Belgium 22 January 2007 Appellate Court Antwerp (N.V. Secremo v. Helmut Papst) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/070122b1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 2004/AR/1382
CASE HISTORY: 1st instance Rechtbank van Koophandel Tongeren 29 October 2003
SELLER'S COUNTRY: Belgium (plaintiff)
BUYER'S COUNTRY: Germany (defendant)
GOODS INVOLVED: Concrete mixers
Reproduced from CISG Belgium database:
"The seller was entitled and obliged by the duty to mitigate damages to sell the goods which were not timely paid by the buyer."Go to Case Table of Contents
APPLICATION OF CISG: Yes
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
64A1 [Seller's right to avoid contract (grounds for avoidance): fundamental breach of contract]; 75A1 [Damages established by substitute transaction after avoidance: resale by aggrieved seller]; 77A [Obligation to take reasonable measures to mitigate damages]; 78B [Rate of interest]
64A1 [Seller's right to avoid contract (grounds for avoidance): fundamental breach of contract];
75A1 [Damages established by substitute transaction after avoidance: resale by aggrieved seller];
77A [Obligation to take reasonable measures to mitigate damages];
78B [Rate of interest]
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=1315&step=Abstract>
CITATIONS TO TEXT OF DECISION
Original language (Dutch): CISG-Belgium database <http://www.law.kuleuven.ac.be/ipr/eng/cases/2007-01-22%20Antwerpen.html>; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=1315&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 January 2007 [2004/AR/1382]
Translation [*] by Kristof Cox [**]
The claim relates to an agreement for the sale-purchase of twenty vehicles, IVECO Concrete Mixers 300-30, sold for a total price of 705,000 Deutsche Mark [DM]. Delivery of only six of these twenty vehicles was allegedly taken and paid for. [Buyer] allegedly did not take delivery or pay for the other fourteen vehicles.
A. At the hearing of 27 February 2006, the parties declared that Belgian law was applicable to the agreement of 12 August 1998. As this is an international sale, this also implies the CISG.
B. [Buyer] appealed the judgment. It claims reimbursement of the advance payment of 30,000 DM (14,339.52 €), stating that "the agreement was amicably avoided by agreement between the parties."
Even though this claim is not explicitly mentioned in the dispositive part of the memorandum, this means that the [Seller] implicitly but certainly criticizes the judgment of the Court of First Instance which declared the contract of sale avoided to the account of the [Seller].
However, this part of the appeal is unfounded, namely, on the basis of the following considerations:
The evidence shows that [Buyer] and [Seller] concluded a contract of sale on 12 August 1998 for the sale of twenty concrete mixers for the price of 705,000 DM. These concrete mixers were to be delivered in Antwerp in the week 37/98, being 14 September to 21 September (1998).
It is not disputed that an advance payment was made of 30,000 DM and that for the balance [Buyer] would open a letter of credit in favor of [Seller] with the Kredietbank, Maaseik, in the week 35/98 (being the week of 24 to 30 August). Even though [Buyer] itself suggested the irrevocable letter of credit, it never came into existence.
It is not disputed either that on 20 October 1998, after the contractually agreed date for delivery, [Buyer] took delivery of (only) six concrete mixers and paid part of the price (211,500 DM) directly via the Hypovereinsbank Wurtzburg to [Seller]. In its fax message of 20 October 1998 [Buyer] stated at the bottom:
"I hope that the money will be in your account by tomorrow, so that the transport can start. We leave the 30,000 DM where it is. I am currently negotiating the next four pieces to Lebanon and ten pieces to China. I am hoping to close the deals in the next two weeks."
[Buyer] admits that it had only taken delivery of six concrete mixers and that it was hoping to close deals for the other fourteen within fourteen days. In reality, this did not happen.
After this (additional) time had elapsed, [Seller] wrote a letter to [Buyer] on 7 November 1998, in which [Seller] stated that only 211,250 DM was transferred, the advance payment of 30.000 DM remained where it was as a down payment for the balance of 493,500 DM. At the bottom of this letter, [Seller] stated:
"The period of delivery and payment has elapsed a long time ago, therefore I am obliged to send you this formal notice and demand that you perform the rest of the agreement."
[Buyer] did not respond to this formal notice. [Buyer] states that it did not receive this letter, which is a reply to its letter of 20 October 1998. The Court of First Instance found this -- correctly -- incredible. Moreover, a registered letter of 25 January 1999 from the attorney of the [Seller] to [Buyer] -- the certificates are added to the record of evidence -- refers to the formal notice of 7 November 1998. This is not rebutted by [Buyer].
[Buyer] also disputes that it has received the letter of 25 January 1999 even though the certificate of the registered mail was delivered. This is just as incredible.
