Switzerland 5 April 2005 Bundesgericht [Supreme Court] (Chemical products case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/050405s1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 4C.474/2004
CASE HISTORY: 1st instance Zivilgerichts Seebezirks 6 June 2003; 2d instance Kantonsgericht Freiburg 11 October 2004 [reversed and remanded]
SELLER'S COUNTRY: Switzerland (defendant)
BUYER'S COUNTRY: Germany (plaintiff)
GOODS INVOLVED: Chemical product (triethylen tetramin)
Reproduced from Internationales Handelsrecht (5/2005) 204
"The formation of a contract may be implied even if there is a custom between the parties to confirm agreements in writing."Go to Case Table of Contents
SWITZERLAND: Federal Court, 5 April 2005 (Chemical products case)
Case law on UNCITRAL texts [A/CN.9/SER.C/ABSTRACTS/93],
CLOUT abstract no. 931
Reproduced with permission of UNCITRAL
Abstract prepared by Thomas M. Mayer
The Swiss company X AG informed the German company Y GmbH that an Italian firm was offering some 70 tons of triethylenetetramine (TETA) for sale. Y GmbH subsequently sent a purchase confirmation to X AG for 60 tons. X AG was unable to acquire the product. Y GmbH, who had already resold the goods, was obliged to buy goods in replacement. It invoiced X AG for the difference in price. However, X AG refused to pay, alleging that no contract had been validly concluded between it and Y GmbH. Thereupon, Y GmbH brought the case before the competent district court, which ruled in the defendant's favour, as did the appeal court subsequently.
In its first judgment, the Federal Court, allowing the application of the CISG, in accordance with its article 1 (1) (a), contradicted both the lower and appeal courts, which had ruled that no contract had been concluded between the parties. The letter of confirmation issued by the plaintiff did not in fact amount to acceptance of a corresponding offer from the defendant within the meaning of article 14 CISG, but in turn constituted a counter-offer which the defendant, through its subsequent conduct (e.g., handing over of requested documents with reference to the purchase confirmation) had ratified by decisive acts (article 19 CISG).
In its second [judgment], the Federal Court considered whether the defendant should assume responsibility for non-delivery to the plaintiff. It observed that the seller must, in principle, bear the risk of its suppliers' failure to deliver. To avoid that risk, it had to free itself of responsibility by means of an appropriate contractual clause. The lower court's finding that the existence of such an agreement could not, in the present case, be inferred from the specific circumstances was admissible.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:
7A3 [Observance of good faith]; 8A ; 8B ; 8C [Interpretation of party's statements or other conduct: intent of party making statement or engaging in conduct; Interpretation based on objective standards; Interpretation in light of surrounding circumstances]; 14A [Criteria for an offer (basic criteria): definiteness of key conditions, intention to be bound in case of acceptance]; 18A [Criteria for acceptance of offer]; 19C [Acceptance with modifications: modifications that are material]
7A3 [Observance of good faith];
8A ; 8B ; 8C [Interpretation of party's statements or other conduct: intent of party making statement or engaging in conduct; Interpretation based on objective standards; Interpretation in light of surrounding circumstances];
14A [Criteria for an offer (basic criteria): definiteness of key conditions, intention to be bound in case of acceptance];
18A [Criteria for acceptance of offer];
19C [Acceptance with modifications: modifications that are material]
CITATIONS TO OTHER ABSTRACTS OF DECISION
English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=1025&step=Abstract>
CITATIONS TO TEXT OF DECISION
Original language (German): CISG-online.ch website <http://www.cisg-online.ch/cisg/urteile/1012.pdf>; Internet website of the Swiss Supreme Court <http://www.bger.ch>; Unilex database <http://www.unilex.info/case.cfm?pid=l&do=case&id=1025&step=FullText>; Internationales Handelsrecht (5/2005) 204-206
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
French: Claude Witz, Recueil Dalloz (22 February 2007) 535Go to Case Table of Contents
Queen Mary Case Translation Programme
5 April 2005 [4C.474/2004/lma]
Translation [*] by Mariel Dimsey [**]
Edited by Institut für ausländisches und Internationales
Privat- und Wirtshaftsrecht der Universität Heidelberg
Daniel Nagel, editor [***]
A. Plaintiff-Appellant ______ [Buyer], a limited liability company (GmbH) established under German law, and Defendant-Appellee B ______ AG [Seller] of Switzerland had a business relationship for more than eleven years. In January 2002, the [Seller] learned that a business in Italy was offering approx. 70 tonnes of triethylene tetramine [TETA] for sale. The [Seller] probably informed several customers about this, but certainly the [Buyer], who was sent a fax headed "Offer" by the [Seller] on 10 January 2002:
A reference to the producer and a request for a prompt response followed.
