France 19 September 2003 Appellate Court Paris (Société Virgin CH... Ltd v. SA Agrana Z... Aktiengesellschaft) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/030919f1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 2003/01961
CASE HISTORY: 1st instance Tribunal de commerce de Paris (2002/21966) 18 September 2002
SELLER'S COUNTRY: Austria
BUYER'S COUNTRY: British Virgin Islands
GOODS INVOLVED: Powdered milk
FRANCE: Court of Appeal of Paris 19 September 2003
Case law on UNCITRAL texts (CLOUT) abstract no. 493
Reproduced with permission from UNCITRAL
The case concerned an Austrian seller of foodstuffs and a French company engaged in the trading of food products, including powdered milk.
In the spring of 2000, the seller supplied the buyer with 30.75 tons of organic powdered milk. The delivery was the subject of three invoices, dated 27 April, 19 May and 7 June 2000, for a total sum of 208,290 Deutsche Mark (98,822.5 Euros).
The buyer refused to pay that amount, on the grounds that the product did not conform to that ordered and that there was no proof that the product was organic. In a letter of 20 December 2001, the buyer finally informed the seller that one client to whom the powdered milk was to have been sold on had suddenly withdrawn and that another had refused to pay the full price, on the same grounds.
On 18 September 2002, the Commercial Court of Paris, in a case brought by the seller, issued an interim relief order against the buyer for a provisional payment of Euros 41,741.87. On appeal by the buyer, the Court of Appeal of Paris, in its judgement of 19 September 2003, upheld the first instance order and ordered the buyer to pay the total sum of Euros 98,822.50.
On the merits of the case, the Court of Appeal upheld the first instance decision. First, the buyer had, in its letter of 20 December 2001, acknowledged receipt from the seller of the certificates requested by its client. Secondly, the buyer had not produced any written evidence that the milk was not organic.
Lastly, the seller had, according to the Court, pointed out that, under article 39 CISG, the buyer lost the right to rely on a lack of conformity of the goods if it did not give notice to the seller, specifying the nature of the lack of conformity, within a reasonable time after it had discovered the lack or ought to have discovered it. The Court observed that the buyer had not put forward any serious defence against this argument.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:
39A [Requirement to notify seller of lack of conformity: buyer must notify seller within reasonable time]
39A [Requirement to notify seller of lack of conformity: buyer must notify seller within reasonable time]
Go to Case Table of Contents
CITATIONS TO OTHER ABSTRACTS OF DECISION
CITATIONS TO TEXT OF DECISION
Original language (French): CISG-France website <http://witz.jura.uni-sb.de/CISG/decisions/190903v.htm>
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 19 September 2003
Société Virgin... LTD v. SA Agrana Z... Aktiengesellschaft
Translation [*] by Melody Matthews [**]
[PARTICULARS OF THE CASE]
Court of Appeal of Paris, 14th Chamber, Section B. Decision of 19 September 2003. RG no. 2003/01961. Decision referred to the Court: Summary Judgment rendered on 18 September 2002 by the Court of Commerce of Paris (Tribunal de commerce de Paris),RG no. 2002/21966 (Mr. Renault-Sablonier).
APPELLANT. Société Virgin [Buyer] Ch...Ltd, represented by its legal counsel having its principal office in [...] the British [Buyer] Islands, represented by the SCP F...-C...-B..., solicitor to the Court assisted by Master C... F..., attorney at the bar of Paris. RESPONDENT. S.A. Agrana [Seller] Z... Aktiengesellschaft, represented by its legal counsel having its principal office in [...] Vienna, Austria, represented by the SCP B...-D...-L..., solicitor to the Court assisted by Master M... I..., attorney at the bar of Paris.
COMPOSITION OF THE COURT. In accordance with the provisions of articles 786 and 910 of the new Code of Civil Procedure, the matter was heard at a public hearing on 17 June 2003, the attorneys not objecting, before Mr. Cuinat, président. This magistrate administered the appeal during the deliberation of the Court, composed of Mr. Cuinat, president; Mr. Seltensperger and Mrs. Taillandier, conseillers; greffier (clerk): during the arguments, Mrs. Rapacciulo.
RULING: publicly pronounced by M. Cuinat, president, who signed the transcript of the judgment with Mrs. Drelin, greffier (clerk) present at the time of the pronouncement. Ruling on the appeal brought by the [Buyer], whose principal office is located in the British Virgin Islands, from an order for summary judgment rendered on 18 September 2002 by the président of the Court of Commerce of Paris, who, upon partially granting the claim of [Seller], a company under Austrian law, condemned [Buyer] to pay to the latter, on a provisional basis, the sum of 41,741.87 Euros in addition to interest at the legal rate running from 13 February 2002 and the sum of 1,500 Euros in accordance with Article 700 of the new Code of Civil Procedure.
[POSITION OF THE PARTIES]
[Buyer] the company Virgin, appellant, is asking the Court to declare the provisional order null and in the alternative, to completely invalidate it, and to non-suit [Seller] of its subsidiary appeal. On the basis of Article 700 of the new Code of Civil Procedure, [Buyer] requests that [Seller] be condemned to pay the sum of 2,500 Euros.
