France 22 December 2006 District Court Strasbourg (Cathode ray tube case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/061222f1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 04/00925
CASE HISTORY: Unavailable
SELLER'S COUNTRY: France (defendant)
BUYER'S COUNTRY: Germany (plaintiff)
GOODS INVOLVED: Cathode ray tubes
APPLICATION OF CISG: Yes
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
9C [Practices established by the parties]; 23A [Time of conclusion of contract: contract concluded when acceptance becomes effective]; 63A [Seller's notice fixing additional final period for performance]; 64A21 [Seller's right to avoid contract (grounds for avoidance): buyer does not pay or take delivery within an additional period set by the seller under art. 63]; 74A ; 74A1 [General rules for measuring damages: loss suffered as consequence of breach; Includes loss of profit]; 78A [Interest on delay in receiving price or any other sum in arrears]
9C [Practices established by the parties];
23A [Time of conclusion of contract: contract concluded when acceptance becomes effective];
63A [Seller's notice fixing additional final period for performance];
64A21 [Seller's right to avoid contract (grounds for avoidance): buyer does not pay or take delivery within an additional period set by the seller under art. 63];
74A ; 74A1 [General rules for measuring damages: loss suffered as consequence of breach; Includes loss of profit];
78A [Interest on delay in receiving price or any other sum in arrears]
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=1371&step=Abstract>
CITATIONS TO TEXT OF DECISION
Original language (French): CISG-France database <http://www.cisg-france.org/decisions/221206v.htm>; CISG-online.ch website <http://www.cisg-online.ch/cisg/urteile/1629.pdf>; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=1371&step=FullText>
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
22 December 2006
Translation [*] by Claire Chabat [**]
PARTICULARS OF THE CASE
Plaintiff and Counterdefendant Stephan S... [Buyer], under the trade name of "C...", with his habitual residence in Hamburg (Germany, represented by Me Ehret, attorney at law registered at the Strasbourg bar, vs. Defendant and Counterclaimant S.A.R.L. D... [Seller], head office at Duppigheim (France), represented by Me P. H..., attorney at law registered at the Strasbourg bar,
Nature of claim
The case is concerned with [Buyer]'s claim to obtain the delivery of the goods or to remedy the non-delivery thereof.
FACTS OF THE CASE AND PROCEDURE
By summons delivered on 19 May 2004 and on the basis of the last conclusive submissions, [Buyer] filed an action against [Seller] requesting that the Court hold that [Seller]'s termination of the sales contract entered into by the parties constitutes a breach of contract and order [Seller] to pay to [Buyer], in addition to recoverable fees (dépens), by way of provisional execution, 400,800 Euro in damages and 9,000 Euro pursuant to Article 700 of the French Civil Code of Procedure
In support of this claim, [Buyer] alleges that:
He operates under the trade name of C... to provide recycling and recuperation of electric and electronic product activities;
[Seller], who provides similar activities, recuperated in the summer of 2003 1,600 tons of cathode tubes coming from the factory DA... in Mont-Saint-Martin, which it had transported to its head office in Duppigheim, which took two months;
As [Buyer] took an interest in the merchandise, he went to the [Seller]'s premises twice, on 15 December 2003 and 4 January 2004, and asked about purchasing the tubes -- according to [Seller]'s manager 158,000 tubes: 42,000 fourteen-inch tubes and 116,000 nineteen inch tubes;
[Seller] made an offer -- by letter of 9 January 2004 -- to sell these tubes for a price of €50,000, not conditional upon either a possible time for collection or upon the payment of storage fees;
By two letters of 13 and 14 January 2004, [Seller] also made an offer for the sorting of tubes, but [Buyer] rejected that offer, the price being too high;
[Buyer] had his representative, C... E... Deutschland, pay by wire transfer the sum of €50,000 to [Seller]'s account at Banque P... D... on 16 January 2004;
This representative introduced [Buyer] to a customer for the tubes, Company U... S... I... E... of Hong Kong, at a price of $600,000. [Buyer] then mandated transportation company H... for the transportation of the tubes to China, as well as Company H... S... GmbH for the sorting of the intact tubes and broken tubes, the latter being subject to higher customs;
Having probably realized that it could obtain a better price, [Seller] contacted [Buyer] on 9 February 2004, by telephone, to advise [Buyer] that [Seller] had another customer who offered to purchase the tubes; without the sorting, for the same price of $600,000 and that, on 13 February 2004, by formal notice [Seller] required [Buyer] to come and load the whole set of tubes within 7 (seven) days, which was not possible, the volume of these tubes being equal to the volume of 110 trucks;
[Seller] advised [Buyer] that if [Buyer] failed to take this action, [Seller] would reimburse [Buyer] the sale price, after deduction of the sum of €20.000 in storage fees and damages;
Having already taken all measures for the collection of the tubes and their transportation to Hong Kong, via a sorting place in Germany, on 17 February [Buyer] made an offer to [Seller] for the re-sale of the merchandise, in return for which it would pay the sum of €160,000 prior to 20 February, payment not made;
[Seller] paid [Buyer] back by wire transfer the said sum of €50,000 in March 2004 and refused from this date to deliver the tubes, regardless of the formal notice. [Seller] alleged that [Seller] is no longer bound by the contract; that indeed the 14 inch tubes have been, to [Buyer]'s knowledge, transported to China by H...N S...G in March 2004.
