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CISG CASE PRESENTATION

Germany 30 July 2001 District Court Braunschweig (Metal case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/010730g1.html]

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

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Case identification

DATE OF DECISION: 20010730 (30 July 2001)

JURISDICTION: Germany

TRIBUNAL: LG Braunschweig [LG = Landgericht = District Court]

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: 21 O 703/01 (028)

CASE NAME: German case citations do not identify parties to proceedings

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Germany (plaintiff)

BUYER'S COUNTRY: United Kingdom (defendant)

GOODS INVOLVED: Metal


Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 75 ; 77 ; 78 [Also cited: Articles 45 ; 74]

Classification of issues using UNCITRAL classification code numbers:

75C [Damages established by substitute transaction (damages recoverable): difference between contract price and price in substitute transaction);

77A [Obligation to take reasonable measures to mitigate damages]

78A [Interest on delay in receiving price or any other sum in arrears]

Descriptors: Damages ; Cover transactions ; Mitigation of loss ; Interest

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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

English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=868&step=Abstract>

CITATIONS TO TEXT OF DECISION

Original language (German): cisg-online.ch <http://www.cisg-online.ch/cisg/urteile/689.htm>; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=868&step=FullText>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

English: Liu Chengwei, Recovery of interest (November 2003) n.266; Larry A. DiMatteo et al., 34 Northwestern Journal of International Law & Business (Winter 2004) 299-440 at n.738; Article 78 and rate of interest: Mazzotta, Endless disagreement among commentators, much less among courts (2004) [citing this case and 275 other court and arbitral rulings]

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Case text (English translation)

Queen Mary Case Translation Programme

District Court (Landgericht) Braunschweig

30 July 2001 [21 0 703/01 (028)]

Translation [*] by Dr. Andrea Vincze [**]

Edited by Jan Henning Berg [***]

FACTS OF THE CASE

[Buyer] requests [Seller] to pay damages for a substitute purchase it had to carry out because [Seller] failed to deliver the goods owed under the contract.

[Buyer] is engaged in mineral and metal business. [Seller] sells metal. According to the contract of 2 July 1998 / 22 July 1998, [Buyer] purchased 968 kilograms (net weight) of the material MARROPINO MICROLITE Ta 205 of 66.91% concentration for a lump sum of US $26,000.00.

[Seller] was unable to deliver the material. In the period following, several communications concerning substitute delivery were exchanged between the parties. However, no agreement could be reached concerning a substitute delivery. [Buyer] informed [Seller] of a prospective cover purchase in South America. Further attempts to settle the dispute out of court failed as well.

POSITIONS OF THE PARTIES

[Buyer]'s position

[Buyer] states that it was contractually obliged to deliver the goods to its own customers. In order to be able to fulfil these contractual obligations, [Buyer] finally decided to carry out a substitute purchase through its Bolivian subsidiary. This caused it to incur extra costs concerning the purchase price, which are a subject of the present claim.

[Seller]'s position

[Seller] states that no substitute purchase was carried out.

REASONING OF THE COURT

[Buyer]'s claim is founded.

      1. The District Court (Landgericht) Braunschweig has jurisdiction to hear the case. During the oral hearings, the parties declared unanimously that they accept the jurisdiction of this court and the application of German law.

      2. The parties also shared the opinion that the arbitration agreement was not valid.

      3. [Buyer] claims damages on the following legal grounds:

            a) The Convention on the International Sale of Goods (CISG - BGBI.[*] 1989 11,

page 588) is applicable to the contract. The parties have their places of business in different states. Since Germany is signatory to the CISG but the United Kingdom is not, Art. 1(1)(a) CISG is not applicable. Yet, according to Art. 1(1)(b) CISG, the rules of private international law lead to the application of German law, i.e., the CISG (cf. Palandt/Heldrich, BGB, 60th ed., Art. 38 EGBGB [*] para. 7). No reference to the applicable law can be found in the contract. The parties merely agreed upon the issue of jurisdiction. According to Art. 28(1)(1) EGBGB, the contract bears a closer connection with Germany. [Seller]'s place of business is in Germany. The place of payment and delivery was agreed upon as being Germany. The parties have agreed that the courts of Germany have jurisdiction.

            b) [Buyer]'s claim for damages is based on Art. 45(1)(b) and Art. 75 CISG. [Seller] was obliged by the contract to deliver the goods. This obligation was not fulfilled. [Seller] does not contest that it is obliged to pay damages for this reason.

