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CISG CASE PRESENTATION

Germany 1 June 2004 District Court Saarbrücken (Pallets case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/040601g1.html]

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

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Case identification

DATE OF DECISION: 20040601 (1 June 2004)

JURISDICTION: Germany

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

JUDGE(S): Müller

CASE NUMBER/DOCKET NUMBER: 8 O 118/02

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

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Poland (plaintiff)

BUYER'S COUNTRY: Germany (defendant)

GOODS INVOLVED: Pallets


Case abstract

GERMANY: Landgericht Saarbrücken 1 June 2004

Case law on UNCITRAL texts (CLOUT) abstract no. 590

Reproduced with permission of UNCITRAL

Abstract prepared by Ulrich Magnus, National Correspondent, and Klaus Bitterich

The plaintiff, a company from Poland, delivered pallets to the defendant, a German company. The delivery was carried out between November 2000 and November 2001. After a customs investigation, the German customs authorities informed the defendant in a preliminary report that neither the place of origin of the pallets was Poland nor enough repair work had been performed to consider Poland place of origin. The defendant received this information at the latest at the beginning of June 2002. On 18 June 2002, the defendant gave notice of non-conformity to the plaintiff, whereupon the plaintiff sent a written confirmation that Poland was the place of origin. On the same day representatives of the customs authorities and the defendant discussed the matter, following which the customs authorities sent the defendant a final report stating again that Poland was not the place of origin of the goods.

After the defendant once again had complained about the false indication of origin and refused to pay the price for the pallets, the plaintiff brought an action for payment. He pleaded that the defendant failed to examine the goods and to give notice of non-conformity within reasonable time. According to the plaintiff, the non-conformity was noticeable because a marking on the pallets indicated the place of origin (obviously not Poland). The defendant, who had been ordered by the customs authorities to pay customs duty on imports, in turn claimed to be entitled to damages for breach of the contract in question, including customs duty on imports. The defendant sought to offset his claims against the plaintiff's claim for payment of the price.

The Court allowed the plaintiff's claim and ruled that the defendant was entitled to damages pursuant to articles 45(1)(b) and 74 CISG and therefore his debt had been offset. The plaintiff had failed to perform his obligation to deliver goods conforming to the contract because the place of origin of the goods was not Poland. The defendant did not lose the right to rely on the lack of conformity of the goods under articles 38 and 39 CISG. The Court noted that the place of origin of the pallets is usually marked by the railway enterprise and does not tell where the pallets originally come from. Therefore, the earliest the place of origin could be discovered was when the German customs authorities informed the defendant with their report of June 2002. A mere suspicion of a lack of conformity with regard to the country of origin that may have incurred before that time was not regarded as a "discovery" under article 39 CISG. Thus the reasonable time period specified in article 39 CISG did not commence earlier than 18 June 2002, the date in which the matter was discussed between the customs authority and the representatives of the defendant. The notice of non-conformity of 18 June 2002 was therefore given within reasonable time.

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Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 6 ; 35 ; 38 ; 39 ; 74 ; 78 [Also cited: Articles 2 ; 3 ; 9 ; 25 ; 45(1)(b) ; 53 ]

Classification of issues using UNCITRAL classification code numbers:

6B [Agreements to apply Convention: references to domestic law of seller's country in seller's pleadings and to domestic law of buyer's country in buyer's pleading not an implicit exclusion of the CISG];

38A [Buyer's obligation to examine goods: time for examining goods];

39A2 ; 39A11 [Requirement to notify seller of lack of conformity: buyer must notify seller within reasonable time; Specification of nature of non-conformity: degree of specificity required];

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

78B [Rate of interest]

Descriptors: Choice of law ; Set-off ; Burden of proof ; Examination of goods ; Latent defects ; Lack of conformity notice, timeliness ; Lack of conformity notice, specificity ; Damages ; Interest

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Editorial remarks

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Citations to other abstracts, case texts and commentaries

CITATIONS TO OTHER ABSTRACTS OF DECISION

Unavailable

CITATIONS TO TEXT OF DECISION

Original language (German): CISG-online.ch website <http://www.cisg-online.ch/cisg/urteile/1228.pdf>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation)

Queen Mary Case Translation Programme

District Court (Landgericht) Saarbrücken

1 June 2004 [8 O 118/02]

Translation [*] by Mariel Dimsey [**]

