Germany 12 December 2003 District Court Bielefeld (Frozen salmon case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/031212g1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 15 O 50/03
CASE HISTORY: Unavailable
SELLER'S COUNTRY: Denmark (plaintiff)
BUYER'S COUNTRY: Germany (defendant)
GOODS INVOLVED: Frozen salmon
APPLICATION OF CISG: Yes
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
4B [Scope of Convention (issues excluded): set-off]; 8A [Interpretation of party's statements or other conduct: intent of party making statement or engaging in conduct]; 92A [Declaration not to be bound by Part II (Formation of Contracts)]
4B [Scope of Convention (issues excluded): set-off];
8A [Interpretation of party's statements or other conduct: intent of party making statement or engaging in conduct];
92A [Declaration not to be bound by Part II (Formation of Contracts)]
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/905.pdf>
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
UnavailableGo to Case Table of Contents
Queen Mary Case Translation Programme
12 December 2003 [15 O 50/03]
Translation [*] by Linus Meyer [**]
Edited by Todd Fox [***]
SUMMARY OF THE DECISION
The [Buyer] is ordered to pay €63,285.31 plus 8 % interest above the respective base level for €26,979.40 since 27 September 2002, for €2.249.91 since 29 September 2002, and for €34,056.00 since 18 October 2002.
The rest of the claim (legal costs incurred before the court proceedings) is rejected.
5% of the costs of the proceedings are borne by the [Seller] and 95% by the [Buyer].
This judgment is provisionally enforceable. The [Seller], however, can only request provisional enforcement if it provides a security bond for 110% of the amount to be enforced. The [Seller] can avert provisional enforcement by the [Buyer] by providing a security bond for 110% of the amount to be enforced as long as the [Buyer] does not provide the same security before enforcement.
Both parties are fish merchants. By so-called Contract No. 12510-35 of 12 July 2003, the [Buyer] placed an order by fax for the delivery of portions of fresh salmon of certain specifications at a price of €5.676 per kilogram. The order provided for a delivery of approx. 50 tons, (approx. 5 to 8 tons per delivery) beginning 19 August 2002 and extending over a period of four weeks. The [Seller] confirmed the order by fax on 15 July 2002 (exhibit K 2, p. 9 of the record). Several installments were delivered. The [Seller] billed those installments as follows:
|Date of invoice||Amount|
|27 August 2002
29 August 2002
17 September 2002
The [Buyer] responded to the invoice of 29 August 2002 by paying €13,695.11; the [Seller] granted the [Buyer] a further credit of €1,082.98 on this invoice. The remaining amount of €2,249.91 is a part of the present claim as are the two other invoices (total preliminary amount: €66,388.71). Because of a further credit of €2,270.40 that had been unnoticed at first, the [Seller] has reduced its demand to €64,118.31and withdrawn its claim concerning the rest of the amount.
During the delivery of the installments under the contract, a dispute arose between the parties concerning quality, weight and punctuality of the installments. The contract has therefore not been implemented entirely. The [Buyer] demanded €3,332.89 from the [Seller] for several reasons. During the proceedings, the parties settled on an amount of €833.00 to be paid to the [Buyer] and declared the proceedings obsolete with respect to this amount. The remaining claim is for €63,285.31.
The [Buyer] has declared a set-off against [Seller]'s claim with claims that the [Buyer] purports to have in a total amount of €63,693.60. This is based on the following: Upon the [Buyer]'s request, the [Seller] informed about the prices of frozen salmon of different specifications via e-mail (exhibit B 1). For a package of 2 x 125 gr. of vacuum-packed salmon, the [Seller] stated a price of €6.11. After the delivery of samples, the [Buyer] placed an order for the delivery of salmon in this package size. In its e-mail of 29 August 2002 (exhibit B 3), the [Buyer] asked the [Seller] to confirm the specifications of the product, among other things: minimum amount 100 tons; additional option for 20 tons; continuous delivery of 20 tons per month. The [Buyer] asked for confirmation "within this week". On 2 September 2002, the [Buyer] reminded the [Seller] via e-mail (exhibit B 4) that the confirmation was still outstanding. The [Seller] replied on 4 September 2002 by an e-mail (exhibit B 6) which contained the following passage:
"2. I can confirm the order of the 125 g.price 6,11 Euro, 20 tons per time. The price is valid for 6 month. The minimum of the order ist 120 tons and maximum (6 x 20 tons) and there ist an option of 20 tons.