[Buyer] disputes the free translation of the correspondence of 13 February 2004 as made by [Seller], which distorts the meaning thereof and should be removed from the hearings. [Buyer] indicates that:
He no longer requests the delivery of the tubes, as he had before the executing judge (juge de l'exécution), but claims damages for the unfair termination of the contract by the [Seller], calling to mind that there was an agreement both on the goods and the price and that the Vienna Convention provides that the contract cannot be avoided unless the buyer commits a fundamental breach of the contract or does not take delivery of the goods within a reasonable extended time set by the seller;
In the present case, [Buyer] did not breach his obligation to take delivery whereas no time period had been initially imposed, taking into consideration the time necessary for organizing transportation, and that the time period set by the [Seller] on 13 February was unreasonable.
As to his harm, [Buyer] estimates that it amounts to his lost profit, that is, $600,000 or €487,800, after deduction of the fees of €37,000 in waste selection and return of the purchase price of €50,000, that is, €400,800.
[Seller] submits that the [Buyer]'s claim should be denied and asserts, by way of a counterclaim, that [Buyer] should be ordered to pay the sums of:
|-||€45,310.46 in storage fees, plus the monthly payment of the sum of €6,171.36 as of January 2005;|
|-||€10,000 in damages as a result of the injury suffered; and|
|-||€9,000 pursuant to Article 700 of the French Civil Code of Procedure.|
[Seller] states the facts in its own way, then acknowledges in law that the Vienna Convention is applicable, in which the principle of good faith in international trade is retained and which allows the avoidance of the contract, not subject to a judge's intervention, upon the sole declaration that one party makes to the other party.
[Seller] calls to mind that, in the case at hand, the contract concerned 158,000 cathode tubes without further indication regarding the price of €50,000, according to [Buyer]'s offer that [Seller] accepted, which is formalized in a document of 9 January 2004, with the buyer being obligated to take delivery of this merchandise at the French premises of Duppigheim and this, on short notice (à bref délai), even if that had not been mentioned in the written contract.
[Seller] further asserts that:
According to the Vienna Convention, in the absence of [Buyer] taking delivery -- notably within the reasonable extension that [Seller] was entitled to grant to the [Buyer] -- the [Seller] was then entitled to avoid the contract.
Indeed, in the present case [Seller] requested by formal notice that the [Buyer] collect the merchandise not on 20 January at the latest, but as of this very date, as indicated in [Seller]'s correspondence of 13 February 2004, which [Buyer] never did, whereas [Buyer] had not less than one month and a half to do so.
[Seller] also challenges [Buyer]'s writings regarding the amount and nature of the sold tubes, regarding [Buyer]'s assertion of the resale of the lot for $600,000, whereas [Buyer] indeed declared that he was ready to authorize [Seller] to resell the lot for a price of €160,000, considering the fact that [Seller] allegedly resold the 14 inch tubes (cf. his writings for more detail) and remarks that it is another legal person, C... E..., which paid the sum of €50,000, apparently on behalf of U... S... I... E..., which is, according to [Seller], an unlawful operation, since [Buyer] never introduced himself as acting on behalf of a third person, and that the [Buyer] apparently never intended to take possession himself of the goods, since it was not until October 2004 that he initiated talks with a transporter.
To support its counterclaims, [Seller] invokes the existence of storage fees, corresponding to the lease of buildings for storage located next to its premises, as well as the multiplication of proceedings initiated by the [Buyer], resulting in [Seller] suffering all the inconvenience.
