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CISG CASE PRESENTATION

Belgium 19 March 2003 District Court Veurne (Leeks case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/030319b1.html]

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

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Case identification

DATE OF DECISION: 20030319 (19 March 2003)

JURISDICTION: Belgium

TRIBUNAL: Rechtbank van Koophandel [District Court for Commercial Matters] Veurne

JUDGE(S): M. Pattyn, L. Tulpin, P. Deseyne

CASE NUMBER/DOCKET NUMBER: A/01/00392

CASE NAME: CVBA L. v. E.G. BV

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Belgium (plaintiff)

BUYER'S COUNTRY: Netherlands (defendant)

GOODS INVOLVED: Leeks


Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 18 ; 38 ; 39 ; 78 [Also cited: Articles 9 ; 11 ; 53 ; 55 ; 57 ; 100 ]

Classification of issues using UNCITRAL classification code numbers:

18A3 [Criteria for acceptance of offer: silence or inactivity insufficient];

38A [Buyer]'s obligation to examine goods: time for examination of goods];

39A2 [Requirement to notify seller of lack of conformity: buyer must notify seller within reasonable time];

78B [Rate of interest]

Descriptors: Acceptance of offer ; Examination of goods ; Lack of conformity notice, timeliness ; 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

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/2003-03-19.html>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

English: 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) [second draft]

Queen Mary Case Translation Programme

Rechtbank van Koophandel [Commercial Court], Veurne

L. CVBA v. E.G. BV

19 March 2003

Translation [*] by Benoit Samyn [**]

[...]

1. FACTS AND CLAIMS. THE PARTIES' ARGUMENTS

      1. By means of a summons, Plaintiff [Buyer] (of Belgium) claims EUR 19,679.55 in principle plus interest as damages from 4 April 2001 until 18 May 2001 as well as statutory interest from 18 May 2001.

In its summons, [Seller] explains that Defendant [Buyer] (of Netherlands]) refuses to pay the abovementioned amount (including VAT) for leeks [Seller] delivered.

      2. [Buyer] argues that the Court lacks jurisdiction to hear the claim. In the alternative, [Buyer] maintains that [Seller]'s claim is unsubstantiated as there was no purchase agreement between the parties for the delivery of (only) seven shipments of leeks at market price. On the other hand, [Buyer] claims that a purchase agreement was entered into for the supply of a total of four hectares of leeks (only half of which [Seller] delivered) at a fixed unit price (to be determined based on the quality of the delivered product and the delivery time). In this regard, [Buyer] argues that oral evidence (witness testimony) should be presented; [Buyer] requests that the parties at least be given an opportunity to testify.

By way of a counterclaim, [Buyer] asks that [Seller] be ordered to pay EUR 4,333.77 (...).

      3. In its written pleadings, [Seller] rejects [Buyer]'s arguments and its counterclaim as well as the objection to jurisdiction. [Seller] states that [Buyer] is unjustly trying to impose on it a contract (concerning the yield for four hectares) which it never entered into; in that context, [Seller] maintains that [Buyer] has even submitted falsified exhibits, which it produced after the fact.

2. JUDGMENT

      1. Objection to jurisdiction (international jurisdiction)

      [Seller] requests payment of the purchase price for an international sale of goods (namely, leeks).

[Seller] argues that the purchase agreement was entered into in January 2001, while [Buyer] claims that the agreement was entered into in December 2000. In any case, the deliveries occurred in January-February 2001.

[Buyer] states tersely that "pursuant to Articles 2 and 5(1) of the EEX Convention it can only be summoned before the Dutch court with subject-matter and territorial jurisdiction of the place where its registered office is located and where its payment obligation should have been executed."

[Seller], for its part, merely quotes from the literature referring, among other things, to The Hague Convention on the Law Applicable to International Sales of Goods of 15 June 1955 and the so-called Uniform Laws on International Sales of 1 July 1964.

