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CISG CASE PRESENTATION

Germany 3 April 2006 Appellate Court Köln (Strawberry plants case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/060403g1.html]

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

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Case identification

DATE OF DECISION: 20060403 (3 April 2006)

JURISDICTION: Germany

TRIBUNAL: OLG Köln [OLG = Oberlandesgericht = Provincial Appellate Court]

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: 16 U 17/05

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

CASE HISTORY: 1st instance Amtsgericht Heinsberg (18 C 88/05)

SELLER'S COUNTRY: Netherlands (plaintiff)

BUYER'S COUNTRY: Germany (defendant)

GOODS INVOLVED: Strawberry plants


Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 6 ; 8 ; 18 ; 74 [Also cited: Articles 2 ; 58 ; 59 ; 62 ; 78 ]

Classification of issues using UNCITRAL classification code numbers:

8A [Interpretation of party's statements or other conduct: intent of party making statement or engaging in conduct];

18A [Criteria for acceptance of an offer];

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

Descriptors: Intent ; Acceptance of offer ; Damages ; Collection costs

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Editorial remarks

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Citations to case abstracts, texts, and commentaries

CITATIONS TO ABSTRACTS OF DECISION

(a) UNCITRAL abstract: Unavailable

(b) Other abstracts

English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=1133&step=Abstract>

CITATIONS TO TEXT OF DECISION

Original language (German): CISG-online.ch website <http://www.cisg-online.ch/cisg/urteile/1218.pdf>; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=1133&step=FullText>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation)

Queen Mary Case Translation Programme

Appellate Court (Oberlandesgericht) Köln

3 April 2006 [16 U 65/05]

Translation [*] by Stefan Dietrich [**]

Edited by Camilla Baasch Andersen [***]

The 16th Civil Division of the Higher Regional Court of Freiburg, as Appellate Court, adjudged the case of Plaintiff-Appellant [Buyer] of Germany against Defendant-Appellee [Seller] of the Netherlands in a lawsuit involving 4,189.32 Euros.

Justification pursuant to 540(1) ZPO [ZPO = German Civil Procedure Order].

I.   [Seller] requests from [Buyer] payment of the remainder of the purchase price due under a sales contract for strawberry plants which [Buyer], domiciled in Germany, ordered orally from [Seller] in the Netherlands. Also at issue is whether [Buyer] is obliged to pay the 6 % Dutch sales tax as well as the cost of collection and pre-procedural attorneys' fees.

The contract transaction originally called for the delivery of a total of 250,000 strawberry plants, however, the purchase of 150,000 of the strawberry plants was changed to 100,000 plants, with the final price was kept the same because of the superior quality of the replaced plants. [Seller] issued two accounts on 18 January 2004:

   -    With one of these accounts, [Seller] requested a prepayment of 13,238.73 Euros in January 2004;
   -    The payment of the remaining 75 % of 39,716.22 Euros was requested with the second account two weeks before the delivery, which was carried out in May 2004.

Altogether, [Seller] requested 52,954.95 Euros including a 6 % Dutch sales tax. [Buyer] made two partial payments of a total of 49,687.50 Euros, refusing to pay the outstanding Dutch sales tax on this cross-border transaction.

This is an action by [Seller] to obtain payment of the remainder, in particular, the outstanding sales tax amount (3,267.45 Euros) as well as pre-procedural costs alleged by [Seller], such as collection and attorneys' fees.

[Buyer] declined to pay the sales tax, referring to the fact that hitherto, it did not receive an account on the modified scope of delivery, which it requires as proof of this transaction for the tax office. Thus, it desires, by way of counterclaim, the issuance of a correct account, an account that complies with the modified delivery volume as well as restitution of accrued attorneys' fees.

For additional facts, reference is directed to the conclusions in the appealed decision.

The Lower Court only allowed the action in regard to 270 Euros, and for the rest dismissed the action as far as the recovery of the sales tax that was sought, because it would have been the matter of an intra-community delivery, which is exempted from sales tax, and because other claims of [Seller] could not be justified. [Buyer]'s claim for accounts to which it was entitled to was supported.

