Hungary 6 June 2007 Congrád County Court (Clothing case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/070606h1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 6.G.40.008/2007/12
CASE HISTORY: 2d instance Judicial Board of Szeged 22 November 2007
SELLER'S COUNTRY: Germany (plaintiff)
BUYER'S COUNTRY: Hungary (defendant)
GOODS INVOLVED: Clothing items
APPLICATION OF CISG: Yes [Article 1(1)(a)]
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
78B [Rate of interest]
78B [Rate of interest]
CITATIONS TO ABSTRACTS OF DECISION
(a) UNCITRAL abstract: Unavailable
(b) Other abstracts
CITATIONS TO TEXT OF DECISION
Original language (Hungarian): Click here for Hungarian text of case; see also <http://www.birosag.hu/engine.aspx?page=anonim>
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
6 June 2007 [No. 6.G.40.008/2007/12]
Translation [*] by Andrea Vincze [**]
IN THE NAME OF
THE REPUBLIC OF HUNGARY
In the lawsuit between Plaintiff ___ [Seller], represented by dr. András Tuller, Attorney (1055 Budapest, Balassi Bálint u. 25. fsz.5.) and Defendant ___ [Buyer], represented by dr. László Varga, Attorney (6721 Szeged, Tisza Lajos krt. 7-9., II/1.), relating to payment of purchase price, the Csongrád County Court made the following
The County Court orders [Buyer] to pay [Seller] EUR 13,277.65 (i.e., thirteen thousand two-hundred and seventy-seven Euros and 65/100 Euro cents) within fifteen days, and a default interest at a rate equaling the current German central bank prime rate plus 8 (eight) percent from 28 September 2006 until the date of payment, as well as HUF 360,000 (three-hundred and sixty thousand Hungarian forints) as costs of the proceedings.
The County Court orders that EUR 10,934.85 (i.e., ten-thousand nine-hundred and thirty-four Euros and 85/100 Euro cents) out of the latter sum shall be executed by provisional measures, regardless of any appeal.
In other respects, the Court rejects the claim.
This judgment may be appealed with fifteen days of receipt of the judgment, which shall be filed in three copies with this Court, addressed to the Judicial Board of Szeged.
The Court of Second Instance will decide upon the appeal without holding a trial if the parties request that, or if the appeal is aimed solely at payment of interest, procedural costs or the amount thereof, or if the appeal is aimed solely at the reasoning of the judgment and the appealing party did not request a trial in the appeal documents, or if, for any reason, the Court of Second Instance finds adjudication without a trial reasonable.
If the appealing party requested a trial on second instance either in the appeal or upon notification by the Court of Second Instance, or the opponent of the appealing party requested that upon notification by the Court of Second Instance, the appeal must be adjudicated on trial.
Upon the order by the [Buyer], having its place of business in Hungary, [Seller], having its place of business in Germany, delivered clothing items in the amount of EUR 13,277.65. [Seller] indicated on the order confirmation document that the goods will remain its property until the purchase price is paid in full (6/A/1). [Buyer] failed to pay the purchase price for the goods ordered and delivered.
The County Court established these facts based on the payment order issued by the Csongrád County Court under no. Gpk. 50.094/2006 and its attachments, the counterclaim, [Seller]'s preliminary documents no. 2 & 4, [Buyer]'s preliminary document no. 6 and presentations of the parties on trial.
In its claim modified and clarified under No. 12, [Seller] requested the Court to order [Buyer] to pay the purchase price of EUR 13,277.65 and additional EUR 2.191.48 that arose concerning collection of the latter sum, as well as default interest concerning these sums payable from 28 September 2006 until payment, and the procedural costs. [Seller] argued that it had given the goods into [Buyer]'s possession, which indeed had taken possession, but failed to pay the purchase price, and [Seller] also requested payment of its reasonable expenses incurred in the proceedings relating to payment of the purchase price. [Seller] argues that in its opinion, the provisions of the Vienna Sales Convention are applicable, but even if the Convention is not applicable, its claim is justified under Hungarian law.
[Buyer] acknowledged the claim in the amount of EUR 10,934.85, and requested the Court to reject the claim relating to the remaining amount (paragraph 2 on page 2 of document no. 12). [Buyer] argued that the Vienna Sales Convention is not applicable to the legal relationship of the parties, because the parties concluded a consignment contract in its opinion, but even if it had been a sales contract, the fact that the property of the goods was retained excludes applicability of the Vienna Sales Convention. Concerning calculation of the amount in excess of the sum acknowledged, [Buyer] stated that a sum of EUR 80 per month, representing the sum due for safekeeping the [Seller]'s unpaid stock located at [Buyer]'s place of business, which amounts to EUR 800 for ten months, as well as EUR 1,081 for the goods still available, representing a total sum of EUR 1,881 must be deducted from the sum of EUR 12,815.85, resulting an amount of EUR 10,934.85 (paragraphs 2&3 on page 2 of document no. 8).
The claim is predominantly founded.
