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CISG CASE PRESENTATION

Switzerland 17 July 2007 Supreme Court (Kickboards, scooters case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/070717s1.html]

Primary source(s) of information for case presentation: Case text

Case Table of Contents


Case identification

DATE OF DECISION: 20070717 (17 July 2007)

JURISDICTION: Switzerland

TRIBUNAL: Bundesgericht [ = BGer = Supreme Court]

JUDGE(S): Corboz (President), Klett, Kiss

CASE NUMBER/DOCKET NUMBER: 4C.94/2006

CASE NAME: Unavailable

CASE HISTORY: 1st instance Handelsgericht Zürich (HG 010154/U/ei) 24 January 2006; 2d instance Kassationsgericht Zürich 2 April 2007

SELLER'S COUNTRY: Germany (plaintiff)

BUYER'S COUNTRY: Switzerland (defendant)

GOODS INVOLVED: Kickboards, scooters


UNCITRAL case abstract

SWITZERLAND: Federal Court, 17 July 2007 (Kickboards, scooters case)

Case law on UNCITRAL texts [A/CN.9/SER.C/ABSTRACTS/93],
CLOUT abstract no. 936

Reproduced with permission of UNCITRAL

Abstract prepared by Thomas M. Mayer

The case under consideration concerned the sale of scooters, by a company based in Taiwan and in the People's Republic of China, to a firm having its principal place of business in the Canton of Zurich. The seller sought settlement of the sale price for goods whose delivery it had withheld owing to alleged payment arrears on the buyer's part amounting to over US$ 7 million. The buyer stated that it had rescinded the contract, maintaining that, owing to the existence of sizeable claims on its part against the seller, the seller had wrongly retained the goods.

The seller instituted proceedings before the Commercial Court of Zurich, seeking payment of the sale price, plus the balance of the aforementioned US$ 7 million. The court rejected the claim. The Court of Cassation of Zurich and the Federal Court upheld that [judgment].

As justification for the application of the CISG, the Federal Court stated that, during the proceedings, the parties had chosen Swiss law as the applicable law, without precluding the applicability of the CISG, and that they had both subsequently referred to that Convention.

On the merits, the Federal Court observed that the seller had relied on article 71 CISG but without demonstrating the alleged deficiency in the buyer's creditworthiness. It thus had to be concluded that the seller had improperly withheld delivery, which entitled the buyer to declare the contract avoided within the meaning of article 49 CISG.

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Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 49 ; 71

Classification of issues using UNCITRAL classification code numbers:

71A11 [Suspension of performance (apparent that a party will not perform substantial part of obligations): grounds for suspension by other party (serious deficiency in ability to perform or creditworthiness)]

Descriptors: Suspension of performance ; Stoppage in transit

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Editorial remarks

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Citations to other abstracts, case texts and commentaries

CITATIONS TO OTHER ABSTRACTS OF DECISION

English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=1318&step=Abstract>

CITATIONS TO TEXT OF DECISION

Original language German: CISG-online.ch website <http://www.cisg-online.ch/cisg/urteile/1515.pdf>; see also Internet website of the Swiss Supreme Court <http://www.bger.ch> and Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=1318&step=FullText>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

French: Claude Witz, Recueil Dalloz (23 October 2008) 2621-2622

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Case text (English translation)

Queen Mary Case Translation Programme

Swiss Federal Supreme Court (Bundesgericht)

17 July 2007 [4C.94/2006]

Translation [*] by Elisabeth Corcoran [**]

Edited by Institut für ausländisches und internationales
Privat- und Wirtschaftsrecht der Universität Heidelberg
Daniel Nagel, editor
[***]

FACTS OF THE CASE

A. The Plaintiff X.A. (hereafter referred to as [Seller]), seated in Taiwan and in the People's Republic of China, produces kickboards and scooters. It is led by C. The Defendant Y.Z. (hereafter referred to as [Buyer]), seated in D. [Switzerland], deals with the development, trading, granting and acquisition of licenses as well as marketing corresponding systems of individual transportation. It is controlled by A.Y., who is the sole director. The latter further participates in Z.E. Limited (Gesellschaft mit beschränkter Haftung; GmbH) seated in F., Germany.