Against this decision, to which reference is directed for the further details of the status of the facts and the dispute, [Seller] appeals. [Seller] alleges that, according to Dutch law, the sales tax would first have to be paid. [Seller] presented the relevant provisions. No special arrangements were made between the parties regarding the tax (- exemption). For the rest of its case, [Seller] repeats its submission before the Court of First Instance.

In its appeal, [Seller] applies for amendment of the First Instance Decision to require [Buyer] to pay to [Seller] an overall sum of 3,267.45 Euros together with interest at 7 percentage points above the base rate since 19 February 2004, as well as 111.87 Euros extra-judicial costs and 780.- Euros collection costs; [Seller] also applies for dismissal of the [Buyer]'s claim in its entirety.

[Buyer], in turn, applies for dismissal of the [Seller]'s appeal. [Buyer] alleges that during the transaction, which was negotiated primarily with Witness B, if requested [Buyer] would have left its German tax number (DE-No.) of the German tax office with him, in order to achieve an exemption from sales taxation.

II.  [Seller]'s appeal is permissible, timely and filed in due form, and [Seller]'s appeal is for the most part successful. [Seller] is entitled to payment of the Dutch sales tax in the amount of 6%, however, this is only unconditional with respect to the amount of 2,097.45 Euros; for the rest, the maturity of [Seller]'s claim (delivery of 100,000 strawberry plants instead of 150,000 plants) depends on the issuing of accounts on [Seller]'s part, so that the claim in the amount of 1,170.- Euros is to be performed only on counter-performance of a correct account.

By presenting an up-to-date excerpt from the Dutch commercial register ("Kamer van Koophandel"), [Seller] proved that it is a company according to Dutch Law domiciled in the Netherlands and, therefore has legal capacity and capacity to sue and to be sued.

      1. The claim

            a. Sales tax

In addition to the monetary claim of 270 Euros, about which the Lower Court already validly adjudicated, [Seller] is entitled to another monetary claim against [Buyer] in the amount of 2,997.45 Euros on the basis of the sales contract, Art. 62 CISG. This concerns the Dutch sales tax which accrues for the delivery of the plants as well as for the examination costs.

The Lower Court rightly acted in accordance with the parties on the assumption that the contract as a sale of goods between contractual partners domiciled in different Contracting States, is subject to the provisions of the CISG (Art. 1(1), Art. 2); the applicability of which was not excluded. The interpretation of the contractual statements, which has to be carried out according to the provisions of the CISG (Art. 8 CISG), leads to the conclusion that [Buyer] is obliged to pay the Dutch sales tax if not all requisites for a tax exemption are existent, which is not the case here.

This transaction commenced with a telephone order placed by [Buyer] around the end of 2003. According to [Seller]'s uncontested testimony, the parties did not at that time expressly discuss whether [Buyer] - who is domiciled in Germany -- should pay the sales tax. Indeed, [Buyer] argues, had the subject been discussed, the parties would have agreed - in communications with Mr. B -- that the sales tax is not to be paid and that [Buyer] would therefore provide [Seller] with its tax number, and [Buyer]would have provided this. [Seller], however, uncontestedly claimed that Mr. B was neither its employee nor its representative; it was also not authorized to accept statements. Therefore, [Seller] alleges that possible agreements between Mr. B and [Buyer] have no legal effect on [Seller]. Finally, [Buyer]'s submission remains unsubstantiated and controversial. [Seller] showed the amounts in gross, including sales tax, in its accounts of 18 January 2004, which [Buyer] had wanted to receive on 4 January 2004; furthermore, on 25 February 2004, [Seller] confirmed the order and expressly alluded to the fact that [Buyer] has to pay the BTW (= value added tax), which can be refunded afterwards from the Dutch authorities. If these writings do not already include an acceptance of [Buyer]'s oral offer, then they constitute a written order confirmation at any rate, to which [Buyer] did not object. Facing these unequivocal writings as regards contents, by [Seller], then [Buyer]'s submission to the -- dissenting -- contents of the contract negotiations is not concrete enough, because [Buyer] does not comment on the writing of 25 February 2004, nor did [Buyer] explain the inconsistencies between its behavior in the past - it did not contradict either the account issued or the further writing of [Seller] -- and [Seller]'s present submission. No supplement to this submission was provided.