Please send me the contract."
[Translator's note: This passage is a quotation from the original judgment. It was not translated or changed.]
The [Buyer] then sent the "first order" for 20 tons of frozen salmon (Exhibit B 8) and, in the letter of 4 September 2002 (Exhibit B 7) that accompanied the installment, stated the following, among other things:
"Please send us a confirmation of the enclosed order and a confirmation for a further 100 tons, continuous delivery from the beginning of November 2002 to the beginning of March 2003, 20 tons per delivery date at a price of 6.11 EURO per kilogram DDP."
The [Seller] neither gave the requested confirmation nor did it give the confirmation for the further 100 tons. It also did not make any deliveries. The parties communicated about the price, mainly via e-mail for a considerable amount of time. They also communicated about when the supplier would eventually be able to deliver. For details, reference is made to exhibits K 11 to K 14 (p. 72-75 of the record) and exhibits B 27 and B 29 (page 91/92 of the record). The [Seller] finally clarified by letter of 24 October 2002 (exhibit K 8, p. 23 of the record) that it was not willing to continue the supply relationship, at least not before the amount of €64,118.31 that was still outstanding for the delivery of fresh salmon would be paid. The [Seller] then instructed its Danish lawyers to pursue the collection of the outstanding amount. The lawyers billed the [Seller] 12,438.25 Danish krone [DKR] for their services.
The [Seller] submits that it is not obliged to pay damages for the deliveries of frozen salmon that had not been provided, since a binding contract had not been concluded.
SUBMISSIONS BY THE PARTIES
Consequently, [Seller] has requested the Court to order the [Buyer] to pay €63,285.31 plus interest of 8% above the respective base level for €26,979.40 since 27 September 2002, for €2,249.91 since 29 September 2002 and for €34,056.00 since 18 October 2002, as well as legal costs incurred before the proceedings of 12,438.25 DKR.
The [Buyer] has requested the Court to dismiss the [Seller]'s claim.
The [Buyer] has alleged that a contract for the delivery of frozen salmon had been concluded on the basis of [Seller]'s e-mail of 4 September 2002, containing the terms previously discussed between the parties. [Buyer] alleges that the [Seller] is therefore in breach of contract and obliged to pay damages. Moreover, the [Buyer] argues that it had made cover purchases of 20,240 kg for which it had to pay a higher price than the contract price. This led to an amount of €51,473.60; for details of the calculation, reference is made to p. 5/6 of the memorandum submitted by the [Buyer] on 8 April 2003 (p. 32/33 of the record). The [Buyer] also claims lost profit caused by the non-delivery of the 100 tons. [Buyer] submits that the order for 100 tons had a value of €611,000.00. Based on a calculation with a 2% profit margin, this leads to further damages of €12,220.00. The [Buyer] has declared a set-off with both amounts (€63,693.60 in total). The [Buyer] also submits that it was entitled to the amounts stated above even if no contract had been concluded on the basis of a breach of duty prior to contracting (culpa in contrahendo).
The [Seller] challenges the [Buyer's] claims and their amounts.
For the details of the parties' arguments, reference is made to the memoranda and the attachments to those memoranda. To the extent that this legal dispute is not governed by the CISG, the parties have, in the course of the proceedings, agreed upon the application of German law.
REASONS FOR THE DECISION
The claim is essentially justified. The [Seller] is entitled to the payment of €63,285.31 by the [Buyer].
1. Denmark and Germany have ratified the CISG. Therefore, the contractual relationship between the parties is governed by the CISG according to Art. 1(1)(a) CISG. For the delivery of fresh salmon (invoices of 27 August, 29 August and 17 September), the [Buyer] still owes the rest of the purchase price, €63,285.31 (cf. Arts. 53, 62 CISG). This amount has been calculated correctly and has not been challenged except for the cross-claims alleged to be set-off against it.
