Germany 21 April 2004 Appellate Court Düsseldorf [15 U 88/03] (Mobile car phones case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/040421g3.html]
DATE OF DECISION:
JURISDICTION:
TRIBUNAL:
JUDGE(S):
CASE NUMBER/DOCKET NUMBER: 15 U 88/03
CASE NAME:
CASE HISTORY: 1st instance Landgericht Düsseldorf (32 O 157/01) 18 February 2003 [reversed]
SELLER'S COUNTRY: Germany (defendant)
BUYER'S COUNTRY: Israel (plaintiff)
GOODS INVOLVED: Mobile car phones
Background
The Prior Ruling
The Appeal
Appellate Ruling
- Applicable law
- Avoidance for fundamental breach
- Applicability of Seller's General Conditions
- The language issue and related issues
Plaintiff [Buyer] is an Israeli firm; Defendant [Seller] is a German firm. Buyer requested the Court to order Seller to repay the price of mobile phones contracted for between the parties. Buyer had avoided the contract because of late delivery.
The Landgericht [LG or Court of First Instance] rejected the original claim on the ground that Buyer was not entitled to request repayment of the price under Articles 326 I and 346 of the Bürgerliches Gesetzbuch [BGB or German Civil Code] because it was questionable whether the delivery was late. It was not evident whether, pursuant to the contract, delivery should have taken place by 3 July 2000 at the latest because the acceptance of the offer contained only the term "as soon as possible". Because Seller's employee in his e-mail of 30 June 2000 had promised that delivery would take place "next Monday", delivery became due then. But this does not release Buyer from the obligation to set an additional period (Nachfrist) including the reservation to reject performance. The latter would be enforceable under Seller's General Conditions of Sale (Art. III 1) application of which was accepted by the parties. Rejection of performance because of losing interest in performance does not come into question pursuant to Art. 326(2) BGB because Buyer's statements in the preliminary contract were not included into the contract and therefore Seller was expressly forced to be late with performing the contract. Not even the requirements of Art. 361 and 376 were met because there is no evidence of a fixed delivery date in the written documents. Since Buyer communicated its withdrawal too early and rejected taking delivery of the goods, Seller became entitled to mitigate its loss by the means of a cover sale.
Buyer appealed against this decision but reduced the amount claimed to Euro 5,000.
Buyer stated that it is of special importance that in the e-mail of 30 June 2000 delivery was expressly promised to take place "next Monday". Furthermore, the LG failed to consider that Seller had admitted in its e-mail of 20 July 2000 that it mistakenly requested damages in the amount of Deutsche Mark [DM] 15,000 and also stated that, as a sign of its good faith, it was also ready to comply with the price difference of DM 1,860. The latter statement qualifies as an acknowledgement. Therefore, the appeal is founded at least in that amount. The LG also failed to consider that Seller's presentation of the facts of the case, to the effect that a minimal price of DM 50 per piece was to be agreed upon, is disputed between the parties. Seller stated that it had informed Buyer only in its e-mail of 7 July 2000 that the goods were to be sold at a lower price, while it requested repayment of the whole advance payment already in the e-mail of 5 July 2000. Seller failed to provide evidence on whether such minimal price was agreed upon. In addition, Seller's whole statement of facts was late because the Answer to the Claim dated 21 March 2002 was received by the Court only on 22 August 2002. The LG failed to consider the objection to the latter late communication, did not reject Seller's claim in spite of the fact that it did not submit the Answer to the Claim within the time limit and the Court also failed to order in integrum restitutio on the latter grounds.
Seller relies upon the original decision and states that its e-mail of 20 July 2000 included neither a promise to comply with the debt nor acknowledgement of debt.
APPELLATE RULING
The Oberlandesgericht [OLG or Appellate Court] found the appeal admissible and well-founded.
Buyer is entitled to claim repayment of the advance payment in the amount of Euro 5,000 pursuant to Art. 81(2) CISG since it lawfully declared avoidance of the contract in its e-mail of 5 July 2000 and, in case of avoidance, the party that had previously partially performed the contract, the Buyer in the instant case, is entitled to claim return of what has already been performed.
The OLG reverses the decision of the LG, holding that Buyer's claim of repayment is not governed by the German Civil Code [BGB] because the CISG is the primary applicable law.
The CISG would not be applicable based on Art. 1(1)(a) because Israel became a Contracting State on 1 February 2003 which was after the conclusion of the contract. Instead, applicability of the CISG is derived from Art. 1(1)(b) because the rules of private international law lead to the application of German law and Germany is a Contracting State to the Convention.