First of all, the Court had to decide upon the applicable law. Relating to that, provisions of the Vienna Sales Convention, promulgated in Hungary with Law Decree No. 20 of 1987, had to be examined to determine whether the transaction in dispute is governed by the Convention. The Convention applies to contracts of sale of goods between parties whose places of business are in different States when the States are Contracting States; or when the rules of private international law lead to the application of the law of a Contracting State. The fact that the parties have their places of business in different States is to be disregarded whenever this fact does not appear either from the contract or from any dealings between, or from information disclosed by, the parties at any time before or at the conclusion of the contract. In this case, it is evident from the details of the order confirmation and other circumstances of the case proved by documents that the buyer is a company with its place of business in Hungary, and that company had ordered and received the goods from a company having its place of business in Germany; therefore, at the time of conclusion of the contract at the latest, both parties were aware that their respective places of business are in different States as set out in the Convention. The fact that their legal relationship represents a sales contract is also evident from the wording of the order confirmation stating that the seller retained property of the goods until the full purchase price is paid. This is a typical feature of sales contracts, and represents a legal act specified in Article 368 of the Hungarian Civil Code. Therefore, the transaction between the parties qualifies as a sales contract, thus, the Vienna Sales Convention applies to the legal relationship in dispute here.
Pursuant to Art. 7(2) of the Convention, questions concerning matters governed by the 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. Pursuant to Art. 11, 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. Pursuant to Art. 23, a contract is concluded at the moment when an acceptance of an offer becomes effective in accordance with the provisions of the Convention. Pursuant to Art. 58(1), if the buyer is not bound to pay the price at any other specific time, he must pay it when the seller places either the goods or documents controlling their disposition at the buyer's disposal. Pursuant to Art. 59, 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. Pursuant to Art. 62, the seller may require the buyer to pay the price, take delivery or perform his other obligations, unless the seller has resorted to a remedy which is inconsistent with this requirement. Pursuant to Art. 71, a party may suspend the performance of his obligations if, after the conclusion of the contract, it becomes apparent that the other party will not perform a substantial part of his obligations as a result of a serious deficiency in his ability to perform or in his creditworthiness, or his conduct in preparing to perform or in performing the contract.
Based on the above provisions, [Seller] raised its claim in accordance with the provisions of the Vienna Sales Convention when it requested payment of the purchase price. Therefore, applying the provisions of the above Convention, the County Court orders [Buyer] to pay to [Seller] the purchase price. As Art. 78 of the Convention provides that 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, the County Court orders [Buyer] to pay interest as well, taking into consideration that none of the grounds for exemption set out in Art. 79 of the Convention are present.
As the Convention does not contain any provisions regarding the interest rate, by virtue of Art. 7(2) of the Convention, cited above, the interest rate shall be determined in accordance with Art. 25 (a) of Law Decree No. 13 of 1979 on Private International Law, modified several times, pursuant to which the law applicable to sales contracts shall be the law of the country where seller's domicile, usual abode, or principal or other place of business is located at the time of conclusion of the contract. In this case, it is the law of Germany, therefore, the interest rate shall be determined under German law.
Pursuant to Art. 5(1) of the above Law Decree on Private International Law, the Court inquired about the foreign law ex officio, and as a result of that the Court found that in the present dispute, Art. 288(2) of the German Civil Code (BGB), in force as of 1 January 2003, applies, according to which the interest rate shall be the central bank prime rate plus 8 percent. (Reference No. IM/NEMZM62003/NKPOLG 7/6729 presented by the Private International Law Department of the Ministry of Justice upon request of the Fejér County Court, which was [applied] in the lawsuit by [Seller] against [Buyer] before the Fejér County Court, docket no. Gf. 40.078/2003/5).
Regarding [Buyer]'s set-off claim, the County Court found that request unfounded because [Buyer] wished to set off the safekeeping fee of items which [Buyer] received as a result of the contract in dispute, i.e., which [Buyer] purchased and, for the same reason, [Buyer] cannot set off the value of the goods available at its place of business because such goods were given by [Seller] into [Buyer]'s possession as a result of the sales contract. Since the parties did not avoid the contract, pursuant to the contractual provisions, [Buyer] shall have the right to the goods as soon as the purchase price is paid, taking into consideration that the sale took place with reservation of property rights.
Based on the data of the lawsuit, it is not even likely that [Buyer] had, at any time, raised a warranty claim against [Seller], [Buyer]'s remark regarding unmerchantability of the stock is irrelevant in adjudicating the legal relationship between the parties; therefore, the set-off claim is unfounded because it lacks factual support, noting that relating to the purchase price owed, it cannot be disregarded that the e-mails sent by [Buyer]'s employee to [Seller] include an acknowledgement that the entire purchase price is due, and the latter statement was subsequently acknowledged by [Buyer] during the course of the lawsuit.
Based on the latter, the County Court ordered the predominantly losing party to pay [Seller]'s court expenses pursuant to the first sentence of Art. 78(1) of the Hungarian Code of Civil Procedure, which expenses consist of the proportionate attorneys' fees due under Art. 3(2) of Decree of the Minister of Justice No. 32/200 (VII.22.) and proportionate part of the court fees paid by [Seller].
Szeged, 6 June 2007
Dr. Károly Szücs
County Court Judge
* All translations should be cross-checked against the original text. For purposes of this translation, Plaintiff of Germany is referred to as [Seller] and Defendant of Hungary is referred to as [Buyer]
** Andrea Vincze is a Fellow of the Institute of International Commercial Law of the Pace University School of Law. She received her law degree from the University of Miskolc, Hungary, and her LL.M. at Pace Law School. She is working on her Ph.D. on ICSID arbitration, and is researching international commercial law and ADR.Go to Case Table of Contents