CISG CASE PRESENTATION

Switzerland 25 June 2007 Commercial Court Zürich (Printed materials case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/070625s1.html]

Case Table of Contents

• Case identification
• IHR headnote
• Classification of issues present
• Editorial remarks
• Citations to case abstracts, texts, and commentaries
• Case text (English translation)

• Guide to links contained in case presentations

Case identification

DATE OF DECISION: 20070625 (25 June 2007)

JURISDICTION: Switzerland

TRIBUNAL: Handelsgericht [Commercial Court] des Kantons Zürich

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: HG 050430/U/ei

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Austria (plaintiff)

BUYER'S COUNTRY: Switzerland (defendant)

GOODS INVOLVED: Printed materials

Reproduced from Internationales Handelsrecht (1/2008) 31

"1. In case of a firm deal the buyer need not fix an additional period for performance before declaring the contract avoided since the late delivery constitutes an objective defect and thus justifies an immediate avoidance of the contract. To avoid the contract, sending the notice is sufficient.

"2. On the necessary extent of submissions to substantiate the loss under Art. 74 CISG.

"3. The interest rate is determined by the national law applying according to the conflict of law rules of the forum state."

Classification of issues present

APPLICATION OF CISG: Yes [Article 1(1)(a)]

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 33 ; 74 ; 78 [Also cited: Articles 3 ; 45 ; 47 ; 49 ; 81 ]

Classification of issues using UNCITRAL classification code numbers:

33A [Time for delivery: on date fixed by or determinable from contract]'

74A [General rules for measuring damages: loss suffered as consequence of breach];

78A ; 78B [Interest on delay in receiving price or any other sum in arrears; Rate of interest]

Descriptors: Delivery ; Damages ; Interest

Editorial remarks

• Unavailable

Citations to case abstracts, texts, and commentaries

CITATIONS TO ABSTRACTS OF DECISION

(a) UNCITRAL abstract: Unavailable

(b) Other abstracts

Unavailable

CITATIONS TO TEXT OF DECISION

Original language (German): CISG-online.ch website <http://www.cisg-online.ch/cisg/urteile/1564.pdf>; Internationales Handelsrecht (1/2008) 31-34

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

Queen Mary Case Translation Programme

PARTICULARS

This is a dispute between Plaintiff, hereafter referred to as [Seller], represented by Dr. iur. Thomas Wyss, Reber attorneys in Zurich vs. Defendant, hereafter referred to as [Buyer], concerning a demand for payment.

[Seller] requests the court (see case record 1, p. 2):

CASE

[Seller] is a printing company seated in Vienna. [Seller] produced printed materials for [Buyer], who distributes printing services under the trademark "C" in Switzerland. With the present suit, [Seller] demands a residual payment. [Buyer] refuses payment alleging that [Seller] delivered behind schedule which caused damage to [Buyer] and its customers.

On 20 December 2005, the payment summons and statement of claim arrived (case record 1 and 3). The proceeding was conducted in writing and closed by order of 27 October 2006 by the judge instructeur per pro (case record 7, 19 and 23; Prot. S. 13). As [Seller] was not amenable to a settlement, no preliminary hearing or hearing for settlement was conducted. The proceeding is ripe for decision.

At the time the suit was filed, [Buyer] was a limited liability company seated in Zurich. In March 2007, [Buyer] has been transformed to a corporation with its seat in Kloten (cf. case record 25), which is to be changed in the caption.

The local and factual jurisdiction of the Commercial Court rightly remained undisputed (case record 1 p. 3; 7; Art. 2 LugÜ [*], Art. 2 IPRG [*] and § 63 cipher 1 GVG [*]).

The case at hand involves an international issue. [Seller] is seated in Vienna, [Buyer] in Zurich or, respectively, now in Kloten. Therefore, the applicable substantive law is to be determined. Austria as well as Switzerland is a Contracting State to the UN Convention on Contracts for the International Sale of Goods of 11 April 1980 (CISG). This Convention is also applicable to contracts for the supply of goods to be manufactured or produced (Art. 3 CISG, Schlechtriem/Schwenzer/Ferrari, Commentary on the CISG, 4th ed., Munich 2004, Art. 3 para. 4 et seq.; Honsell/Siehr, Commentary on the CISG, Berlin/Heidelberg 1997, Art. 3 para. 3).