It is not disputed by the parties that they had agreed upon application of German law and since Germany did not make any reservation under Art. 95 CISG, Art. 1(1)(b) is applicable. Application of the latter provision would be excluded only when German private international law provisions would cause disadvantage to a State that had made reservations. When ratifying the CISG, Israel did not make any reservation. As Germany abrogated the ULIS at the time of ratification pursuant to Art. 99(2) CISG, according to German law only the CISG is applicable in the instant case.
- Avoidance for fundamental breach
The OLG ruled that avoidance of the contract was lawful by means of e-mail [the original text of the decision contains the expression "fax" which seems to be contrary to what has been stated in other parts of the judgment] on 5 July 2000. In that Buyer avoided the contract because of late delivery (using the expression "cancel") and rightly communicated its avoidance pursuant to Art. 49(1)(a) CISG. The avoidance was lawful and effective because Seller had breached one of its contractual obligations and that breach was fundamental in the light of Art. 25 CISG.
The OLG explains that under Art. 33(a) CISG the goods must be delivered by the date included in the contract, Art. 33(b) refers to a certain delivery period and Art. 33(c) to a certain date after conclusion of the contract. Breach of the latter obligation qualifies as fundamental in the light of Art. 25 CISG if the parties had agreed upon a fixed delivery date and if both parties are clearly aware of the fact that delivery should take place at that certain date. Also with regard to a longer delivery period, non-compliance with the delivery date can qualify as fundamental if it is of special importance for the business and even without expressly agreeing upon it. That was the case here, too.
It was also questioned whether the parties had expressly agreed upon a delivery by 3 July 2000, as Buyer stated, and whether Seller had known that timely delivery was necessary because of the fact that Buyer had already sold the goods to its own customers.
| - | In its acceptance of the offer, Seller agreed to deliver the mobile phones not only "as soon as possible", which had already been agreed upon by the parties in the previous telephone conversations. Seller further agreed in the acceptance of the offer to deliver and hand over the goods immediately after Buyer's payment had arrived. It is not disputed between the parties that, in spite of the latter promise, delivery had to take place not only after the whole amount of the contract price had arrived but already when 20 percent of the contract price would be received. The latter 20 percent was received by Seller on 29 June 2000. Therefore, under these circumstances, Seller was aware that Buyer needed immediate delivery. The fact that Seller was indeed aware of the latter is also shown by the behavior of one of its employees, Mr. Goldenstein. He apologized for the delay in his e-mail on 30 June 2000 (using the word "delay") and stated that they had indeed agreed on delivering the goods earlier. He also promised to deliver the goods to Spedition Hellmann next Monday (3 July 2000). |
| - | Under these circumstances, a fundamental breach has occurred because, in spite of what had been agreed upon in the acceptance of the offer, Seller failed to deliver the mobile phones to Spedition Hellmann, the company which was to deliver the goods to Buyer, immediately after having received the specified payment. Furthermore, although being already late with performance and with avoidance by Mr. "G" in his e-mail of 30 June 2000 having already taken place, delivery to Spedition Hellmann did not take place prior to the next Monday (3 July 2000) either. Even if there are a few days between the delivery date originally agreed upon and the later substitute date ("next Monday"), non-compliance with the second delivery date led to fundamental breach because Buyer could rightly expect the goods to be delivered as soon as possible. |
| - | Even if the promise to deliver the goods immediately after the payment arrived would be regarded as not having special importance in connection with the contract, breach of contract by Seller would be evident and that would entitle Buyer to avoid the contract under Art. 49(1)(b) CISG. Even if the parties had not agreed upon a specific delivery date, Seller was obliged to deliver the goods to Spedition Hellmann because of the above mentioned reasons. Buyer did not fix an additional period under Art. 47 CISG. Since Seller was aware that Buyer needed immediate delivery, yet it was late with performance on 30 June 2000 and promised to deliver on 3 July 2000, it was not necessary for Buyer to fix a Nachfrist because Seller itself had acknowledged late delivery and set a new date for delivery. |
- Applicability of Seller's General Conditions
Seller cannot refer to the fact that under Art. III 1 of its General Conditions of Sale, the buyer is not released from the obligation to set a Nachfrist including the reservation to reject performance in cases of failing to comply with delivery dates and dates concerning avoidance of the contract because the delivery date or period needs to be fixed expressly and in writing but in the instant case this requirement was not met. Firstly, because the General Conditions of Sale were not effectively included into the contract and secondly because based on the provisions of Art. 8 CISG even if the General Conditions had been effectively included into the contract, different regulations on the preconditions of fixing Nachfrist with the reservation to reject performance would be surprising in the light of Art. 3 AGBG [German Unfair Contract Terms Act].
To the question whether the General Conditions were effectively included into the contract, the OLG bases its ruling on the CISG instead of the AGBG.
It stood beyond doubt that inclusion of the General Conditions of Sale into the contract pursuant to the provision of Art. 14 CISG shall be judged by taking Art. 8 CISG into account. Under the latter, General Conditions of Sale can become part of the contract if the parties expressly agree upon their application and exact contents.