Edited by Institut für ausländisches und Internationales
Privat- und Wirtshaftsrecht der Universität Heidelberg
Daniel Nagel, editor
[***]

JUDGMENT

IN THE NAME OF THE PEOPLE. In the legal dispute: Plaintiff [Seller] against Respondent [Buyer] for claim of purchase price, the 8th Civil Chamber of the District Court of Saarbrücken HELD, on the basis of the oral proceedings of 11 May 2004, carried out by the presiding judge at the District Court, Müller, as sole judge:

I. The [Buyer] is liable to pay the [Seller] EUR 18,854.98 plus 8% interest on EUR 3,963.06 since 21 January 2002, on EUR 4,564.50 since 6 February 2002 and on EUR 10,327.42 since 28 February 2002; for the remainder, the claim is dismissed.
 
II. The costs of the legal proceedings are to be borne 37% by the [Seller], 63% by the [Buyer].
 
III.     The judgment is provisionally enforceable for the [Buyer], but for the [Seller] only in return for providing security in the amount of 110% of the amount to be enforced. The [Seller] can defer enforcement by providing security or making a deposit in the amount of 110% of the amount to be enforced under the judgment if the [Buyer] does not give security of 110% of the amount to be enforced before enforcement is made.

FACTS

The [Seller], who is located in Poland, claims from the [Buyer] payment of the purchase price for deliveries in the time frame from 21 January until 4 March 2002, in an amount of EUR 29,728.30. The claim is comprised of invoices of the [Seller] for EUR 3,963.06 + EUR 4,564.50 + EUR 4,113.40 + EUR 3,963.06 + EUR 4,564.50 + EUR 3,812.70 + EUR 4,747.08. The [Buyer] has been obtaining used Euro pallets (Europaletten) from the [Seller] for many years.

Used Euro pallets were delivered to the [Buyer]:

   -    In the time frame from 25 March until 9 December 2000 by ALTEX-SC having a Customs value of Deutsche Mark [DM] 255,099.00 (p. 89 of the file);
 
   -    In the time frame from 24 January until 22 November 2001 by PAL-DREW SC having a Customs value of DM 666,979.50 (pp. 96, 97 of the file);
 
   -    In the time frame from 27 November 2000 until 23 November 2001 by the [Seller] (B.H.Z. ECO-PAL) having a Customs value of DM 708,879.00 (pp. 92, 93 of the file); and
 
   -    In the time frame from 14 August until 10 December 2001 by P.H.Z. ALPACK having a Customs value of DM 709,312.50 (pp. 87, 88 of the file).

Starting on 29 January 2002, an external customs examination took place at the [Buyer]'s for the time frame from 1 October 1999 until 31 December 2001 (pp. 33 et seq., 113 of the file). In the course of this examination, it turned out that the delivered Euro pallets did not have the assured features. The draft of the report on this examination was received by the [Buyer], at the latest, on 3 June 2002 by fax.

On 18 June 2002, the [Buyer] notified the [Seller] of the lack of conformity of the goods over the phone. On the same day, the [Seller] (p. 68 of the file), PAL-DREW SC (p. 67 of the file), ALTEX-SC (p. 69 of the file) and P.H.Z. ALPACK (p. 66 of the file) confirmed to the [Buyer] in writing that the delivered Euro pallets were of Polish origin, i.e., they were manufactured in Poland, or manufactured in other countries, but repaired in Poland, whereby the repair costs comprised at least 60-70% of the original price.

All companies have the same address, telephone, fax and mobile phone number. On 18 June 2002, a final meeting took place with the main customs office of Saarbrücken at the request of the [Buyer] as well. The final examination report dated 21 June 2002 was received by the [Buyer] on 29 July 2002.

As stated in the notification of 15 July 2003, the delivered Euro pallets attracted import Customs duty in a total amount of EUR 35,765.45. With respect to deliveries of the [Seller], the Customs duty notification showed an amount of EUR 10,873.32. For the deliveries of ALTEX-SC, an amount of EUR 3,781.52 was determined, a further amount of EUR 10,230.64 was determined for the deliveries of PAL-DREW SC, and for the deliveries of P.H.Z. ALPACK, an amount of EUR 10,879.97.

Owing to the Customs duty determined against it, the [Buyer] declared a set-off against the claimed amount with a counterclaim, initially in the amount of EUR 35,896.83 and ultimately in the amount of EUR 35,765.45.

