France 10 September 2003 Appellate Court Paris (Société H. H... GmbH & Co. v. SARL MG...) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/030910f1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 2002/02304
CASE HISTORY: 1st instance Tribunal de commerce de Paris (1999/75600) 13 September 2001 [affirmed]
SELLER'S COUNTRY: Germany (plaintiff)
BUYER'S COUNTRY: France (defendant)
GOODS INVOLVED: Woven material
FRANCE: Court of Appeal of Paris 10 September 2003
Case law on UNCITRAL texts (CLOUT) abstract no. 490
Reproduced with permission from UNCITRAL
This case involved a German seller of textiles and a French buyer. In the normal course of their commercial relationship, the seller's sales representative visited the buyer's headquarters on 9 September 1998. During this visit, the seller's representative showed the buyer a new Lycra-type fabric and offered it to the buyer for sale.
On 28 September 1998, the seller sent the buyer a letter in German, headed "Confirmation of order", regarding the sale of 100,000 metres of fabric at a cost of 11.4 French francs per metre. The letter stated that the fabric would be delivered, at the buyer's request, in 25,000-metre batches between November 1998 and February 1999. This procedure for confirming an order made orally had already been followed with previous orders by the buyer.
The buyer subsequently requested a first delivery of 1,718 metres. This delivery was the subject of an invoice issued on 15 March 1999, which referred to the balance of 98,772 metres remaining to be delivered. The buyer paid the invoice without expressing any reservations but made no further request for delivery of the outstanding amount of fabric.
The seller claimed that a sales contract to supply 100,000 metres of fabric had been concluded between itself and the buyer at the time of the representative's visit. The seller therefore on 7 September 1999 issued a writ against the buyer before the Commercial Court of Paris seeking an order requiring the buyer (1) to pay 330,480 francs, corresponding to the balance of the unclaimed fabric after a deduction for stock sold on to third parties, (2) to take delivery of the outstanding amount of fabric and (3) to pay 242,315 francs in damages to compensate for losses resulting from the resale to third parties at a lower price. In its judgement of 13 September 2001, the Court dismissed the seller's claim.
The Court of Appeal of Paris, hearing the seller's appeal, upheld the first instance decision on the grounds that there was no contractual relationship between the parties which would substantiate the seller's claim.
The Court noted first that, under article 1315 of the French Civil Code, it was for the seller to prove the claimed obligation.
The Court further noted that the sale concerned parties based in two different States that were Contracting States of CISG, article 4 of which provided that CISG governed only the formation of the contract of sale and the rights and obligations of the seller and the buyer arising from such a contract.
The Court began by considering whether a sales contract could have been formed orally during the visit by the seller's representative to the buyer. It ruled that, in view of the buyer's categorical denial of the formation of a contract, the seller had failed to provide the proof required to establish that a contract had been formed.
The Court further ruled that a contract had also not been formed in accordance with the usage established between the parties, even though the same procedure, whereby an order was made orally by the buyer and confirmed in writing by the seller, had been followed before. The Court held that the existence of such usage did not absolve the parties of their obligations arising out of article 14(1) and article 18(1), which provided, respectively, that an offer should be sufficiently definite and that silence on the part of the offeree did not in itself amount to acceptance. The Court concluded that, in the case in point, the seller, who wished to supply the buyer with a new kind of fabric, very different from the fabrics sold previously, could therefore not rely on the previous usage developed by the parties for transactions concerning standard fabrics. Since the usage was immaterial, the "confirmation of order" should be regarded as an offer of goods to buy which the buyer had not accepted.
In addition, the Court considered that the buyer, not knowing German, was entitled not to have understood the meaning of the "confirmation of order", which was drawn up in German only.
Lastly, the Court held that the delivery of 1,718 metres of fabric did not constitute partial fulfilment of a presumed total sale of 100,000 metres.Go to Case Table of Contents
APPLICATION OF CISG: Yes
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
8C [Interpretation in light of surrounding circumstances];
9C [Practices established by the parties];
14A1 [Criteria for an offer: definiteness of key conditions];
18A3 [Criteria for acceptance: silence or inactivity in and of itself insufficient]
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CITATIONS TO OTHER ABSTRACTS OF DECISION
English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=935&step=Abstract>
CITATIONS TO TEXT OF DECISION
Original language (French): CISG-France website <http://Witz.jura.uni-sb.de/CISG/decisions/100903v.htm>; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=935&step=FullText>
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
UnavailableGo to Case Table of Contents
Case text (English translation) [second draft]
Queen Mary Case Translation Programme
Court of Appeals of Paris 10 September 2003
Société H. H... GmbH & Co. v. SARL MG...