Such an agreement was not made in the instant case. Therefore, inclusion of the General Conditions of Sale comes into question under Art. 19 CISG as well if acceptance of the offer with modifications and additions is not objected to by the other party and such counter-offer is accepted by the other party. Buyer communicated its offer to Seller on 28 June 2000 which was accepted by Seller on the same day. In its acceptance of the offer Seller made reference to its General Conditions of Sale which, therefore, qualifies as a counter-offer pursuant to Art. 19 CISG. It can be alleged that this counter-offer was accepted by Buyer due to the fact that Buyer subsequently urged delivery of the goods.
Nevertheless, the Seller's General Conditions of Sale were not effectively included into the contract because reference to the application of the General Conditions and its text which was sent to Buyer were in the German language whereas the language of the contract was English.
- The language issue and related issues
The OLG argued that in practice there is an acknowledged criterion that in order to be applicable, the other party should be aware of the contents of General Conditions of Sale. The OLG referred to a decision of Oberlandesgericht Düsseldorf (6U 86/00 of 15 February 2001) which dealt with the latter issue.
The OLG concluded that precondition of including General Conditions of Sale into a contract is that the recipient of the offer be aware of the intent of the offering party that the latter wished to include the General Conditions into the contract. Therefore, the party wishing to apply the General Conditions must send the text of the General Conditions or arrange for any other possibility to read them. It is against the principle of good faith in international trade and the general duty to cooperate and inform the other party required to seek information concerning the General Conditions of Sale which were not sent to it if it was to bear risks and disadvantages of such unknown General Conditions.
Therefore these General Conditions of Sale were not effectively included into the contract in spite of the fact that the text was actually sent to Buyer but it could not reasonably find out the exact contents of it.
Buyer, however, failed to prove why it did not have the opportunity to become aware of the contents of the General Conditions of Sale. It only argued that the text was not readable but since the fact that all communications between the parties were via e-mail is not disputed by the parties, the Court did not see why the General Conditions dispatched in e-mail could not be readable. To the contrary, bad readability of the General Conditions sent to the LG was due to the fact that Buyer sent it by fax to the legal representative. Yet, even if the Buyer would not have been able to read the General Conditions, effective inclusion would not be excluded. This case is not the same as where the General Conditions were not at all communicated to the other party. Since the General Conditions were sent to Buyer, the latter was aware that these should be applicable to the contract. If Buyer was not able to read the General Conditions in parts, under the principles of good faith, cooperation and the duty to inform the other party require that Seller be notified about the existence of General Conditions of Sale, whereupon Seller could have been sent a better copy, which could have been done also immediately by e-mail.
Inclusion of the General Conditions of Sale is also contested by the fact that reference to its application was printed with small letters in German language on the acceptance of the offer and text of the General Conditions were also sent in German, whereas the language of the contract was English.
The question about which language should have been used in order to make the reference about the application of the General Conditions effective and in which language the General Conditions should have been sent cannot be answered beyond any doubt. The OLG refers to one opinion according to which General Conditions which are not in the language of contracting or the language of the other party do not become parts of the contract, but the Court also referred to another opinion according to which it is sufficient to use any globally known language (e.g., English) when referring to the application of the German-language General Conditions of Sale. The Court also refers to the requirement that the General Conditions of Sale must be in a language understood by the other party and the offer should clearly refer to its application.
In the instant case, the language of contract was English which is evident from the communication via e-mail and also from the acceptance of the offer, which has a German title but the agreement about terms of delivery and transportation is in English, yet the requirement to deliver as soon as possible is in German language. The General Conditions would be included if the employee dealing with the contract could have spoken German. Since the reason for requiring explicit reference to the application of the General Conditions and sending the text to the other party is the protection of that party from unknown conditions, the latter cannot refer to the fact that the General Conditions were in a language other than the language of contracting, if one of its responsible employees speaks that language.
Seller failed to provide evidence on the latter and it cannot be substantiated by circumstances of contracting either. Correspondence with Buyer's responsible employee, Witness "N" was carried out in English. Whether Buyer's responsible staff spoke German is not evident from the letters of 28 July 2000 and 6 August 2000 by Buyer's General Manager, Mr. "R.F." and not even from the letter by Buyer's employee "M.W." dated 15 July 2000 which are all written in English. Buyer did state at the oral hearings that its employee, Mrs. "W." does speak German and that she translated the whole correspondence for General Manager Mr "F.", however, she had become an employee only after the conclusion of the contract.
Since the staff employed at the time of the conclusion of the contract did not speak German and the language of contracting was English, the General Conditions of Sale did not become part of the contract.
