Germany 12 January 2007 Appellate Court Köln (Paperboard containers case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/070112g1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 19 U 11/07
CASE HISTORY: 1st instance Landgericht Köln 1 September 2006
SELLER'S COUNTRY: Czech Republic (defendant)
BUYER'S COUNTRY: Germany (plaintiff)
GOODS INVOLVED: Paperboard containers
Reproduced from Internationales Handelsrecht (5/2007) 200
"1. An exclusive jurisdiction clause in the sense of Art. 23, para. 1, second sentence, of Council Regulation 44/2001 may be reached implicitly.
"2. The place of performance for the sale of goods pursuant to a framework contract is the seat of the buyer and not the place to which the buyer instructs the goods to be delivered.
"3. Place of performance and jurisdiction for obligations form a contract for commercial agency or authorised dealership is the seat of the agent or dealer.
"4. The obligation to examine the goods in accordance with Art. 38, para. 1, CISG depends on the circumstances of the case; this includes the type and extent of the examination. The costs and effort of the examination are to be in a reasonable proportion to the expected information to be gleaned from the inspection; tests involving damage to the goods or rendering them unfit for further sale have to be carried out only randomly.
"On the prerequisites of an analogous application of s. 89b German Commercial Code."
APPLICATION OF CISG: Yes
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
38A [Buyer's obligation to examine goods: time for examining goods]; 39A2 [Requirement to notify seller of lack of conformity: buyer must notify seller within reasonable time]
38A [Buyer's obligation to examine goods: time for examining goods];
39A2 [Requirement to notify seller of lack of conformity: buyer must notify seller within reasonable time]
CITATIONS TO ABSTRACTS OF DECISION
(a) UNCITRAL abstract: Unavailable
(b) Other abstracts
CITATIONS TO TEXT OF DECISION
Original language (German): Internationales Handelsrecht (5/2007) 200-206
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
French: Claude Witz, Recueil Dalloz (23 October 2008) 2628Go to Case Table of Contents
Queen Mary Case Translation Programme
12 January 2007 [3 U 135/05]
Translation [*] by Jan Henning Berg [**]
Edited by Institut für ausländisches und internationales
Privat- und Wirtschaftsrecht der Universität Heidelberg
Daniel Nagel, editor [***]
Plaintiff [Buyer] claims damages because of lost profit and defective deliveries of goods as well as restitution of tools, and further relies on a compensation claim on the basis of authorized dealership.
[Buyer] is located in X and runs a business for office organization systems. Defendant [Seller] is located in the Czech Republic and manufactures products for archival storage, called "archive-solid-boards". [Seller] possesses 14 die-cutting tools of [Buyer].
On 7 and 11 August 1997, the parties concluded a contract for the manufacture of archive-solid-boards intended for use in Germany, Switzerland, Austria and the Benelux countries by [Seller] upon order placed by [Buyer], which they referred to as a contract for delivery. The contract provided for Prague as place of performance and place of jurisdiction.
On 20 December 1999, the parties concluded an annual framework contract for delivery of [Seller]'s archive-solid-boards to [Buyer]. In this contract, [Seller] granted [Buyer] an exclusive retail right within Germany for these products.
|-||Deliveries should be made according to ISO [*] 9706 in perfect quality, in the amount requested, at competitive prices and within the time limits agreed upon.
|-||The parties agreed on a standard turnover value for the year 2000 of at least Deutsche Mark [DM] 150,000, on at least DM 200,000 for 2001 and on at least DM 230,000 for 2002.
|-||Fourteen days with a 2 per cent discount, or 30 days without discount, after reception of the invoice was agreed on as the time frame to effect payment.
|-||The contract provided for a limited duration until 31 December 2000 and for an extension of one year, if it was not cancelled in writing three months before that date. Furthermore, the contract contained a right for immediate termination "due to severe reasons" which referred inter alia to non-compliance with the payment terms.
|-||The so-called preamble to the contract contained the following provision:
"In case of a dispute, both parties shall make attempts to reach a settlement. Should the parties not reach a settlement, both parties will have the right to take recourse to the Regional Commercial Court in Prague."
After [Buyer] refused to enter into a follow-up contract proposed by [Seller], which inter alia provided for a different agreement on jurisdiction ("the legal relationships according to this contract shall be governed by the laws of the Czech Republic; competent for the settlement of any disputes shall be the Arbitration Court attached to the Chamber of Commerce of the Czech Republic and to the Chamber of Agriculture of the Czech Republic, consisting of a single arbitrator"), [Seller] declared by letter of 12 December 2002 the immediate termination of the contract of 20 December 1999 with effect as of 31 December 2002. [Seller] justified the termination by referring to "systematic breaches of payment terms". In January 2003, the parties entered into talks, in the course of which they did not succeed in reaching an agreement on a continuation of the cooperation. Further details of these talks are in dispute.