By letter dated 23 August 2002, the [Buyer] was requested to pay the amounts due by 9 September 2002.

In a letter of its authorized legal representative dated 30 August 2002, the [Buyer] again notified the [Seller] of the lack of conformity of the goods.

The [Seller] claims that, with respect to the trade conditions, the INCOTERM CIP [*] was agreed upon. The origin of the pallets had been branded on the crates and was therefore immediately recognizable. Therefore, the [Buyer] was under an obligation, according to Art. 38 CISG, to notify of the lack of conformity immediately after delivery.

Delay allegedly occurred through the issuance of invoices, namely 14 days after delivery of the goods. The deadline has the support of the ongoing case law of the highest Polish court. The interest claim of 8% arises from Art. 481 2 of the Polish Civil Code.

[CLAIMS OF THE PARTIES]

The [Seller] applies for the [Buyer] to be held liable to pay to the [Seller] EUR 29,728.30 plus 8% interest on EUR 3,963.06 since 21 January 2002, on EUR 4,564.50 since 6 February 2002, on EUR 12,640.96 since 28 February 2002 and on EUR 8,559.78 since 4 March 2002.

The [Buyer] applies for the claim to be dismissed.

   -    The [Buyer] claims that the [Seller] had assured it of the actual origin of the goods, and that the [Seller] had delivered the goods to it under the name of the named companies.
 
   -    The lack of conformity of the goods was not finally determined for the [Buyer] until it received the letter from the main Customs office of Saarbrücken dated 4 July 2003, as, in this letter, it was confirmed that the issued declarations of origin had been incorrectly made. At no time had [Buyer] doubted the conformity of the delivered goods. Doubts only started to arise at the time of the Customs examination. Therefore, [Buyer] had turned to the [Seller], who confirmed the conformity of the goods.

With respect to details, reference is made to the content of the pleadings and their attachments.

REASONS FOR JUDGMENT

The [Seller]'s claim is justified. The international jurisdiction of the German courts, which is to be examined ex officio, is present because the [Buyer] is located in Germany (Art. 2(1) Brussels Regulation).

On the merits, the claim is established within the scope described; for the remainder, the claim is dismissed.

I.  The United Nations Convention on Contracts for the International Sale of Goods (CISG) of 11 April 1980 (BGBl. [*] 1989 II 588, corrected BGBl. 1990 II 1699) is to be applied to the legal relationship of the parties, as Poland and Germany are Contracting States. Both parties have their respective business seats located in a Contracting State, and the goods are not intended for private use (Art. 1(1)(a), Art. 2, Art. 3(1) CISG). This is not contradicted by the fact that the parties argued in their pleadings referring to provisions of the Polish ([Seller]) and German ([Buyer]) law, as that action, in itself, does not lead to an implicit exclusion of the UN Sales Law (cf. Piltz NJW [*] 1996, 2770 with further references; BGH [*] NJW 1999, 1259).

II.  According to Art. 53 CISG, the [Seller] has a claim to the purchase price in the amount of EUR 29,728.30. This is not disputed by the [Buyer].

The [Buyer] declared a set-off against the claim for the purchase price with an alleged claim for damages arising from Art. 45(1)(b) in conjunction with Art. 74 CISG owing to a lack of conformity of the goods.

The [Buyer] has not lost the right to rely on a lack of conformity of the goods because it notified the lack of conformity of the goods in good time. A fundamental breach of contract by the [Seller] is present within the meaning of Art. 25 CISG if the [Buyer] is substantially deprived of what the [Buyer] was entitled to expect under the contract. This can be founded in the delivery of non-conforming goods (cf. Schlechtriem, in Caemmerer/Schlechtriem, Komm. zum Einheitlichen UN-KaufR, 3rd ed., Art. 25 para. 20). An external Customs examination took place at the [Buyer]'s city for the timeframe from 1 October 2001 until 31 December 2001. This examination showed that the delivered Euro pallets were not of Polish origin, namely, were not produced in Poland, or produced in other countries and then repaired in Poland, whereby the repair costs comprised at least 60-70% of the new price. Therefore, the delivered Euro pallets attracted import duty in a total amount of EUR 35,765.45, according to a written notice dated 15 July 2003. With respect to the deliveries of the [Seller], the written notice of import duty amounted to EUR 10,873.32.