Moreover, the OLG concluded that even if the General Conditions had been included into the contract, under Art. III.1, Buyer was not obliged to set a Nachfrist with the reservation to reject performance lacking written agreement on a specific delivery date because such an obligation would have been surprising in the light of Art. 3 AGBG.
Such a surprising clause is present where there is controversy in the course of contracting or if there is a significant deviation from dispositive law. As, in the instant case, delivery "as soon as possible" was agreed upon, and under the circumstances which are to be taken into account pursuant to Art. 8 CISG, Seller could foresee the significance of prompt delivery, such a clause was unusual and surprising because by requiring Buyer to fix a Nachfrist, avoidance of the contract in case of late performance becomes difficult. In addition, this provision includes a significant deviation from the dispositive regulations of the CISG which when supporting application of trade usages in international trade, do not make a reservation to reject performance the precondition of the effective fixing of a Nachfrist.
Buyer's original claim is not discontinued because of Seller's set-off claim in connection with the cover transaction. Since, pursuant to Art. 49(1)(a) CISG, Buyer lawfully avoided the contract based on fundamental breach by the other party, Seller is not entitled to rely on Art. 75 CISG.
It is true that Seller carried out its cover transaction immediately after the avoidance. Nevertheless, Seller is not entitled to claim the difference between the contract price and the price in the cover transaction. Buyer did not commit a breach of contract by declaring the contract avoided. Therefore, Seller is not entitled to claim damages under Arts. 74 and 75 CISG.
FOOTNOTES
* For the purposes of this abstract, the Israeli Plaintiff is referred to as [Buyer]; the German Defendant is referred to as [Seller]. Amounts in European currency are indicated as [Euro], amounts in previous German currency (Deutsche Mark) are referred to as [DM].
Translator's note on other abbreviations: BGB = Bürgerliches Gesetzbuch [Civil Code of Germany]; AGBG = Gesetz zur Regelung des Rechts der Allgemeinen Geschäftsbedingungen [German Unfair Contract Terms Act] ; LG = Landgericht [District Court]; OLG = Oberlandesgericht [Provincial Court of Appeal]
** Dr. Andrea Vincze is a Fellow of the Institute of International Commercial Law of the Pace University School of Law. She received her law degree from the University of Miskolc, Hungary, in 2002. She is a Ph.D. candidate at the same university, working on her research project on international commercial arbitration and ICSID arbitration. She has also dealt with cross-border and Internet-related copyright issues.
Go to Case Table of ContentsAPPLICATION OF CISG: Yes [Article 1(1)(b)]
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
4A [Issues covered by Convention: inclusion of standard terms and conditions]; 7A33 [Application of good faith standards]; 8C [Intent: interpretation in light of surrounding circumstances]; 19C [Offer and acceptance (acceptance with modifications): modifications that are material]; 25B [Definition of fundamental breach: substantial deprivation of expectation, etc.]; 33B [Time for delivery: contract (circumstances) provide period of time for delivery]; 47A2 ; 47B11 [Buyer's right to fix additional period for performance: basis for avoidance for delay in delivery; Buyer's remedies during peried: seller states (indicates) that he will not comply with notice]; 49A [Buyer's right to avoid contract: grounds for avoidance]; 81C [Effect of avoidance on obligations: restitution of benefits received]
Descriptors:
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/915.pdf>; Internationales Handelsrecht (1/2005) 24-29
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
German: Sauthoff, Internationales Handelsrecht (1/2005) 21-24
Go to Case Table of ContentsTranslation by Joan Felice Hofmann [*]
Institut für ausländisches und internationales Privat-und
Wirtschaftsrecht, Ruprecht-Karls-Universität Heidelberg
21 April 2004 [I- 15 U 88/03] [**]
FACTS
The Plaintiff [Buyer] requests repayment of the remaining deposit that was paid to the Defendant [Seller] for a delivery of mobile phones. The [Buyer] declared avoidance of the contract because of late delivery.
[...]
[Lower court ruling]
[The District Court had applied German law and held that the claim is unfounded.]
Pursuant to Section III.1 of the General Terms and Conditions of the [Seller], a party that intends to declare the contract avoided, has to set an additional period of time under penalty of declaration of avoidance [Ablehungsandrohung].
Decision of the District Court: Since the [Buyer] declared the avoidance of the contract too early and refused the goods, the [Seller] had the right to sell the goods elsewhere to mitigate its losses.
The [Buyer] appealed in due time and form. It requests repayment only in the amount of 5,000 Euro.