REASONING OF THE COURT
The principal claim by [Buyer]
As a preliminary matter, the Court takes note that the correspondence sent by fax, dated 13 February 2004, from [Seller] to [Buyer] to require by formal notice that [Buyer] remove the goods, failing which the [Seller]'s offer would be regarded as having lapsed, specified « wir auffordern Sie die Wahre bis am 20. Februar aus unserem Hof zu bringen », which was translated by the registered translator Madam R... as « vous mettons en demeure d'enlever la marchandise avant le 20 février de notre cour », which fits with the meaning of the correspondence, but literally means, according to the knowledge that the Court may have in German and to a French-German dictionary, « nous vous sommons ou vous mettons en demeure d'ôter la marchandise de notre cour jusqu'au 20 février ».
By any means, the terms « bis am » mean « à partir de », as indicated in the free translation submitted to the file by the [Seller] -- the terms to be used in this case should have been « vom 20. Februar ab » -- and thus the [Seller]'s translation should not be taken into consideration; regard should only be given to the translation by Madam R..., registered translator.
The only issue to be addressed by the Court is whether the additional period of time set by [Seller] for the performance of the contract was reasonable, in order to determine whether, pursuant to the Vienna Convention of 11 April 1980, and more specifically to its articles 60 et seq., the [Seller] could declare the contract avoided.
Indeed, contrary to the terms used by [Seller], it was no longer a matter of declaring the "offer as having lapsed", but rather of avoiding a contract already concluded, since it is consistently accepted in this case that, notwithstanding the mention of « price offer », the correspondence from [Seller] to [Buyer] dated 9 January 2004, amounted to [Seller]'s consent to the sale to [Buyer] of « 158,000 cathode tubes "as is" (finished, semi-finished, broken) at a total price of €50,000 » and that this sum was paid on behalf of [Buyer] as of 16 February 2004, which constituted the unambiguous acceptance of this offer by the [Buyer], so that it is undisputable that, by virtue of Article 23 CISG, a sales contract had been entered into by and between the parties.
The Court states that there is no discussing the quarrel that [Seller] looks to entertain regarding the content of the offer (which clearly concerned 158,000 tubes and [Seller] itself indicated, in the proposal for waste selection that [Seller] made to [Buyer] on 14 January 2004, that the tubes were of 19'' and 14''...), the merchandise being perfectly identified as being the 1,600 tons of tubes coming from the factory DA..., or indeed on the payment made: indeed, there is nothing in the law precluding a merchant from mandating a third person to execute payment on his behalf.
In the present case, there was nothing wrong in the fact that [Buyer] had recourse to, as of 15 December 2003, Company C... E... Deutschland to serve as sole agent responsible for, in exchange for a commission, reselling the goods upon it acquiring them -- [Buyer] being at liberty, in accordance with trade laws, to recycle the tubes itself or to search for another buyer -- and to request this company, which was already provided with an offer from U... S... I... E..., providing for the payment of an installment of $200,000 upon acceptance of the buyer, to pay the price to [Seller] on its behalf.
By virtue of Article 64 of the Vienna Convention, [Seller] could therefore declare the contract avoided only where non-performance by the buyer of any of his obligations under the contract or under the Convention constituted a fundamental breach of the contract or where the [Buyer] did not perform his obligation to pay the price or did not take delivery of the merchandise within the extension granted by the [Seller] pursuant to Article 63 paragraph 1 (which requires a reasonable extended time) or if [Buyer] declared that it would not do so within the extension thus granted.
In the present case, still pursuant to this Convention, there is among the fundamental obligations of the buyer, referred to in Chapter III of the Convention, more specifically in its Article 54, the obligation to abide by "the conditions set out in the contract and the present Convention" to pay the price and take delivery of the goods.
In the instant case, the obligation to pay the price was fulfilled; as to the obligation to take delivery, the Court states that the document forming the contractual basis of [Seller]'s obligations, namely the correspondence of 9 January, did not impose on [Buyer] any strict time period in which to take delivery of the tubes, nor did it specify that these tubes had to be quickly collected, [Seller] only points to the fact that, in order to obviously fulfill its own obligation to deliver the sold goods, upon payment of the price, it undertook to load [Buyer]'s trucks and to fill the palettes.
