceptio non adimpleti contractus in respect of an obligation to make payment for the most recent delivery.

This is implicitly, but clearly affirmed by Art. 73(1) CISG which provides:

"In the case of a contract for delivery of goods by instalments, if the failure of one party to perform any of his obligations in respect of any instalment constitutes a fundamental breach of contract with respect to that instalment, the other party may declare the contract avoided with respect to that instalment." (Underlining added by Appellate Court.)

From this it can be concluded that the Court of First Instance has in a judicious way granted the original main claim of [seller].

7. [Buyerís original counterclaim]

Concerning the original counterclaim of [buyer], which could result in legal compensation, the Appellate Court makes the following assessment.

     7.1 [Delivery made by buyerís sister company]

Concerning the claim of [buyer] relating to the goods delivered by [buyer]ís sister company, S.A. Secopa, [buyer] had to address its claim for compensation in the amount of US $23,401 to S.A. Secopa.

[Buyer] after all dealt with S.A. Secopa and has also, without any protestation, paid the invoices issued by S.A. Secopa. [Seller] has never committed himself to be liable for the actions of S.A. Secopa with regards to [buyer]. The fact that [seller] has interacted in his capacity of supplier to S.A. Secopaís supplier, GmbH B., does not affect the above conclusion.

The statement of [buyer] that she had always been the buyer and that [seller] had always been the seller is contradicted by her own documents from which it appears that there were consecutive sales contracts between GmbH B. and S.A. Secopa and between S.A. Secopa and [buyer].

Nor can it be deduced from the intermediary role of the Dutch agent of [seller] that there was a direct contractual link between [seller] and [buyer]. Also, the meetings on 28 July 1991 between [buyer] and [seller] did in no way refer to the deliveries made by S.A. Secopa but to deliveries made by the [seller] directly to [buyer].

     7.2 [Delivery made by seller]

Regarding the alleged defective delivery by [seller] in March 1991, the Appellate Court notes that [buyer] did not submit any complaint made by the end user, Intermarche, even though [buyer] reported in its written notice of 19 August 1991 that 560,000 bags had been returned due to their bad quality.

Nor does [buyer] prove that the alleged defective plastic bags were actually delivered by [seller], despite the fact that [buyer] does not contest the allegation that [buyer] also bought plastic bags from other manufacturers from the Far East.

[Seller]ís argument that his willingness to negotiate was motivated exclusively by commercial considerations is credible to the Appellate Court and does not change the fact that the burden of proof of the (latent) defects and for the consequential damages suffered rests upon [buyer].

And in any event, [buyer] did not fulfil the obligation required under Art. 38 CISG to examine the goods, or cause them to be examined, within as short a period as is practicable in the circumstances.

To the Appellate Court, it is clear that, in the case of a lack of conformity to the extent alleged by [buyer] (560,000 defective plastic bags out of a total quantity of 1,378,000), if [buyer] had taken the precaution to take simple random samples, [buyer] would have been able to confront [seller] with the defect within the required "short term."

Taking into account the quick means of communication means that are available nowadays, five months in the given circumstances does not fulfil the requirement of a reasonable time. In addition, after [buyer] had received a complaint on 10 June 1991 from S.A.R.L. J., [buyer] waited two months before transmitting the complaint to [seller]. (See items 10 and 17 in the [buyer]ís file).

[Seller] rightly refers to Art. 39(1) CISG which provides:

"The buyer loses the right to rely on a lack of conformity of the goods if he does not give notice to the seller specifying the nature of the lack of conformity within a reasonable time after he has discovered it or ought to have discovered it."

From the above it follows that [buyer] is also not entitled to the damages of US $7,114.40 claimed.

8. [Sellerís claim for interest]

[Seller] rightly claims the (legal) interest for arrears starting on 18 December 1991. [Seller] provided proof of default at that date and [buyer] did not dispute receiving the delivery. (See item 4 in the [seller]ís file).

RULING OF THE APPELLATE COURT

On these grounds, the Appellate Court, doing justice by adversarial proceedings, and taking into account Article 24 of the law of 15 June 1935 concerning the use of language in court proceedings:

-   Declares [buyer]ís principal appeal and [seller]ís incidental appeal admissible, rejects the first one as unfounded and upholds the second one;
- Confirms the disputed judgment of the Court of First Instance in all its parts, with the only addition that on the principal sum to which [buyer] was held liable, interest is due from 18 December 1991 to 20 January 1992;
- Orders [buyer] to pay the costs of the appeal.

On the [seller]ís side, the legal costs up to the present† are estimated at Bf 16,800.

[...]


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Appellant of Belgium is referred to as [buyer]; the Respondent of Singapore is referred to as [seller]. Monetary amounts in Belgian francs are indicated as [Bf].

** Benoit Samyn practices law with the Arbitration Group of Coudert Brothers in Brussels. He graduated from Ghent University and has an LL.M. from Queen Mary, University of London and an MBA from Brussels. The second-iteration redaction of this translation was by Dr. John Felemegas of Australia.

*** Sieg Eiselen is Professor in Private Law, University of South Africa; Advocate of the High Court of South Africa.

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Pace Law School Institute of International Commercial Law - Last updated September 27, 2004
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