B. On 24 April 2001 [Seller] (along with a Co-Plaintiff, which then assigned all its claims to [Seller]) brought an action against [Buyer] before the Commercial Court (Handelsgericht) of Zürich claiming the payment of US $7,540,010.20 [U S. dollars] i.e., after the reduction of US $110,376 according to the replication to the amount of US $7,429,634.20 (equivalent to SFR 12,258,995 [Swiss francs]) plus interest for goods it had sold to [Buyer] (kickboards and scooters).

[Buyer] requested that the case be dismissed in its entirety. [Buyer] contested the claims in part and raised counterclaims for set-off (compensation, license contract claim/commission; alleged commission on roughly US $59 million on kickboards and scooters that had been sold by [Seller]).

In its rejoinder of 4 November 2002, [Seller] served a third party notice on Z.E. Limited. Per order of 24 January 2006, the Commercial Court disposed of the [Seller]'s claim to the extent of US $110,376 plus interest. By judgment of the same day, the Court held [Buyer] obligated to pay to [Seller] US $520,951 plus 5% interest since 9 December 2000. The [Seller]'s claim was rejected regarding the remainder.

[Seller] appealed against the judgment of the Commercial Court of 24 January 2006 to the Zürich Cantonal Supreme Court (Kassationsgericht). The Court dismissed the appeal in its decision of 2 April 2007.

C. In its appeal to the Federal Supreme Court Switzerland, the [Seller] seeks to set aside sections VIII.3., VIII.4., and XIII of the judgment appealed against and the approval of its claim in the amount of US $7,357,772 plus 5% interest since 9 December 2000. In eventu, [Seller] requests that sections VIII.3.,VIII.4., and XIII of the judgment appealed against be reversed and that the matter be referred back to the lower instance for a new decision.

[Buyer] seeks the dismissal of [Seller]'s appeal.

In eventu, [Buyer] requests that the matter be referred back to the lower instance.

THE SUPREME COURT CONSIDERS:

1. The Federal Law concerning the Federal Supreme Court of 17 June 2005 (BGG [*]; SR 173.110) took effect on 1 January 2007 (AS 2006 1205, 1243). Since the decision appealed against was issued beforehand, the proceedings still fall under the Swiss Law of Obligations (Obligationenrecht; OR [*]) (Art. 132(1) BGG).

2. The letter of appeal must contain an exact indication of the points of the decision that are being contested and of the requested amendments (Art. 55(1)(b) of the Swiss Law of Obligations (Obligationenrecht; OR)). It must refer to the operative part of the decision appealed against. Requests for mere alterations of considerations will not be considered (BGE [*]103 II 155 E. 2 p.159 et seq.).

[Seller] requests the reversal of considerations under Sections VIII.3, VIII.4, and XIII. [Seller] hereby objects to the motivation of the judgment of the Commercial Court and not to the operative part. However, the reasons for the appeal and the substantive application for approval of the claim for the amount of US $7,357,773 clearly states in what way the appeal is directed against section I.2 of the operative part of the Commercial Court's judgment (dismissal of the claim for the remainder). This is sufficient. Therefore, the wording of the motion of appeal does not prevent the Court from considering the appeal.

3. 3.1 According to Art. 55(1)(c) of the Swiss Law of Obligations (Obligationenrecht; OR):

     [Seller] needs to specify which Swiss federal regulations [Seller] are deemed violated by the ruling of the lower instance and specifically how the ruling infringes the relevant legal provisions.

     The exact articles do not have to be stated if the allegations clarify which rules of the Swiss Private Law the lower instance is said to have violated (BGE [*] 130 III 102 E. 2a p. 400). However, it is essential that the appeal considers the reasons for the decision appealed against and states in detail in what way Swiss federal law has been violated (BGE 116 II 745 E. 3 p. 749). The Federal Supreme Court does not consider appeals that lack the necessary substantiation (BGE 105 II 308 E. 2.2. p. 106).