However, both Belgium and the Netherlands have revoked the two conventions of 1 July 1964 (Belgium effective 1 November 1997, and the Netherlands effective 1 January 1992), and Belgium had previously revoked the 1955 convention. In fact, the 1955 convention has not been effective since 1 September 1999; the reference rules for sales agreements can now be found in the so-called Rome Convention of 19 June 1980 on the Law Applicable to Contractual Obligations (effective 1 April 1991 as the conflict-of-law rules for contracts) (...).

The Court also notes that the parties have not mentioned the so-called Vienna Convention (United Nations Convention of 11 April 1980 on Contracts for the International Sale of Goods or "CISG"), even though they are both established in Contracting States to this Convention (the CISG has been applicable in Belgium since 1 November 1997 and in the Netherlands since 1 January 1992). Moreover, this Convention governs, amongst other matters, the entering into of an international sales contract (which is the underlying issue between the parties); on the other hand, there is no indication that the parties contractually excluded the application of the CISG (see Articles 4 and 6 of the CISG).

Pursuant to Article 1(1)(a) of the CISG, this Convention applies to contracts for the sale of goods between parties whose places of business are located in different Contracting States; in this regard, the CISG refers directly to its own territorial assessment criteria, without the need for reference rules [...].

In the case at hand, the purchase agreement, in any case (as stated by both [Seller] and [Buyer]), postdates the entry into force of the Vienna Convention in both countries. Therefore, the requirement of Article 100(2) CISG is met.

It can therefore be concluded that the case at hand should be analysed in accordance with the provisions of the CISG.

Consequently, Article 57(1)(a) CISG stipulates that, unless agreed otherwise (which [Buyer] appears to implicitly argue but cannot prove), the buyer must fulfil its payment obligation at the place where the seller is established.

[Buyer]'s contested payment obligation should therefore have been executed at [Seller]'s place of business in Houthulst (Veurne judicial district) [Belgium]. Consequently, the Court has jurisdiction on the basis of Article 5(1) of the EEX Convention (...).

For the sake of clarity, the Court also notes that the claim was lodged before 1 March 2002 so that the new rule on the sale and purchase of goods provided for in Article 5(1)(b) of the EEX Convention (Regulation No 44/2001) does not apply (see Article 66 of the EEX Convention).

      2. The merits

            2.1 The Parties do not agree on the date on which or the manner in which the agreement was entered into and, consequently, the scope of their mutual obligations.

[Seller] argues it has been the victim of blackmail tactics by [Buyer], namely with respect to a purchase agreement previously entered into for the 1999-2000 crop. In that case, [Buyer] committed itself, pursuant to a contract dated 15 March 1999, to purchasing [Seller]'s entire six-hectare leek crop at a fixed unit price. When the market price turned out to be lower than the fixed price at the time of delivery, [Buyer] threatened to reject the delivery so that [Seller] was forced to accept a lower price than had been previously agreed. [Seller] refused to sign a similar contract for the contested 2000-2001 crop which [Buyer] sent it in July 2000. Nor did [Seller] accept an oral offer made by [Buyer] in December 2000 owing to the proposed price, which [Seller] found to be too low. Finally, after being contacted by [Buyer] in January 2001, [Seller] alleges that it agreed to sell seven shipments of leeks at market price, i.e., EUR 0.37 per kilo and that [Buyer] accepted this offer.

[Buyer] does not contest the fact that [Seller] did not sign the contract which it sent [Seller] in July 2000 for the 2000-2001 crop. [Buyer] states, however, that after a visit on 5 December 2000 to the leek fields of its Belgian suppliers, an intermediary (a so-called Mr. Crétien) proposed visiting [Seller]'s leek fields as well, since [Seller] was still interested in supplying [Buyer] with leeks. In its letter of 6 December 2000, [Buyer] confirmed to [Seller] that it would purchase four hectares of leeks in accordance with the terms and conditions of the contract that had been sent earlier but not signed. This letter ends with the sentence: "If we do not receive a reply within seven days from today's date we shall assume that you agree with the content of the purchase agreement" ([Buyer]'s Exhibit 4).