Translation [*] by Melody Matthews [**]
[PARTICULARS OF THE CASE]
Court of Appeal of Paris. 5th Chamber, Section A. RG no. 2002/02304. Appeal from a decision rendered on 13 September 2001 by the Court of Commerce of Paris, 4th Chamber. RG no. 1999/75600. Date of final order: 11 June 2003. Nature of the decision: Judgment. Decision: Affirmed.
APPELLANT. Société H. H... GmbH & Co. [Seller], represented by its legal counsel having its principal office in [...], Stadtlohn, Germany, represented by SCP G-K.-G, solicitor, assisted by Master J-F, M., attorney at the bar of Paris. RESPONDENT. SARL MG... [Buyer], represented by its legal counsel having its principal office in [...], Paris, represented by Master P., solicitor, assisted by Master J-P. C., attorney at the bar of Paris, Association C. and R.-C.
COMPOSITION OF THE COURT. During the pleadings: Mr. Picque, the magistrate, has, in accordance with Article 786 of the new Code of Civil Procedure, heard the pleadings of the attorneys who made no objection. During the deliberation: Président: Mrs. Riffault-Silk, Conseillers: Mr. Faucher and Mr. Picque. During the pleadings and entry of the ruling; Greffier (clerk): Mrs. Klein. PLEADINGS before a public audience on 30 June 2003. RULING pronounced publicly by Mrs. Riffault-Silk, Président, who signed the transcript of the judgment with Mrs. Klein, Greffier.
[POSITION OF THE PARTIES]
The German company, "H" [Seller], claims to have sold 100,000 linear meters of material to the French company, "MG" [Buyer], who (it is claimed) took only partial delivery. [Seller] has since 7 September 1999, brought [Buyer] before the Court of Commerce of Paris seeking, in the last stage of claims made before the judges of first instance, an order directing [Buyer] to:
|-||Pay the price of up to 330,486 French francs [f], for the sale of material, the delivery of which was refused (after deducting the quantities resold to other clients in the meantime under less favorable financial conditions);
|-||Take delivery of the remaining 28,990 meters, under "definitive" penalty of 10,000 f for each late day starting 15 days after "notification" of the decision;
|-||Pay 242,315.30 f in damages as reparation for the harm resulting from an inferior resale price, as well as 20,000 f legal costs and expenses.|
[Buyer], whose principal defense is the nonexistence of a contract for sale within the meaning of the CISG, has, in the final stages of its claims before the Court, counterclaimed asking for 50,000 f in damages for "improper and reckless" proceedings and 25,000 f for legal expenses not included in the costs awarded. In the alternative, it has requested cancellation of the contract due to total liability of [Seller] and the ordering of [Seller] to pay to it 1,000,000 f in damages for failure to perform its contractual obligations.
In a contrary judgment of 13 September 2001, the Court rejected all these claims and directed [Seller] to pay 2,286.73 Euros in legal costs and expenses to [Buyer].
Appealing on 22 January 2002, [Seller], in the final part of its written notifications served on 21 May 2003, invites the court to draw all inferences "of law and of fact" against [Buyer] for [Buyer]'s refusal during the pleadings to produce the bills for purchases of material between September 1998 and June 1999, in spite of the request for discovery that had been previously delivered to [Buyer]. [Seller] claims, in effect that the price of material having seriously fallen subsequent to the legal action, [Buyer] has "seemingly" found itself another supplier at a better price in seeking to extricate itself from the order it made with [Seller].
The [Seller] states that it is represented in France by Mr. L., its commercial agent and that he, accompanied by the commercial director of the [Seller], had visited [Buyer] on 9 September 1998 where he met Mr. I. The [Seller] claims that during this meeting, a contract for sale was concluded for 100,000 meters of lycra material at the price of 11.40 f per meter, to be delivered between November 1998 and February 1999, in lots of 25,000 meters each. The [Seller] specifies having addressed on 28 September 1998, not an offer, but a confirmation of this order from [Buyer], who did not contradict it and who did not have to accept it within the meaning of Article 15 of the CISG, the meeting of minds having previously occurred during the meeting of 9 September 1998.