     3.2 In the appellate proceedings, the Federal Supreme Court is bound by the findings of the lower instance and has to base its decision on these unless there is an obvious error, a violation of federal provisions for the taking of evidence or the need to supplement due to insufficient clarification or an incorrect application of the law by the Cantonal Supreme Court, even though the crucial allegations and motions for the admission of evidence have been submitted in due time and form (see Arts. 63 and 64 of the Swiss Law of Obligations (Obligationsrecht; OR); BGE 130 III 102 E. 2.2 p. 106; 127 III 248 E. 2c p. 252). The party that wishes to have the facts of the case amended must state this clearly with reference to the respective files (Art. 55(1)(d) OR; BGE 130 III 102 E. 2.2 p. 106; 115 II 484 E. 2a p. 485 et seq.). The Court will not consider statements that are directed against the actual findings or against the evaluation of evidence of the lower instance in an inadmissible way (BGE 127 III 543 E. 2c p. 547; 127 III 73 E. 6a p. 81).

4. The lower instance noted that during the proceedings, the parties had agreed on Swiss law. As Switzerland was a Contracting State of the United Nations Convention on Contracts for the International Sale of Goods of 11 April 1980 (hereafter referred to as CISG) and the application of the CISG had not been excluded, it was applicable. Both parties have referred to the CISG; the Court approves.

5. [Seller]'s first allegation is directed against the dismissal of its claim for US $536,640. In this context, [Seller] accuses the lower instance of an incorrect application of principles of the CISG.

     5.1 Article 71 CISG states:

"(1) 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) a serious deficiency in his ability to perform or in his creditworthiness; or
(b) his conduct in preparing to perform or in performing the contract.

(2) If the seller has already dispatched the goods before the grounds described in the preceding paragraph become evident, he may prevent the handing over of the goods to the buyer even though the buyer holds a document which entitles him to obtain them. The present paragraph relates only to the rights in the goods as between the buyer and the seller.

(3) A party suspending performance, whether before or after dispatch of the goods, must immediately give notice of the suspension to the other party and must continue with performance if the other party provides adequate assurance of his performance."

     5.2 Regarding the purchase price claim for US $536,640, the lower instance held that [Seller] had interrupted the delivery of the goods for which it demanded this amount. [Seller] had invoked its right to suspend performance of its obligation according to Article 71 CISG (after originally enforcing the right of retention) and had alleged that its credit balance had amounted to US $7,429,634 in December 2000. According to [Seller], for several months [Buyer] had failed to pay due claims amounting to millions, from which [Seller] deduced the right to stop the containers. In [Seller]'s opinion, the party obliged to perform in advance has the right to suspend performance, according to the CISG, if the performance of a contract is endangered. The offered credit had not constituted an adequate guarantee for the payment of the purchase price.

[Buyer], in contrast, had disputed the [Seller]'s right to suspend performance (and the right of retention), arguing that [Seller] had acted in breach of contract by withholding the containers. [Buyer] had allegedly declared to repudiate the contract and resign from further delivery, or the taking of these goods, respectively.

[Buyer] had argued that [Seller] had known that the credit from the license contract was much higher than the unpaid invoices for the delivery of the goods. According to [Buyer], there was no reason for [Seller] not to perform in advance. [Buyer] had even proposed to open a letter of credit for a container, which [Seller] had refused. In doing so, [Seller] had acted in breach of contract and had failed to perform on time, according to [Buyer].

The lower instance considered that, if the conditions according to Article 71 CISG were fulfilled, the vending party did not act in breach of contract if it stopped delivery during transport. The purchasing party, however, remained obliged to perform.