2. The [Buyer] cannot rely on a set-off. The CISG does not contain any provisions about the requirements for a set-off. According to the parties' choice of German law during the proceedings (cf. Art. 27(1), (2) EGBGB [*]), §§ 387 et seq. BGB [*] are therefore controlling. Consequently, there are no doubts about the admissibility of a set-off. However, the court is unable to determine that the cross-claims alleged for the set-off actually arose.
a) The [Seller] did not incur an obligation to pay damages under Art. 74 CISG by refusing to deliver frozen salmon of a certain specification after September 2002. A binding contract had not yet been concluded. This result cannot be based on the rules in Part II of the CISG (Arts. 14-24) on contract formation, as Denmark has declared a reservation according to Art. 92(1) CISG (cf. Piltz, NJW [*] 2003, 2056). According to the choice of law by the parties, German law (§§ 145 et seq. BGB) applies instead. According to those provisions, contracts are formed by offer and acceptance. Contrary to the [Buyer]'s submissions, it cannot be assumed that the contract had been formed when the [Buyer] received the [Seller]'s e-mail of 4 September 2002. Although the parties had formerly agreed upon the basic conditions which were then confirmed in the e-mail ("I can confirm"), by adding the words "please send me the contract" the [Seller] made it sufficiently clear that it still considered itself to be in the "offer phase" and that the actual contract should only be concluded later. The [Buyer]'s behavior also corresponds to this. On the same day the [Buyer] sent the first order and asked for a confirmation of this order and also a confirmation that an additional 100 tons would be delivered continuously. Such confirmations were never made, a fact which is not in dispute.
This demand for a confirmation is the decisive indication against the claim that a contract had already been concluded. Furthermore, it apparently also corresponds to the practices between the parties that orders by the [Buyer] (offers to conclude a contract) were confirmed (and thereby accepted) by the [Seller], as exhibits K 1 and K 2 show for so called contract 12510-35 for fresh salmon. There was therefore no reason to hear the witnesses named by the [Buyer] (memorandum of 17 November 2003, p. 96/97 of the record), as those witnesses would not bring any new knowledge about facts, but only about interpretations concerning the formation of a contract. The [Seller]'s statements in the subsequent communication with the [Buyer] do not compel the Court to assume that the [Seller] itself had assumed that a contract had been concluded. The communication about eventual delivery possibilities can easily be explained by the assumption that at the time the [Seller] did not consider the contract to have finally failed but thought it would be able to reach an agreement with the [Buyer] on the delivery amounts and prices. Moreover, the [Buyer] had questioned the price again, which indicates that a contract had not been concluded.
b) The claim brought forward by the [Buyer] can also not be based on a breach of duty prior to contracting (culpa in contrahendo) (cf. now § 311(2) BGB [*]), even if it is assumed in favor of the [Buyer] that the [Seller] had demonstrated its readiness to conclude a contract by the e-mail of 4 September 2002 and thereby caused reliance in future contract formation but then for no reason refused to conclude the contract. This is because a claim based on culpa in contrahendo is limited to the so-called reliance-interest. Neither lost profit nor additional costs of the alleged cover purchases are included in this interest. The [Buyer] also did not first conclude contracts for the resale of the goods while trusting in the formation of the contract with the [Seller]. The [Buyer] had informed the [Seller] already via its e-mail of 29 August 2002 that it had gotten the order from its customer.
3. A claim for the legal costs incurred before the proceedings (costs incurred from the Danish lawyers) based on material law does not exist, as after [Buyer]'s refusal to pay the [Seller] had to anticipate a court proceeding requiring the [Seller] to engage German lawyers. However, this does not interfere with the question of whether the costs of Danish correspondence-lawyers can be compensated. This is to be determined in the proceeding for the amount of the legal costs.
4. The decision on interest follows from Art. 78 CISG; the court has used German law to determine the interest rate.
5. The procedural incidental decisions are based on §§ 91a, 92, 269(3), 708 no. 11, 709, 711 ZPO [*].
* 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 European currency are indicated as € Euros. Amounts Danish currency are indicated as [DKR].
Translator's note on other abbreviations: BGB = Bürgerliches Gesetzbuch [German private law]; EGBGB = Einführungsgesetz zum Bürgerlichen Gesetzbuche [German international private law]; NJW = Neue Juristische Wochenschrift [German law journal]; ZPO = Zivilprozessordnung [German Code on Civil Procedure].
** Linus Meyer is a law student at the University of Osnabrück, Germany.
*** Todd Fox received his J.D. from Rutgers University and his LL.M. summa cum laude from the University of Freiburg, Germany. A member of the Bar of the State of Pennsylvania, he is an Associate of the Institute of International Commercial Law.Go to Case Table of Contents