[Buyer]'s action in First Instance
[Buyer] demanded from [Seller] payment of a total sum of EUR 69,443.51 plus interest as well as restitution of 14 die-cutting tools. In an action submitted to the District Court (Landgericht) Köln on 30 November 2005. [Buyer] was of the opinion that the provision contained in the contract of 20 December 1999 (cited above) did not constitute an exclusive agreement to confer jurisdiction in terms of Art. 23 Brussels I Regulation. Instead, [Buyer] alleged that the jurisdiction of the District Court (Landgericht) Köln followed from Art. 5 Brussels I Regulation.
[Buyer] has further asserted that it had suffered lost profit amounting to EUR 29,754 in 2003 from the allegedly unjustified immediate termination by [Seller]. Based on an expected turnover of EUR 115,000 -- as can be derived from [Seller]'s letter of termination of 12 December 2002 -- and a profit margin of 30%, this would lead to an expected profit of EUR 34,500 (subject to a cost subtraction of 10%). However, not more than EUR 1,444 of profit had been realized. As for the margin of profit, [Buyer] referred to a comparison of purchase and resale prices. In addition to the thus calculated loss of profit of EUR 29,754 [Buyer] claimed damages because of defective deliveries in the amount of EUR 4,862.58. In that respect, [Buyer] asserted that the goods purchased from [Seller] (and subsequently delivered to its customer G & Q GmbH) had not been in conformity with the stipulated DIN [*] requirements. This was the result of a material test carried out by the testing institute "Papiertechnische Stiftung" (PTS). In particular, the goods) had not been in conformity with the required anti-aging durability of less than 5 kappa. [Buyer] had informed [Seller] about this immediately by letter dated 30 January 2003 after having taken notice. With reference to this defect, which the general director of [Seller] had confirmed in writing, [Buyer] was forced to grant its customers a purchase price restitution of EUR 3,998.38 and pay examination costs of EUR 864.20.
[Buyer] further relied on a claim for compensation worth EUR 34,826.93 in analogy to § 89b HGB [*] and purported that [Seller] had requested the handing over of customer data from [Buyer] in December 2002 and that it had received this in January 2003. [Buyer] had been integrated in [Seller]'s sales organization and had raised its compensation claim during the talks in January 2003. [Buyer] had created new business contacts with six customers, which were now being supplied by [Seller] directly. In relation to the amount of the claim for restitution, [Buyer] argued that it had at least realized the minimum margins of profit which were stated in [Seller]'s letter of 12 December 2002 between 2001 and 2003, or that it had been able to do so, respectively. Consequently, [Buyer] was justified in assuming a gross profit of 30% which in turn resulted in the claimed amount.
[Seller]'s response in First Instance
During proceedings in first instance, [Seller] requested the dismissal of [Buyer]'s action.
|-||Particularly, [Seller] argued that the District Court (Landgericht) Köln lacked
jurisdiction because of an agreement on a different exclusive jurisdiction by way of the
contract of 20 December 1999. [Seller] has expressed that its immediate termination of
the agreement with [Buyer] had been justified because [Buyer] had repeatedly been in
arrears in effecting payment.
|-||Concerning the amount asserted in [Buyer]'s claim, [Seller] argued that a margin of profit of 30% was too high, and the alleged own costs of [Buyer] of 10% were too low.
|-||[Seller] further argued that its deliveries to [Buyer] did not need to comply with the ISO [*] 9706 standard.
|-||Furthermore, any alleged defects had not been notified by [Buyer] in due time.
|-||Moreover, [Seller] has contested that [Buyer] had in fact incurred the damage which it claimed. [Seller] contested [Buyer]'s claim for compensation in its existence and in its amount.
|-||Concerning the claim for restitution [Seller] has relied on a retention right because of non-payment of EUR 7551.52 and further announced to lodge a counterclaim before the competent court in order to apply for a judgment against [Buyer] for payment conditional upon restitution of the tools.|
RULING IN FIRST INSTANCE
By judgment of 1 September 2006, [Buyer]'s action was dismissed as inadmissible. It was held that the District Court (Landgericht) Köln did not have venue jurisdiction, because the preamble of the annual framework contract for delivery of 20 December 1999 contained an exclusive agreement on jurisdiction in terms of Art. 23 Brussels I Regulation.
REASONING OF THE APPELLATE COURT
[Buyer]'s appeal is admissible and partially justified.
B. The admissible appeal is justified in most parts regarding the denial of jurisdiction by the District Court. However, the appeal in terms of substantive issues is only partially justified.
1. The District Court (Landgericht) Köln has international, subject-matter and venue jurisdiction to consider items no. 1 to 3 of [Buyer]'s request for relief. However, German courts lack jurisdiction to consider item no. 4.
