Germany 21 December 2001 District Court Hamburg (Stones case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/011221g1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 419 O 48/01
CASE HISTORY: Unavailable
SELLER'S COUNTRY: Italy (plantiff)
BUYER'S COUNTRY: Germany (defendant)
GOODS INVOLVED: Stones
APPLICATION OF CISG: Yes [Articles 1(1)(a)]
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
14A [Criteria for an offer]; 18A [Criteria for acceptance of offer]; 21A [Late acceptance: consequences]; 23A [Time of conclusion of contract: contract concluded when acceptance becomes effective]; 26A1 [Effective declaration of avoidance: notice to the other party required]; 49A [Buyer's right to avoid contract: grounds for avoidance]; 71A1 [Suspension of performance: grounds for suspension by other party]; 74A ; 74B [General rules for measuring damages: loss suffered as consequence of breach; Outer limits of damages: foreseeability of loss]; 75A2 [Damages established by substitute transaction after avoidance: repurchase by aggrieved buyer]; 78B [Rate of interest]; 80A [Failure of performance caused by other party (party causing non-performance: loss of rights]
14A [Criteria for an offer];
18A [Criteria for acceptance of offer];
21A [Late acceptance: consequences];
23A [Time of conclusion of contract: contract concluded when acceptance becomes effective];
26A1 [Effective declaration of avoidance: notice to the other party required];
49A [Buyer's right to avoid contract: grounds for avoidance];
71A1 [Suspension of performance: grounds for suspension by other party];
74A ; 74B [General rules for measuring damages: loss suffered as consequence of breach; Outer limits of damages: foreseeability of loss];
75A2 [Damages established by substitute transaction after avoidance: repurchase by aggrieved buyer];
78B [Rate of interest];
80A [Failure of performance caused by other party (party causing non-performance: loss of rights]
CITATIONS TO ABSTRACTS OF DECISION
(a) UNCITRAL abstract: Unavailable
(b) Other abstracts
CITATIONS TO TEXT OF DECISION
Original language (German): CISG-online.ch website <http://www.cisg-online.ch/cisg/urteile/1092.pdf>
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
UnavailableGo to Case Table of Contents
Queen Mary Case Translation Programme
21 December 2001 [419 O 48/01]
Translation [*] by Sabine Kossebau [**]
Edited by Jan Henning Berg [***]
The court rules that:
The basis for the action is a demand for payment of the purchase price, which [Buyer] counters with a claim for damages.
[Buyer] was commissioned to do the construction work involving natural stones on the site of the new "S Hotel Hamburg". The natural stones needed were to be delivered by [Seller], which is domiciled in Italy. [Buyer] contacted the sales representative of [Seller] in December 1999 and early talks were held (see attachment B6). In a letter of 14 February 2000 (attachment B1), [Buyer] then gave the "order, based on our order terms, listed on the backside, to produce and deliver the stone panels, material Serpentin Classico, for the above named building project in Hamburg."
[Buyer] planned to give [Seller] a detailed delivery schedule and information on the exact quantities and surface processing of the stones in a meeting on 16 February 2000 at the Bau-TEC fair in Berlin, where the managers of both parties actually met and discussed quantities and dates of delivery. In that context, the manager of [Buyer] declared that performance was required by 8 September 2000 at the latest. Otherwise, [Buyer] would have to pay a contractual penalty to its sub-contractor. The manager of [Seller] stated that delivery would be possible within two to three months. Following that, on 21 February 2000 [Seller] sent an order confirmation to [Buyer] (Attachment B7), which on the same day sent a list of the "estimated" delivery dates to the sales representative of [Seller] (Attachment K5).