[Basis for appeal]
The [Buyer] emphasizes the District Court's advice according to which, it is particularly relevant that, by e-mail of 30 June 2000, delivery was expressly promised for "next Monday". [...] The [Buyer] also alleges that:
| - | The District Court disregarded the fact that the [Seller]'s submissions that it had incurred
losses in the amount of DM 50 per unit, were disputed. |
| - | According to its own submission, the [Seller] did not inform the [Buyer] until 7 July 2000 by
e-mail that the goods were sold for a lower price per unit. However, the [Buyer] had already
demanded repayment in its e-mail of 5 July 2000. |
| - | The [Seller] did not show clear evidence that it actually suffered the losses it claimed. [...] |
[...]
JUDGMENT
The appeal is admissible and successful on the merits. The [Seller] has to pay 5,000 €.
REASONS
1. The [Seller] has to restitute the deposit in the amount the [Buyer] is claiming on appeal, Euro 5,000 pursuant to Article 81(2) CISG because the [Buyer] effectively declared the contract avoided by its e-mail of 5 July 2000 and because in case of a declaration of avoidance by one party that has in part performed under the contract, such as the payment of the deposit, it has the right to demand restitution.
a) Contrary to the District Court's opinion, the [Buyer]'s right to demand restitution does not arise out of German civil law because it is not applicable. In fact, the prevailing provisions of the CISG apply for sale of goods between parties that have their relevant places of business in different countries.
The CISG is not applicable according to Article 1(1)(a) CISG because Israel became Contracting State by 1 February 2003 and therefore after the conclusion of the contract. However, the CISG applies according to Article 1(1)(b) CISG because the rules of private international law lead to the application of German law and therefore to the law of a Contracting State (cf. Staudinger-Magnus, CISG, <1999>, Article 1 para. 101).
It is undisputed that the parties have agreed on the application of German law. Therefore German law applies according to Article 27 para.1 EGBGB [**]. Although Germany declared a reservation according to CISG Article 95 CISG on Article 1(1)(b) CISG, this does not lead to the inapplicability of the CISG. Article 1(1)(b) CISG remains out of consideration only if the (German) law of conflict rules leads to the disadvantage of a State that has declared an Article 95 reservation (Staudinger-Magnus, loc. cit., Article 1 para. 111). At the time of the conclusion of the contract, Israel had not ratified the CISG under reservation. Since, pursuant to Article 99(2) CISG, Germany, when ratifying the CISG, denounced the Hague Sales Convention which had also been ratified by Israel, the CISG applies according to German law.
b) As a consequence of its declaration of avoidance, the [Buyer] is entitled to demand restitution for the payment of the deposit pursuant to Article 81(2) CISG.
[...]
The [Buyer] effectively declared the contract avoided by its fax of 5 July 2000. The [Buyer] terminated the contract because of the late delivery and thereby declared the avoidance in accordance with Article 49(1) CISG. The [Buyer] had the right to declare the contract avoided because the [Seller] failed to perform his obligation under the contract and because this breach of contract amounted to a fundamental breach pursuant to Article 25 CISG.
aa) According to Article 33(a) CISG, the seller must deliver the goods on the date fixed by the contract or, according to Article 33(b) CISG within a period of time determinable from the contract or, according to Article 33(c) CISG, within a reasonable time after the conclusion of the contract. The breach of such a duty is fundamental pursuant to Article 25 CISG if the parties have agreed that delivery shall be at a fixed date and both parties obviously suppose that the existence of the contract imperatively depends on timely delivery. However, if the delivery date is exceeded over a long term, this could amount to a fundamental breach if time is of the essence, even without an explicit agreement (Schlechtriem, CISG, 3rd ed. 2000, Article 49 para. 5; Staudinger-Magnus, loc.cit., Article 49 paras. 10 et seq.) . This is the case here.
It is of no relevance whether the parties, as argued by the [Buyer], expressly agreed on delivery by 3 July 2000 and whether the [Seller] knew that timely delivery was required because the [Buyer] had already resold the mobile phones to one of its customers. Because it arises out of the undisputed circumstances of the conclusion of the contract to which due consideration is to be given when interpreting the statements of the parties, that the parties have agreed upon immediate delivery of the mobile phones.
The [Seller] not only assured the "quickest possible" delivery in its sales confirmation which is undisputedly in accordance with the agreement made during the preceding telephone conversations. In addition, in the sales confirmation, the [Seller] even assured that it would dispatch and release the goods immediately after it had received payment. It is undisputed that the goods should be dispatched, contrary to the wording of the sales confirmation not after the receipt of the whole payment, but after the receipt of 20% of the payment. The [Seller] received the payment on 29 June 2000. From these circumstances, the [Seller] could have gathered that immediate delivery was of fundamental importance for the [Buyer]. That the [Seller] was aware of that, can be discerned especially from the behavior of Mr. Goldstein acting for the [Seller]. It was Mr. Goldstein who apologized for the delay by e-mail of 30 June 2000 and confirmed that they had agreed to have the goods delivered the goods earlier. At the same time he promised to deliver the goods to the forwarding agent Hellman next Monday.
