Spain 31 March 2005 Appellate Court Valencia (Frischaff Produktions v. Guillem Export) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/050331s4.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: Unavailable
CASE HISTORY: 1st instance Juzgado de Primera Instancia No. 5 de Gandia 11 June 2004
SELLER'S COUNTRY: Spain (defendant)
BUYER'S COUNTRY: Germany (plaintiff)
GOODS INVOLVED: Oranges
SPAIN: Audiencia Provincial de Valencia, 31 March 2005
Case law on UNCITRAL texts (CLOUT) abstract no. 730
Reproduced with permission of UNCITRAL
A German buyer entered into a sales contract for the purchase of oranges with a Spanish seller. The delivery was agreed to take place between the beginning of January and July 2002. When January passed without the delivery, the buyer entered into two substitute purchases with other sellers at a higher price. The last delivery of these substitute purchases took place at the end of September 2002. The buyer notified the seller of its avoidance of the contract and its substitute purchases only four days prior to the last substitute purchase in September 2002.
The buyer claimed the price difference as damages between the original contract price and the substitute purchases according to article 75 CISG. The first instance court granted the damages, but based on article 74 CISG due to the late notification of the seller. The seller appealed the decision claiming that due to the late communication, there should be no recovery at all, either under article 74 or article 75 CISG.
The court followed the seller's reasoning and noted that a substitute purchase necessitated prior notification of avoidance according to article 26 CISG. The court held that article 74 CISG referred to other damages for breach of contract, in particular compensation of the injured party. Further, that the determination of damages under article 74 CISG was a different procedure than under article 75 CISG and that the buyer had not made a claim fulfilling these requirements. Consequently, the court reversed the first judgment and thus rejected the buyer's claim.Go to Case Table of Contents
APPLICATION OF CISG: Yes
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
26A1 [Effective declaration of avoidance: notice to other party required]; 74A [General rules for measuring damages: loss suffered as consequence of breach]; 75A [Damages established by substitute transaction: substitute transaction after avoidance]
26A1 [Effective declaration of avoidance: notice to other party required];
74A [General rules for measuring damages: loss suffered as consequence of breach];
75A [Damages established by substitute transaction: substitute transaction after avoidance]
CITATIONS TO OTHER ABSTRACTS OF DECISION
Spanish: CISG-Spain and Latin America website <http://www.uc3m.es/cisg/respan48.htm>
CITATIONS TO TEXT OF DECISION
Original language (Spanish): CISG-Spain and Latin America website <http://www.uc3m.es/cisg/sespan48.htm>; see also Fuente: Aranzadi Westlaw JUR 2005\130644
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
UnavailableGo to Case Table of Contents
Case text (English translation)
Queen Mary Case Translation Programme
Translation [*] by Adrián Cisneros Aguilar [**]
Edited by Guillermo Coronado Aguilar [***]
Heard before the Eighth Division of the Court of Appeals of Valencia, acting as Opining Judge the Hon. Justice Mr. D. Fernando Javierre Jiménez, the writs of Ordinary Trial, filed before Court of First Instance no. 5 of Gandía, docket no. 498/03, in the case of Plaintiff Frischaff Produktions GmbH [Buyer] v. Defendant Guillem Export, S.L. [Seller]; regarding a claim pending before this Court due to a Motion of Appeal filed by [Seller]
FINDINGS OF FACT
First. The Appealed Decision, issued by the Judge of the Court of First Instance no. 5 of Gandía, on 11 June 2004, contains the following ruling:
"In response to the claim raised on behalf of the [Buyer] against the [Seller], I direct the [Seller] to pay the amount of 55,117.73 euros for damages and losses caused to the [Buyer], with express imposition upon the [Seller] of the [legal] costs caused by these proceedings."
Second. A Motion of Appeal was filed against this decision in time and form by [Seller], which was admitted to both effects and the records of the case were forwarded to this Court. The appeal was accepted establishing 15 March 2005 as the date for deliberation, voting and ruling on the Appeal.
Third. All the legal provisions of limitations and formalities have been observed.
