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CISG CASE PRESENTATION

Germany 25 March 2003 District Court Köln (Racing carts case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/030325g1.html]

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

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Case identification

DATE OF DECISION: 20030325 (25 March 2003)

JURISDICTION: Germany

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

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: 3 O 196/01

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

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Denmark (plaintiff)

BUYER'S COUNTRY: Germany (defendant)

GOODS INVOLVED: Racing carts


Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 47 ; 50 ; 74 [Also cited: Articles 3(1) ; 6 ; 35 ; 36 ; 38 ; 46 ; 48 ; 53 ; 67 ; 78 ]

Classification of issues using UNCITRAL classification code numbers:

47A [Buyer's right to fix additional period for performance];

50A [Buyer's right to reduce price for non-conforming goods];

74A [General rules for measuring damages: loss suffered as consequence of breach]

Descriptors: Nachfrist ; Reduction of price, remedy 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 (German): CISG-online.ch website <http://www.cisg-online.ch/cisg/urteile/1090.pdf>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation)

Queen Mary Case Translation Programme

District Court (Landgericht) Köln

25 March 2003 [3 O 196/01]

Translation [*] by Thorsten Tepasse [**]

Edited by Jan Henning Berg [***]

Plaintiff [Seller] is seated in Denmark, and is a producer and vendor of racing carts. Defendant [Buyer] has its seat in Germany and runs a racing track for carts.

1. JUDGMENT

[Buyer] is ordered to pay [Seller] the sum of Euro [EUR] 5,689.16 plus 5 % interest above the prime lending rate (maximum: 12.5 %) since 22 September 2000.

In all other respects, the claim is dismissed. [Seller] bears 1/3 and [Buyer] 2/3 of the cost of the proceedings. The judgment is preliminarily enforceable. [Seller] may only enforce the judgment on return of a security in the amount of 110 % of the enforceable sum. [Seller] may further prevent further judicial enforcement by [Buyer] by furnishing security in the amount of 110 % of the sum, unless [Buyer] has provided bond in the same amount before enforcement.

2. FACTS OF THE CASE

[Seller] is a Danish company that produces and sells carts (single-seated, engine-driven racing cars with four wheels in an open construction and without suspension) as well as replacement parts and cart accessories. [Buyer] runs a racetrack for carts in Cologne and had a persisting business relationship with [Seller]. In 1999, [Buyer] ordered thirteen new carts of the model "DINO Leisure" with red chassis and "completely assembled" from [Seller] through its sales representative for a total sum of Deutsche Mark [DM] 47,580.00. [Buyer] was obliged to provide the engines, tires and exhaust pipes. The carts were intended to be used in a 24-hour race that took place on [Buyer]'s racetrack on 30 and 31 October 1999. After delivery of the engines, which were manufactured by the American company B&S, to Denmark by [Buyer], the [Seller] delivered the carts to Cologne some days before 30 October 1999. The carts were not completely assembled, in particular the fuel supply for the engines was not assembled, the rear wings were not tailored and the seats were not installed.

[Seller] invoiced the sum of DM 47,580.00 for the delivered carts on 25 October 1999; [Buyer] paid DM 37,000.00 under reservation. Further invoices of 29 November 1999 for DM 346.50 and 21 December 1999 for DM 5,900.53, which belonged to other deliveries of goods, remained unpaid. On 31 January 2000, [Buyer] forwarded to [Seller] an invoice for the sum of DM 15,762.50. This account was sent once again on 27 March 2000. Later, the carts in dispute were sold by [Buyer] in Hungary for an unknown price.

By letter of 20 September 2000, [Seller] requested from [Buyer] payment of the outstanding sum of DM 16,827.03. This sum is the cause of the present action.

3. POSITION OF THE PARTIES

[Seller]'s position

[Seller] alleges, that [Buyer] did not confer the provision of B&S engines with [Seller]. [Seller] was moreover not obliged to foresee that fact, since [Buyer] had only delivered and [Seller] only mounted Honda engines in former transactions. As a result, after receipt of the engines, a German-speaking employee of [Seller] contacted [Buyer] by telephone on 21 October 1999 and recommended that the engines should be assembled by a mechanic in Cologne. This was also the way it happened. [Buyer] was satisfied with the assembly, when [Seller]'s mechanic returned to Denmark.

[Seller] requests the Court to order [Buyer] to pay EUR 8,603.52 plus interest of 12.5 % since 22 September 2000.