According to Art. 66(1) Brussels I Regulation, the issue of jurisdiction concerning the action commenced on 30 November 2005 must be considered pursuant to Council Regulation (EC) No 44/2001 of 22 December 2000 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (Brussels I Regulation), even though the parties' agreement in their annual framework contract for delivery dated 20 December 1999 was concluded both prior to this Regulation becoming effective as of 1 March 2002 and prior to the Czech Republic's accession to the European Union on 1 May 2004.
The jurisdiction of the District Court (Landgericht) Köln follows from Art. 5 Brussels I Regulation for items no. 1 to 3. The parties have not validly conferred exclusive jurisdiction pursuant to Art. 23 Brussels I Regulation on the Regional Commercial Court in Prague through the preamble to their contract of 20 December 1999.
a) The agreement according to which each contracting party shall have the right to take recourse to the Regional Commercial Court in Prague, which is generally admissible according to Art. 23(1)(1) Brussels I Regulation, has been concluded in the proper form, Art. 23(1)(3)(a) Brussels I Regulation, and is also sufficiently specific (cf. for the requirements of the law on specificity: OLG [*] Hamm, judgment of 20 September 2005 -- Case docket 19 U 40/05, in: OLGR [*] 2006, 23 et seq.; OLG Celle, judgment of 26 November 2003 -- Case docket 7 U 104/03, in: NJOZ [*] 2004, 2925, at 2926 [= IHR [*] 2004, 125] with further references). It would even be valid for a contract for commercial agency and is therefore valid in any case for an authorized dealership contract (cf. OLG Hamburg, judgment of 14 April 2004 -- Case docket 13 U 76/03, in: NJW 2004, 3126, at 3127 and 3128).
However, the content of the agreement cannot be understood as being an exclusive conferment of jurisdiction. Any agreement by the parties that deviates from the exclusivity of a jurisdiction (which will be presumed according to Art. 23(1)(2) Brussels I Regulation) need not be made expressly, but can be reached impliedly (cf. Zöller/Geimer, ZPO [*], Art. 23 Brussels I Regulation para. 1). The burden of proof is on Plaintiff [Buyer] (cf. OLG Hamburg, judgment of 14 April 2004 -- Case docket 13 U 76/03, in: NJW 2004, 3126, at 3127).
An agreement by the parties to the effect that merely one additional jurisdiction should be established, granting [Seller] the possibility to sue [Buyer] in Prague -- that is, near its own place of business -- follows from the wording and the context of the agreements reached:
First, the wording contradicts the assumption of an exclusive jurisdiction because it grants each party the right - and does not impose the duty -- to take recourse to the court in Prague. With consideration to the previous agreement of 7 and 11 August 1997 and the draft of a successive contract prepared by [Seller] of 12 December 2002, it must be assumed that the parties did not agree to confer exclusive jurisdiction in terms of Art. 23(1)(2) Brussels I Regulation. The contract of 7 and 11 August 1997 shortly and precisely provides:
"Place of performance and place of jurisdiction shall be Prague."
Had the parties intended to make a corresponding agreement for the contract of 20 December 1999 (which is relevant for the assessment of the claims at issue), it would have been easy and sensible to employ this formulation. In fact, however, the annual framework contract for delivery, which fundamentally re-designed the parties overall legal relationship since they had agreed on delivering finished products from [Seller] to [Buyer] rather than on any manufacturing of goods by [Seller] upon order placed by [Buyer], contains a deviating formulation, which further suggests that the parties also intended a different legal effect. Even the draft of a successive contract prepared by [Seller] of 12 December 2002 provided unequivocally for an exclusive conferment of jurisdiction, when it said that "the Arbitration Court attached to the Chamber of Commerce of the Czech Republic and to the Chamber of Agriculture of the Czech Republic should be competent to settle any disputes". It is inter alia this provision by which [Seller] obviously attempted to gain a better legal position in comparison with the previous agreement and which [Buyer] did not accept. This is a further argument to give the provision contained in the contract of 20 December 1999 a different meaning than the provisions contained in the previous and successive contracts.
Finally, there can be no argument construed in favor of an exclusive conferment of jurisdiction by the draft of a successive contract dated 30 November 2002 (submitted in [Seller]'s memorandum of 29 March 2007), which was allegedly prepared by [Buyer] and which contains a provision on jurisdiction that mainly resembles the provision of the annual framework contract of 20 December 1999. Neither is it comprehensible how this was supposed to indicate a conferment of exclusive jurisdiction, nor does it support [Seller]'s vague and unspecific argument that the exclusive jurisdiction of the Commercial Court in Prague was discussed and agreed upon during talks between its commercial director and the CEO of [Buyer] in consideration of the argument which was also put forward in court, namely, that [Seller]'s commercial director could not speak German.