First. [Buyer], a company of German nationality, filed a claim against [Seller], a Spanish firm, claiming the amount of 55,117.17 euros, suing for the payment of this sum as damages and losses as per article 75 of the United Nations Convention on the International Sale of Goods of 11 April 1980 (RCL 1991, 229 and RCL 1996, 2896), basing its claim in the breach by the [Seller] of an international sales contract dated 23 October 2001, by which the [Seller] bound itself to deliver to the [Buyer] 1,500 tons of oranges for juice between the first week of January and the month of July 2002.
Given that the [Seller] did not deliver the goods correspondent to the month of January, and with the purpose of complying with its business commitments, the [Buyer] decided, by mid-February, to avoid the contract in what was related to the month of January and to proceed to substitute purchases.
|-||This was communicated to the [Seller] through the [Buyer]'s intermediary
Scantrad Fruits, S.L, along with the fact that the [Buyer] would continue to
make such substitute purchases in the event that the [Seller] did not comply
with the subsequent deliveries.
|-||In this situation, the [Buyer] contacted the German company Donkers-Van Rijn, proceeding to the purchase of 585.846 kilos of oranges for a price of 210,713.79 euros, goods that were sent to the [Buyer] in several deliveries since 20 February 2002 until 25 June 2002. The price per kilogram ranged between 0.36 and 0.33 euros plus the corresponding VAT.
|-||Given the insufficiency of the goods provided by Donkers, the [Buyer] also
established a contractual relationship with the Spanish company Comercial
Mandel Bab, S.L, from which it bought 650.405 kilograms of oranges from 14
June to 26 September 2002, for a total price of 227,641.75 euros, that is,
0.35 euros per kilogram.
|-||In sum, the [Buyer] purchased 1,236.251 kilograms of oranges at 438,355 euros, when it should have paid the [Seller], for that same quantity, the amount of 383,237.81 euros, since the agreed price per kilo was of 0.61 German Marks, that is, 0.31 euros.|
That is the reason for which the [Buyer] claimed the amount of 55,117.73 euros for the surplus paid to the other providers for the substitute purchases that the [Buyer] had to make given the contractual breach of the [Seller].
The decision of the Court of First Instance regarded as proven the breach of contract on the part of the [Seller], but given that the [Buyer] did not communicate the termination of the contract until 26 September 2002, the First Instance Court understood that the [Buyer]'s claim could not have a legal standing under art. 75 of the Vienna Convention, but it could under art. 74 of this Convention, assessing the claim in its integrity based on such art. 75, and imposing the court expenses upon the [Seller].
The [Seller] lodged an appeal against the decision of First Instance, manifesting that the communication of the termination of the contract to the [Seller} did not take place until 25 September, that is, after every single one of the substitute purchases had been made.
Second. [Discussion of Spanish procedural law which limits a cause of action to the claim pleaded and the precise legal protection requested, calling attention to the inability of the Court to "change or vary the suit brought into a different one, though acknowledging that a Court can "decide according to the provisions applicable to the case even if such provisions were not properly cited or pleaded by the parties."]
In the case at hand, the [Buyer]'s petition is determined by the facts claimed by the [Buyer], who has assessed them in the factual hypothesis of a concrete provision - art. 75 of the United Nations Convention on the International Sale of Goods of 11 April 1980 ( RCL 1991, 229 and RCL 1996, 2896) - which, in turn, derives a legal consequence. In sum, the [Buyer] brings a concrete and effective action in which it asserts repeatedly that it pleads for not another relief but the relief contained in the cited art. 75 which provides that
"If the contract is avoided and if, in a reasonable manner and within a reasonable time after avoidance, the buyer has bought goods in replacement or the seller has resold the goods, the party claiming damages may recover the difference between the contract price and the price in the substitute transaction as well as any further damages recoverable under article 74."
This provision grants a contracting party the right to make a substitute purchase, but subject to the avoidance of the contract that the aggrieved party wants to replace "economically speaking". However, in accordance with art. 26 of the Vienna Convention of 1980, once declared such avoidance will only have legal effect if it is communicated to the other party.