[Buyer]'s position

[Buyer] requests the court to dismiss [Seller]'s claim. [Buyer] alleges that the carts that were delivered were not in conformity with the contract (besides having been delivered too late, given that delivery should have taken place one week before the 24-hour race). Consequently, [Buyer] had to make extensive modifications whichit could set off against [Seller]'s claim (namely DM 15,762.50 pursuant to the invoice of 31 January 2000).

Mr. _____, [Seller]'s head agent in Germany, agreed that B&S engines should be installed in the carts, which were, by the way, only two centimeters (0.79 inch) wider than the engines produced by Honda. Moreover, the fuel supply, the fuel pumps and the rear wings should have been assembled in Denmark while only the tires should have been mounted in Cologne. Additionally, [Seller] delivered couplers with 21 centimeter pinions, instead of 19 centimeter pinions which had been ordered. Instead of red carts, as ordered, [Seller] delivered carts with black chassis. There was plastic chipping in the fuel tanks, which made dismantling, cleaning and re-integrating the tanks inevitable. Finally, the seat frames had to be modified, since, instead of individually fixed frames, [Seller] delivered solidly welded seat frames, which broke apart after a short period of time.

[Buyer] further alleged that the invoiced modification costs effectively incurred were usual and reasonable for such operations, as well as the asserted reduction in value; and that Mr. _____ had declared that the account would be all right and put to a set-off; as [Seller]'s principal agent in Germany, he was authorized to issue such a statement in the name of [Seller].

The court adopted evidence by witnesses and experts and refers to the transcripts of 20 February 2002 and 17 April 2002, as well as the appraiser's report of 10 December 2002.

4. REASONS FOR THE DECISION

The claim is partially founded.

[Seller] has a claim for payment of the outstanding purchase price pursuant to Arts. 1(1)(a), 3(1), 53 CISG on the basis of the undisputed facts and circumstances. The CISG has to be applied, since Germany and Denmark are Contracting States and the parties did not exclude its application (Art. 6 CISG). Undisputedly the parties concluded a contract in the sense of the Convention, concerning delivery of the carts and further goods (equipment and replacement parts) belonging to the accounts of 29 November 1999 and 21 December 1999. Considering the partial payment of DM 37,000.00, a balance of EUR 8,603.52 (DM 16,827.03) was still outstanding.

Bearing the evidence in mind, [Buyer] may either reduce the purchase price by EUR 2,914.36 (DM 5,700.00) or -- as [Buyer] requests in the first place, but which leads to the same result -- put to a set-off with a claim for damages under Arts. 50, 74 CISG.

At the time the risk passed (Art. 67 CISG), the delivered carts were not in conformity with the contract (Arts. 35, 36 CISG).

Even [Seller] does not seriously dispute, that the carts, except for the tires, which were to be installed in Cologne, should have been delivered "completely assembled", i.e., ready-to-operate with functional engines; this very fact was undisputedly the only reason why [Buyer] first sent the engines to [Seller]'s Danish branch. [Seller]'s allegation, that the parties agreed in the telephone call of 21 October 1999 to install the engines in Cologne by [Seller]'s mechanic due to the unfamiliar type, is not proven, because of the conflicting testimonies provided by witnesses _____ and _____ (supporting [Seller]'s presentation) and witnesses _____, _____ and _____ (stating that the engines were already mounted on the carts, but were inoperative). Ultimately, such agreement is not decisive in the instant case, since it was [Seller]'s obligation, according to its own statement, to mount the engines ready-to-operate, irrespective of whether this should occur in Denmark or Cologne.

It is proven by statements of the witnesses _____, _____, _____ and _____, that after delivery of the carts (which took place, with credible affirmation of witnesses _____ and _____, on Tuesday, 26 October 1999), apart from [Buyer]'s duty to install the tires, still significant assembly and modification works were necessary to put the carts into the functioning and "ready-for-race" condition which corresponded with the ordinary and particular purpose of the carts (Art. 35(2)(a), (b) CISG).

The above-mentioned witnesses stated specifically and with many details (not mentioned in the memoranda), how they tried to make the defective carts fully functional. Beyond the missing installation of the fuel supply (fuel pumps and pipes), which had to be done later, as well as the rear wings and seats, which were even pursuant to [Seller]'s allegation not mounted at the time of delivery, it is, given these statements, very likely that the carts were also equipped with wrong pinions. As a result, the transmission did not work properly and the throttle cables had to be modified. Especially witness _____ confirmed that the delivered carts did in various points differ -- inter alia with respect to their color -- from the carts which would have complied with the specifications that were provided to [Seller]. In contrast, the Court repudiates witness ____'s allegation, that he and Mr. _____ installed the engines in the delivered carts, whereupon Mr. _____ was satisfied with the assembly. This statement is contrary to Mr. _____'s testimony and also conflicts with the statements of the other witnesses. Moreover, this witness, pursuant to his own assertion, did not even take part in a test drive of the carts.