The reliance on a deviating intent by the parties in terms of Art. 23(1)(2) Brussels I Regulation by [Buyer] and with reference to the context of the agreements is not precluded. This constitutes an issue which had been considered neither by the parties nor by the court in the first instance, § 531(2)(1) No. 1 ZPO [*]. As can be seen in its judgment, the District Court assumed that a deviating agreement by the parties had to be concluded expressly and in writing in the context of the conferment of jurisdiction. However, as stated above, an implied agreement is sufficient and which this court acknowledges on the basis of the above reasoning.
b) Failing any agreement conferring exclusive jurisdiction, the international and territorial jurisdiction of the District Court (Landgericht) Köln follows from Art. 5 No. 1 Brussels I Regulation in respect to the request for relief items no. 1 to 3 regardless of the fact whether the argument refers to the single deliveries under the contract of 20 December 1999 or to the parties' legal relationship as a whole.
In the first scenario, Art. 5 No. 1(b) first alternative Brussels I Regulation applies (contract on the sale of goods). In the absence of any contrary agreement, the place of performance will be the place where, according to the contract, the goods were delivered to or should have been delivered to. In that respect, any deviating provisions concerning the place of performance under the domestic law applicable by virtue of conflict of laws rules is irrelevant (Zöller/Geimer, Art. 5 Brussels I Regulation para. 3). In respect to all deliveries of goods, the seat of [Buyer] must be considered as the place of delivery and not, e.g., the seat of its respective customers, where [Seller] had effected direct deliveries of the goods to upon request by [Buyer].
First, it is evident that [Seller]'s direct deliveries to [Buyer]'s customers and without a "detour" to [Buyer]'s storehouse was supposed to save time and money. Eventually, this direct delivery did not occur in all cases in accordance with the standard terms of delivery and payment. Rather, it follows from the parties' statements that sometimes goods had in fact been delivered to [Buyer]'s storehouse.
Second, Art. 5 No. 1(b) Brussels I Regulation defines a common place of performance and place of jurisdiction for all reciprocal obligations that arise from the respective contract (cf. OLG [*] Köln, judgment of 1 September 2006 -- Case docket 19 U 65/06). This will be the seat of the buyer in case of deliveries of goods on the basis of a framework contract. This result also reconciles with the reasonably inferred interests of the parties and also provides for procedural efficiency, because otherwise there could have been disputes in a multitude of venues about cases on the same or at least similar factual basis (i.e., the various single deliveries).
Even if there was an authorized dealership contract, jurisdiction of the District Court (Landgericht) Köln would follow from Art. 5 No. 1(b), second alternative Brussels I Regulation, given its broad scope of application. This is due to the fact that the common place of performance and place of jurisdiction for the obligations arising out of commercial agency contracts and accordingly also for those arising out of authorized dealership contracts is the place of business of the commercial agent or the authorized dealer, respectively (cf. OLG Saarbrücken, judgment of 27 October 2006 -- Case docket 1 U 138/06 -- available on juris -- on the activity of a commercial agent as "service" in terms of Art. 5 No. 1(b) Brussels I Regulation).
This provision on jurisdiction applies to all claims encompassed by [Buyer]'s action which result from the annual framework contract for delivery of 20 December 1999 and/or its termination, including a claim for compensation from authorized dealership.
c) Art. 5 Brussels I Regulation, however, does not apply in respect to the claim for restitution (request for relief, item no. 4).
[Buyer] has not conclusively demonstrated that this claim could result from the annual framework contract for delivery of 20 December 1999 (cf. for conclusive demonstration as prerequisite for jurisdiction under the former Brussels Convention: BGH [*], judgment of 30 October 2003 -- Case docket I ZR 59/00, in: NJW-RR [*] 2004, 935 [= IHR [*] 2004, 42] with further references).
Even according to [Buyer]'s arguments, a claim for restitution of the tools does not result from the contract of 20 December 1999-- neither does it as a possible ancillary obligation --. This contract does not make reference to [Buyer]'s die-cutting tools. It appears that these tools are related to the previous delivery contract of 7 and 11 August 1997. The surrender of tools also conformed to the legal nature of the contractual relationship, under which [Seller] had manufactured and delivered paperboard containers upon order placed by [Buyer], while [Buyer] asserts to have reached the status of an authorized dealer by virtue of the annual framework contract for delivery of 20 December 1999. Under normal circumstances, an authorized dealer does not supply a manufacturer with any tools.
In the previous contract of 7 and 11 August 1997, Prague was expressly determined as place of performance and place of (exclusive) jurisdiction; neither have any doubts ever been raised in respect to its validity nor would such doubts seem to be justified. Art. 5 Brussels I Regulation would as well not apply in respect to a possible claim under § 985 BGB [*] (respectively, any similar provision under Czech law).
2. The action, being admissible in terms of items no. 1 to 3 of [Buyer]'s request for relief, is justified only in respect to item no. 1 (lost profit) in the amount of EUR 29,754. A claim for damages because of deliveries of defective goods in the amount of EUR 4,862.58 (item no. 2) and a claim for compensation based on authorized dealership in the amount of EUR 34,826.93 (item no. 3) do not exist.