Subsequently, [Buyer] gradually sent "production lists for production and delivery" (Attachments K6, K8, K10 and K12) in accordance with construction progress. Each time, [Seller] sent order confirmations of the delivery quantities ordered, which then were reconfirmed by [Buyer] (Attachments K7, K9 and K11). Starting 27 June 2000, [Seller] delivered the stones ordered in several installments as follows:
|Order||Order Confirmation||Performance Target||Delivery Date|
|28 March 2000||4 April 2000||21st calendar week||27 June 2000|
|17 April 2000||20 April 2000||23rd cw||11 July - 11 Aug. 2000|
|26 May 2000||1 June 2000||26th cw||25 Sept. - 18 Nov. 2000|
|28 August 2000||-||-||-|
|4 Sept. 2000||-||-||-|
|15 Sept. 2000||-||39th cw||-|
As [Buyer] was unsatisfied with the "sluggish and sporadic" deliveries, it wrote a letter to [Seller] dated 12 September 2000 (see attachment B3) in which it requested [Seller] to present a delivery schedule for the remaining deliveries by 16 September 2000. [Seller] did not react to this in any way nor to another letter sent by [Buyer] on 3 November 2000, in which [Buyer] "for the last time" requested [Seller] to adhere to the promised delivery dates and to deliver the ordered goods by 10 November at the latest. In case of non-performance by that date, [Seller] announced it would commence legal proceedings.
[Seller] invoiced the stones delivered on 6 October 2000 and 17 November 2000 for DM 30,963.- and DM 28,535.28, respectively (attach. K1 and K2). In letters of 17, 22 and 27 November 2000, [Seller] demanded payment in vain. In a further letter of 30 November 2000 (attach. B17), [Seller] demanded payment of the invoices through its lawyer while announcing that in case of failure to observe the given time limit for payment it would immediately cancel the contract.
In the main, the parties are in dispute about having fixed dates of delivery that were agreed upon by both parties.
POSITIONS OF THE PARTIES
[Seller] alleges that at the time of contract negotiations it had pointed out that it could not accept fixed delivery dates and that this was not done so. Moreover, it argues that in February 2000 there was no final agreement, as consent had not been reached in all points, for example, concerning the prices. Furthermore, [Buyer] was not able to make binding statements in regard to the delivery dates which is confirmed by the fact that the "estimated" schedule for delivery was revised later on. Ultimately, it was agreed that installments were to be delivered per individual orders. There was no aggregated order. The stated delivery times of two to three months were calculated in accordance with the individual orders, provided that standard measurements were observed, which, however, was not the case. The excess of measurements even with the first order resulted in higher costs and delays all of which [Buyer] was informed about. Accordingly, the delivery dates were left undetermined in its order confirmations. [Seller] was only able to start production with the order lists present. The problems that arose were based solely on the chaotic planning of [Buyer]. From the fact that the last order was made after the purported date of completion, one could obviously conclude that [Buyer] was in default in its dealings with its contractor for which now [Buyer] alleges that [Seller] is to be made responsible.
[Seller] requests the court to direct [Buyer] to pay DM 69,498.26 together with 5 percent interest on DM 30,369.- since 7 October 2000 and on DM 38,535.26 since 18 November 2000.
[Buyer] requests the court to dismiss [Seller]'s claim.
[Buyer] contends that, at the Bau-TEC fair, the delivery dates were coordinated and firmly agreed upon in keeping with the usages of construction projects. The same was done concerning the measurements of the stones, which resulted out of the design plans (attach. B8) handed over. As the agreed delivery dates were not revoked by [Seller], the last delivery should have been completed on 21 July 2000 by the latest. In reality, [Seller] was notably late in delivery, namely with the deliveries up to November only resulting in about 60 percent of the total amount to be delivered. The production of raw slats should have begun after the placing of the order as is customary in the industry. For that, detailed work lists were not needed, as these were only to be taken as part of the aggregated order for customization and the finishing touch, for which significantly less time is needed. The cause for the problems is from [Buyer]'s point of view that [Seller] did not have sufficient raw materials in stock to observe the delivery dates and, moreover, had given priority to delivering to the construction site of the Office of the Federal Chancellor (cf. Attach. B 18).