If, on the other hand, the requirements for such a right of stoppage in transitu were not fulfilled, the vending party acted in breach of contract by not handing over the documents of title to goods, though being obliged to do so. In this case the purchasing party was entitled to withdraw from the contract. Furthermore, [Seller] had not distinguished between the claims against [Buyer] and against Z.E. Limited. The requirements for deficiency in creditworthiness were only fulfilled if there were serious defects regarding the financial demands the contract imposed on [Buyer]. Due to the lack of detail in [Seller]'s statement, the court was unable to assess whether such a serious defect in the ability to pay on behalf of [Buyer] regarding the several purchase contracts was at hand. Furthermore, a deterioration of the financial situation in comparison to the conclusion of the contract was authoritative. If the vending party knew that the solvency was poor prior to the conclusion of the contract and the solvency had not deteriorated since then, it was not entitled to stop the goods. Moreover, due to the lack of detail in [Seller]'s statement, the Court was unable to assess whether after the conclusion of the contract it turned out that due to a serious defect of creditworthiness [Buyer] had not performed a substantial part of its contractual obligation.

The lower instance dismissed the claim for US $536,640 due to insufficient substantiation of the requirements for a claim.

     5.3 It is true that [Seller] formally asserts a misapplication of Article 71 CISG. However, [Seller] does not claim that the lower instance had considered inappropriate requirements for the application of the right of stoppage in transitu according to Article 71 CISG.

In contrast to the reasoning of the lower instance, [Seller] alleges in its appeal that it had fulfilled its obligation to substantiate. The obligation of a party to substantiate its statement not only means to state the main features of the facts but also to state them in such a comprehensive way that will allow the taking of evidence.

Hereby, the federal law provides for the extent the facts of the case are to be substantiated in order to be subsumed under the provision of substantive law (BGE [*] 108 II 337 E. 2b p. 339; since then BGE 133 III 153 E. 3.3 p. 162; 127 III 365 E. 2b p. 368; 123 III 183 E. 3e p. 187 et seq.).

In the present case, it is of no advantage to [Seller] to point out that it had given a long statement about its claim for US $536,640 in its legal submissions. The decisive factor is whether [Seller] has sufficiently substantiated its claim regarding the main elements of [Buyer]'s creditworthiness after the conclusion of the contract regarding the respective contracts. The lower instance did not consider this to be the case, and [Seller] does not sufficiently substantiate the opposite in its appeal. Therefore, the dismissal of the claim for US $536,640 does not constitute a violation of federal law.

6. [Seller]'s second allegation is directed against the dismissal of claims for US $2,218,601 for goods that were delivered to Z.E. Limited. It alleges, in particular, a violation of the principle of confidence.

     6.1 The lower instance held in this respect that [Seller] had alleged that [Buyer] should pay for the claims against Z.E. Limited. Furthermore, A.Y. had possessed the sole authority to sign documents as director or manager, respectively, holding a share of 60% in Z.E. Limited. [Seller] had deduced an acknowledgement of the debt on behalf of [Buyer] for the debt of Z.E. Limited from an e-mail by G.Y. (wife of A.Y.). The e-mail of 25 September 2000 from G.Y. to H. (of [Seller]) reads [Translator's note: The e-mail is presented in its original version as it has been sent in English.]:

"Payments for Z.E. ___ GmbH all orders shipped to Z.E. ___ GmbH will be paid directly by them. Z.E. ___ GmbH is a separate company, belonging to Y.Z. ___ but because of tax reasons they have to make their own payments. If you still have outstanding payments which you mentioned in your email dated 09/19 please send me the payment list for Z.E. ___ GmbH and I will make sure the payments are done."

Regarding the question whether this e-mail could be regarded as an acknowledgement of debt on behalf of [Buyer] for the debt of Z.E. Limited, the lower instance considered that a natural consensus would not exist. Even with respect to the principle of confidence, the lower instance came to a negative conclusion. G.Y. had explicitly pointed to the fact that the German company had to pay for this delivery of goods. She had not said that she offered to assume the debt of the Z.E. Limited in the name of [Buyer]. The content of the e-mail was to be understood according to the principle of good faith, namely, that G.Y. had promised to remind Z.E. Limited to meet its obligation. In an acknowledgement of debt, the debtor admits to the creditor that it owes a claim amounting to a specific amount in the name of a specific company. A corresponding statement had not been made. Since it had been Z.E. Limited that had ordered the goods, there had been no reason for [Buyer] to guarantee this outside debt.