[Seller] denies ever having received this letter.

The fact is that in the period from 29 January 2001 until 20 February 2001, [Seller] sent [Buyer] seven shipments of leeks, each of 28 full cases. These shipments were collected and shipped from Belgium to the Netherlands by a carrier appointed by [Buyer] at its expense.

By letter dated 7 March 2001, [Buyer] informed [Seller] that the last two shipments (of 19 and 20 February 2001, respectively) were of very poor quality and thus not acceptable. [Buyer] insisted on receiving another two hectares of leeks in accordance with the parties' alleged agreement for the supply of four hectares of leeks.

By letter dated 4 April 2001, counsel for [Seller] contested [Buyer]'s letter of 7 March 2001 and the arrangement expressed therein and set forth [Seller]'s version of the facts (as stated above).

Further correspondence (from [Buyer] on 23 April 2001 and from counsel for [Seller] on 4 May 2001) was unable to resolve the parties' dispute. On 18 May 2001, the summons was served.

            2.2 Article 11 CISG states that a sales contract need not be entered into in writing or evidenced by a writing and is not subject to any other requirements as to its form; a sales contract can be proven by any means, including witness testimony. Part Two of the CISG deals specifically with the formation of a contract (Arts. 14-24). Article 19 CISG, among others contains strict rules on the offer, acceptance and modification of the terms of a sales contract, indicating that a complete meeting of the minds (consensus ad item) is required before a contract can be formed. Article 18(1) CISG indicates, among other things, that silence or failure to act cannot in itself amount to acceptance. On the other hand, Article 9 CISG states that the parties are bound by custom and trade practice.

[Buyer] states that [Seller] did not reply within seven days from its mailing date to the aforementioned letter of 6 December 2000, in which the agreement was supposedly formed (in accordance with the terms set forth therein). It should be noted, however, that [Seller] expressly denies ever having received this letter. [Buyer] has not proved that [Seller] received the letter of 6 December 2000 and accepted the terms set forth therein. It should also be noted that [Buyer] only brought up this letter after difficulties between the parties arose, namely, in its letter of 23 April 2001, after counsel for [Seller] had, in his letter of 4 April 2001, contested [Buyer]'s claims in their entirety. In its (first) letter of 7 March 2001, [Buyer] did not mention the letter of 6 December 2000. However, [Buyer] felt it necessary to explain in this letter how the agreement, in its opinion, had been formed. [Buyer] writes:

"Despite the fact that you did not return the contract signed, you wanted to supply us with the leeks, which we have seen, under the conditions of the contract we sent. We agreed to this orally, and Mr. Chrétien of Novartis is aware of this."

It appears to the Court logical and acceptable that had [Buyer] indeed confirmed the agreement in writing in its letter of 6 December 2000, reference should have been made to this letter in its letter of 7 March 2001 (which was not the case).

Consequently, the Court notes that [Buyer], in acting thus (assuming [Seller] received the letter of 6 December 2000), attempted to construe [Seller]'s silence as acceptance. This is, in principle, not possible further to Article 18 CISG, and no agreement, custom or trade practice indicating that [Seller]'s failure to reply to the letter of 6 December 2000 should be interpreted as tacit (implied) acceptance has been produced or proven. On the contrary, it appears from [Buyer]'s extensive description of the facts that "considering the enormous purchase volumes of its own clientele, [Buyer] simply never purchases vegetables through such a small system of one or more shipments. It systematically works with almost identically drafted standard contracts for each supplier, whereby as usual vegetables are purchased per hectare (...)."