REASONING

1.  a) In its statement of claim, [Seller] remarked that it produced several printed products for [Buyer] between August and November 2004 and delivered each order to [Buyer] in compliance with the contract. The dates of delivery, which were contractually agreed upon and in single cases were delayed by mutual agreement, were met by [Seller]. The deliveries were accepted by [Buyer] without objection. The parties agreed in the particular contracts on a period for objections of three days. [Seller] did not receive any objections until the due date. The stipulated costs for the printing orders were invoiced. According to the invoices, [Buyer] owed [Seller] 41,800.17 EUR for the delivered printed products. To date, [Seller] received from [Buyer] two payments, 20,900.08 EUR and 11,659.54 EUR. There is a remaining balance of 9,240.55 EUR (case record 1, p. 4 et seq.).

      b) According to [Buyer]'s statement in its answer to [Seller]'s complaint, [Seller] had an "alleged" loss of production due to a mechanical breakdown. Several of the printing orders given by [Buyer] to [Seller] were affected. The printing orders D, E and especially the WIR-MAILING had been forward orders where [Buyer] had to comply with fixed delivery dates toward its customers. While a major damage could be prevented as regards the commissions D and E by negotiations with the customer, this was not possible concerning the WIR-MAILING. Delivery date was 13 October 2004; as regards D, it was 15 October 2004. The forwarding agency "Brothers F" was instructed with the collection. The collection date of the WIR-MAILING was delayed for two days to 15 October 2004 as -- shortly before the planned collection -- it became clear that a timely delivery was not possible. Delivery or, respectively, customs clearance of the goods was finally conducted on 21 October 2004. Before that, [Buyer] communicated its problem to [Seller] by telephone and in writing on 18 October 2004 and expressly pointed out that a delivery of the goods would be carried out at [Seller]'s financial risk. [Buyer]'s customers claimed damages in the amount of 17,000.00 CHF. [Buyer]'s own loss was not included in this amount (case record 7).

      c) In its reply, [Seller] asserted that [Buyer] had accepted [Seller]'s claim: By letter of 21 April 2005, [Seller] had requested [Buyer to pay the accepted amount of 12,000.00 EUR -- a part of the whole amount of 20,900.19 EUR -- and to identify disputed and undisputed claims having to do with payment of this amount. In reply, [Buyer] paid 11,659.54 EUR without any reference that a certain claim is disputed. Therefore, [Buyer] accepted [Seller]'s claim without any reservation (case record 19, p. 3 et seq.).

Concerning the order "E invoice forms", no fixed dated was agreed upon. Despite different delivery dates of the particular printing orders, Brothers F was, in any event, instructed to collect all deliveries together at a later date and in line with one single shipping order. It therefore seems to constitute an abuse of law if [Buyer] now invokes a fixed date. There is neither a breach of contract by [Seller] nor any loss (case record 19, p. 4 et seq.).

Concerning the order "D", the order of 5 October 2004 scheduled the delivery date on 15 October without any reference to a fixed date. This was only a date without obligation. A breach of contract by [Seller] and a loss is missing here as well (case record 19, p. 5 et seq.).

Concerning the order "WIR-MAILING", the request for delivery and the offer of 5 October were lacking a reference to a fixed date. If 13 October 2004 had, however, been a fixed date despite the requirement of writing, this date was impliedly delayed for an undefined period by [Buyer] delaying the printing release which was only carried out on 12 October 2004 at 8.53 p.m. An express, new delivery date was not agreed upon. On 20 October 2004, [Buyer] accepted the WIR-MAILING without any objection. At this time, [Seller] did not have knowledge of [Buyer]'s letter of 18 October and the alleged avoidance of contract by [Buyer]. Delivery at own risk would have been an adaptation of the contract which [Seller] rejected by issuing the invoice of 20 October 2004. By accepting this invoice without any reservations and by partial payment in the amount of 10,351.50 CHF, [Buyer] accepted the contractual relationship and its obligation to perform to remain unchanged (case record, p. 6 et seq.).

      d) In its rejoinder, [Buyer] pointed out that [Seller] relies on the fact that the functional e-mail communication was not recorded and no "telephone history" was created to imply an alleged misdemeanor of [Buyer]. By letter of 18 October 2004, these three orders were deleted and [Seller] was offered the opportunity to deliver the goods at its own financial risk. This was indeed done by [Seller]. As the "affirmation for printing" that was given was delayed by [Seller], the printing release could only be carried out late in the evening (case record 23).