This document does not sufficiently support [Seller]'s assertion whereby, by agreement between the parties, the taking possession of the goods by [Buyer] had to take place on short notice (« à bref délai »). Indeed, this assertion is contradicted by the two offers for waste collection, which were spontaneously made, according to [Buyer], by [Seller] on 13 and 14 January 2004, providing for 3 (three) to 4 (four) months' work for this waste selection on the premises, which necessarily delayed accordingly this taking of possession.
Besides, the Court notes that, before 13 February, [Seller] apparently never asked [Buyer] either about the time that [Seller] deemed necessary for the collection of the goods, or about the means that [Seller] intended to use to that end, and did not mention either any expiration date that [Seller] would like to impose or ask the [Buyer] when the first truck would arrive...
It is consistently accepted that, absent a fixed period of time in the contract, regard must be had to the usages or established practices between the parties or to international trade usages relating to the same type of contracts, which were applicable pursuant to Article 9 of the Vienna Convention and, in the present case, regarding sales or the extended time within the meaning of Article 63, these usages retain the notion of a reasonable extended time.
In the present case, between 9 January at the earliest, January 16 at the latest, date of payment and thus of the clear acceptance of the offer, and 13 February, 1 (one) month and 4 (four) days had passed at the most, namely, a perfectly unreasonable time span to plan the delivery of the merchandise. [Seller] acknowledging in its writings that it took it between 8 July and 14 August 2003, that is, at least 5 (five) weeks, to transport the merchandise from factory DA... to its premises in Duppigheim.
This extended time was all the less reasonable in that it was necessary to plan, in addition to the time for the transportation itself, the time necessary for the [Buyer] to implement the logistics necessary for this transportation, that is, according to [Seller] itself, to find a transporter which is able to make an average of 5.8 trucks a day permanently available..., plus a company which is able to carry out the indispensable waste selection of the tubes, [Seller]'s price offer for this selection having been deemed too high by [Buyer], which was within its legitimate right to do so.
It cannot therefore be found that, by not taking the goods within the sole time frame at issue, of a little more than one month, [Buyer] committed a fundamental breach of the contract. [Buyer] at least gave evidence of his requesting, by way of mandating his agent C... E... as of 14 January 2004, the collection of two palettes in Hong Kong to be transported to U... S... I... E..., otherwise referred to as his sub-buyer, which in its offer had requested for the inspection of the merchandise, then of his requesting company H... S.... , "in Spring 2004", still through his agent, to transport, by means of 4 (four) loads per day, approximately 110 loads from Duppigheim to a place for waste selection located in Reinardshagen.
The Court specifies that it is consistently accepted that [Seller] did not reply to [Buyer]'s correspondence of 1 March 2004 asking for the [Seller] to confirm that [Buyer] could collect the merchandise, nor did [Seller] reply to his counsel's correspondence, Maître K, dated 10 March 2004, asking again for this discount -- being content with simply opposing (faire opposition) the wire payment, already executed, of the €50,000. The [Seller] is at the very least ill-advised to criticize the fact that it is not until October 2004 that [Buyer] considered having the goods sent to Hong Kong, via a freight company based in Hamburg, after having to execute a seizure (saisie revendication) in order to ensure that [Seller], who obviously regarded the contract as terminated, did not use the goods at its will.
The Court notes that, even though the breach of the extension granted to [Buyer] could not support the avoidance of the contract, given that this extension, limited to seven (7) days, is likely to be qualified as utterly unreasonable in view of the circumstances.
Indeed, by reference to the wording of Article 64, the Court finds that this additional time period should not be used cumulatively with the time period normally used for collection of the goods, of which the possible breach is to be remedied as a fundamental breach of the contract, but this additional time period otherwise qualified as an extension, which the [Seller] was indeed free to grant or not, but which had to be, provided that it was granted to the [Buyer], also reasonable, should be treated separately.
In the case at hand, [Seller] could not have been unaware that only two palettes had already been removed from the premises and that it was thus impossible for its yard to be emptied, even very partially, by the date of 20 February, assuming that [Buyer] could have implemented a rotation of four trucks or more per day...
Besides, it is consistently accepted that the [Buyer] never declared that he would not collect the merchandise within the granted additional period of time or even within the additional period of time of a reasonable length, which he would have normally been granted, even though he declared that he was ready, in exchange of the payment of the supplementary price of €160,000 prior to 20 February, to allow [Seller] to resell 120,000 tubes -- which offer was initially accepted by the [Seller] (see fax dated 16 February 2004), but which was eventually not followed through.
