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CISG CASE PRESENTATION

Slovak Republic 27 June 2006 District Court in Nitra (Children's equipment case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/060627k1.html]

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

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Case identification

DATE OF DECISION: 20060627 (27 June 2006)

JURISDICTION: Slovak Republic

TRIBUNAL: District Court in Nitra

JUDGE(S): JUDr. Jana Coboriova

CASE NUMBER/DOCKET NUMBER: 23 Cb/127/2006

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Czech Republic (plaintiff)

BUYER'S COUNTRY: Slovak Republic (defendant)

GOODS INVOLVED: Children's equipment


Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 7(2) ; 11 ; 30 ; 31(1)(a) ; 54 ; 59 ; 78

Classification of issues using UNCITRAL classification code numbers:

Unavailable

Descriptors: Unavailable

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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

Unavailable

CITATIONS TO TEXT OF DECISION

Original language (Slovak): Click here for Slovak text

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation) [second draft]

Queen Mary Case Translation Programme

District Court in Nitra

27 June 2006 [23 Cb/127/2006]

Translation [*] by Juraj Kotrusz [**]


JUDGMENT
IN THE NAME OF THE SLOVAK REPUBLIC

The District Court in Nitra, deciding by a single judge, JUDr. Jana Coboriova, in the case of Plaintiff K., Spol. S.r.o. [Seller], with its registered office in Z., P.,___ Czech Republic, represented by attorney JUDr. M. M., versus Defendant Ing. L. F., [Buyer], conducting business under the name Ing. L.F.D.-P., with its place of business in N. ___, [Slovak Republic], regarding payment of 436,424.- Czech koruna [Kc] and appurtenances

h a s   d e c i d e d   a s   f o l l o w s:

The [Buyer] is obliged to pay to the [Seller] the sum of 436,424.- Kc and interest of 5.5% annually on the sum of:

-    66,504.- Kc for the period from 16 June 2002 until payment;
-    59,920.- Kc for the period from 16 June 2002 until payment;
-    1,829.- Kc for the period from 16 June 2002 until payment;
-    28,912.- Kc for the period from 13 July 2002 until payment;
-    58,300.- Kc for the period from 1 May 2002 until payment;
-    39,300.- Kc for the period from 1 May 2002 until payment;
-    27,636.- Kc for the period from 1 May 2002 until payment;
-    91,020.- Kc for the period from 31 May 2002 until payment;
-    22,755.- Kc for the period from 26 June 2002 until payment.

The court stays the proceedings with respect to the residual part of the action.

The [Buyer] is obliged to pay to the [Seller] the sum of 108,970.- Slovak koruna [Sk] as a reimbursement of costs of the proceedings within three days after the judgment comes into force on the account of legal counsel of the [Buyer].

REASONING

The [Seller] claimed in the proceedings its right to payment of 436,424.- Kc with appurtenances as the purchase price for goods delivered to the [Buyer].

The [Seller] stated in the action that the parties to the dispute concluded several contracts of sale in oral form under which the [Seller] delivered goods to the [Buyer]. The [Seller] claimed its right to payment of the purchase price emerging from ten separate contracts of sale. The customs declarations constitute a proof of delivery of the goods.

      [1]   The [Seller] delivered under the first contract of sale the goods duly and on time and invoiced the purchase price by invoice no. 103096/02 amounting to 66,504.- Kc which was not paid by the [Buyer] and it was thereby in default with its payment on 16 June 2002.

      [2]   The [Seller] delivered under the second contract of sale the goods duly and on time and invoiced the purchase price by invoice no. 103097/02 amounting to 59,920.- Kc which was not paid by the [Buyer] and it was thereby in default with its payment on 16 June 2002.

      [3]   The [Seller] delivered under the third contract of sale the goods duly and on time and invoiced the purchase price by invoice no. 103101/02 amounting to 40,248.- Kc which was not paid by the [Buyer] and it was thereby in default with its payment on 16 June 2002.

      [4]   The [Seller] delivered under the fourth contract of sale the goods duly and on time and invoiced the purchase price by invoice no. 103114/02 amounting to 14,468.- Kc which was partially paid by the [Buyer] in amount of 12,639.- Kc by a set-off and it was thereby in default with payment of 1,829.- Kc on 16 June 2002.

      [5]   The [Seller] delivered under the fifth contract of sale the goods duly and on time and invoiced the purchase price by invoice no. 103737/02 amounting to 28,912.- Kc which was not paid by the [Buyer] and it was thereby in default with its payment on 13 July 2002.

      [6]   The [Seller] delivered under the sixth contract of sale the goods duly and on time and invoiced the purchase price by invoice no. 200007/02 amounting to 58,300.- Kc which was not paid by the [Buyer] and it was thereby in default with its payment on 1 May 2002.

