Belgium 4 October 2004 Appellate Court Ghent (Deforche NV v. Prins Gebroeders Bouwstoffenhandel BV) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/041004b1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 2003/AR/2763
CASE HISTORY: 1st instance Rechtbank van Koophandel Kortrijk 12 November 2003
SELLER'S COUNTRY: Netherlands (plaintiff)
BUYER'S COUNTRY: Belgium (defendant)
GOODS INVOLVED: Building materials (plates for greenhouse)
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): statute of limitations]; 6A [Modification of Convention by contract]; 8A [Interpretation of party's statements or other conduct: intent of party making statement or engaging in conduct]; 39A2 [Requirement to notify seller of lack of conformity: buyer must notify seller within reasonable time]; 40A [Seller's knowledge of non-conformity: seller fails to disclose known non-conformity]
4B [Scope of Convention (issues excluded): statute of limitations];
6A [Modification of Convention by contract];
8A [Interpretation of party's statements or other conduct: intent of party making statement or engaging in conduct];
39A2 [Requirement to notify seller of lack of conformity: buyer must notify seller within reasonable time];
40A [Seller's knowledge of non-conformity: seller fails to disclose known non-conformity]
Overview comments (CISG-Belgium database): "Applicable law -- European Contracts Convention (1980) -- choice by parties -- if no choice, law of residence of party characteristic performance -- Netherlands. Applicable law -- determines applicability of general conditions and fills gaps in CISG. General terms valid -- choice of law of Netherlands. Information given by seller to buyer -- obligation more stringent when buyer is layman, less stringent when buyer is in the trade. Notice of lack of conformity -- nine months, too late. Interest -- law of Netherlands applied. Counterclaim. Prescription -- according to applicable law, thus of Netherlands."Go to Case Table of Contents
CITATIONS TO ABSTRACTS OF DECISION
(a) UNCITRAL abstract: Unavailable
(b) Other abstracts
CITATIONS TO TEXT OF DECISION
Original language (Dutch): CISG-Belgium database <http://www.law.kuleuven.ac.be/ipr/eng/cases/2004-10-04.html>
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
4 October 2004 [2003/AR/2763]
Translation [*] by Kristof Cox [**]
I. A. For the most important facts and as to the claims before the Court of First Instance, the Court refers to the judgment under appeal under "The claims" and "A. Most important facts" under "Discussion" (judgment under appeal, pp. 1 and 2).
B. a. The Court of First Instance had granted the main claim of the [Seller], respondent on appeal, to a large extent and ordered [Buyer], claimant on appeal, to pay 5,378.70 €, plus judicial interests at the legal interest rate of 7% on 5,042.02 € from the date of the writ (7 February 2003) to the day of payment. The sum of 5,378.70 is composed as follows:
|-||4,583.66 € balance of the invoice;|
|-||336.68 € moratory interest at 7% from the due date to the day of the writ;|
|-||458.36 € supplementary damages (10%).|
b. The [Buyer]'s counterclaim for a provisionary sum of 8,800 €, plus compensatory and judicial interest from 30 March 2001 and the appointment of an expert, was declined as inadmissible because of prescription.
II. A. On appeal, [Buyer] seeks to have that judgment quashed, to have [Seller]'s claim rejected and to have [Buyer]'s original counterclaim granted.
In its act of appeal deposited on 11 December 2003, [Buyer] asks the Appellate Court to order [Seller] to pay a provisionary sum of 8,800 € (4,563.66 € in the memoranda deposited on 1 April 2004), plus compensatory and judicial interest and for the appointment of an expert to examine the defects it alleges and the consequences that have to be attached to those.
B. [Seller] requests that [Buyer]'s main appeal be rejected as unfounded and that its incidental appeal be granted. In [Seller]'s incidental appeal, it claims an interest of 9% instead of the 7% the Court of First Instance granted. Further, [Seller] asks to have the memoranda of [Buyer] deposited on 3 April 2003 at the Court of First Instance be rejected.
[Seller] asks to have the Court reject the memoranda of [Buyer] that were deposited on 3 April 2003 at the Court of First Instance because they were late in application of Article 747 § 2, final paragraph of the Judicial Code. It had not been argued before the Court of First Instance that these memoranda should be rejected, nor had the Court of First Instance invoked this sua sponte. Meanwhile the Court of First Instance has rendered its final judgment, which is under appeal.
Under these circumstances, the Court of Appeal can no longer answer the said question. Article 864, second paragraph of the Judicial Code reads:
"Avoidance and nullity as determined in Article 862 are only then covered, when a judgment (not a judgment that contains an internal measure) is rendered without a party invoking the avoidance or nullity or the judge declaring it sua sponte."