The court does not consider it necessary to receive additional statements of the parties, meaning that it can render a conclusive decision on the merits without the need for a possible referral back to the District Court pursuant to § 538(1), (2)(1) No. 3 ZPO [*].
a) German law governs the claims alleged by [Buyer] under items no. 1 to 3 of its request for relief.
In the contract of 20 December 1999, the parties had not made any (deviating) choice of law in terms of Art. 27(1) EGBGB [*]. A choice of law needs not to be made expressly, but can be made impliedly, Art. 27(1)(2) EGBGB, if a corresponding actual intent of the parties can be inferred with sufficient certainty from the contractual provisions or the circumstances of the case (cf. Palandt/Heldrich, Bürgerliches Gesetzbuch, 66th ed. 2007, Art. 27 EGBGB para. 3 with further references). Indicators for a choice of law are inter alia the language of the contract and the place of conclusion of the contract (cf. Palandt/Heldrich, Art. 27 EGBGB, para. 4 with further examples). Thus, the German text of the contract and its conclusion in X lead to the application of German law. This is confirmed by the draft of a successive contract which -- in contrast to the agreement of 20 December 1999 -- expressly called for the application of Czech law. On the other hand, the parties have agreed to confer jurisdiction -- not exclusive, yet still legally effective (see above) -- to Czech courts, which argues against a choice of German law. In any case, however, these not totally clear circumstances do not suffice to assume a choice of Czech law.
Even without an (implied) choice of law, German law applies according to Art. 28 EGBGB. The legal relationship between the parties on the basis of the annual framework contract for delivery of 20 December 1999 has its closest connection to Germany under Art. 28(1)(1) EGBGB, this being the country where the characteristic performance in terms of Art. 28(2)(1) EGBGB had to be effected. For authorized dealership contracts, the characteristic performance is effected at the place of business of the authorized dealer if the circumstances of the case do not establish a closer connection of the contract to a different State (cf. Palandt/Heldrich, Art. 28 EGBGB para. 16 with further references). The agreement of 20 December 1999 constitutes an authorized dealership contract in the broader sense because the parties concluded a continuous contract on the purchase of [Seller]'s goods and their resale by [Buyer] on its own behalf and on its own account (cf. for a definition of an authorized dealership contract: Baumbach/Hopt, Handelsgesetzbuch, 31th ed. 2003, § 84 HGB [*] para. 10). This broad meaning is relevant at least for the purposes of private international law, while the additional requirements for an analogous application of § 89b HGB need only be considered for the substantive legal assessment. Because the parties had agreed to impose an obligation upon [Buyer] to make efforts for the resale and because of corresponding target sums, the agreement goes beyond the mere setting-up of a framework for some future purchasing activity. Therefore, it is justified to apply German law to any possible claims which arise out of each single sales contract and for which Czech law would otherwise apply being the law applicable at the seat of the seller (cf. Palandt/Heldrich, Art. 28 EGBGB para. 9). The particularities of transnational trade in goods are taken into account by the legal rules on the international sale of goods (CISG) (cf. Palandt/Heldrich, Art. 28 EGBGB para. 8).
(1) [Buyer] is entitled to claim damages in the amount of EUR 29,754 on the basis of §§ 280(3), 281 BGB [*] in conjunction with § 252 BGB following non-performance of the annual framework contract of 20 December 1999.
This contract remained in effect in 2003. The termination declared by [Seller] on 12 December 2002 and with effect as of 31 December 2002 was ineffective. [Seller] had no right to an exceptional immediate termination on the basis of an alleged non-compliance of the [Buyer] with the agreed payment terms. [Seller], who bears the burden of proof in this respect, has not sufficiently demonstrated the existence of a reason giving rise to immediate termination:
Failing any conclusive substantiation of a reason for an immediate termination of the annual framework contract of 20 December 1999, it is irrelevant whether [Seller] would be entitled to an immediate termination because of delayed payment pursuant to Art. 25 CISG, in addition to the contractual possibilities to terminate.
As this ineffective immediate termination by [Seller] is to be understood as an effective regular termination under § 140 BGB the contractual relationship between the parties remained in legal effect until 31 December 2003 in accordance with the agreed period for termination. In 2003, [Seller] has not complied with its obligation to deliver under the annual framework contract of 20 December 1999.
[Buyer] had no duty to grant a grace period because [Seller] seriously and definitely refused to perform in terms of § 281(2) BGB. [Seller] was of the opinion that its termination was valid with effect as of 31 December 2002 and made continuation of the contractual relationship conditional upon [Buyer]'s signing of a draft for a successive contract containing various provisions detrimental to [Buyer] in comparison to the former contract. Due to the continuance of the contract until 31 December 2003, however, [Buyer] was not obliged to engage in [Seller]'s move to impose new conditions. It can also not be concluded from [Seller]'s additional statements in its memorandum of 10 April 2007 (probably typing error in original judgment - 2006) that [Seller] would have been willing to make deliveries to [Buyer] also after the termination declared on 12 December 2002 under the original conditions. Although it is evident from exhibit BB3 that [Seller] effected one delivery to one of [Buyer]'s customers in 2003 and evident from exhibit BB4 that one order of [Buyer] was cancelled, it does not in any way indicate [Seller]'s willingness to process any orders placed after the determined date of contract termination, being 31 December 2002, under the original conditions.