      [7]   The [Seller] delivered under the seventh contract of sale the goods duly and on time and invoiced the purchase price by invoice no. 200008/02 amounting to 39,300.- Kc which was not paid by the [Buyer] and it was thereby in default with its payment on 1 May 2002.

      [8]   The [Seller] delivered under the eighth contract of sale the goods duly and on time and invoiced the purchase price by invoice no. 200009/02 amounting to 27,636.- Kc which was not paid by the [Buyer] and it was thereby got in default with its payment on 1 May 2002.

      [9]   The [Seller] delivered under the ninth contract of sale the goods duly and on time and invoiced the purchase price by invoice no. 200010/02 amounting to 91,020.- Kc which was not paid by the [Buyer] and it was thereby in default with its payment on 31 May 2002.

      [10]  The [Seller] delivered under the tenth contract of sale the goods duly and on time and invoiced the purchase price by invoice no. 200011/02 amounting to 22,755.- Kc which was not paid by the [Buyer] and it was thereby in default with its payment on 26 June 2002.

The [Buyer] did not react to the [Seller]'s calls for payment and subsequently tried to delay the settlement of the dispute by promising to contact the [Seller], but it never did so.

The legal counsel of the [Seller] stated at the proceedings that the parties to the proceedings concluded ten separate contracts of sale in oral form and that under them the [Seller] delivered goods to the [Buyer] and claimed its right to payment of the purchase price by drawing invoices. The invoices were not paid. The delivery of the goods was evidenced by the customs declarations signed by the driver that were attached to the action. The parties to the proceedings did not make a choice of law and did not agree on the interest rate. The [Seller] claims its right to the interest at the statutory rate prescribed by Czech law.

The executive of the [Seller], J. B., stated at the hearing that the parties to the proceedings concluded an oral agreement on cooperation and elaborated a price list which was sent by telefax. The agreement was concluded and purchase orders were placed in the name of the [Buyer] by Mrs. K. In 2001, the goods were delivered in response to telefax purchase orders placed by Mrs. L, Mrs. S or Mr F. Pursuant to the telefax purchase orders, the [Seller] prepared the goods, documents and customs declarations. The [Buyer] initially paid for the goods in advance, after some time it paid the purchase price upon the drawn invoices. The goods were delivered by a carrier arranged for by the [Buyer]. Evidence of delivery is provided by an invoice signed by the driver containing the identification number of the vehicle used for carriage. Ninety percent of deliveries were made by company M. K. The invoices functioned as bills of delivery as well. The driver also carried JCD consisted of three documents - one for customs office, one returned to the [Seller] and one used for the transit in Slovakia. The maturity period of the invoices was 30 days. The [Buyer] did not oppose the purchase price or the quality of goods delivered. These proceedings concern the purchase price for goods delivered in three deliveries, in April, May and June 2002. The [Buyer] issued a false document alleging the sending of the sum of 275,176.- Kc to the [Seller]. The [Buyer] promised to pay this sum before [Seller] filed this action but paid only 10,000.- Kc. The [Buyer] sent a letter to the [Seller] on 21 April 2006 stating that it had partially paid the debt. The value of part of the goods returned to the [Seller] was set-off from the debt.

The legal counsel of the [Buyer] stated at the hearing that the parties to the proceedings concluded an agreement under which the [Buyer] stored the goods delivered by the [Seller] in its warehouses and distributed them to shops. The [Buyer] alleged that none of the goods that the [Seller] claimed to be delivered was actually delivered to the [Buyer] and that goods were not delivered in the amount stated at the invoices. The [Buyer] opposed the actual delivery of the goods.

The [Buyer] stated that it did not receive any of the goods stated in the invoices attached to the action. The [Buyer] does not recollect that the [Seller] handed over the goods.

Witness Mgr. M.S. stated at the hearing that he was employed by the [Buyer] during the period from 1999 to 2005. His job concerned the sale of drugstore goods and human resources management. He is a relative of the [Buyer]. He did not place any purchase orders in this case, as he was in charge of selling the drugstore goods. He stated that: The purchase orders to the [Seller] were placed by the [Buyer] personally or by employee Mrs. L. After delivery of goods, an invoice was sent to an administrative department and goods were handed over by warehousemen. The carriage of goods was usually arranged for by the [Buyer]. The witness was not able to react to the unpaid invoices. He was present at negotiations with the [Seller]. The witness was authorized to sign payment orders if others from the [Buyer] were not present. _____ was in charge of the children's equipment. He does not remember making purchase orders for the deliveries of goods which are the object of these proceedings.