[Seller] points out that [Buyer] did not send for the quantities on the expected dates, with the exception of one lot of 1,718 meters to deliver to a third company, the subject of a bill issued on 15 March 1999 making express reference to the sale of 98,772 meters remaining to be delivered. Invoking the previous practices between the two partners according to which [Buyer] did not formalize its orders in writing, these being taken by the commercial agent of [Seller], who confirmed in writing the terms to the [Buyer], after transmitting the order to his principal in Germany. The [Seller], deduces that at the moment of the sale in question, the exchange of the parties' consent operated according to the previous practices between the parties, which had never yet failed. However, this time, the retransmission of the order of purchase by the commercial agent of [Seller] was unnecessary due to the presence during the meeting, of the commercial director of the [Seller], who had immediately registered the order in the name of the [Seller]. [Seller] contests that the delivery of 1,718 meters of material could be considered as a furnishing of samples as the Court had considered it, because the surplus of the corresponding bill was paid with neither protest nor reserve. [Seller] claims without foundation the supposed offense of the defect in delivery to which [Buyer] objects in that, according to the [Seller], it is the [Buyer] who did not perform his obligation to take possession by not sending for the lots on the agreed upon dates.
[Seller] asks the Court to order [Buyer] to produce "the whole of the bills for purchase of material for the period of September 1998 to July 1999 and the supplier accounts for the same period". Alternatively, [Seller] invites the Court to draw all inferences of law and of fact. As for the surplus, [Seller] seeks a reversal of the judgment, and renews its previous claims (though now in Euros) formulated before the judges of first instance, asking for 3,000 Euros in legal costs and expenses.
[Buyer], replies, in its plea of defense, served on 25 April 2003, the "impromptu" visit of 9 September 1998, the occasion on which the commercial director of [Seller] visited [Buyer]'s offices for the first time, had as its goal to present to [Buyer] a new material, "crossed lycra", with the purpose of proposing an offer for 100,000 meters. [Buyer] formally denied having placed an order at this time, but having on the contrary received on the following 28 September, not a confirmation of order but a detailed proposition, written in the German language, of an envisaged offer during the preceding meeting, accompanied by a provisional schedule for delivery. [Buyer] specifies in the first place, not having followed up on this proposition but, after contact with the commercial agent, having ordered a mere sample in order to succeed at its attempts to resist the color and cut of the product of this new technology derived from petroleum. [Buyer] alleges that the tests, having not been conclusive and in the face of the absence of reaction from clients, it definitively renounced the initial proposition. [Buyer] claims, furthermore, that the request for the production of documents, new to its eyes, as grounds of appeal, is not in the interest of a solution to the pending litigation.
[Buyer] asserts that:
|-||He who claims the performance of an obligation must prove it in another way than by documents produced by himself;
|-||If there had been a sale, the international character of such would subject it to the CISG of 11 April 1990, in which Article 18 states that the formation of a contract necessitates the manifestation of acceptance of a proposed offer;
|-||In the present case, the offer had been materialized in the document of 28 September 1998, which did not respect the obligatory use of the French language in accordance with the law of 4 August 1994;
|-||In accordance with Article 18 of the CISG, silence or inaction cannot bring about acceptance, whereas the defect in translation into French permitted [Buyer] to believe that the matter concerned "the materialization of the orally presented offer of 8 September". The German expression, "Auftragsbestatigung", which could translate as "confirmation of order" was not opposable as it was expressed in a language that [Buyer] did not understand and did not constitute, an acceptance within the meaning of Article 18(1) of the CISG.;
|-||[Buyer] did not manifest expressly or implicitly acceptance of an offer since mere silence does not constitute acceptance of an offer for the international sale of goods;
|-||[Seller] did not fulfill its own obligation on the specified dates in the offer of 28 September 1998, of delivery resulting from a sales contract that it alleges.|
In the alternative, if the existence of a sales contract is found to exist, [Buyer] invokes the provisions of Article 1587 of the Civil Code on sale by samples, applicable to the order of 1,718 meters of material and maintains that the bill of 15 March 1999, drawn up only in the German language, is insufficient to justify a more extensive obligation, its regulation having legal value only for the executing party.
[Buyer] consequently asserts that:
|-||A sale [by sample] is not complete where the buyer has not approved the sample;
|-||The "franco" sale took into account that the delivery is made by the seller in the context of its obligation of delivery in accordance with Article 1614 of the Civil Code, in the way that, according to the analysis of the [Buyer], it was not for [Buyer] to perform a supposed obligation of taking possession, but for [Seller] to perform its obligation of delivery, if, as it claims, there had been a perfected sale on 28 September 1998.|
[Buyer] seeks the affirmation of the judgment and asks for 3,000 Euros in legal expenses not included in the awarded costs. In the alternative, invoking the protection of Article 1587 of the Civil Code, [Buyer] asks the Court to reject the claims of [Seller].