Moreover, G.Y. had pointed to tax planning. According to her statement it had been authoritative that the German company effected the payment. Furthermore, it was unknown which delivery of goods and which amount the promise to pay was referring to. Therefore, sufficient grounds for [Seller]'s claim were missing.

     6.2 [Seller]'s allegation does not meet the requirements for an appeal in this respect. [Seller] argues, the lower instance had violated federal law by "having misapplied general rules of interpretation of the General Part of the Swiss Law of Obligation and of the CISG, in particular the principle of confidence of Article 2 of the Swiss Civil Code (Zivilgesetzbuch ZGB), which states that the parties' manifestation of will, including [Buyer]'s manifestation of will, must be interpreted in the way the recipient, in this case [Seller], could and should have understood it in good faith.

Therefore, it can only be inferred from this with sufficient certainty that [Seller] wishes to argue that there was a violation of the principle of confidence. However, [Seller] refers to numerous purported facts of the case which have actually not been ascertained by the lower instance, without applying for an exception from the federal law obligation to the facts of the case according to Article 63(2) and Article 64 of the Swiss Law of Obligations (Obligationsrecht; OR); [Seller] argues that only the e-mail of 25 September 2000 had been "singled out" and points to further circumstances that arose from the legal arguments, notably the surrejoinder, which indicated that up to the rejoinder [Buyer] had not refused liability for the claims against Z.E. Limited. These further circumstances, however, cannot be seen from the lower instance's findings and, hence, cannot be taken into account by the Federal Court (see 3.2.). The lower instance's interpretation of the e-mail of G.Y. of 25 September 2000 cannot be objected to by the rules of federal law. It cannot be deduced in good faith that [Buyer] made an acknowledgement of a debt for claims against Z.E. Limited.

     6.3 Furthermore, in [Seller]'s opinion, the lower instance had wrongfully not taken [Buyer]'s conduct into consideration. [Buyer] had "muddled and confused" claims against [Buyer] and Z.E. Limited in particular regarding claims for set-off and had not denied liability for claims against Z.E. Limited prior to the rejoinder. Thereby, [Seller] alleges that [Buyer] had abused rights according to Article 2 of the Swiss Civil Code (ZGB).

Article 2(2) does not grant legal protection for evident abuse of law. The presence of an abuse always depends on the circumstances of the particular case (BGE [*] 129 III 493 E. 5.1 p. 497; 121 III 60 E. 3d p. 63).

The leading doctrine and jurisprudence have accepted a group of examples which show an evident abuse of law. For example, an abuse of law is assumed with respect to contradictory behavior or the misuse of a right (see Honsell, Basler Kommentar [Basel commentary], N. 37 et seq. to Art. 2 ZGB [*]; Merz, Bern Kommentar [Bern commentary], N. 340 et seq. and N. 400 et seq. to Art. 2 ZGB; Hausheer/Jaun, Die Einleitungsartikel des ZGB [The introductory articles of the CISG], Bern 2003, p. 150 et seq.). It has not been ascertained whether [Seller] had already raised the accusation of abuse of law before the Commercial Court. It is unclear which example [Seller] is referring to; the most likely seems to be "contradictory behavior." However, [Seller] is unable to disclose an evident abuse of law by [Buyer] in its statement. The accusation is not tenable, especially as it was admissible to object to the claims against Z.E. Limited in the rejoinder.