The remainder of [Buyer]'s counterclaim or assertion of set-off is unsuccessful. The [Buyer] claims that the [Seller] delivered the goods to it under the name of the company mentioned, although, in each case, the [Seller] was the party concerned. However, the [Buyer] has not provided any evidence for this claim. The fact that all companies have the same postal address, telephone, fax and mobile phone number and that the bank account details of the [Seller] and the PAL-DREW SC are identical is not sufficient to assume a common identity of the companies. A Mr. Piotr Wiwior had signed for the [Seller] and for ALTEX S.C., for PAL-DREW S.C. and P.H.Z. ALPACK, a Mr. Piotr Malecki. Under these circumstances, it could have also been -- as asserted by the [Seller] -- a group of shared offices.

A continuation of the company, as alleged by the [Buyer], is excluded, as there were different company descriptions and as the deliveries of the companies overlap in terms of the timeframes, which can be ascertained from the delivery documentation provided by the [Buyer] (pp. 87-97 of the file).

The [Buyer] received deliveries of used Euro pallets from ALTEX-SC in the timeframe from 25 March to 9 December 2000 having a Customs value of DM 255,099.00 (p. 89 of the file), from PAL-DREW SC in the timeframe from 24 January to 22 November 2001 having a Customs value of DM 666,979.50 (pp. 96, 97 of the file), from the [Seller] (B.H.Z. ECO-PAL) in the timeframe from 27 November 2000 to 23 November 2001 having a Customs value of DM 708,879.00 (pp. 92, 93 of the file) and from P.H.Z. ALPACK in the timeframe from 14 August to 10 December 2001 having a Customs value of DM 709,213.50 (pp. 87, 88 of the file). The deliveries from PAL-DREW SC, the [Seller] and P.H.Z. ALPACK overlapped in 2001, with the consequence that there can be no talk of a continuation of the company. The [Buyer] had even listed the companies as separate suppliers in its records itself. In addition, the certification presented by the [Buyer] in the oral negotiations of 11 May 2004, from which can be ascertained that, with respect to the deliveries of PAL-DREW SC, 3% import Customs was deducted subsequently in two cases, shows that here, the [Buyer] had made a precise distinction between who had delivered its goods and that it did not always make the general assumption that the [Seller] was the only party that came into consideration as the seller. In the absence of evidence as to the common identity of the various companies, it is to be assumed that each company is a different one, with the consequence that the [Buyer] must sperately claim against the other suppliers with respect to the excess amount. Hence, the set-off is only deliveries accredited to the [Seller] in the duties notice.

The notice of lack of conformity was made in good time. After an acceptance of the goods without objection, burden of proof lies with the buyer (cf. Herber/Czerwenka, Int. KaufR, 1991, Art. 35 para. 9; Piltz, Int. KaufR, 1993, 5 para. 21). The [Buyer] accepted the used Euro pallets by taking them over (Art. 60(b) CISG) at the place of destination in Germany. According to Art. 38 CISG, the buyer must examine the goods within as short period of time as is practicable in the circumstances. It must notify the seller of defects within a reasonable period of time, according to Art. 39(1) CISG (Staudinger/Magnus, CISG, 13th ed., 1999, Art. 38 para. 1). If the buyer wishes to derive rights from the lack of conformity, it must notify these to the seller properly, namely in good time and in the correct form (Staudinger/Magnus, ibid, Art. 39 para. 1). Doing this, the buyer must precisely describe the lack of conformity; general statements are not sufficient (Staudinger/Magnus, ibid, Art. 39 para. 21).

The [Buyer] rightly relies on the fact that the defect was not clearly visible and, therefore, owing to the lack of visibility and knowledge, the [Buyer] could not have given notice immediately. The reasonable period for giving notice under Art. 39 CISG begins as soon as the buyer discovers the lack of conformity of the goods or could have discovered it during the examination required by Art. 38 CISG. Hence the reasonable period of time is of different length for goods with hidden defects in comparison to goods with obvious defects. Defects are hidden if they cannot be discovered by a proper examination; in such a case, the reasonable period of time commences for hidden defects without further examination periods, as soon as the buyer discovers the lack of conformity (Staudinger/Magnus, ibid, Art. 39 para. 31). This determination does not commence until the point in time when a prudent buyer would take steps to examine the goods closer as well as take legal steps due to the existence of suspicious circumstances (Staudinger/Magnus, ibid, Art. 39 para. 32).