Therefore, the acceptance of the contract on the part of [Seller] as a result of the telephone order was either effected expressly with the proviso that [Buyer] pays the BTW with the possibility of a subsequent refunding, or the contract is to be interpreted -- in the absence of such an agreement - so that the established obligations of the parties should stand in line with the Dutch tax law. Based on this interpretation, it can be assumed that the parties wanted to adhere to the existing Dutch laws.

[Seller] referred to the, in this case authoritative, legal situation under fiscal law according to Dutch law. [Buyer] did not counter this. The Dutch tax law provides, in consideration of EC-Directive 77/388 of 17 May 1977 -- Harmonisation of the Laws of the Member States Relating to Turnover Taxes (Gazette No. L 145 of 13 June 1977 with several later modifications, inter alia, through Council Directive 2003/92 of 7 October 2003), for a tax exemption if the recipient is a business person that was identified in another EC-State and the goods were shipped in line with the delivery into the area of another EC-State (cf. thereto Communication No. 38 of the excise taxes office as well as the information brochure of the Dutch tax authorities, page 168 et.seq.). The last condition, the proof of which is problematic in the present case, must be -- apart from the sales tax identification number of the recipient, which is to be noted on the account -- proved by the Dutch business person through different documents, such as the waybill and inter alia entries in its books, when it initiates the shipment of the goods abroad. If, as in the present case, it is a matter of a collection transaction ("Abholgeschäft"), whereby it is unimportant whether the buyer itself or a carrier ordered by it collects the goods, the Dutch tax law demands for a "permanent recipient" on behalf of the distributor, as a result of an existing business connection as well as a documentation on the export through a formalized declaration of the recipient, which must contain details of the carriage of the goods as another condition for a tax exemption. The Dutch law provides a model form for this declaration.

The provision of the German tax number alone, which is alleged by [Buyer], accordingly, is not sufficient to prove the export was actually carried out. In particular, the necessary formalized declaration of the recipient of the carriage of the goods to Germany is lacking. Therefore, this transaction cannot be treated as sales-tax-exempted. [Buyer] still has the possibility to apply to the Dutch authorities for the refund of the Dutch sales tax.

Consequently, [Seller] can demand payment for the sales tax in the amount of 2,997.45 Euros, which calculates at 1,800 Euros for the delivery of 100,000 cold frame plants; in the amount of 1,170 Euros for the modified purchase of 100,000 strawberry plants, and in the amount 27.45 Euros for examination costs in connection with this delivery.

But the claim for the amount of 1,170 Euros (100,000 strawberry plants) is not yet due as [Seller] has not yet provided a correct account for this delivery. Pursuant to Art. 58 CISG, the maturity of the claim has to conform to the contractual agreement, which in this case calls for payment in two steps (25 % at conclusion of the contract, 75 % two weeks before the first delivery; similarly, in the writing of 25 February 2004 and in the accounts of January 2004). This agreement is henceforth to be interpreted according to the contract modification, that an additional condition for the maturity of the modified order sum is an orderly issue of account. Such an interpretation complies with [Seller]'s procedure; [Seller] issued accounts on the whole originally intended transaction directly after the contract conclusion still in January 2004 and called on [Buyer] to pay on the basis of these accounts. After the modification of the extent of the transaction, according to this, again, in order to establish the payment obligation, a modified issuing of accounts is necessary. This is called for, as [Buyer] as the recipient of a delivery from the EC-area, is hence reliant on an account which contains the correct scope of delivery, in order to provide to the tax authorities evidence of the actual receipt of these goods.