[Buyer] did not lose its right to rely upon a lack of conformity of the delivered goods (Arts. 38 et seq., Arts. 46 et seq. CISG), although it remedied the carts' deficiencies without setting an additional period of time for [Seller]. Firstly, [Buyer] complied with its duty to inform [Seller] by declaration to Mr. _____, who was introduced as [Seller]'s representative in Germany (not only in magazine advertisements, but also specifically towards [Buyer]) and took part in the subsequent modifications of the carts. Secondly, bearing in mind the upcoming 24-hour race , it would have been unreasonable to grant [Seller] the possibility to repair the deficiencies with its own personnel or to deliver carts in replacement.

However, this applies only for the works which had to be carried out before the beginning of the race, as well as the efforts -- according to testimonies of witnesses _____, _____ and _____ -- necessary during the race, namely to free the fuel tanks from plastic chipping. As far as [Buyer] complains about the defectiveness of the seat frames, which were allegedly broken and had to be replaced, there was no urgency to repair the defects. It can be perceived on the basis of the invoice of 31 January 2000 and an on-site inspection of an expert that the frames burst some time after the 24-hour race. Insofar, [Buyer] was obliged to set an additional period of time for removal of defects to be allowed to exercise its rights due to a breach of contract on [Seller]'s part (Art. 47(1), (2) CISG). It is not proven, that this happened or that [Seller] denied supplementary performance before [Buyer] began to remove the defects on its own.

Thus, [Buyer] can only reduce the purchase price or recover damages for the modification costs occurring until the end of the 24-hour race, as well as for the color of the carts, which was not in conformity with the contract and could not be changed until begin of the race. The Court laid down the estimated costs (pursuant to 287 ZPO [*]) on the basis of an expert's report, which would have accumulated in a normal course of operations, namely EUR 1,917.34 (DM 3,750.00) as expenses for modifications.

On the one hand, [Buyer] requests an "abstract" calculation, according to its account of 31 January 2000. However, [Buyer] did not prove that [Seller] -- represented by witness _____ -- already accepted the invoiced claim for payment: In fact, the witness credibly assured that he did not concede any costs or cost calculations.

On the other hand, it does not seem reasonable, because of missing indications, to calculate the costs on a "concrete" basis which could have been (regarding the amount of working hours) beyond or (regarding the remuneration) below the costs reasonable, usual and appropriate for corrective actions performed by a specialist workshop. The expert convincingly determined the sum of EUR 1,917.34 (DM 3,750.00) for these works. The Court refers to the expert's report, since it was not attacked by the parties.

Additionally, the loss in value resulting from the wrong color was set by the expert at the sum of EUR 997.02 (DM 1,950.00).

In conclusion, this calculation leads to a remaining purchase price of EUR 5,689.16 (= EUR 8,603.52 outstanding minus EUR 2,914.35 reduction of price).

The claim for interest follows from Art. 78 CISG. Since [Seller] did not prove its damages in interest, it may, pursuant to 287 ZPO [*], only recover a variable interest rate in accordance with 288 BGB [*].

The decision on costs is based on 92(1) ZPO. The decision on preliminary enforceability of this judgment is based on 708 (No. 11), 709, 711, 713 ZPO.

The value of the dispute is: EUR 8,603.52 (DM 16,827.03).


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff of Denmark is referred to as [Seller]; Defendant of Germany is referred to as [Buyer]. Amounts in the former German currency (Deutsche Mark) are indicated as [DM]. Amounts in the uniform European currency are indicated as [EUR]

Translator's note on other abbreviations: BGB = Bürgerliches Gesetzbuch [German Civil Code]; ZPO = Zivilprozessordnung [German Civil Procedure Code].

** Thorsten Tepasse is a law student at the University of Osnabrück, Germany and participated in the 12th Willem C. Vis Moot with the team of the University of Osnabrück.

*** Jan Henning Berg has been a law student at the University of Osnabrück, Germany, and at Kings College London. He participated in the13th Willem C. Vis Moot with the team of University of Osnabrück. He has coached the team of the University of Osnabrück for the 14th Willem C. Vis and 4th Willem C. Vis (East) Moot.

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