Respondent [Seller], seeks the confirmation of the original order and, in bringing a subsidiary appeal, the granting of its initial request, that is condemning [Buyer] to pay to [Seller] the sum of 98,822.50 Euros (including the 41,741.87 Euros) in addition to interest at the rate of 6%, applying to each of the bills from 27 May, 19 June, and 7 July 2000. In the alternative, [Seller] asks that this sum of 98,822.50 Euros bear interest at the legal rate running from the formal demand for payment of 12 February 2002. It also seeks the sum of 6,000 Euros in application of article 700 of the new Code of Civil Procedure.
Should more information concerning each party's argument be desired, please refer to their respective pleas.
[RULING OF THE COURT]
Whereas the order dated 18 September 2002 joined to the verdict of [Buyer]'s appeal condemned it to pay to [Seller] the sum of 41,741.87 Euros in addition to interest at the legal rate running from 13 February 2002 and the sum of 1,500 Euros in application of article 700 of the new Code of Civil Procedure.
Whereas it so happens that, the same day, under the same references, the judge of first instance rendered another order exactly identical with the exception of a possibility for the debtor, to free itself from debt in twelve monthly payments, and for the absence of the amount to be paid in accordance with Article 700 of the new Code of Civil Procedure however announced in the reasons of the decision.
Whereas only one of the orders was served upon [Buyer] by [Seller].
Whereas the reasons for the difference between the two orders remains unexplained and whereas the judge of first instance did not respect the provisions of Article 462 of the new Code of Civil Procedure to make a correction, [Buyer] maintains that the provisional order is null.
Whereas if it appears that two orders were handed down by the judge of first instance, the fact that they were made on the same day, under exactly identical references, with the same role number, shows that the provisions of Article 462 of the new Code of Civil Procedure were not essential to the magistrate insofar as, if he made a correction, it is not after, but before having rendered his decision that he did so.
Whereas the amount claimed by [Seller], whose business is in the sale of powdered milk and other foodstuff, corresponds to a delivery of 30.75 tons of organic powdered milk, the object of three bills on the dates of 27 April, 19 May and 7 June 2000 for a total of 208,280 Deutsche Mark [DM] (98,822.50 Euros), the deduction of a deposit of 15,000 DM having been made.
Whereas to contest payment of this amount, [Buyer], (...) submits that the product sold is non-conforming to the product ordered and that its quality as an organic (bio) product has not been established.
Whereas [Buyer] wrote to [Seller] on 20 December 2001:
"We had a client in France for whom we have ordered merchandise from you. The client suddenly withdrew from the deal when the merchandise was ready to be sent. We then negotiated with another client who agreed to take the merchandise at the price of ordinary powdered milk. The client said that he would be willing to pay the full price for organic powdered milk if we could prove that the product was in fact organic. We have written to you to request the documents that you had sent to us and that we had passed on. To our immense disappointment, the client has not kept his word and has caused us a great loss."
Whereas this letter dated a year and a half from the delivery resulted in [Buyer]'s acknowledged receipt from the respondent of the client's requested certificates concerning organic powdered milk.
Whereas it is in vain that [Buyer] alleges a defect in the organic quality of the milk, since it has produced no document to that end.
Whereas as no privity exists between [Seller] and [Buyer]'s clients;
Whereas the debtor may not rely on problems it had in reselling the purchased powdered milk in order to avoid its obligations to [Seller] and to contest payment for the merchandise.
Further, [Seller] points out that Article 39 of the [CISG] sets forth that the buyer loses the right to take advantage of a non-conformity [and avoid the contract] if he does not declare it to the seller, specifying the nature of the defect within a reasonable time after the buyer knew or knew or ought to have known of the defect.
Whereas [Buyer] has raised no serious grounds for appeal, the Court will non-suit the appellant of its principal appeal. As to the subsidiary appeal, the Court will grant [Seller]'s request seeking the amount of 98,822.50 Euros. The order will be modified in this way.
Whereas the matter concerns late interest sought at the rate of 6% for each of the three bills, [Seller] produces the general terms of the contract in German with only three lines translated into French. Whereas the general terms of contract are dated later than the disputed orders and deliveries.
Whereas the Court has no grounds for assessment of [Seller]'s request, interest on the sum of 98,822.50 Euros will run at the legal rate starting from the formal demand for payment on 12 February 2002.
Whereas this judgment calls for rejection of the request presented by [Buyer] in accordance with Article 700 of the new Code of Civil Procedure and justice calls for the application of this section to the advantage of [Seller] for a maximum of 2,000 Euros.
FOR THESE REASONS
The Court finds [Buyer]'s principal appeal to be unfounded and [Seller]'s subsidiary appeal to be well founded. The Court:
|-||Reverses the order;
|-||Directs [Buyer] to pay to [Seller] the sum of 98,822.50 Euros in addition to interest at the legal rate starting from 12 February 2002 as well as the sum of 2,000 Euros in accordance with Article 700 of the new Code of Civil Procedure;
|-||Directs [Buyer] to pay legal costs to the SCP [...] solicitor, as required by 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, Appellant of the British Virgin Islands is referred to as [Buyer]; Respondent of Austria is referred to as [Seller]. European monetary amounts are indicated as Euros; monetary amounts in the currency of Germany (Deutsche Mark) are indicated as [DM].
** Melody Matthews, Research Assistant of the Institute of International Commercial Law of the Pace University School of Law, is a J.D. candidate at the Pace University School of Law.Go to Case Table of Contents