Finally, the Court finds that [Seller] wrongly declared the price offer as having lapsed and wrongly reimbursed the sum of €50,000 in early March 2004.
[Buyer], who eventually waived his right to take delivery of the merchandise by canceling the seizure proceedings -- which he was entitled to do in view of [Seller]'s attitude -- [Seller] obviously did not wish to give effect to the contract -- is therefore well-founded to claim compensation for the injury that [Buyer] suffered as a result of the wrongful avoidance of the contract by the [Seller].
In the case at hand, the Court finds that this injury does not amount to the profit expected by [Buyer] from the resale -- after deduction of the fees which he eventually did not have to assume -- of the goods to company U... S... I... E..., based in Hong Kong, such company having not been created and in the absence of any supporting evidence that [Buyer] was allegedly made, certainly in addition to pay once again the installment of $200,000, to compensate this company, but that it may be rightly estimated, by reference to [Buyer]'s own counsel's writings (Maître K...'s correspondence of 10 March 2004) to €210,000, such sum corresponding, as indicated by this Counsel, to a portion of the actual profit that [Buyer] would have obtained from the cathode tubes and in exchange of the payment thereof [Buyer] was ready to waive his claim for damages, inclusive of the deduction of the sum of €50,000 already reimbursed as the sale price of these cathode tubes, which [Buyer] eventually did not have to disburse, which leaves an outstanding amount of €160,000, that is, the payment of an amount in exchange of which the [Buyer] had agreed to the resale of a great part of the tubes directly by [Seller] to a third person and that the latter had indeed agreed to pay at an initial stage.
This amount of €160,000 awarded for damages by the present judgment will be tied in with interest at the legal rate as of the present judgment, when it comes to a debt to a beneficiary creditor.
The [Seller]'s counterclaim
The Court finds that:
The price offer, in as much as it did not fix any time period for delivery, did not provide in any way to ascribe any storage fees to [Buyer],
The price offer relating to the tubes selection, notwithstanding the fact that it had foreseen three or four month-work, did not provide either to ascribe storage fees, and
It was not until its fax of 13 February 2004 that [Seller] attempted to make [Buyer] pay €380 per day in fees as of 9 January until the date for the collection of the last tube, that is, unilaterally modified its initial offer, which had yet already been accepted by [Buyer].
What indisputably followed there from was the gratuitous nature of the storage of the merchandises before being collected.
Such a modification cannot be approved and much less so in so far as [Seller] committed a breach of the contract by imposing on the [Buyer] an unreasonable period of time in which to pick up the goods.
In fact, [Seller] does not by any means support its claim, whereby it allegedly was led to store the disputed tubes at third persons' -- considering the seizure executed on 26 April 2004; to the contrary all the palettes could be found prima facie on the premises of Duppigheim.
Besides, since [Seller] believed that it was no longer bound by the sales agreement and had reimbursed the price to [Buyer], it could certainly no longer request payment of storage fees from the [Buyer]. [Seller]'s counterclaim for payment of such fees is denied, as is its claim for damages, in the absence of any abuse of process against it.
The [Buyer]'s additional claim for provisional enforcement of the judgment
The provisional enforcement of the judgment is justified by the nature and the length of the proceedings. The [Seller], who fails in its action, shall assume all the legal costs.
It is fair, however, to ascribe to the [Buyer] a sum of €3,000 to cover these fees that are not included in the legal costs.
For these reasons,
The Court, deciding by way of submitting the file to the registrar, in a judgment rendered after due hearing of both parties and in first instance:
|-||ORDERS [Seller] to pay to [Buyer] a sum of €160,000 (one hundred and sixty thousand Euros) in damages, with interest at the legal rate as of the present judgment;
|-||ORDERS [Seller] to pay all the legal costs of the proceedings;
|-||ORDERS it to pay to [Buyer] the sum of €3,000 (three thousand Euros) pursuant to Article 700 of the French Civil Code of Procedure;
|-||DENIES [Seller]'s counterclaims; and
|-||ORDERS the provisional enforcement of the present judgment.|
* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Plaintiff of Germany is referred to as [Buyer] and the Defendant of France is referred to as [Seller].
** Claire Chabat is a candidate for a Ph.D. in Comparative Law at the University Panthéon Assas in Paris. She was a participant in the 2007 Willem C. Vis International Commercial Arbitration Moot on the CISG.Go to Case Table of Contents