B. Subsequent to this letter, the parties started negotiations by telephone. On 22 January 2002, the [Buyer] sent the [Seller] a written confirmation of purchase, which, among other things, stated the amount to be 60t net and determined the price by reference to a "joint sale". The confirmation also contained a description of the quality and the details of delivery. Under the heading "Remarks", the [Buyer] asked the [Seller] to communicate the specifications and the current EC-safety data sheet by fax. The safety data sheets were sent by the [Seller] by fax dated 24 January 2002. In the cover letter, the following was noted:
On 28 January 2002, the [Seller] sent the analysis data, along with the indication that the subject matter was a technical product, which had been taken into account in the determination of the price. The cover letter indicated the order number of the confirmation of purchase in the reference line. On the same day, the [Seller] sent, in a separate letter, the supplier's declaration in accordance with EC Regulation No. 1207/2001 written on its own stationery.
C. The [Buyer] was made aware of delays before the first delivery date and on 6 February 2002, at the latest, it received information that the new delivery date could not be complied with either. The [Seller] could not make the TETA available, although it had sent a truck to Italy to exert pressure on the supplier. For its part, the [Buyer] had found a buyer for the TETA and had already concluded a sales contract with this party. This second buyer complied with the contract and undertook the necessary substitute transaction. It claimed the price difference from the [Buyer]. The [Seller] was not prepared to reimburse this amount. It asserted the view that no contract was concluded between it and the [Buyer].
D. The [Buyer] proceeded before the Civil Court of the Lake District on 27 June 2002 and claimed the amount of Swiss Francs [CHF] 25,913.55 plus interest, from the [Seller]. The Civil Court and, on the appeal of the [Buyer], also the Cantonal Court Fribourg, I Appellate Division, supported the position of the [Seller] and dismissed the claim, which the [Buyer] had, before the Cantonal Court, reduced to CHF 23,582 plus interest, on the basis that no contract had existed between the parties.
E. The [Buyer] lodged an appeal against the judgment of the Cantonal Court. It applied to the Federal Supreme Court for the reversal of the judgment appealed against and maintained (with the exception of specifying the period of interest) the position it took before the Cantonal Court. The [Seller] applied for dismissal of the appeal with costs.
REASONING OF THE FEDERAL SUPREME COURT
1. As the [Buyer] is located in Germany and the [Seller] in Switzerland, the cantonal instances judged the facts in accordance with the United Nations Convention on Contracts for the International Sale of Goods, concluded in Vienna on 11 April 1980 (SR 0.221.211.1, CISG). As the [Buyer] bases its claims on a sales contract allegedly concluded with the [Seller], the previous instance rightly examined whether a sales contract had been concluded in accordance with the provisions of the CISG. That, to this extent, the CISG is applicable, has not been questioned by either party before the Federal Supreme Court.
2. Initially, the [Buyer] asserts that the fax dated 10 January 2002 was to be regarded as a valid offer, which it accepted by the confirmation of purchase dated 22 January 2002. The price was able to be determined at this stage. Nothing is altered by the fact that a profit participation had been agreed upon.
2.1 Under Art. 14 CISG, a proposal is only definite enough to be regarded as an offer if it describes the goods and expressly or implicitly determines, or makes provision for determining, the amount and the price. The offer itself does not state a price. Although the [Buyer] asserts that the price was already determinable at this stage, it fails to show which statements outside the offer, or other criteria, were supposed to have determined this price (cf. Schlechtriem, Kommentar zum Einheitlichen Kaufrecht - CISG -, 4th ed, Munich 2004, Art. 14 CISG, para. 5; Brunner, UN-Kaufrecht - CISG, Berne 2004, Art. 14 CISG, para. 4).
2.2 In addition, the fact that a response to an offer that contains additions or deviations that fundamentally change the offer constitutes a rejection of the offer and a counter-offer under Art. 19 CISG, must also be considered. The confirmation of order provides for a joint sale, and even a profit participation, to which no reference whatsoever was made in the "offer". Even if one was to assume that the "offer", in itself, fulfilled the requirements of Art. 14 CISG, the confirmation of purchase shows that no mere "acceptance" of this "offer" took place, as even the amount deviated from that in the offer. Thus, deviations exist not only with respect to the amount, but also with respect to the determination of the price. These are therefore fundamental changes (Art. 19(3) CISG), as these are more than obviously minor discrepancies (Brunner, ibid, Art. 19 CISG, para. 3). Therefore, it cannot be seen from the letter dated 10 January 2002 and the confirmation of purchase that a sales contract could have been concluded within the meaning of the confirmation of purchase.