            2.3 It appears from the transport documents submitted that [Seller] delivered to [Buyer] seven shipments of leeks, of 28 boxes each, in the period from 29 January 2001 until 20 February 2001. The parties do not dispute that the deliveries were made further to the execution of a sales contract between them, which entailed for [Buyer] a (logical) obligation to pay (Article 53 CISG). However, [Buyer] claims that the price was not determined in advance and, therefore, on the basis of Article 55 CISG, the free market price should be applied

            2.4 If it can be proven that [Buyer] refused, for the first time, the last two shipments of leeks (of 19 and 20 February 2001, respectively) by its letter dated 7 March 2001, it must be acknowledged that, due to the nature of the goods (fresh vegetables), the refusal was not made within a reasonable period of time, pursuant to Article 39 CISG, as considering the perishable nature of the goods, [Buyer] should have immediately proceeded to inspect or have the goods inspected in accordance with Article 38 CISG after delivery of the goods by the carrier to its warehouses. Consequently, [Buyer] cannot base itself on the alleged non-conformity of [Seller]'s shipments. Moreover, [Buyer] does not contest, as [Seller] states, that the goods had already been processed when [Seller] learned from the letter of 7 March 2001 (more than two weeks after delivery) that the two shipments in question were "unacceptable". Verification in the presence of the other party was, at that point, no longer possible.

            2.5 [Buyer] has not proved that [Seller] agreed to deliver more than the seven shipments of leeks which it effectively delivered. The Court does not accept [Buyer]'s offer of testimony. Testimony, which is only allowed in exceptional cases, need not be admitted by the judge, who has discretion to decide if it is relevant. Moreover, in commercial cases, this form of evidence should be treated with caution, all the more so when it appears that the party that wishes to testify would like to do so simply in order to cover up its own negligence, as it should have taken care, at the proper time, to issue a written statement of the obligation(s), or if this party is the source of the uncertainty. Testimony by the parties is useless, as they have extensively explained their positions in their written pleadings; the Court fails to see which new elements would justify their personal appearance.

In light of the foregoing, the Court concludes that the [Seller]'s main claim is substantiated and the [Buyer]'s counterclaim unsubstantiated. As to the net weight of the shipments delivered, it should be assumed, considering the specific circumstances of this case and custom in the vegetable processing sector, that the net quantities given by [Buyer] in its statement of 23 April 2001, i.e., a total of 47,750 kg for seven shipments, are accurate. [Seller] has not proven that larger net quantities should be applied. On the other hand, based on the parties' exhibits, it appears that a market price of EUR 0.37 per kilogram should be applied. [Seller] cannot claim VAT as it has not yet issued an invoice with VAT and, moreover, the goods were intended for (intra-community) export and thus free of taxes. The main claim is substantiated up to the amount of 47,750 kg x EUR 0.37 / kilo = EUR 17,668.24 in principle.

      4. [Seller] can claim interest for late payment further to Article 78 CISG. The CISG, however, does not specify the interest rate. According to the literature, the term 'interest rate', as used in Article 78 CISG, should be interpreted in a transnational context (H. Van Houtte 'Het Weens koopverdrag in Belgisch recht', T.B.H. 1998, 344; K. Rooks, note on the Ieper Commercial Court's judgment of 29 January 2001, R.W. 2001 - 2002, 1398). Both the Netherlands and Belgium are EU Member States and consequently have transposed or should have transposed the Directive [2000/35/EC] of 29 June 2000 on combating late payment in commercial transactions. The Court thus applies the interest rate foreseen therein, meaning a rate of 10% per year as determined hereafter.

      5. [Seller] has not proved that it would be harmed by a delay in payment, and its request to exclude payment into court cannot be accepted.

For these reasons,

The Court, ruling in the first instance,

   -    Declares the [Seller]'s main claim admissible and substantiated to the following extent:
 
   -    Orders [Buyer] to pay to [Seller] the amount of EUR 17,668.24 plus interest at a rate of 10% per year from 4 April 2001 until receipt of payment in full.


FOOTNOTES

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

** Benoit Samyn, LL.M, MBA, is a lawyer with NautaDutilh in Brussels.

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