An external Customs examination took place at the [Buyer]'s city starting on 29 January 2002; the draft of the corresponding report of the main Customs office on this examination which the lack of conformity of the goods ascertained, was received by the [Buyer] by fax on 3 June 2002. On 17 June 2002, the [Seller] received a declaration formulated by the [Buyer], in which it was confirmed that the delivered pallets were of Polish origin. Subsequently, at the request of the [Buyer], a final discussion took place with the main Customs office of Saarbrücken on 18 June 2002. A final examination report was received by the [Buyer] on 29 July 2002, by letter dated 24 July 2002.

The objection dated 18 June 2002 was made in good time unless the defect could have been discovered immediately, which the [Seller] initially alleged in its letter dated 9 March 2004, and which also contradicts its own written confirmation.

The burden of proving the lack of visibility of the defect lies with the buyer as such a proof would be to its advantage.

According to the Customs report (p. 82), the branding marks of the train companies cannot be seen as conclusive evidence of the origin of the Euro pallets, as these could still have been obtained from third countries. Hence the defect was not clearly visible.

With respect to deliveries from the [Seller], the import duty notice amounts to EUR 10,873.32. This amount constitutes the loss sustained by the [Buyer] and is, therefore, to be deducted from the claim. This results in a remaining claim of EUR 29,728.30 - EUR 10,873.32 = EUR 18,854.98. The further claim was dismissed.

III.  According to Art. 78 CISG, a seller who has not been paid in time is, without any further requirements, entitled to demand interest on the outstanding payments.

Thus, it is sufficient for the entitlement to interest that a payment is due. (cf. Eberstein/Bacher in Caemmerer/Schlechtriem, ibid, Art. 78 para. 9).

The set-off applies to the older claims first. Further claims for interest cannot be considered owing to the retrospective application of the set-off. With respect to the amount of EUR 3,963.06, the decisive point in time is 21 January 2002, with respect to the amount of EUR 4,564.50, 6 February 2002, with respect to the amount of EUR 10,327.42, 28 February, because the goods were delivered at this point in time.

However, the UN Sales Law solely regulates the claim for interest on the merits and does not contain regulations on the rate of interest. To the extent that the parties have not reached agreement in this regard, first and foremost, the usages stated in Art. 9 CISG are to be taken into account. Such usages have neither been presented here, nor are they otherwise apparent. In any case, the statutory rate of interest of the legal system that applies according to the rules of private international law of the forum to those legal issues not covered by the UN Sales Law, is decisive. In this regard, the Polish legal system is decisive according to Art. 28(2) EGBGB [*]. The contract has the closest connection to Poland, as the [Seller], who is located in Poland, undertook the characteristic performance (delivery of the goods). According to Art. 481 2 Polish Civil Code in conjunction with the Cabinet Regulation to Determine Statutory Default Interest dated 10 March 1989 in the version dated 15 December 2001, value amounts attract interest at a rate of 8% p.a. This can be seen from the arguments of the [Seller], the correctness of which is doubtless, which is sufficient within the scope of 293 ZPO [*] to persuade the court.

The decision on costs is based on 92(1) ZPO. The decision on the provisional enforceability is based on 708 No. 11, 709, 2nd sentence, 711 ZPO.

Müller, Presiding Judge at the District Court.

Prepared by

Officer of the Judiciary as Clerk of the Court.


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff of Poland is referred to as [Seller] and Defendant of Germany is referred to as [Buyer].

Translator's note on abbreviations: BGBl. = Bundesgesetzblatt [Federal German Law Gazette]; BGH = Bundesgerichtshof [German Federal Supreme Court]; CIP = Cost and Insurance Paid (INCOTERM); DM = Deutsche Mark [former German currency]; EGBGB = Introductory Law to the German Civil Code; EUR = Euro; NJW = Neue Juristische Wochenschrift [German law journal]; ZPO = Zivilprozessordnung [German Code of Civil Procedure].

** Mariel Dimsey, LL.M., is a Research Assistant and Teaching Assistant at the University of Basel, Switzerland.

*** Daniel Nagel has been a law student at Heidelberg University since October 2002 and an exchange student at Leeds University in 2004/2005.

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