2.  a) The parties undisputedly concluded several contracts which obliged [Seller] to produce and deliver printing products and [Buyer] to pay the agreed remuneration (cf. case record 4/3 et seq.). It is further undisputed that [Seller] delivered the owed printing products. Having paid 11,659.54 EUR on [Seller]'s outstanding claim in the amount of 20,900.09 EUR, [Buyer] did not contest that it was generally obliged to pay [Seller] a residual price in the amount of 9,240.55 EUR (case record 4/24, 4/25, 20/2, 1 p. 6 and 19 p.4).

      b) On 18 October 2004, [Buyer] informed [Seller] with reference to "Delay, cancellation" that the predetermined delivery dates could definitely not be met anymore. Further, [Buyer] notified (case record 8/4):

[Buyer] thereby stated that it was not willing to perform the contract anymore (cf. Schlechtriem/Schwenzer/Müller-Chen, Commentary on the CISG, 4th ed., Munich 2004, Art. 49 para. 24). Therefore, it is to be verified whether [Buyer] was entitled to cancel the orders -- which means the avoidance of the contract -- for failure to comply with the delivery dates. This is disputed by [Seller] (case record 19, p. 5).

      c)  aa) According to Art. 33(b) CISG, the seller must deliver the goods -- if a date is fixed by or determinable from the contract -- on that date. If the seller fails to perform any of his obligations under the contract or the CISG, the [Buyer] can according to Art. 45(1) exercise the rights provided in Arts. 46-52 or claim damages as provided in Arts. 74-77 CISG. Art. 49(1)(b) CISG provides that the buyer may declare the contract avoided in case of non-delivery, if the seller does not deliver the goods within the additional period of time fixed by the buyer in accordance with Art. 47(1) or declares that he will not deliver within the period so fixed. Avoidance of the contract releases both parties from their obligations under it, subject to any damages which may be due, Art. 81(1) (sentence 1) CISG. If the contract is a transaction in which time is of the essence, the buyer is not obliged to fix an additional period of time before he is entitled to declare the contract avoided since a delayed delivery is an objective defect and the immediate termination of the contract by the buyer is justified (Schlechtriem/Schwenzer/Müller-Chen, loc. cit., Art. 48 para. 15, Art. 49 para. 5; Honsell/Schnyder/Straub, Commentary on the CISG, Berlin/Heidelberg 1997, Art. 49 para. 14).

Therefore, the failure to comply with fixed delivery dates entitled [Buyer] to declare the termination of the contract.

            bb) The dispatch of the notice is sufficient for the termination of the contract (Schlechtriem/Schwenzer/Müller-Chen, loc. cit., Art. 49 para. 25). Thus, it is of no relevance for the termination of the contract whether [Seller] received [Buyer]'s letter of 18 October 2004 only after the forwarding of the goods, as [Seller] asserts. If the seller is not aware of the termination of the contract for lack of receipt or if he rejects the declaration and thereby expresses that he wants to perform the contract, the buyer can use the goods and claim the compensation of the reduced market value by way of damages or reduction in price (Schlechtriem/Schwenzer/Müller-Chen, loc. cit., Art. 45 para. 16, Art. 45(1)(b), Arts. 74-77 CISG).

In the instant case, [Buyer] has accepted the printing products and supplied its customers with them. However, [Buyer] claims -- correspondingly as a set-off-- damages for delayed delivery. By order of the judge instructeur per pro of 22 August 2006, the following notices for substantiation were issued to [Buyer] (Prot. p. 9 et seq.):

According to Art. 74 (sentence 1) CISG, 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. The creditor has to demonstrate the loss in great detail for the purpose of evidence (Schlechtriem/Schwenzer/Stoll/Gruber, Commentary on the CISG, 4th ed., Munich 2004, Art. 74 para. 52). The substantiation of the loss allegedly suffered by [Buyer] for the delayed delivery is entirely insufficient. Already in the answer to [Seller]'s complaint, [Buyer] reported that the G-publishing-company claimed from [Buyer] a loss in the amount of 17,500.00 CHF (case record 7, p. 2). The letter of 25 November 2004 concerning this matter does not clarify how this loss is composed. The G-publishing-company merely explained that the direct loss resulting from the non-compliance with promised performances amounted to 17,500.00 CHF. These damages did not contain the consequential loss resulting from the loss of reputation and reliance at the customers, particularly with regard to the prospective execution on schedule of the WIR-MAILINGS. The considerable expenses for the loss of sales and profits in the part of the card-customers were also not contained (case record 8/7). After the above-mentioned order for substantiation was issued, [Buyer] asserted in the rejoinder for the substantiation of the loss that [Buyer] and the customers of the G-publishing-company had liabilities from this mailing since fixed performances and dates were not complied with. In the meantime, [Buyer] was exacted by company G in the amount of 25,859.75 CHF. The other customers were partly compensated by reductions and discounts. The additional expenses for working hours, loss of reputation, follow-up orders not obtained, lost customers, direct and indirect costs, etc. were hard to quantify. The amount was, in any event, higher than the value in dispute (case record 23, p. 2). Therefore, [Buyer] refrained from figuring and substantiation of the concrete items of damages. It is also completely unsettled, whether, why and at best in which amount the G-publishing-company has suffered a loss that can be claimed from [Buyer]. As threatened, the deficient submission of [Buyer] is therefore to be applied -- following that no loss is demonstrated sufficiently as to law.