I. A. Both contracts, object of the claims of both [Buyer] and [Seller], are contracts for the international sale of goods, concluded after 1 November 1997. Accordingly, the CISG is applicable. As the Court of First Instance correctly pointed out, the parties have their place of business in different Contracting States (Netherlands and Belgium). In accordance with Article 1(1)(a) CISG, this Convention is directly applicable and the parties have not excluded its application.
Since a contract of sale does not have to be concluded in a written document (see Article 11 CISG), parties can agree without a writing to exclude one or more of the provisions of the Convention.
B. According to Article 3 of the Rome Convention which determines the law applicable to this case, a contract is governed by the law chosen by the parties. Their choice of law must be explicit and must be sufficiently clear from the provisions of the contract or the circumstances of the case.
Article 8.1 of the Rome Convention provides that the existence and the validity of an agreement or of a provision of the agreement are determined by the law that would be applicable under that Convention if the agreement or its provision would be valid.
According to Article 4.1 and 2 of the Rome Convention, the agreements in this case are governed by Dutch law, since the characteristic performance in these agreements is that of [Seller], whose place of business is in the Netherlands.
As the "lex contractus", Dutch law is applicable to the following disputed issues:
|-||The question of what is necessary for an agreement to come into existence by the
meeting of offer and acceptance, including the question of the applicability of special
or general conditions that differ from the provisions of the CISG;
|-||"External gaps" of the CISG.|
C. It should be stressed that the fact that [Seller] filed its claim before a Belgian court does not influence the applicable law. By filing its claim before a Belgian Court, [Seller] has not made a choice of law or renounced anything.
II. A. The existence of the sales contracts is not disputed.
B. The question of agreement is in essence limited to the question whether the conditions of sale and delivery that [Seller] deposited at the Registry of the Court of Amsterdam are applicable or not.
Dutch law should be applied to answer that question (cf. supra).
In the case at hand, it seems that both contracts came into existence in the same manner:
[Buyer] sent an order with only one condition: "conditions of payment: 60 days end of month" [...].
[Seller] delivered and sent an invoice. On the delivery note and the invoice it is printed at the bottom:
"General Conditions of Sale and Delivery:
"To all our offers, acceptances, announcements and agreements are applicable the Conditions of Sale and Delivery Building Materials (AVLB) with arbitration clause, as these are deposited at the latest before the day of offer at the Registry of the Court of Amsterdam at the request of the Association of Merchants in Building Material in the Netherlands. In case you do not have this text in your possession, we are willing to send it. Protests within eight days."
On the invoice it is also stated "Payment within 30 days net." [...] It should be noted that [Buyer] never protested these statements on the invoices and delivery notes.
C. Since there is no irregularity as to the "standard arrangement" for the sector of the building materials, as it is deposited at the Registry of the Court of Amsterdam and is presented ... and since [Buyer] never implicitly or explicitly denied its applicability -- so that as to [Buyer] there is a state of "elaborate silence" -- the "General Conditions of Sale and Delivery Building Materials" that are mentioned are applicable to the contractual relation between the parties.
Under Article 15.1 of these conditions it is mentioned that all agreements concluded with the seller are governed by Dutch law, to which the general conditions are a supplement, and in as far as binding provisions do not resist, are an exception. Thus, the parties should be considered to have chosen Dutch law.
As to Dutch law, it should be noted that this does not necessarily mean the law of sale as determined by the Dutch Civil Code. As is the case in Belgium, the CISG has been adopted in the national law and is directly applicable. As already mentioned in point I.A., where the contract is an international sales contract, the CISG is applicable.
The cited general conditions of sale and delivery are relevant in as far as these depart from the CISG and in as much as the parties do not dispute the applicability. More precisely, some considerations will have an influence on the determination of the interest and damages claimed by [Seller].
D. Where Dutch law is applicable to resolve "external gaps" in the CISG, this has consequences for the determination of the prescription of the claim of [Buyer], which will be determined by the Dutch Civil Code.
III. Claims of [Buyer] - original counterclaim
A. Article 7 - 23.2 Dutch Civil Code reads:
"Claims and defenses founded on facts that would justify that the delivered goods are not in conformity with the contract, are prescribed after two years from the notice given according to the first paragraph. Nevertheless, the buyer retains the competence to rebut the claim for payment of the price by its right to reduction thereof by partial avoidance of the sale or to damages."