     6.4 The appeal hence has to be dismissed as well in this respect.

7. [Seller] finally argues against the approval of a set-off claim by [Buyer] for commissions in the amount of US $4,081,580. [Seller] accuses the lower instance of a breach of the legal rule of burden of proof according to Article 8 Swiss Law of Obligations (Obligationsrecht; OR), and states that there possibly was "a violation of the general rules of interpretation of the opening articles of the Swiss Law of Obligations, in particular the principles of confidence according to Article 2 Swiss Law of Obligations."

     7.1 The lower instance held in this respect that at the beginning of 2000 the parties had undisputedly agreed that [Seller] could also distribute scooter model L. in Europe, for which [Seller] was to pay a remuneration to [Buyer]. The extent of this remuneration (commission) was disputed. According to [Buyer], 20% of the retail price FOB Hong Kong had been agreed upon, as had been the rule for [Seller]'s distribution of the remainder of the scooters. According to [Seller], it had been agreed to charge the commission of 20% calculated from [Seller]'s profit margin.

The lower instance took evidence with respect to the content of the agreement as regards the basis of calculation for the commission; the lower instance heard witnesses A.Y. and C. and the interpreter. The lower instance came to the conclusion that the rate of commission was undisputedly 20%, however, neither A.Y. nor C. had given a concrete statement regarding the basis of calculation for the commission at their meeting in Atlanta. Therefore, no concurrent manifestations of will regarding the basis of calculation for commission could be established. On the other hand, it could not be assumed that the parties had left the basis of calculation undecided and had not made a statement in this matter, since statements about a commission were pointless as long as they only included the rate and not the basis of calculation. Therefore, it could be assumed that both parties had assumed that their statement had implied the basis of calculation. However, the inherent intention of the parties had not been in conformity. Therefore, the principle of confidence had to be applied. As a result, the lower instance came to the conclusion that the parties' statements had to be understood according to the principle of good faith, namely, that the commission was to be calculated on the basis of the retail price. An indication of this was that due to a statement of accounts of 7 March 2000 it had to be assumed that, according to X.B. Limited, represented by C., in the case of distribution in England and Ireland the commission should be calculated on the basis of the retail price and not on the basis of profit. Therefore, it seems obvious that the agreement of Atlanta should be understood in the same manner, if not explicitly stated otherwise.

The latter had not been expressed according to the evidence. Furthermore, profit licenses were uncommon in practice. The reason was most probably that the retail price could be objectively ascertained, while the profit of the distributor was not only difficult to measure but, ultimately, may be easily influenced by the distributor, therefore, rendering the opposite party dependent on the arbitrariness of the distributor. Hence, a basis of calculation on profit could only be inferred by way of exception if particular circumstances pointed to this. However, such circumstances were not apparent in the case at hand.

     7.2 [Seller]'s allegation does again not meet the requirements of an appeal (see E. 3.1 above). For the main part, [Seller] presents the same statements as in its Cantonal nullity appeal and combines in an improper way reasons for nullity and for appeal. [Seller] repeatedly states that the judgment of the lower instance was "clearly erroneous" or "incorrect" and expresses general criticism, however, fails to indicate any violation of federal law. [Seller] partly appeals against actual findings of the lower court without asserting an exception of the fact that the federal court is bound to the facts of the case as ascertained by the lower instance (Art. 63 Abs. 2 and 64 OR [*]). The Court cannot consider this matter.

     7.3 In as far as a sufficiently substantiated reproof of a violation of federal law has been apparent, it fails. [Seller] wrongfully accuses the lower instance of having violated the legal rule of burden of proof according to Article 8 ZGB [*]. The lower instance imposed the burden of proof with respect to [Buyer]'s alleged true intention on [Buyer]. The latter was unable to produce this evidence. [Seller] was also unable to prove its alleged statement. Therefore, the lower instance came to the conclusion that no truly concurrent manifestation of will could be detected and interpreted the agreement according to the principle of confidence. This procedure is correct (BGE [*] 132 III 24 E. 4 p. 27 f., 626 E. 3.1 p. 632; 131 III 606 E. 4.1 p. 611; 130 III 66 E. 3.2 S. 71, 417 E. 3.2 p. 424; 129 III 118 E. 2.5 p. 122, 702 E. 2.4 p. 707, with respective indications).