[Seller] has not rebutted the presumption of fault according to § 280(1)(2) BGB in respect to its breach of contract.
[Buyer] has suffered damages due to [Seller]'s unjustified immediate termination. In 2003 [Buyer] has not received any further deliveries of goods by [Seller] and was therefore unable to realize profits through a resale of the goods.
Contrary to [Seller]'s assertion in its memorandum of 10 April 2007 (probably typing error in original judgment - 2006) [Buyer] did not fail to comply with its duty to mitigate losses according to § 254(2)(1) BGB or Art. 77 CISG:
[Buyer] had no duty to accept deliveries under the new conditions proposed by [Seller] -- not even with reservation. The ineffectiveness of the termination and any related incorrect legal implications made by [Seller] fall within its own sphere of risk and responsibility. Thus, [Seller] was obliged to offer [Buyer] deliveries under the original conditions until it was determined whether the termination of 12 December 2002 was indeed justified. Even [Seller] has stated that this did not occur at any point in time.
As far as [Seller] alleges in its memorandum of 10 April 2007 (probably typing error in original judgment - 2006) (for the first time) that [Buyer] had to enter into cover transactions in order to make deliveries to its customers, this plea is both precluded under § 531(2)(1) No. 3 ZPO [*] and unsubstantiated. First, it has neither been demonstrated nor was it otherwise evident whether and if so, which, other suppliers offered goods similar to [Seller]'s archiving products which are also protected by trademark laws. Second, it has not been demonstrated to what extent [Buyer] remained at all able to conclude contracts with its (former) customers after [Buyer] -- according to [Seller]'s uncontested plea in first instance -- had started to effect direct deliveries to them in 2003.
Under the rule of § 252 BGB for a facilitated calculation of damages, the sum owed to [Buyer] can be estimated according to its statements and according to § 287 ZPO as a minimum damage of EUR 29,754. Furthermore, even with consideration of the jurisprudence cited in [Seller]'s memorandum of 10 April 2007 (OLG Köln, judgment of 4 March 1993 -- case docket 12 U 138/92, in: VRS [*] 85, 262 et seq.) referring to the procedural duty to substantiate while claiming lost profit, did [Buyer] demonstrate a sufficient factual basis to allow an estimation. [Seller] has not substantially contested the estimation.
[Buyer] has based its calculation of lost profit on the turnover expectation of EUR 115,000 as stated by [Seller] itself in its letter of 12 December 2002. [Buyer] further properly assumed a profit margin of 30% at cost savings of 10% and an actually realized turnover of EUR 1,444.
Contrary to [Seller]'s assertions in its memorandum of 10 April 2007 (probably typing error in original judgment - 2006), it cannot be assumed that this constituted a gross turnover sum. Instead, [Buyer] has expressly made reference to the net turnover in its statement of claim without this being contested by [Seller] subsequently. As [Buyer]'s communicated turnover expectation for 2003 was not contested by [Seller] at least prior to the present proceedings, as it constitutes a continuation of the contractual standard turnover rates and as it also remains within the frame of previous turnover development, it was for [Seller] to demonstrate that and why the rates assumed by [Buyer] were either ex ante unfounded or that they ex post turned out to be too high (e.g., due to a collapse in turnover). [Seller] was also in a position where it must have been able to give the corresponding information on the basis of orders placed by [Buyer] until 2002 it was able to retrace turnover development. Moreover, according to [Buyer]'s plea (not contested in first instance) [Seller] started to make direct deliveries to [Buyer]'s former customers. [Seller] has not attempted to contest that plea, neither in first nor in second instance.
[Seller] may also not plead ignorance as a means of challenging [Buyer]'s margin of profit of at least 30% -- which it proved by having submitted a comparison of purchase and resale prices -- by stating that [Seller] had relied on a lower margin during contractual negotiations. First, [Seller] has not specified which margin of profit had been proposed back then. Second, it is not an unusual move to negotiate on the basis of too low figures. Therefore, any statements made by [Seller] are subject to similarly justified doubts especially in consideration of the fact that [Seller] itself was not willing to continue business with [Buyer] to the conditions initially agreed upon.
The same applies to [Seller]'s challenge of cost savings reached by unprocessed transactions which [Buyer] took into account. With consideration to [Seller]'s own commercial experience, it was able and under a duty to make specific pleas in relation to the proposed savings.