[Buyer] sets off claims for damages and additionally files a counterclaim. Regarding this, [Buyer] states that because of the delay in delivery it was subjected to massive demands by its contractor, of which it informed [Seller]. Had the goods arrived in time, [Buyer] could have made the agreed date of completion and would not have been hit by these demands. The agreed contractual penalty was forfeited and [Buyer] had to perform services for free which it normally would have invoiced (cf. Attach. B5). And because the natural stone provided by [Seller] is unique and cannot be found anywhere else in the world, there had to be a change of materials which caused the need for massive re-schedulings.
The base of the building had to be re-measured and the lower structure had to be reinforced (cf. Attach. B12). Moreover, because of the non-delivery by [Seller], the construction time was prolonged, causing additional costs for the subcontractor and additional rental fees to be paid for needed lifting gear (attach. B15 and B 16).
[Buyer] details the following claims:
|Contractual penalty||DM 110,240.86|
|Costs of material change||DM 270,100.37|
|Costs for lower structure|
|Axis F and 3||DM 195,689.21|
|Employment / lifting gear||DM
[Buyer] alleges that all these expenditures had to be made to prevent threatening damages much higher than this.
[Buyer] requests the court to direct [Seller] by way of counterclaim to pay DM 335,510.18 together with 10 percent interest since 2 July 2001.
[Seller] requests the court to dismiss [Buyer]'s counterclaim.
[Seller] contends that [Buyer] itself has excluded the possibility of a set-off with contentious counterclaims in its own general terms and conditions (attach. K 13). [Buyer] was not entitled to damages because the requirements for a delay of delivery are not met. On the contrary, [Seller] delivered within an adequate period of time, bearing in mind that the minimum delivery date was prolonged by the two weeks of company holiday in August. [Seller] had no knowledge of the specific details of the contractual penalty. At any rate, this had not been effectively agreed upon, because the assessment of a daily rate of 0.5 percent of the total of the contract would present an unreasonable disadvantage ro the contractor. The other alleged extra or additional costs would also not be comprehensible and were not at all foreseeable. Moreover, a change of materials did not take place; instead, the natural stone was obtained by [Buyer] from another company. Furthermore, [Buyer] did not state which price it would have had to pay for comparable material if purchased from [Seller]; therefore, the alleged additional costs resulting from the alternative purchase cannot be calculated.
REASONING OF THE COURT
Excluding parts regarding interest, [Seller]'s claim is justified and [Buyer]'s counterclaim is dismissed.
1. [Seller] is entitled to payment of the purchase price in accordance with CISG Art. 53 and Art. 62. The business relationship of the parties and the resulting rights and duties of the parties are subject to the United Nations Convention on Contracts for the International Sale of Goods, as both parties are located in different countries (Italy and Germany) which are Contracting States, CISG Art. 1(1)(a). This Convention is also applicable to contracts for the supply of goods to be manufactured or produced as these are regarded as sales contracts, CISG Art. 3(1).
The parties were bound to each other by a contract for the supply of goods to be manufactured or produced, the only aspect in dispute being when and under which conditions an agreement was reached. The offer needed for outward consent (CISG Art. 14) was made on 16 December 1999 by [Seller], it being sufficiently definite, as it indicated the goods, named the quantity as well as the individual prices. The offer was accepted by [Buyer] on 14 February 2000, but this was not effective because of late acceptance (CISG Art. 18); this late acceptance not having been confirmed without delay by [Seller] as required for effectiveness (CISG Art. 21(1)). Nonetheless, an agreement between the parties was reached (CISG Art. 23) as can be seen from the letter of contract confirmation by [Seller] following the talks at the Bau-TEC fair. The confirmation recited the respective quantities. A mention of prices was not needed as these could be taken from the first offer. Concerning the dates of delivery, the contract confirmation of [Seller] is based on the dates given by [Buyer] which can be seen by the fact that the individual quantities were taken from that data.
The court proceeds on the assumption that the parties concluded a general [framework] contract and the individual orders were not supposed to constitute separate agreements. Rather, the orders are to be taken as individual retrievals within the scope of a general contract.