      4. The claim for damages equals the following sum.

            a) [Buyer] carried out a substitute purchase. [Seller] has not properly challenged that substitute purchase under the procedural provision of 138 ZPO [*].

In its response, [Seller] confined itself to request the court not to award the lump-sum concerning the substitute transaction. Upon order by the court, [Buyer] considerably substantiated its statement concerning the substitute purchase and the relevant evidence was submitted (invoices, freight documents, statement of the buyer). During the oral hearings, this evidence was discussed in detail with the managers of both parties. At the time, [Seller] was unable to explain these documents. The manager of [Seller]'s business did not answer several questions either, such as the world market price of the material at the time of the substitute purchase. In order to be able to carry out a proper oral hearing for presentation of the case, [Seller] was given an additional period of three weeks to submit the missing documents. Upon [Seller]'s request, this was extended by a short time. In its statement which was submitted one day after the deadline, [Seller] once again contested the lump-sum payment requested by [Buyer]. This conduct of [Seller] does not fulfil the requirements set in 138 ZPO [*]. Yet, even if [Seller]'s objection were admissible, [Buyer] submitted the requested evidence for the substitute transaction. Although the submitted faxes and photocopies do not conform with the formal rules of evidence under 414 et seq. ZPO, they are admissible pursuant to the principle of free pondering of evidence laid down in 414 et seq. ZPO (BGH DB [*] 1986, 798).

[Buyer] can rely on this evidence. [Buyer] presented the contract concluded with its Bolivian subsidiary, which proves that the latter purchased the requested amount for [Buyer] on 13 April 1999. [Buyer] presented the so-called "Packing-List" as well, which proves that the material was packaged for the delivery from Bolivia to the USA. [Buyer] also presented the invoice completed by the Bolivian subsidiary. It turns out from the invoice that the material was sold by the Bolivian subsidiary to [Buyer], that it had to be transported from Santa Cruz, Bolivia to Philadelphia, USA and that it was received in Philadelphia by CABOT Corporation. [Buyer] submitted the relevant air-freight documents and a certification by the recipient in Philadelphia proving that the material did arrive. [Seller] objects to this evidence simply by stating that they were just photocopies. The court ruled that nothing refers to the fact that these copies would not match the original documents nor that they had been manipulated or forged somehow.

             b) Under Art. 75 CISG, [Buyer] is entitled to damages being the difference between the contract price and the price of the substitute transaction. The contract price for 1,472.67 pounds of the material Ta 205 should be US $26,000. This means that the contract price equals US $17.655 per lb. For the substitute purchase US $34 per lb was charged. The difference between the two is US $16.345 per lb. This difference in price multiplied by the amount of 1,472.67 equals the damages of US $24,070.79 requested by [Buyer].

      5. By the issue of damages, the question is not whether the Bolivian subsidiary chose the right legal form to carry out the substitute purchase. [Seller]'s objection concerning this question is unintelligible. The question which the Tribunal has to decide is whether the substitute purchase was carried out at the price mentioned.

      6. The alleged non-performance of the obligation to mitigate the loss cannot be held against [Buyer] either. [Buyer] cannot be expected to commit a breach of contract in order to cover a sum which appeared as a result of the substitute purchase it needed to carry out. Otherwise, [Buyer] would be obliged to pay further damages.

      7. Under Art. 78 CISG, [Buyer] is entitled to interest. The rate of interest was not contested by [Seller].

[...]


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For the purposes of this translation, the Plaintiff from the United Kingdom is referred to as [Buyer]; the German Defendant is referred to as [Seller]. Amounts in United States currency [US dollars] are indicated by [US $].

Translator's note on other abbreviations: BGH DB = Bundesgerichtshof Datenbank [Database of the German Federal Supreme Court]; BGBI = Bundesgesetzblatt [official journal of the Federal Republic of Germany]; EGBGB = Einführungsgesetz zum Bürgerlichen Gesetzbuch [German Code on Private International Law]; ZPO = Zivilprozessordnung [German Code of Civil Procedure].

** Dr. Andrea Vincze 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 in European legal systems. She has also dealt with cross-border and Internet-related copyright issues in her thesis written in English.

*** Jan Henning Berg is a law student at the University of Osnabrück, Germany and participated in the 13th Willem C. Vis Moot with the team of the University of Osnabrück. He has coached the team of the University of Osnabrück for the 14th Willem C. Vis Moot and 4th Willem C. Vis (East) Moot.

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Pace Law School Institute of International Commercial Law - Last updated June 11, 2007
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