3. The [Buyer] rightly assumes, as it also did in the previous instance with respect to Art. 19(1) CISG, that the confirmation of purchase can at least be regarded as an offer. The issue is whether the [Seller] accepted this offer, as asserted by the [Buyer] in the appeal.
3.1 According to Art. 18 CISG, every declaration or other act that expresses acceptance of an offer is deemed an acceptance, but not, however, mere silence or inactivity alone, unless such a practice existed between the parties (Art. 18(1), (3) CISG; Brunner, ibid, Introduction to Arts. 14-24 CISG, para. 5 et seq).
According to these provisions, what must be determined is whether a contractual agreement arose between the parties and, if so, on what terms. Thereby, within the scope of the appeal proceedings, the following requirements must be assumed.
3.2 The primary aim of contractual interpretation is to determine the real mutual will of the parties (Art. 8(1) CISG; Achilles, Kommentar zum UN-Kaufrechtsübereinkommen [CISG], Berlin 2000, Art. 8, para. 2; Brunner, ibid, Art. 8 CISG, para. 3; Schmidt-Kessel, in Schlechtriem/Schwenzer, ibid, Art. 8 CISG, para. 22). This subjective contractual interpretation is based on evaluating the evidence, which is not subject to federal jurisdiction in the appeal proceedings within the scope of application of the CISG, subject to the exceptions in Art. 63(2) and Art. 64 OR (cf. on the provisions of domestic law: BGE 126 III 375 reason 2e/aa, pp. 379, 380; 121 III 118 reason 4b/aa, p. 123, each with references).
3.3 If an actual "meeting of the minds" cannot be proved, it has to be determined -- owing to the entire circumstances -- whether the actual will of one party was so easily recognizable by the other party that it could not have been unaware of it (Art. 8(1) CISG in fine; cf. Brunner, ibid, Art. 8 CISG, para. 4; Schmidt-Kessel, ibid, Art. 8 CISG, para. 16). If this is not the case, then, for the purposes of determining the probable will of the parties, the declarations of the parties have to be normatively interpreted in the way that they would have been understood by a reasonable person in the same position, taking account of their wording and context, as well as the entire circumstances (Art. 8(2) CISG; Judgment of the Swiss Federal Supreme Court 4C.103/2003 dated 4 August 2003, reason 4.3; Brunner, ibid, Art. 8 CISG, para. 6). This rule corresponds to the principles of normative interpretation of declarations of intention in accordance with the principle of good faith (Vertrauensprinzip), which finds application in domestic law (Honsell, Schweizerisches Obligationenrecht, Besonderer Teil, 7th ed., Berne 2003, p. 135; BGE 130 III 686 reason 4.3.1, p. 689).
3.4 As an issue of law in the appellate proceedings, the Federal Supreme Court examines not only the question of whether the opposing party must have recognized the actual significance of a statement, but also the objectified interpretation of the declaration of intention in accordance with the understanding of a reasonable person in the position of the other contractual party, although it is generally bound by the findings of the cantonal judge concerning the external circumstances, as well as the knowledge and intention of the parties (Art. 63(2) and Art. 64 OR; cf. for the domestic law BGE 130 III 66, reason 3.2, p. 71, 686, reason 4.3.1, p. 689, each with references).
3.5 In determining the actual will of the parties, as is also the case within the scope of normative interpretation, the entire circumstances have to be taken into account. In particular, the negotiations between the parties, the practices that have arisen between them, the trade usages and the subsequent behavior of the parties is to be taken into account (Art. 8(3) CISG; Federal Supreme Court judgment 4C.103/2003 dated 4 August 2003, reason 4.3; Achilles, ibid, Art. 8 CISG, para. 4; Schmidt-Kessel, ibid, Art. 8 CISG, para. 28 et seq). Actual findings in this regard bind the Federal Supreme Court as the appellate instance.
4. The [Buyer] has been unable to successfully bring evidence of an actual mutual declaration of intention before the dispatch of the confirmation of purchase. Furthermore, contrary to the assertions of the [Buyer], no circumstances are apparent that normatively lead to the conclusion that a contract was concluded in this phase. Thereby, the only issue left to be determined is whether a reasonable person in the position of the [Buyer], based on the confirmation of purchase and the entire circumstances of the contractual negotiations and the behavior of the [Seller] after receipt of the confirmation of purchase, could have assumed that a contract was concluded on the terms asserted by the [Buyer].
4.1 A practice, whereby a written confirmation not contradicted by the other party attains legal effect, was not known to the parties according to the factual determinations of the previous instance. On the contrary, it was usual between the parties that each one confirmed the agreement reached in writing.