But even if the contractual relationship were to be judged differently, [Seller] would be entitled to demand the purchase price because it had delivered those goods accordingly and they were accepted by [Buyer] without complaint. Therefore, the invoices of 6 October 2000 in the amount of DM 30,963.00 and of 18 November 2000 in the amount of DM 38,535.26 cannot be disputed.
2. [Buyer] has not convincingly presented and given proof that it is entitled to damages against [Seller].
a) As far as [Buyer] demands reimbursement of the additional expenses because of the alleged change of materials, it asserts non-performance damages, namely the costs of a substitute transaction, which, in accordance to CISG Art.75, can only be claimed if the contract is avoided and the substitute transaction was done within a reasonable time after avoidance. The preconditions are not met in this case.
Disregarding the question whether [Buyer] had the right to declare the contract avoided (CISG Art. 49), in any event, [Buyer] did not declare the contract avoided (CISG Art. 26), which would have been necessary. Even in cases appearing to be indisputable, a pronouncement by [Buyer] is necessary, which, depending on the case, may also be an implied pronouncement (cf. Schlechtriem, Kommentar zum UN-Kaufrecht, 3rd ed., Art. 49, para. 28f.). Here, [Buyer] neither explicitly nor implicitly made obvious that it was not willing to fulfil the contract because of the late delivery.
In its letter of 12 September 2000, [Buyer] complained about sluggish deliveries but did not avoid the contract. Contrary to that, [Buyer] pressed for quick fulfilment.
In [Buyer]'s letter of 3 November 2000, it also requested delivery. The additional declaration that [Buyer] would start legal proceedings against [Seller] if another date would pass by without delivery did not constitute an avoidance. At any rate, from the viewpoint of [Seller], this could not be explicitly understood in such a way, because the declared start of legal proceedings could have also meant the enforcement of the aforementioned demand for fulfilment of the contract. Furthermore, [Buyer] did not clarify in any other way that it assumed the contract to have ended.
An exception to the requirement of notice of avoidance of contract was not present in this case. Such an exception could only be made if at the time of the substitute transaction it had been clear that the obligor would not perform in any case, if he seriously and definitely refused to perform so that an avoidance of contract would not serve its function but would only be purely a matter of form (cf. Schlechtriem, as above, Art. 75, para.5). That is not the case here.
Although [Seller] did not fulfil the orders starting from 28 August 2000, it did continue delivery of previous orders until November 2000. [Seller] then made further deliveries contingent on payment of its invoices. Disregarding the question whether [Seller] had a right to withhold deliveries, it nonetheless did not declare its intention not to deliver anymore at all. [Seller] itself states that it was willing to continue delivery. Nothing else can be concluded from the letter of its attorney of 30 November 2000. In this letter, [Seller] itself declares the avoidance of the contract which implies that it had concluded the contract to be valid and ongoing until then. The fact that [Seller] gave the supplying of the construction project of the Office of the Federal Chancellor a higher priority was no indication that it did not want to deliver to [Buyer] anymore.
At this point, explicit clarifications by [Buyer] would have been needed, not only concerning the deliveries it demanded but even more so concerning the ending of the contract. Added to that, [Buyer] carried out the alleged change of material and the work needed to do so before the last delivery by [Seller] had arrived. [Buyer] demands payment of an invoice of 5 October 2000 concerning the expansion of static and the revision of records. The commission for this was given on 22 September 2000 as stated on the invoice. There are doubts as to whether these costs are connected to the change of material. The same is applicable to the invoice of 7 December 2000 which resulted from the same commission. Performances were made which fell into the period of delivery agreed upon with [Seller].
With the invoice of 2 March 2001, [Buyer] bills forty-nine hours which supposedly accrued on 8, 12, 15 and 27 February 2001. According to the attached statement, work was done only seventeen hours during these days. [Buyer] did not bring forth which hours of the attachment to Invoice No. 01013 are to be billed to [Seller]. Concerning Invoice No. 010314, a part of the billed hours falls into the time between 12 July and 4 September 2000. Even if it is only half an hour, it is not comprehensible for the court in which way this work should have been connected to the change of material.