Therefore, for the action brought before the Court to be successful, the [Buyer] should have proved that the avoidance of the contract signed with the [Seller] was notified to the latter, and only after that may the [Buyer] proceed to make the substitute purchases. Since it was proven in the records that the avoidance was only notified on 25 September 2002 (document no. 67 of the Written Claim, in folio 152) and that the substitute purchases were made between 20 February 2002 and 29 September 2002 in order to "substitute" the goods that should have been delivered between 1 January 2002 and July 2002, the [Buyer]'s claim shall be rejected, without it being possible to sanction the [Seller] based on the application of art. 74 of the [Vienna] Convention, as was done by the Judge of First Instance contradicting the conformity principle, since this provision refers to a factual hypothesis different from that present in these proceedings, specifically to the payment of damages and losses due to a breach of contract, as well as its quantification, which is different than the one established in an article 75 determination, fixation and quantification of damages that would require certain and specific evidence that the [Buyer], indeed, has not even suggested in these proceedings.
Because of the considerations expressed above, the decision of the Court of First Instance shall be revoked for being non-conforming with the law applicable to the factual background and the [Buyer]'s claim rejected as the specific factual hypothesis has not been fulfilled for the action enforced to be appraised, and in such sense we deem the Motion of Appeal filed.
Third. In the case at hand, the contractual breach on the part of the [Seller] has been thoroughly proven and, regarding that particular aspect, we agree with the considerations for the assessment of the evidence presented that were made by the Judge of First Instance. However, as we have sustained in the reasoning set forth above, the [Buyer]'s claim cannot succeed given the contents of the action the [Buyer] filed. Now, this Court is aware and recognizes the difficulties and doubts that have originated around the concept of conformity of pleadings, generating serious legal doubts about its extension (substantiation and individualization theories: identifying elements of the object of the proceedings), and those serious doubts ought to have translation in that the decision regarding the payment of the legal costs is referred to, pursuant to article 394 of the Civil Procedure Act (RCL 2000, 34, 962 and RCL 2001, 1892); thus, this Court's appraisal is that, regarding the legal costs [caused] during the First Instance, each party will pay the costs incurred by itself, with this Court not making any special condemnatory decision regarding [the legal costs caused] in this [Second] instance, in accordance with that which is provided in article 398 of the aforementioned Act.
Having seen the cited articles, as well as others of general and relevant application:
We partially appraise the Motion of Appeal filed by [Seller] against the decision issued on 11 June 2004 by the Court of First Instance no. 5 of Gandía in writs of Ordinary Trial followed with the no. 498/03, which we revoke, and as a result we reject the claim filed by [Buyer] against [Seller], which we release from the damages claim settled against it by the [Buyer] without issuing any special decision as for the imposition of court expenses caused in both instances.
Notify this decision to the parties and, in turn, return the main files to the First Instance Court, with a notice and a certification of the present decision for its enforcement. Against this decision, there does not proceed any recourse, without prejudice to what is provided in article 477. 2 no. 3 of the Civil Procedure Act 1/00 (sic) of 7 January (RCL 2000, 34, 962 and RCL 2001, 1892), in which case the recourse shall be presented in writing before this Division within 5 days following the notification of this Decision.
In this manner, by this our decision, to which a certification for the records will be attached, we issue it, we command it and we sign it.
PUBLICATION.- The Decision above has been read and published by the [Very Illustrious] Justice Mr. D. Fernando Javierre Jiménez, from the Eighth Division of this Provincial Court.
* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff-Appellee of Germany is referred to as [Buyer] and Defendant-Appellant of Spain is referred to as [Seller].
** Adrián Cisneros Aguilar recently graduated from Universidad Panamericana Faculty of Law in Mexico City. Since 2005, he has been collaborating in the law firm Fonseca, Lozano y Treviño.
*** Gullermo Coronado Aguilar was a participant in the 15th annual Willem C. Vis International Commercial Arbitration Moot representing Universidad Panamericana, campus Guadalajara. He is now correspondent of the Global Sales Law Project directed by Ingebor Schwenzer and adaptor from English to Spanish of articles of the book "Commentary of the UN Convention on the International Sales of Goods", directed by Ingebor Schwenzer and Edgardo Muñoz. He is Legal Advisor for the law firm Coronado Figueroa y Associados, S.C.Go to Case Table of Contents