Witness M.K. stated at the hearing that he handled the carriage of goods from the Czech Republic for the [Buyer]. The carriage was from three or four different places based upon purchase orders. The goods were delivered to N. or C., as is stated in CMRs which were submitted to the court. The witness handled the carriage for the [Buyer] only from the Czech Republic. The [Buyer] never challenged the delivery of goods and duly paid the costs of the carriage. The Customs office always confirmed delivery of goods to Slovakia and payment of customs duty by its seal on the CMR. The invoices were drawn upon submitting of the confirmed CMR. One copy of the CMR was lodged in the customs office and other copies were presented to the [Buyer] when handing over the goods. The carrier kept one copy of the CMR for its own purposes. Since the customs duty was paid, it is unrealistic to believe that the goods would not be subsequently delivered.

[Assessments of evidence presented]

The court evaluated the evidence, reading the submitted documents:

   -    List of invoices unpaid by the [Buyer];
   -    Record of the [Seller] from the Companies Register, and Record of the [Buyer] from the Trade Register;
   -    E-mail from Mgr. F of 3 March 2006 and Invoices no. 103096/02, 103097/02;
   -    Customs declaration rec. no. 15 and Invoices no. 103101/02, 103114/02, 103737/02;
   -    Customs declaration rec. no. 20 and Invoice no. 708061;
   -    International bill of lading no. 1277863 and Invoice no. 200007/02;
   -    Customs declaration rec. no. 25, Loading certificate rec. no. 26. and Invoice no. 200008/02;
   -    Customs declaration rec. no. 28 to 35 and Invoice no. 200009/02;
   -    Customs declaration rec. no. 37, Loading certificate rec. no. 38. and Invoice no. 200010/02;
   -    Customs declaration rec. no. 40 and Invoice no. 200011/02;
   -    Customs declaration rec. no. 42 and e-mail correspondence between the parties to the contract rec. no. 74 to 79;
   -    Letter from the [Buyer] rec. no. 80 to 82 and Documents submitted by the [Seller] rec. no. 94 to 122;
   -    Documents submitted by the Customs office in N. on 19 March 2007 rec. no. 124 to 189.

With reference to the evidence gathered, the court investigated the following factual situation:

The parties to the proceedings concluded several contracts of sale in oral form pursuant to which the [Seller] delivered goods (children's equipment) to the [Buyer]. The delivery of the goods was performed via the carrier which was arranged for by the [Buyer]. The carriage was performed by the carriers M.K.- Carriage of goods and V.S.S. Carrier M.K. loaded goods for carriage on 17 April 2002 and 16 May 2002, carrier V.S. loaded goods for carriage on 12 June 2002.

   -    For the goods loaded for carriage on 17 April 2002, duty was paid on 18 April 2002;
   -    For the goods loaded for carriage on 16 May 2002, duty was paid on 17 May 2002;
   -    For the goods loaded for carriage on 12 June 2002, was duty paid on 13 June 2002.

The documents proving payment of customs duty were sent to the court by the Customs office N. When loading the goods, the carrier received invoices no. 103096/02, 103097/02, 103101/02, 103114/02, 103737/02, 200007/02, 200008/02, 200009/02, 2000010/02, 200011/02 which set forth claims of the [Seller] for the purchase price. The [Buyer] did not pay the purchase price amounting to 436,424.- Sk.

[Applicable provisions of law]

Under article 1(1) of the UN Convention on Contracts for the International Sale of Goods (hereinafter referred to as the "Convention"), published in Collection of Acts as number 160/1991 Coll., this Convention applies to contracts of sale of goods between parties whose places of business are in different States: (a) when the States are Contracting States; or (b) when the rules of private international law lead to the application of the law of a Contracting State.

Under article 7(2) of the Convention, questions concerning matters governed by this Convention which are not expressly settled in it are to be settled in conformity with the general principles on which it is based or, in the absence of such principles, in conformity with the law applicable by virtue of the rules of private international law.

Under article 11 of the Convention, a contract of sale need not be concluded in or evidenced by writing and is not subject to any other requirement as to form. It may be proved by any means, including witnesses.

Under article 30 of the Convention, the seller must deliver the goods, hand over any documents relating to them and transfer the property in the goods, as required by the contract and this Convention.

Under article 31(1)(a) of the Convention, if the seller is not bound to deliver the goods at any other particular place, his obligation to deliver consists if the contract of sale involves carriage of the goods - in handing the goods over to the first carrier for transmission to the buyer.

Under article 54 of the Convention, the buyer's obligation to pay the price includes taking such steps and complying with such formalities as may be required under the contract or any laws and regulations to enable payment to be made.

Under article 59 of the Convention, the buyer must pay the price on the date fixed by or determinable from the contract and this Convention without the need for any request or compliance with any formality on the part of the seller.

[Ruling on the law]

With reference to the evidence gathered, the court determined that the commercial relationship between the parties to the proceedings shall be qualified under the UN Convention on Contracts for the International Sale of Goods, since the [Buyer] has its registered office (i.e., also its place of business) in the Slovak Republic which is a Contracting State of the Convention.