Finally, it is to be held against [Buyer] that it did not deduct the costs which would have occurred even if [Seller] had delivered on time. Because the stones originally planned on would have had to be moored too, these "anyway"-costs would have had to be deducted. The accounting does not show that such separation was made and that only the additional costs were claimed.
b) As far as [Buyer] demands compensation damages for losses resulting from delay, it is a requirement that such damages be based on a breach of contract by the other party, CISG Art. 74. And such 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 it then knew or ought to have known as a possible consequence of the breach of contract.
The court is under the assumption that [Seller] has breached its duty to deliver (CISG Art. 30); nevertheless, it is not obligated to pay for the alleged damages, CISG Art. 45(1)( b).
There was a default in delivery by [Seller]. The parties did not, as was argued by [Buyer], agree on fixed delivery dates or fixed periods for delivery, as at first only "estimated" delivery dates were given, the details of which were subject to the individual orders. In any event, as shown by the quantities referred to in its contract confirmation, [Seller] based itself on the schedule of delivery given out by [Buyer], which therefore was implicitly integrated into the contract. Even if no fixed dates can be deduced from this, the schedule of delivery gives a frame for the appropriateness of length of the periods of time for delivery (CISG Art. 33) which, accordingly, are determined to be two to three months after a call for delivery.
According to this, only the first two deliveries were made in the required time frame. The order of 26 May 2000 was not delivered within the time frame even when making allowances for the case that possible special adjustments to the stones were needed to complete the order. The following orders by [Buyer] were not carried out at all by [Seller] for which the latter is responsible as it did not have a right to suspend the performance (CISG Art. 71). Though the claim was due after the delivery, [Buyer] had the right to wait for an invoice, which only followed on 6 October, resp. 18 November 2000 with an acknowledged time for payment of two weeks. Therefore, [Seller] did not have a right to suspend the performance of its obligations, as it itself was in delay before that (CISG Art. 80).
Nevertheless, the amounts claimed cannot be awarded to [Buyer] as the individual amounts are unsubstantiated and were not foreseeable, respectively, unproven:
aa) Consequential damages for non-performance may include so-called liability damages, which arise because the breach of contract causes the creditor to be liable to third parties which may include the forfeiture of a contractual penalty in cases of late delivery.
[Buyer] agreed on a contractual penalty with its contractor. The effectiveness of this is based on [VOB/B] [*] § 11. Accordingly, a contractual penalty that is agreed upon for the case in which the contractor does not perform within the agreed upon time becomes due if the contractor is in default of delivery.
A precise date for completion of construction cannot be gathered from the agreement on contractual penalty entered into by [Buyer] and its contractor. Rather, the beginning of the construction work as well as the completion is only given as an estimated time frame. The overall time frame for the project, especially an agreed upon date of completion cannot be conclusively gathered from this even if additionally the schedule for work times is consulted. In this schedule, too, only periods of time are given but no fixed dates, and it remains unclear from which point of time the contractual penalty should be calculated. Meanwhile, the violation of non-binding deadlines does not lead to a forfeit of the contractual penalty (cf. Ingenstau-Korbion VOB, 13. ed., B § 11 para.22)
Moreover, [Buyer] was not bound to payment of a contractual penalty for a further reason. The contract penalty clause was void in accordance with [AGBG] [*] § 9(1) because it unjustifiably put [Buyer] at a disadvantage. This is because the fixed rate of interest of .5 percent per each work-day leads to the full contractual penalty expiring in a time frame that is too short. The objective of contractual damages to press speedy completion may scarcely be reached within ten days with large construction projects like this one. This time frame is too short for the contractor to reasonably react and avoid the full contractual penalty (cf. BGH [*] NJW [*] 2000, 2106).