            cc) For lack of sufficient substantiation of a loss, [Buyer] is obliged to pay [Seller] the purchase price agreed upon. Under these circumstances, it can be left undiscussed whether the parties agreed on fixed dates with which [Seller] did not comply and which entitled [Buyer] to declare the contracts avoided.

      d) In the contracts of the parties, prices were agreed upon in Euro and [Seller] invoiced also in Euro (case record 4/12, 4/13, 4/15, 4/20 and 4/21). [Buyer] therefore owes the purchase prices in Euro (Honsell/Schnyder/Straub, loc. cit., Art. 54 para 28). Consequently, [Buyer] is to be obliged to pay [Seller] 9,240.55 EUR.

      e) 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, Art. 78 CISG. The obligation to pay interest arises when the particular payment is due. The extent of the interest rate is based on national law which is applicable to the contract according to the conflict of laws (Honsell/Magnus, Commentary on the CISG, Berlin/Heidelberg 1997, Art. 78 para 12, Weber, in: Berner Tage für die juristische Praxis 1990, CISG, Bern 1991, p. 208, critically: Schlechtriem/Schwenzer/Bacher, Commentary on the CISG, 4th ed., Munich 2004, Art. 78 para. 26 et seq.). For lack of a particular agreement, the entitlement to the purchase price is due when the goods or the documents are at the buyer's disposal (Honsell/Magnus, loc. cit., Art. 78 para. 9). According to [Buyer]s illustration, the printing orders were delivered on 21 October 2004 (case record 7, p. 2), following that interest claimed since 1 November 2004 is justified. Work and delivery contracts are -- as far as the CISG is not applicable -- subject to the law of the producer and seller (Art. 117 IPRG). In the instant case, this is Austrian law. The statutory interest rate for payment demands between business companies out of business transactions is 8 percentage points above the base rate of interest (§ 1333(2) ABGB [*], § 352 UGB[*]) and is thus higher than the 5 % requested by [Seller]. Therefore, [Buyer] has to pay [Seller] -- according to [Seller]'s submission -- 5 % interest on the owed amount since 1 November 2004.

      f) [Seller] requested the removal of the objection filed by [Buyer] in debt enforcement No. 137984 of the prosecution office [Beitreibungsamt] Zurich 3. A claim is to be enforced according to the SchKG [*], even if it is a dept payable in a foreign currency, except it is to be paid in the foreign currency in real terms. In the instant case, this is not claimed by any of the parties. The conversion to the Swiss currency is a measure solely subject to the law of enforcement. According to civil law, the debtor can pay in foreign currency also during the debt enforcement (BSK SchKG I-Acocella, Art. 38 para. 10, BSK SchKG Erg.Bd.-Steahelin, Art. 38 para. 10). The amount requested in the debt enforcement is 32,378.40 CHF with an actual exchange rate of 1 EUR = 1.5492 CHF (case record 4/26). 9, 240.55 EUR corresponds to 14,315.46 CHF. The objection filed is therefore to be removed in its entirety.

      g) [Seller] claims payment of the costs of the payment summons in the amount of 100.00 CHF. As [Seller] is entitled to claim these costs in advance of the debtor's payment (Art. 68(2) SchKG), it is unnecessary to grant them.

DECISION

[Buyer] loses the legal proceeding. Therefore, [Buyer] becomes liable to pay the costs and compensation (§ 64(2) ZPO [*] and § 68(1) ZPO). The value in dispute according to the BGG [*] amounts to 15,305.00 CHF (1 EUR = 1.65632 CHF) and thus does not reach the limit of value in dispute provided in Art. 74(1) BGG.

The Court therefore orders:

FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff of Austria is referred to as [Seller] and Defendant of Switzerland is referred to as [Buyer].

Translator's note on other abbreviations: ABGB = Allgemeines Bürgerliches Gesetzbuch [Austrian General Civil Code]; BGG = Bundesgerichtsgesetz [Swiss Federal Court Act]; DM = Deutsche Mark [former German currency]; GVG = Gerichtsverfassungsgesetz [Austrian Code on Court Constitution]; IPRG = Bundesgesetz zum Internationalen Privatrecht [Austrian Conflict of Laws]; LugÜ = Luganer Gerichtsstands- und Vollstreckungsübereinkommen [Lugano Convention on Forum and Execution]; SchKG = Bundesgesetz über Schuldbeitreibung und Konkurs [Swiss Act on Insolvency and Collection of Debts]; UGB = Unternehmensgesetzbuch [Austrian Commercial Code]; ZPO = Zivilprozeßordnung [Swiss Civil Procedure Code].

** Florian Arensmann is a law student at the University of Osnabrück, Germany, and participated in the 13th Willem C. Vis International Commercial Arbitration Moot with the team of the University of Osnabrück.