Until now, [Seller] has not satisfied this obligation. Indeed, the accounts of January 2004 show the correct total sum, but do not reflect the scope of delivery correctly. The account of "29 August 2005" presented in the First Instance, does not comply with this, as it does not show the modified delivery of plants. In the Second Instance, [Seller] presented an account which also did not resolve the overall scope of delivery.

[Seller]'s written submission of 29 March 2006 was after the conclusion of the oral hearing and could no longer be considered, 296a ZPO.

            b. Collection costs

The Lower Court rightly denied [Seller]'s claim for collection costs, as [Seller] did not demonstrate the requisites conclusively. Indeed, in Art. 74, the CISG provides a basis for a claim. The entitlement to the claim is to be measured on the basis of the provisions of the CISG and not of the Dutch Law of Obligations, as [Seller] alleges. And Art. 74 CISG imposes strict standards as to the necessity of retaining of a collection agency in order to minimize losses (comp. Schlechtriem/Stoll, CISG, 3rd ed., Art. 74, Rn. 19). Whether these standards have been satisfied can be left unanswered because [Seller] did not adequately demonstrate how the collection costs were calculated, nor if and when they were charged. Moreover, the collection rates presented cannot be brought in line with the figures [Seller] claims. The question of whether the original reference by the Lower Court was sufficient, can be left open. In the Second Instance, the [Seller] also did not present any other facts to found this claim, notwithstanding the denial of the claim by the Court of First Instance.

            c. Attorneys' fees

The restitution of pre-procedural attorneys' fees within the scope of Art. 74 CISG fails because it is no longer a matter of factually necessary costs of legal prosecution (comp. Schlechtriem/Stoll, l.c., Art. 74, Rn. 19). The assignment of the lawyer occured after the employment of the collection agency. At this time, [Seller] could no longer count on further payments by [Buyer] without judicial help, who since that time settled the deliveries except for the sales tax and a small remainder.

            d. Interest

The claim for interest is based upon Art. 78 CISG as far as the monetary claim is mature. According to this provision, a reminder is not required. Interest is to be paid from the maturity of the indebtedness, i.e., for the unmodified part of the contract, two weeks before the first delivery, therefore from 27 April 2004.

Regarding the rate of interest, Dutch law, as the law of the characteristic performance, is to be applied, as the CISG does not contain provisions (Schlechtriem, l.c., Art. 78, Rn. 27 et seq.). According to Art. 120 of the "New Dutch Civil Code", Book 6, the legal interest rate is 7 percentage points above the base rate on 26 April 2004.

      2. The [Buyer]'s counterclaim is justified, as far as it was not already adjudicated on. [Buyer] can request the issue of an account which complies with the modified scope of delivery on the delivery of 100,000 strawberry plants, type "Frigo 15-22", to the delivery date of May 2004. Hereunto, reference is drawn to the considerations regarding the maturity of the monetary claim in the amount of 1,170.- Euros (above under 1.a.).

Against [Seller]'s claim in this amount, [Buyer] can hold its counterclaim claim on issuing an account to which it is entitled, so that insofar [Buyer]'s performance is subject to counter-performance by [Seller].

The order as to costs is based on 92, 97 ZPO, the one as to the provisional enforceability is based on 708 No. 10, 713 ZPO.

The amount in dispute in regard to the appellate proceedings is 4,189.32 Euros (action: 3,889.32 Euros + counterclaim 300.- Euros).

There is no reason to allow a further appeal ( 543(1) No. 1, (2) ZPO). The legal matter has neither fundamental importance nor do interests of the development of the law or of the protection of a uniform adjudication require a decision of the Federal Court of Justice.


FOOTNOTES

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

** Stefan Dietrich, Dipl. iur University of Bochum, LL.M. University of London (2004/2005). His fields of law are International Commercial Law and Corporate Law. Since January 2006 articled clerk with the Higher Regional Court (OLG) Hamm.

*** Camilla Baasch Andersen, Lecturer in International Commercial Law, University of Leicester, Fellow of the Institute of Commercial Law, Pace, visiting lecturer at University of London.

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Pace Law School Institute of International Commercial Law - Last updated November 21, 2006
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