The Convention does not demand any formal requirements to be met when concluding a contract of sale and it can be proved by any means. The parties to the proceedings did not oppose the fact that the contracts of sale were concluded in oral form and therefore there was no need to prove this fact.

The objects of the contracts were goods - children's equipment -- and the parties to the contract agreed on the price with reference to the price list elaborated by the [Seller].

The [Buyer] opposed the delivery of the goods and alleged that the [Seller] did not hand over the goods. The court ordered the [Seller] to submit documents proving delivery and gathered further evidence proving the delivery.

Under article 31 of the Convention, the seller is obliged to deliver the goods to the first carrier for transmission to the buyer. The court found to be proved that the [Seller] fulfilled this obligation, as is evidenced by the fact that the carriers M.K. and V.S. or their employees received the invoices. This fact was also proved by the international bills of lading which stated that the carriage was performed either by M.K. or by V.S.

Witness M.K. confirmed that he conducted the carriage of goods for the [Buyer] from the Czech Republic upon oral purchase orders and that he delivered the transported goods to the [Buyer] who duly paid the costs of the carriage.

The court thereby determined that the [Seller] fulfilled its obligations arising from the contracts and delivered the goods to the [Buyer] by handing over the goods and the documents to the first carrier for transmission and thereby transferred title to the goods. The [Buyer] took possession of the goods but failed to pay the purchase price. The handing over the goods is indirectly evidenced also by the fact that the [Buyer] paid to carrier M.K. the costs of the carriage. It would be illogical to pay for the carriage if no goods were actually received.

The court therefore determined that the [Seller]'s action was justified with respect to the claimed principal which represents the unpaid purchase price for the goods delivered.

The [Seller] claimed also the right to payment of interest of 0.05% per day (18.25% annually) on the unpaid sums commencing from the day after the due date of each invoice.

Under article 78 of the Convention, if a party fails to pay the price or any other sum that is in arrears, the other party is entitled to interest on it, without prejudice to any claim for damages recoverable under article 74.

As the Convention does not prescribe the interest rate, the court determined the rate under the rules of private international law.

Under sec. 10 part 1 of act no. 97/1963 Coll. on international private and procedural law as amended, if the parties have not made such choice of law, their contractual relationships will be governed by the law which assures their reasonable solution.

Under sec. 10 part 2 a) of this act, with reference to the abovementioned, contracts of sale and work contracts will usually be governed by the law of the country of the seller's or constructor's registered office (domicile) at the time of concluding of a contract.

The parties to the contract did not choose the applicable law. The court therefore decided on the rate of interest under the law applicable at the place of business of the [Seller], i.e., under the law of the Czech Republic.

Under sec. 517 part 2 of the Czech Civil Code, in case of default in payment of a monetary debt, a creditor has the right to claim interest, unless the debtor is obliged to pay a charge on default, with the interest rate determined by a special regulation.

Under Regulation of the Government of the Czech Republic no. 142/1994 Coll. prescribing the interest rate and the charge on default under the Civil Code, the interest rate is calculated by doubling the discount rate for payment of a monetary debt fixed by the Czech National Bank and in force on the first day of the default.

As the parties to the proceedings did not agree on a special interest rate, the court granted interest to the [Seller] as prescribed by the Czech Civil Code in connection with the abovementioned Regulation, i.e., corresponding to double the discount rate fixed by the Czech National Bank in force on 1 May 2002, i.e., 2.75 x 2 = 5.5%. With respect to the interest claimed at a higher rate, the court dismissed the action as unjustified.

The court ruled on the reimbursement of costs of the proceedings under sec. 142 part 3 CPC and granted the full reimbursement to the [Seller], as it was not successful in asserting its claim only with respect to a marginal part of that claim.

The costs of the proceedings consist of the paid court fee, amounting to 34,513.- Sk, and costs of legal aid, amounting to 74,458.- Sk, total 108,970.- Sk.

Instruction: An appeal against this judgment must be filed with the Regional Court in Nitra via this court within fifteen days of its receipt.

District Court in Nitra, 27 June 2006.

JUDr. Jana Coboriova, Judge


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff of the Czech Republic is referred to as [Seller] and Defendant of the Slovak Republic is referred to as [Buyer]. Amounts in the currency of the Czech Republic (Czech koruna) are indicated as [Kc]; amounts in currency of the Slovak Republic (Slovak koruna) are indicated as [Sk].

** Juraj Kotrusz is a Slovak lawyer who studied law at the University of Trnava, Slovakia, and at the Hague Academy of International Law. He is the Editor of the CISG Slovakia website.

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Pace Law School Institute of International Commercial Law - Last updated March 25, 2009
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