Due to these circumstances, it is a fundamental breach of the contract that the [Seller], contrary to the promise contained in the sales confirmation, did not, immediately after the receipt of the deposit on 29 June 2000, deliver the mobile phones to the forwarding agent H... that should transfer the goods to the [Buyer]. It is also a fundamental breach because the delivery was even not made until next Monday (3 July 2000) as announced by e-mail of 30 June 2000 although the delivery was already delayed. Even if there were only some days between the original duty to deliver to the forwarding agent H... and the alternatively announced date, the failure to comply with the dates leads to a fundamental breach of the contract because, according to the circumstances, the [Buyer] was entitled to expect the goods the "quickest possible".
Even if the promise to deliver the goods immediately after the receipt of the deposit is not of utmost importance to the contract, the [Seller] would have committed a fundamental breach of contract that entitled the [Buyer] to declare the avoided according to Article 49(1)(b) CISG. Even if the parties did not expressly agree on an exact delivery date, the [Seller] was, according to what was said above, under the obligation to deliver the goods to H... after it had received the deposit. It did not fulfill this obligation. The [Buyer] did indeed not fix an additional period of time according to Article 47 CISG. Since the [Seller] yet knew, due the mentioned circumstances, that a delivery quickest possible was essential for the [Buyer] and since it admitted the delay on 30 June 2000 in fully awareness of the fact that the [Buyer] did not need to set an additional period of time because there was the self-reminder of the [Seller] combined with the fixing of a period of time.
bb) The [Seller] cannot rely on Section III.1 of its General Terms and Conditions according to which the buyer has to fix an additional period of time under penalty of avoidance of the contract unless the date or period was referred to expressly in writing as binding; and [Seller] cannot allege that such a written promise about the date was given. The General Terms and Conditions were not effectively included in the contract [...]
(1) The question whether General Terms and Conditions have been effectively included in the contract is not governed by the AGBG [**] but by the CISG.
It is undisputed that the inclusion of General Terms and Conditions is governed by Articles 14 et seq. CISG in accordance with the rules of interpretation set forth in Article 8 CISG (Schlechtriem, loc. cit. Intro to Articles 14-24 para. 9; Piltz NJW [**] 1996, p. 2768, p. 2770). According to these provisions, General Terms and Conditions become part of the contract if the parties agree expressly on the content and that the General Terms and Conditions should govern their contractual relationship.
Such an agreement was not made in the case at hand. The General Terms and Conditions could also be included according to Article 19 CISG if the acceptance contains additional or different terms and if this counter-offer is accepted. The [Buyer] made an offer to the [Seller] by its order of 28 June 2000. The [Seller] accepted the same day by its sales confirmation. The [Seller] referred to its General Terms and Conditions in its sales confirmation and therefore made a counter-offer pursuant to Article 19 CISG. That was accepted by the [Buyer] by pushing for delivery afterward.
Nevertheless, the General Terms and Conditions were not effectively included in the contract because the reference that the General Terms and Conditions should be applicable was in German and the transmitted General Terms and Conditions were written in German while the contract language was English.
It is accepted by legal practice that the other party easily must have the possibility to take note of the General Terms and Conditions. The Appellate Court Düsseldorf has appropriately found in its judgment of 15 February 2001 (6 U 86/00):
"For the purposes of the German Act on General Terms and Conditions (AGBG), the German Supreme Court differentiates between commerce among merchants and commerce among non-merchants. For the purposes of the commerce among merchants, it considers sufficient if the central statement on the contract refers to the General Terms and Conditions. It considers as irrelevant whether they are attached to the letter or are known in all its particulars to the addressee. Rather it is reasonable to demand that a merchant acquires unknown General Terms and Conditions and takes note thereof (cf. BGH NJW 1976, 1886, 1887; BGH [**] NJW [**] 1982, 1749, 1750; Palandt/Heinrichs, § 2 AGBG para. 26). For the purposes of commerce among non-merchants, the party that introduces the General Terms and Conditions, generally has to make available the full text of the Terms and Conditions to the other party so it can take note of them without much ado. Even an explicit offer to provide them on demand is not sufficient (cf. BGH NJW-RR, 1999, 1246, 1247 on the inclusion of VOB/B, Vergabe- und Vertragsverordnung von Bauleistungen, Regulation on placing and contracts in construction matters; Palandt/Heinrichs, § 2 AGBG para. 9).