This "system of prescription" applies to the claims of the [Buyer], formulated by way of counterclaim in memoranda before the Court of First Instance, deposited on 3 April 2003.
A prescription period of two years is set forth inn Article 7 - 23.2 of the Dutch Civil Code. However, the disputed invoice was paid, so that the second sentence of Article 7 - 23, 2 Dutch Civil Code is not relevant (claim for damages if the seller claims payment).
B. The Court of First Instance has correctly declined the claims of [Buyer] as unacceptable because of prescription, for reasons which this Court considers appropriate, except where they are in conflict with what is considered in this judgment.
C. a. The period of two years starts to run on the date the buyer gives notice of the facts that justify the statement that the delivered goods are not in conformity with the agreement.
In this regard, the date of notice as it is mentioned by [Buyer] itself is determinative ("theory of sending"). Another criterion, namely the date of receipt, may not be used and would undermine legal certainty.
In its letter of 30 March 2001 [Buyer] has given notice to [Seller] of the alleged defects, namely "spots and mold on the inside".
b. 1. [Buyer] cannot be followed where it states that "where [Seller] cannot prove that it received the letter of 30 March 2001 on 2 April, it can do so with regard to the notice of 11 July 2001, since [Seller] replied to this for the first time on 15 August 2001. Thus, the period of two years starts on 15 August 2001 at the earliest, being the date on which [Seller] replied for the first time and from which it seems that it received the letter of [Buyer] dated 11 July 2001." [...]
2. Firstly, this reasoning mistakenly assumes that the [Seller] has to prove when it has received the notice, while it would be sufficient for the [Seller] to refer to the date as mentioned by the [Buyer] in its letter of protest (in this case 30 March 2001). Further, it cannot be accepted that [Buyer] suddenly creates a reasoning that assumes that its letter of 30 March 2001, which it present itself, actually would not exist.
3. If the reasoning of [Buyer] is further considered, one cannot but find that it relies on its letter of 11 July 2001. From the facts at hand, however, it appears that this letter of 11 July 2001 no longer meets the "reasonable time" prescribed by Article 39(1) CISG for the buyer to give notice to the seller of the alleged defects after they have been discovered. In that hypothesis, [Buyer] would be estopped from its right to rely on the non-conformity of the goods (application Article 39(1) CISG) ...
c. 1. The exhibits and information make clear that [Seller] delivered to [Buyer] what was ordered. This is not disputed. Intrinsically, there were no defects in the delivered goods.
2. [Buyer] states that, after some time, spots and mold appeared on the plates delivered by [Seller]. These spots and mold would be the consequence of the non-vertical application of the plates. [Buyer] blames [Seller] for not having informed it of these consequences of the non-vertical application of the plates and alleges that, by virtue of Article 40 CISG, [Seller] cannot invoke Articles 38 and 39 CISG.
3. However, it was not [Seller]'s duty to inform [Buyer] that it might be better not to apply the plates in a non-vertical position, due to the risk for spots and mold. [Buyer] is a specialist in the placement of greenhouses and may be considered to know what it ordered and whether it was completely appropriate for what the plates were aimed for. Of course, the duty of information towards a specialist is much less stringent than the duty of information towards a layman.
It is clear that the plates can also be used in other ways. It is not up to the seller to list these uses and to state each time that that way of using the plates is less appropriate. To the contrary, it is up to the buyer to request necessary technical information on the basis of the given concrete information about the application.
In addition, it is not shown that [Seller] knew that [Buyer] would apply the plates in a non-vertical position.
[Seller] has not breached its duty to inform. Moreover, this is not a case of fraud.
4. [Buyer] refers in vain to the letter of [Seller] of 8 October 2001 [...], in which [Seller] writes: "Eterkasplates are delivered by the thousands for the construction of greenhouses, especially for the roof too." [Buyer] forgets to cite the next paragraph of said letter:
"In previous years, you have already placed multiple orders with us in this material and seen the delivered measurements also in the reach of the roof. Further you have also received plates in coated form."
Since [Buyer] has not contested this, it is assumed that plates in coated form were also delivered.
It is precisely so that coated plates prevent the formation of mold. From all this, it is clear that [Buyer] itself eventually failed to order coated plates, while only [Buyer] itself knew what it would do with the plates and while it should know itself that coated plates prevent the formation of mold.
5. In as far as necessary, it is stressed that the Belgian "system" of assumption of knowledge of defects by the professional seller, is not applicable.
c. The Court also considers by way of obiter dictum the following: From a letter of Company Eternit of 18 December 1997 to [Seller] it seems that a growth of mold "will not or hardly influence the life span of the plates. In our opinion, this growth of mold does not lead to disintegration or rotting of the plates", so that one may wonder to which degree there would be a defect and not rather a mere matter of appearance.