Not only did the [Buyer] fail to open an irrevocable letter of credit for the price in favor of [Seller], the [Buyer] also was late in taking delivery of the six concrete mixers and did not keep its promises as to the taking delivery of and paying for the other fourteen concrete mixers within the extra time it suggested itself.
The [Buyer] admitted the partial payment with regard to the six concrete mixers and did not reply to the formal notices of [Seller]. It does not show the slightest evidence of an alleged amicable avoidance of the contract, be it in part (with regard to fourteen mixers), let alone that this allegation of [Buyer] would have the slightest air of credibility.
The implied though certain incidental appeal to declare that the parties amicably avoided the contract, does not succeed in any way. No proof what so ever of these allegations was shown.
Given all this, the appeal with regard to the allegedly wrongful withdrawal of the advance payment of 30,000 DM cannot be allowed.
C. Based on the evidence taken, and taking cognizance of the considerations set forth under B, it can be concluded that the Court of First Instance correctly decided that the claim for (partial) avoidance of the sale agreement was founded to the account of [Buyer].
[Buyer] fundamentally breached both the obligation of taking delivery and the obligation of payment, being a breach of Article 53 CISG.
The avoidance of the contract may be timed at 4 November 1998, being after the extra time elapsed which [Buyer] suggested itself in its letter of 20 October 1998 to take delivery of the other fourteen concrete mixers and to pay in accordance with the contract.
Naturally, the avoidance also relates to these fourteen concrete mixers. In that sense, the judgment under appeal requires some slight distinctions and/or addition.
D. This leaves us with the question how much damage [Seller] has suffered because of the (partial) avoidance of the agreement of 12 August 1998.
Lacking any specific information, the Court of First Instance set the amount of damages at 30,000 DM, being the amount of the advance payment (which was withdrawn).
* * *
The principles are determined in Articles 74-77 CISG.
Article 75 states that if the contract is avoided to the account of the seller and the seller concluded a cover sale in a reasonable manner and within a reasonable time after the avoidance, the party claiming damages is entitled to the difference between the agreed price and the price of the cover sale as well as any further damage under article 74 CISG. A party who relies on a breach of contract must take such measures as are reasonable in the circumstances to mitigate the loss, if not the amount of damages can be reduced (Article 77 CISG).
Article 74 CISG states that damages for breach of contract by one party consist of a sum equal to the loss, including loss of profit, suffered by the other party as a consequence of the breach.
* * *
Now these principles will be checked against the facts.
The [Seller] presented seven invoices in these proceedings for the sale of the fourteen remaining concrete mixers between 12 November 1998 and 8 April 1999 for the sum of 394,927 DM (201,922.97 €) (items 7a to 7g).
The balance -- without deduction of the advance of 30,000 DM -- of the contract price for the fourteen concrete mixers amounted to 493,500 DM.
The difference between the balance of 493,500 DM and the realized sales price for the fourteen concrete mixers amounting to 394,927 DM is 98,573 DM (50,400.34 €).
[Buyer] incorrectly alleged that [Seller] started selling the concrete mixers nearly immediately after the formal notice of 7 November 1998 and even made a profit (as [Buyer] miscalculated).
[Seller] was confronted with a considerable breach of the contractually agreed time for taking delivery, did not receive the letter of credit that was irrevocably promised by [Buyer], at least the letter of credit elapsed because [Buyer] did not take it timely or only partially, so that [Seller], rightfully and under its obligation to mitigate damages, has not hesitated to sell the vehicles nearly immediately, vehicles which [Buyer] did not take, not even within the extra time it suggested itself. The acts of [Seller] are reasonable.
The amount of 98,573 DM (50,400.34 €) claimed and calculated by [Seller] is correct and cannot reasonably be disputed. [Seller] is entitled to keep the received advance payment of 30,000 DM (15,339.52 €) permanently.
The claim for a supplementary sum of 35,060.82 €, plus interest at the legal interest rate from November 1998 to 18 September 2000, and from then on the judicial interest till the day of payment, is founded.
It is not proven that a conventional interest rate of 10% per year would be due.
* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff-Appellee of Belgium is referred to as [Seller] and Defendant-Appellant of Germany is referred to as [Buyer]. Amounts in the former currency of Germany (Deutche Mark) are indicated as [DM].
** Kristof Cox is a researcher at the Institute for International Trade Law at the Catholic University of Leuven (Belgium). He is preparing a Ph.D. on the effects of an arbitration award on third parties. Further, he regularly publishes articles and case notes on the CISG and International Commercial Arbitration. Kristof Cox can be contacted at <Kristof.firstname.lastname@example.org>.Go to Case Table of Contents