"The case-law mentioned above cannot be applied to the CISG off-hand. In order to support the rules for merchants (Wolf/Lindacher /Horn tend to do so) it may be argued that the general rules for the conclusion of a contract (offer and acceptance) are applied and not the special provisions of § 2 AGBG. If, accordingly, it is sufficient that there is the possibility to demand for the General Terms and Conditions, this could be the case for the purposes of the CISG as well. However, German law on commerce among merchants, that is not unified as opposed to the CISG, makes higher demands on the other party's responsibility and diligence. Whereas the CISG neither distinguishes between merchants and non-merchants nor between contracts of either civil or commercial character (Article 1(3) CISG). Therefore, if the rules for merchants would be applied to the international sale of goods, non-merchants would face the higher demands of diligence as well. However, this does not justify the application of the case law on the commerce among non-merchants (so Schlechtriem tends to say, Intro to Articles. 14-24 para. 9). The case law is stamped by the consumer protective character of § 2 AGBG, which the CISG does not have.
"Finally, the issue can be solved by an autonomous interpretation of the CISG. In consideration of all aspects, the ability of the addressee to order the General Terms and Conditions that were mentioned in the statements of the party that introduced the General Terms and Conditions and thereby take note of the content of them is not sufficient. The main purpose of the CISG is to have provisions that are clear and simple for parties involved in the international sale of goods. This aim is challenged if General Terms and Conditions are accepted generously. A party that introduces its General Terms and Conditions might try to alter the rules of the CISG in its own favor and look about its own legal system. Furthermore, the CISG does not contain any provisions on the control of the content of General Terms and Conditions but refers to national law (Article 4(a) CISG); cf. Schlechtriem, Intro to Articles 14-24 para. 1); Schlechtriem / Schwenzer, Article 35 CISG para.42). In case of doubt, the law of the seller's place of business applies (Article 28 paras.1 and 2 EGBGB [**]), even if criteria for appraisal are to be taken from the rules laid down in the CISG. However, this leads to fragmentation of the law that should have been overcome by the CISG and the other party faces the danger of unmanageable adverse effects on its legal position. This is not objectionable in the face of the principle of party autonomy that applies to the CISG as well (Article 6 CISG). However, it is compatible with the aims of the conventions only, if the corresponding agreements of the parties' wills were expressed clearly and unequivocally. This requires that the party that has not introduced the General Terms and Conditions knows the content of them or that it easily can take note of them. This is not the case if he has to acquire the conditions (cf. Senat WM [**] 2000, 2192, 2194 [...]). Therefore, on the basis of an interpretation in favor of the Convention and considering legal certainty and clarity, the ease of international trade and the protection of the other party from hardly unmanageable adverse effects of its legal position, the standard that has to be applied, has to be more strict than the standard that applies to domestic commercial trade. ..."
The court subscribes to the view mentioned above. The German Supreme Court has found by its judgment of 31 October 2001 (VIII ZR 60/01, <www.jurisweb.de>, = NJW 2002, 370) that this view is accurate. An effective inclusion of General Terms and Conditions requires that the recipient has the possibility to note the will of the offeror that he wants to include his conditions into the contract. Furthermore, for the purposes of uniform sales law the party that has introduced the General Terms and Conditions can be expected to transmit the text to the other party or make it available otherwise. It would contradict the principle of good faith as well as the general obligation of cooperation and information of the parties, to impose an obligation to inquire on the other party about the clauses and to burden the risks and disadvantages of the unknown terms and conditions of the party that has introduced them (BGH [**] see above, page 3 f.)
Upon these considerations, the Terms and Conditions of the [Seller] were not effectively included into the contract. Although it is undisputed that the [Seller] transmitted the Terms and Condition to the [Buyer], the [Buyer] could not reasonably take note of the content of the General Terms and Conditions.
Even if the Terms and Conditions were not readable in parts it would be possible to take note of them. The [Buyer] has made sufficient submissions on this. It is undisputed that the entire correspondence was by e-mail. Therefore bad readability is incomprehensible. The partial bad readability of the General Terms and Conditions that were given to the District Court might derive from the fact that the Terms and Conditions were send by fax from the [Buyer] to the [Buyer]'s representative. But, even if the Terms and Conditions were difficult to read, this would not be an obstacle to the effective inclusion of the General Terms and Conditions. This case is not comparable with the case where the General Terms and Conditions were not made available at all because the [Buyer] knew, due to the transmission, that they should be important for the contract. If the General Terms and Conditions were not readable in parts, he was, in consideration of the principle of good faith and the general duty of cooperation and information of the parties, obliged to point it out to the [Seller] in order to provide an opportunity to transmit a copy that is readable. This would have been possible without further delay by e-mail.
However, the fact that the reference to the application of the General Terms and Conditions was in fine-print and in German and that the General Terms and Conditions have been transmitted in German, while the contract language was English, militates against the effective inclusion.