[Buyer]'s objection that the AGBG was not applicable in this case does not hold up. General terms and conditions of trade are not given only in cases where a contract includes an additional list of pre-formulated clauses, but can also be integrated in the contractual document itself, AGBG § 1(1). It is to be considered differently only in cases where the contractual conditions are individually negotiated.
[Buyer] claims that this was the case here but does not bring forward particular arguments to support this. This would have been needed especially because the individual sections of the contractual contract starting from page 3 are phrased in such a general way that they fit every single one of the individual contracts placed by the general contractor with the different trade sub-contractors. Additionally, the clause is phrased so disadvantageously for the contractor that it is not perceptible to what extent it individually could have contributed to this.
But even if the clause were not ineffective, [Buyer] could not hold [Seller] liable for the contractual penalty loss as in its individual realization, the penalty is not foreseeable as a possible result of [Seller]'s breach of contract. To be sure, [Buyer] informed [Seller] that it was threatened by a contractual penalty and such a penalty can be expected to be included in construction contracts, but [Seller] did not know that the full contractual penalty would be forfeited within ten days.
Foreseeability in the sense of CISG Art. 74, sentence 2, is present if the party in breach or a reasonable person in its place could have foreseen such a loss at the time of the conclusion of the contract as a possible consequence of the breach of contract (cf. Schlechtriem, as above, Art. 74, para. 35). According to this, the risk that has materialized here does not conform to the risk of damages assumed by [Seller]. It did not have to reckon with the fact that [Buyer] would forfeit the full contractual penalty with a delay in delivery of two weeks.
bb) More than ever, this also holds for performances that [Buyer] made without receiving payment. Such accommodation is abnormal to such an extent that the [Buyer]'s resulting losses cannot be attributed to [Seller].
The damages resulting from breach of contract are normally to be definitely accounted for. A contractor handling an additional commission without invoicing it or for half the price does not conform with normal practices. This holds even in the case that [Buyer] tried to avert larger damages with this accommodation. [Seller] was not able to adjust to this, the more so, as [Seller] is not able to substantiate the threatening damages of allegedly DM 400,000.-- per month.
cc) Concerning the costs for the prolonged sub-contractor work and fees for lifting gear, these are foreseeable losses at times of delay in delivery in accordance with CISG Art. 74. Nonetheless, [Buyer] did not give any proof of the amounts at dispute, therefore, it cannot be awarded these amounts. The invoices are not sufficient as evidence. Moreover, a substantiated accounting concerning the exact number of extra days needed and what the costs for the license procedure are supposed to be about was not given.
3. [Seller]'s claim for interest is based on CISG Art. 78, whereas the interest rate and amount owed is to be taken from the applicable national law. In accordance with [Cc] [*] Art. 1284(1), this equals 10 percent, exceeding the demanded rate of interest. Because [Buyer] was given a period of two weeks for payment, the interest is to be calculated from that point on.
The subsidiary decisions are based on [ZPO] [*] §§ 91, 92(2) (costs), ZPO § 709 sent. 1 (provisional enforceability).
* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Plaintiff of Italy is referred to as [Seller] and the Defendant of Germany is referred to as [Buyer]. Amounts in the former currency of Germany (Deutsche Mark) are indicated as [DM].
Translator's note on other abbreviations: ABGB = Gesetz zur Regelung des Rechts der Allgemeinen Geschäftsbedingungen [Act on General Terms and Conditions of Trade]; BGB = Bürgerliches Gesetzbuch [German Civil Code]; BGH = Bundesgerichtshof [German Federal Supreme Court]; Cc = Codice civile [Italian Civil Code]; CISG = United Nations Convention on Contracts for the International Sale of Goods; NJW = Neue Juristische Wochentschrift [New Legal Gazette]; VOB/B = Vergabe- und Vertragsordnung [Standard Building Contract Terms]; ZPO = Zivilprozessordnung [German Civil Procedure Code].
** Sabine Kossebau, student of law at the University of Hanover, Germany.
*** 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.Go to Case Table of Contents