Therefore, the lost profit can be estimated according to [Buyer]'s plea as follows:
|Turnover expectation||EUR 115,000|
|Expected profit (30%)||34,066.80|
|Cost savings (10%)||3,406.68|
|Lost profit||EUR 30,660.12|
Thus, at least the sum of EUR 29,754 as claimed by [Buyer] is justified (§ 308(1) ZPO [*]).
[Buyer] is entitled to claim interest in the amount of 8% above the base lending rate pursuant to §§ 288(2), 291 ZPO from 15 March 2006, this being the date when [Seller] communicated its intention to defend [Buyer]'s claim. Any earlier serving of the statement of claim to [Seller] has not been proved.
(2) However, [Buyer] is not entitled to a claim for damages under Arts. 45(1)(b), 74 CISG or any other legal basis due to the defectiveness of the goods which were delivered by [Seller] and forwarded to its customer G & Q GmbH.
It is irrelevant whether the paperboard containers delivered by [Seller] lacked conformity with the contract under Art. 36 CISG because of having a kappa value of more than 5 and therefore not conforming to the provisions of DIN / ISO [*] 9706. [Buyer], who bears the burden to prove the existence of a non-conformity according to §§ 377, 378 HGB [*] (Baumbach/Hopt, § 377 HGB [*] para. 55), has not demonstrated that it had complied with its duty to examine and notify. Therefore, [Buyer] is barred under Arts. 38, 39 CISG to rely on any non-conformity of the goods.
The buyer has the duty under Art. 38(1) CISG to examine the goods, or cause them to be examined, within as short a period as is practicable in the circumstances. The reference to "circumstances" not only affects the time allowed for an examination but also its type and extent. These factors are determined according to the particularities of the individual case, while costs and effort of the examination must be in a reasonable proportion to the expected gain of the examination (cf. Gruber, in: Münchener Kommentar zum Bürgerlichen Gesetzbuch, 4th ed. 2004, Art. 38 CISG para. 25). Thus, an external examination of the goods is necessary in any situation (cf. Gruber, ibid., para. 28 with further references). Examinations which cause damage or make the goods unfit for further sale, however, need only be carried out by randomly testing samples (cf. Gruber, ibid., para. 29 with further references).
[Buyer] has not complied with these requirements according to its own statements. It is true that [Buyer] has stated that, with its letter dated 30 January 2003, it had complained to [Seller] about the non-compliance with the official standards after receipt of the first examination report of PTS I dated 23 January 2003 -- which was confirmed by [Seller] in its letter dated 5 March 2003. However, it cannot be inferred from this complaint that [Buyer] also fulfilled its particular duty to examine and notify in respect to the deliveries made to G & Q GmbH, on the basis of which it now claims damages. [Buyer] did not have to examine every single delivery by [Seller] in view of compliance with the (allegedly) agreed official standards through some complex examination procedures. However, on the basis of the cited authority, [Buyer] was under a duty to carry out at least random tests within a reasonable period of time after delivery. From [Buyer]'s statements (that examinations had only been initiated after corresponding complaints by its customers), it can neither be derived that [Buyer] generally conducted random tests nor that there had been a duly examination with regard to the products delivered to G & Q GmbH. This delivery was already effected in 2002 as [Buyer] has stated. Evidenced by a credit note of 26 January 2005, the corresponding invoice was dated 29 August 2002. However, the respective order to examine was placed at PTS I only on 24 November 2004. It cannot be inferred from [Buyer]'s plea that any of the previous examinations conducted by PTS I (orders of 27 December 2002 and 7 July 2003) were concerned with any of the goods delivered to G & Q GmbH. Even if this were the case, the examination would still not have been carried out within the time required in respect to the goods delivered under the invoice dated 29 August 2002.
(3) [Buyer] is as well not entitled to a claim for compensation against [Seller] according to § 89b HGB [*].
The annual framework contract for delivery of 20 December 1999 is to be considered as an authorized dealership contract in its broad sense (see above), meaning that an analogous application of § 89b HGB is in principle possible. However, the additional prerequisites are not fulfilled in order to draw the analogy.