4.2 However, the [Seller] did not simply remain inactive after receipt of the confirmation of purchase. It reacted by unreservedly agreeing to the request of the [Buyer] expressed in the confirmation of purchase, sent the documents requested, made reference - to some extent explicitly - to the confirmation of purchase and also specified the delivery amount. A reasonable person in the position of the [Buyer] could not have interpreted the letter in question in any other way than that the [Seller] was generally in agreement with the confirmation of purchase. Had the confirmation of purchase contained unacceptable conditions, then, according to the principle of good faith, the [Seller] would have been under an obligation to indicate this to the [Buyer]. As it did not do this, the confirmation of purchase must be able to be held against it. That the sending of the documents, according to the findings of the previous instance, was a routine procedure and that the appropriate documents had already been sent with the offer does not change anything in the result, since, as stated here, the [Seller] answered the offer contained in the confirmation of purchase in the manner described.
4.3 In addition, the fact that the [Seller] informed the [Buyer] about the delay in delivery cannot be explained from the position of a reasonable person if one assumes that no contractual commitments whatsoever existed between the parties. It is irrelevant whether the contractual commitment already arose with the dispatch of the documents requested and the cover letter, or whether it did not arise until the communication of the delay in delivery. In any case, the finding of the previous instance that no contractual commitment existed cannot be upheld in the light of Art. 8(2) CISG.
5. The damages claimed by the [Buyer] under Art. 45(1)(b) CISG require that the [Seller] failed to perform one of its obligations under the contract or the provisions of the CISG (Art. 45(1) CISG). As a contract was concluded, it remains to be determined whether the [Seller] fulfilled its contractual obligations.
5.1 It can be seen from the judgment appealed against that the [Seller] claimed in the cantonal proceedings that it had acted cautiously on purpose and had not sent a confirmation of sale, as it was not sure whether it could provide the TETA and had also communicated this to the [Buyer]. To what extent one of the parties involved bore the risk of procurement was able to be freely agreed upon (cf. Brunner, ibid, Art. 79 CISG, para. 11; Stoll/Gruber, in Schlechtriem/Schwenzer, ibid, Art. 79 CISG, para. 18). Thereby, for example, for the benefit of the seller, it can be agreed that this party is only obliged to deliver the goods if it itself receives delivery, or it can be in accordance with established practice that the seller does not assume the risk of procurement until it has confirmed the sale in writing. Even bearing the risk of procurement jointly, analogous with a joint sale, could be possible.
5.2 The confirmation of sale did not contain any information concerning what was to occur if the TETA could not be made available. Thereby, what must be determined is how, on consideration of the entire circumstances within the scope of normative contractual interpretation, the risk of procurement was regulated between the parties. The previous instance did not make any findings concerning these circumstances, from which conclusions could be drawn (Art. 8(3) CISG), according to which a rejection of the dispute in order to complete the factual determinations is necessary (Art. 64(1) OR). It can be seen from the decision appealed against that the [Seller] made efforts to procure the goods and even sent a truck for the purpose of exerting pressure on the supplier. To the extent that it did not bear the risk of procurement, it would have thereby fulfilled its contractual obligations (Brunner, ibid, Art. 79 CISG, para. 18). However, if the risk of procurement does lie with the [Seller], the previous instance will have to determine whether the additional requirements for the damages claim asserted are fulfilled and will have to determine the amount. To this extent, the appeal is justified.
6. By way of contrast, the [Buyer] is not to be heard to the extent that it asserts, within the scope of a claim for correction of the evaluation of facts due to obvious oversight (Versehensrüge), that the previous instance should not have been allowed to dismiss one of its exhibits as late. There is no obvious oversight, as the court was aware of the document and deliberately did not consider it. Up until which point in time exhibits are to be considered in cantonal proceedings is primarily a question of cantonal procedural law. To this extent, a violation of federal law cannot be shown by the [Buyer].
7. In partially allowing the appeal, the dispute is to be referred back to the previous instance for the purpose of amending the factual determinations and for a new decision concerning the liability for failure to make delivery. If appropriate, the previous instance will have to make findings as to the amount of the damages claimed. The [Buyer], who has applied for the affirmation of the claim, is only partially successful in its pleadings. Whether its claim will be successful still remains open. Based on this outcome of the proceedings, the court costs are to be split evenly between each party and each party bears its own costs (Art. 156(1) and 159(1) OR).
Therefore, the Federal Supreme Court holds:
* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff-Appellant of Germany is referred to as [Buyer] and Defendant-Appellee of Switzerland is referred to as [Seller]. Amounts in the currency of Switzerland (Swiss Francs) are indicated as [CHF].
** Mariel Dimsey is a Research Assistant and Teaching Assistant at the University of Basel.
*** Daniel Nagel has been a law student at Heidelberg University since October 2002 and an exchange student at Leeds University in 2004/2005.Go to Case Table of Contents