[RULING OF THE COURT]
Whereas in accordance with Article 1315 of the Civil Code, it is for [Seller] to prove the obligation that it alleges was undertaken by [Buyer];
|-||The [Seller] maintains that a contract for sale for 100,000 meters of material had been verbally concluded between itself and the [Buyer], which the latter formally contests;
|-||In the context of the burdens of proof in this litigation, the knowledge of eventual purchases of material by [Buyer] from other suppliers would not be of the nature of proving the sale alleged by one of the parties and denied by the other;
|-||As a consequence, [Seller]'s request to have production ordered from [Buyer] of "the whole of the bills for purchase of material for the period of September 1998 to July 1999 and the furnished accounts for the same period" will not be granted, the production of these documents being of no aid in the litigation.|
Whereas the alleged sale concerns parties whose respective establishments are located in two different countries and Germany and France are both Contracting States of the CISG, which in terms of Article 4, governs exclusively the formation of a sales contract and the rights and obligations born from such a contract between a buyer and seller, to the notable exclusion of the validity of clauses in a contract and the effects that it can have on the ownership of goods for sale;
Because the meeting of minds during the course of the meeting on 8 September 1998 is formally contested by [Buyer], to establish the veracity of that which [Seller] claims, [Seller] must produce the proof, in the form of attestations of its commercial agent and director;
|-||Taking into account the links joining these two witnesses to one of the parties to the action, the corresponding attestations are not of a character sufficiently probative to establish the reality of an alleged exchange of consent;
|-||In the absence of the demonstration incumbent on [Seller], there is no proof of the reality of the sale alleged, which would have been verbally concluded at the aforementioned meeting.|
Whereas [Seller] invokes the practices and habits which were established between the parties to show that the same process had been observed as previously, consisting of sending a confirmation of order to [Buyer] after it had verbally ordered the desired goods from the commercial agent of [Seller] on the occasion of his visits at the offices of [Buyer];
|-||While Article 9(1) of the general provisions of the CISG, stipulates that the parties are bound by the usages to which they consented and by the habits they have established between them, Articles 14(1) and 18(1), concerning particularly the formation of a contract, state that an offer must be sufficiently precise and that the acceptance of the buyer must result in behavior indicating acquiescence, his silence or inaction cannot equal acceptance;|
|-||It is not contested that the material discussed on 8 September 1998 in the offices of [Buyer] in Paris was of an entirely new technique and very different from the previous materials purchased by the [Buyer] from the [Seller];|
|-||In these circumstances, [Seller] is not founded in invoking the previous practices between the parties, since it appears that this had been elaborated in the context of transactions concerning materials of classic and ancient conception; whereas the discussion on 8 September 1998 concerned the presentation of an entirely new material, which had never previously been sold to [Buyer].|
Whereas the surplus, that it is not contested that the "confirmation of order" of 28 September 1998 addressed by the commercial agent of [Seller] to [Buyer], was written exclusively in the German language, nor that this was not sufficiently understood by the representatives of the [Buyer];
|-||It follows that moreover it has been proven that [Buyer] was unable to understand that a confirmation of order had been sent, and in light of [Buyer]'s ignorance of the German language, [Buyer] was justified in claiming that the matter concerned details about an envisaged offer during the course of discussions of the preceding meeting;
|-||Also, it is not contested that [Buyer] never expressly acquiesced to the aforesaid offer and [Seller] does not present proof that [Buyer]'s behavior could have been considered as acquiescing within the meaning of Article 18(1) of the CISG.|
Whereas otherwise, contrary to the contention of [Seller], the subsequent order of 1,718 meters of the material in question, which occurred after the schedule of delivery in the supposed confirmation of 28 September 1998, does not constitute a partial performance of a supposed sale of 100,000 meters. Payment of the corresponding bill does not permit the inference that [Buyer] was obliged to buy a larger quantity of the product in question.
FOR THESE REASONS,
The Court affirms all provisions of the judgment, and orders [Seller] to pay costs of appeal and to pay to the [Buyer] 3,000 Euros in legal costs to Master P... in accordance with Article 699 of the new Code of Civil Procedure.
* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff-Appellant of Germany is referred to as [Seller]; Defendant-Respondent of France is referred to as [Buyer]. European monetary amounts are indicated as Euros; monetary amounts in the currency of France (French francs) are indicated as [f].
** Melody Matthews, Research Assistant of the Institute of International Commercial Law at the Pace University School of Law, is a J.D. candidate at the Pace University School of Law.Go to Case Table of Contents