Section 89b HGB applies to the termination of an authorized dealership contract by analogy if there is a legal relationship between the authorized dealer and the manufacturer which is not merely a buyer-seller relation but which by contract integrates the dealer into the distribution system of the manufacturer in a way that he mainly carries out tasks which are economically similar to those conducted by a commercial agent (persistent jurisprudence: cf. e.g., BGH [*], judgment of 10 February 1993 -- VIII ZR 47/92, in: NJW-RR [*] 1993, 678, at 679). An integration into the distribution system set up by the manufacturer that is similar to the position of a commercial agent is existent if the authorized dealer has to make efforts similar to those of a commercial agent in the distribution of the manufacturer's products, and is also under further engagements and obligations which characterize the position of a commercial agent (BGH, ibid.). It is further required for the authorized dealer to be under a duty to leave the established customer base to the manufacturer in case of contract termination, in order to enable the manufacturer to take immediate advantage of this customer base without any restrictions. It is irrelevant whether this obligation must be performed only at the time of termination or already during the run time of the contract through continuous communication of the customer data. It is decisive whether or not the manufacturer is being put into a position where it can actually make use of the established customer base even after a termination of the contract (persistent jurisprudence: cf. e.g., BGH, judgment of 12 January 2000 -- VIII ZR 19/99, in: NJW [*] 2000, 1413 et seq.; OLG [*] Köln, judgment of 14 June 1996 -- 19 U 4/96, in: OLGR [*] 1996, 177, at 178 with further references). However, the mere communication of customer data without any corresponding legal obligation under the contract does not suffice for constituting a compensation claim in analogy to § 89b HGB [*] (cf. BGH, judgment of 25 March 1998 -- VIII ZR 337/96, in: WM [*] 1998, 1256).
Under these tests and given [Buyer]'s own statements in court, the annual framework contract for delivery of 20 December 1999 neither integrated [Buyer] into the distribution system of [Seller] similar to the position of a commercial agent, nor had there been an obligation to communicate customer data:
First, neither the annual framework contract for delivery of 20 December 1999 itself nor the way in which it was being performed suggests that [Buyer] had been integrated into [Seller]'s distribution system comparable to the level of integration usually apparent in commercial agency. Apart from granting [Buyer] the exclusive rights to sell [Seller]'s products in Germany and imposing on [Buyer] the obligation to intensely penetrate the German market, the contract contains no provisions on how [Buyer] should specifically handle the sale of the products. The stipulation of sale targets and/or the obligation to intensely penetrate the German market -- which would have been in the interest of [Buyer] even without any particular provision -- are not sufficient without knowing further details of specific provisions in respect to the way of selling the products and/or the existence of specific supervision and instruction rights for [Seller] in order to assume an integration of [Buyer] into [Seller]'s distribution system which would have resembled the position of a commercial agent. [Buyer]'s statements also do not indicate that the contract was performed in deviation from the written obligations.
Second, [Buyer] was not legally obliged to communicate customer data to [Seller]. The annual framework contract for delivery of 20 December 1999 contains no provision to that effect. It has not been argued by [Buyer] that there existed another agreement apart from the contract itself to impose such obligation and this is not evident either. In particular, it is insufficient to argue that [Seller] knew the customer data through [Buyer]'s communication of delivery addresses. It is evident that the agreement on a direct delivery to [Buyer]'s customers was made to serve its own interest -- to save time and money. Any information gained in this way furthermore seemed insufficient for [Seller] as, according to [Buyer]'s plea, [Seller] had still requested the communication of customer data by the end of 2002 / start of 2003. [Buyer]'s statement that it acted in accordance with the request does also not suffice to assume a previous consent by the parties on a corresponding obligation, as [Buyer] did not argue in which way any such amendment of the contract should have been reached. Furthermore, the mere communication of consumer data does not constitute an (implied) amendment of the contract of 20 December 1999. It cannot be assumed that [Buyer] had been willing at this stage of negotiations to accept a subsequent extension of its obligations arising out of the contract terminated by [Seller].
* For purposes of this translation, Plaintiff of Germany is referred to as [Buyer] and Defendant of The Czech Republic is referred to as [Seller]. Amounts in the former currency of Germany (Deutsche Mark) are indicated as [DM]. Amounts in the uniform European currency (Euro) are indicated as [EUR].
Translator's note on other abbreviations: BGB = Bürgerliches Gesetzbuch [German Civil Code]; BGH = Bundesgerichtshof [German Federal Supreme Court]; DIN = Deutsches Institut für Normung [German Institute for Standardization]; EGBGB = Einführungsgesetz zum Bürgerlichen Gesetzbuche [German Code on the Conflict of Laws]; HGB = Handelsgesetzbuch [German Commercial Code]; IHR = Internationales Handelsrecht [a German journal on international commercial law]; ISO = International Organization for Standardization; NJOZ = Neue Juristische Online Zeitschrift [a German online law journal]; NJW = Neue Juristische Wochenschrift [a German law journal]; NJW-RR = Neue Juristische Wochenschrift Rechtsprechungsreport [a German law journal]; OLG = Oberlandesgericht [German Appellate Court]; OLGR = OLG Report [case reporter of the German Appellate Courts]; VRS = Verkehrsrecht digital [a German digital law journal]; WM = Wertpapiermitteilungen [a German law journal]; ZPO = Zivilprozessordnung [German Code on Civil Procedure].
** Jan Henning Berg has been a law student at the University of Osnabrück, Germany and at King's College London. He participated in the 13th Willem C. Vis Moot with the team of the University of Osnabrück. He has coached the team of the University of Osnabrück for the 14th Willem C. Vis and 4th Willem C. Vis (East) Moot.
*** 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