There are different views on the issue of the proper choice of language for the reference to General Terms and Conditions and the proper language of the General Terms and Conditions themselves. According to one authority, General Terms and Conditions that are not in the contract language or in the native language of the other party (Piltz, Neue Entwicklungen im UN-Kaufrecht, NJW 2003, 2056, 2059) are not included in the contract (AG Kehl, NJW-RR 1996, 565, 566; Piltz, Neue Entwicklungen im UN-Kaufrecht, NJW 1996, 2768, 1771; arguably also OLG Celle, OLGR 1999, 360; on the whole discussion, Schlechtriem, loc.cit., Article 14 para.16 fn.102). According to another authority it is sufficient if the reference to General Terms and Conditions that are in German is in a universal language (English) (OLG [**] Karlsruhe, December 11 February 1993, U 61/92, <www.jurisweb.de> S.1 0 DWiR 1994, 70; OLG Koblenz, December 10 January 1992, 5 U 534/91, <www.jurisweb.de> S.3 = Iprax 1004, 46). Some authors demand for the language of the General Terms and Conditions to be comprehensible to the recipient and for the offer to refer in a clear manner to their application (Staudinger-Magnus, loc.cit., Article 14 para. 41).
Acting on the presumption that the recipient should have the possibility to take note in a reasonable manner, the dominant issue is, whether he could understand the reference that the General Terms and Conditions should be applied and, whether he could understand the transmitted General Terms and Conditions. If there are doubts, these have to be solved to the disadvantages of the party that has introduced the General Terms and Conditions
The contract language was German. This can be discerned not only from the e-mails that were sent, but also from the sales confirmation that in fact had a German headline. But the agreements concerning the transport and the carrier were written in English, while the reference concerning the delivery "schnellstmöglich" [quickest possible] was in German. However, the General Terms and Conditions would have been included effectively if the assistants, that were busy with the execution of the contract, were able to speak German. For the purposes of concrete reference and transmission of the General Terms and Conditions, the other party cannot rely on a language that is different from the contract language if the responsible assistants are able to speak the language in which the General Terms and Conditions are written.
Neither was this shown by the [Seller] nor does it result from the circumstances of the execution of the contract. The correspondence by e-mail was conducted entirely in English by the witness N..., who conducted the negotiations on behalf of the [Buyer]. That some responsible assistants of the [Buyer] were able to speak German, can neither be gathered from the letters of 28 June 2000 and 6 August 2000 by the managing director of the [Buyer], Mr. R...F..., nor from the letter of 15 July 2000 of the assistant M... W... of the [Buyer]. The [Buyer]'s submissions, made after the court's instructions on the effective inclusion of General Terms and Conditions, that the employee Mrs. W... indeed speaks German and has translated the correspondence for the managing director Mr. F... is undisputed. However, she had joined the company after the conclusion of the contract.
Since the employees that were acting on behalf of the company at the time of the negotiations were not able to speak German and the contract language was English, the General Terms and Conditions were, according to all authorities, not effectively included in the contract although they were transmitted to the [Seller].
(2) [...]
[...]
cc) Since the [Buyer] has only received repayment in the amount of 13,140.- Deutsche Mark [DM] (6,718.38 €) from the deposit in the amount of 28,140.- DM (14,387.75 €), the [Seller] has to pay 15,000.- DM (7,669.38 €) of which the [Buyer] is claiming only 5,000.- € on appeal.
[...]
2. The [Buyer]'s claim is not extinguished by an impliedly declared set-off against a claim for compensation because of a cover purchase. Since the [Buyer] has effectively declared the avoidance of the contract according to Article 49(1)(a) CISG, the [Seller] cannot rely on Article 75 CISG.
The [Seller] in fact made a cover purchase immediately after the avoidance of the contract. However it does not have a right to claim damages in the amount of the difference between the agreed upon price of the contract and the price of the cover purchase because the [Buyer] did not breach the contract when declaring the avoidance of the contract. The [Seller] therefore cannot claim damages according to Articles 74, 75 CISG. A breach of contract by the other party is a prerequisite to the claim for damages according to Article 74 CISG based on the calculation of Article 75 CISG (Staudinger Magnus, loc. cit., Article 74 para. 8)
3. [...]
Judges: Schüssler, Peters, Hesper
FOOTNOTES
Translator's note on abbreviations: AG = Amtsgericht [Lower Court]; AGBG = Gezetz sur Regelung des Rechts der Allgemeinen Geschäftsbedingungen [Act on General Terms and Conditions (today §§ 305 et seq. German Civil Code)]; BGH = Bundesgerichtshof [Federal Supreme Court of Germany]; EGBGB = Einführungsgesetz zum Bürgerliches Gesetzbuch [Introduction Code to the German Civil Code]; NJW = Neue Juristische Wochenschrift [German law journal]; OLG = Oberlandesgericht [Appellate Court]; WM = Wertpapier-Mitteilungen [German law journal].
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Institute of International Commercial Law - Last updated September 24, 2007