D. Since there is no breach of the duty to inform by [Seller], there is no reason to apply Article 40 CISG. Thus, it need not be further examined whether [Buyer] fulfilled its duty to examine and protest in conformity with the CISG.
IV. Claims of [Seller] - original main claim
A. a. In the judgment under appeal, the Court of First Instance accepted the claims of [Seller] on the basis of correct grounds which the Court considers as explicitly repeated here, except in as far as they would be inconsistent with what is considered in this judgment.
The Court considers the sentences in the judgment a quo "After the assignment of a claim the assignee is entitled to extra-judicial costs and interest, not the assignor. It is also the assignee who, after assignment of the claim, possibly allows extension of the time for payment, or starts proceedings." as unwritten.
b. In its letter of 18 September 2002, the "Kredietbewaking Bouw" - named debt collection agency as printed on the bottom of the said letter - states: "Our client, Gebr. Prins Bouwstoffen- handel B.V., has assigned its claim on you of € 5,588.34 for collection." Further the collection agency constantly talks about its "client" that claims payment. However, it is impossible to consider this to be an assignment of claim. The wording is not interpretable that way: "assigning a claim for collection" is nothing more and nothing less than "giving the order to collect the claim."
B. a. [Buyer] does not contest the balance of the invoice for the delivery of the "polykasplates" of 4,583.66 €, nor the fact that it is principally due. However, it wishes to compensate its alleged damage from the alleged defects, object of the delivery of mid-2000. It is not possible to offset this against the claims of [Seller], since the original counterclaim of [Buyer] has been declined as prescribed.
b. From the fact that [Seller] waited some nine months after the date of the invoice to send a formal notice, it cannot be derived - and certainly not unequivocally - that it would have declined no matter which right.
C. As to the interest and supplemental compensation claimed by [Seller]:
a. It has already been determined that the "General Conditions of Sale and Delivery Building Materials" as deposited at the Registry of the Court of Amsterdam and as deposited under its exhibit no. 4, are principally applicable.
b. Article 13.2.b of these "General Conditions of Sale and Delivery Building Materials states:
"The buyer, who failed to pay or pay completely on the thirtieth day after the due date, is, without any formal notice being required, in breach and thus obliged to pay interest on the sum."
Article 13.2.c states:
|-||"The interest mentioned in section 2b of this Article, starts to run from said thirtieth day to the moment of full payment. The interest rate is the legal interest, plus two percent."|
Articles 13.3.b and 3.c , mention a date from which the interest starts to run, which is 30 days after delivery. In the case at hand, this would be 23 November 2001, while the invoice is dated 18 December 2001.
Some things are confused and confusing in law and in fact, so that the application of the conditions most favorable for the buyer should be taken into account. From this it follows that [Buyer] has to pay 4,583.66 €, plus interest from 19 February 2002 - 30 days on the 30 days as mentioned on the invoice, comes to interest from two months after the date of the invoice -, at the legal Dutch interest rate, plus two percent.
c. Article 13.5 of the "General Conditions of Sale and Delivery Building Materials" states inter alia:
"In any event the buyer has to pay a fixed sum of costs, calculated according to the collection rate of the Dutch Bar, as it is in force at the moment the buyer is in breach. If seller proves higher costs, that were reasonably necessary, the buyer has to pay these too."
Costs should be avoided. Equivocal assumptions can also be a proof. [Seller] could have presented exhibits on some aspects. However, it failed to do so. The Court considers a compensation of 5% or 229.18 € as acceptable. However, what is claimed above is not proven.
d. The main sum [Buyer] is ordered to pay is reduced to 4,583.66 € (balance invoice) + 229.18 € (damages of 5%) = 4,812.84 €.
IV. Taking into account the - be it minimal - justified arguments of [Buyer], it is appropriate to leave the costs of the procedure on appeal to the parties that have made them.
FOR THOSE REASONS,
* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff of Netherlands is referred to as [Seller] and Defendant of Belgiumis referred to as [Buyer].
** Kristof Cox is a researcher at the Institute for International Trade Law at the Catholic University of Leuven (Belgium). He is preparing a Ph.D. on the effects of an arbitration award on third parties. Further, he regularly publishes articles and case notes on the CISG and International Commercial Arbitration. Kristof Cox can be contacted at <Kristof.email@example.com>.Go to Case Table of Contents