It is incomprehensible what [Seller] intends to achieve through its allegation that the lower instance should have assumed a "hidden lack of agreement". Assuming a normative obligation actually implies this (BGE 123 III 35 E. 2b p. 39 f. and E. 2c/bb p. 44; Gauch/Schluep/Schmid/Rey, Schweizerisches Obligationenrecht [Swiss Law of Obligations], Allgemeiner Teil [General part], Volume I, 8. Ed., Zürich/Basel/ Genf 2003, Rz. 328 and Rz. 315 et seq.). It is therefore correct, to interpret according to the principle of confidence regarding the basis of calculation and to identify a normative consensus. The fact that the lower instance came to the conclusion that based on the principle of confidence the respective statements indicated that the commission was to be calculated on the basis of the retail price, does not violate federal law.

It is true that [Seller] alleges a violation of the principle of confidence of Article 2 ZGB [*], however, [Seller] fails to present relevant explanations that would demand a different evaluation. [Seller] claims that the particular circumstance -- as requested by the lower instance for the existence of an agreement -- would be "obvious": it would be "abstruse" to assume that C. had agreed to a provision of US $6.30 in a binding way, although the profit margin had only amounted to US $6.09. The alleged profit margin has not been ascertained by the lower instance and a claim has not been raised in this respect. Therefore, the allegation cannot be considered and the interpretation of the lower instance is upheld. There is no violation of the principle of confidence.

     7.4 The lower instance held with respect to the dispute whether the commission rate of 20% had been reduced to 10%, that [Seller] had alleged that the rate had been reduced to 10% starting from 1 July 2000 according to a letter of 30 June 2000 from H. to A.Y [Translator's note: The letter is presented in its original version as it was sent in English.]:

"Therefore, we would like to advise you that from 1st of July, we would like to reduce the commissions of L. ___ from 20% to 10%".

[Buyer] had neither orally nor verbally objected to this letter. It had therefore accepted the reduction, in [Seller]'s opinion. The lower instance held that silence did not necessarily imply an approval in every case. According to Article 6 OR, a contract only came into existence tacitly if due to the specific nature of the arrangement or due to the circumstances an explicit consent was not to be expected. The occurrence of such circumstances had not been presented by [Seller]. Therefore, regarding the reduction of the commission, only the one-sided request by [Seller] had been present without an affirmation from [Buyer] and, therefore, no mutual agreement. The lower instance furthermore noted that at this point it could not be geared to the statements of witness C, who stated that regarding the endorsement no mutual agreement but only a one-sided proposal had existed, could not be treated as the determining factor. This statement was contradictory to [Seller]'s own presentation of the facts, in which [Seller] had reported an agreement of a commission and/or an agreement of the parties. Therefore, it could not be assumed that [Seller] had made a one-sided promise to voluntarily perform that [Seller] could have withdrawn from.

     7.5 [Seller]'s argument against this statement of the lower instance is an inadmissible criticism of the evaluation of evidence and does not demonstrate a violation of Article 8 ZGB [*]. [Seller] describes the assumption of the lower instance that the failed reaction of [Buyer] to the letter of 30 June 2000 could not be regarded as a consent, as "absurd". [Seller] again builds its criticism on facts which have not been ascertained and does not substantiate a violation of federal law. Hence, the Court cannot consider this matter.

     7.6 Furthermore, [Seller] claims a violation of the right to give evidence according to Article 8 ZGB. [Seller] had argued repeatedly that a commission for the benefit of Y.Z. of 20% of the retail price FOB Hong Kong would have been "absurd and meaningless". According to [Seller], the lower instance did not look further into this allegation or [Seller]'s offer of proof. As a correlative to the burden of proof, the Federal Court deduces from Article 8 ZGB [*] in particular the right of the party on which the burden of proof is imposed to be permitted to produce evidence in this respect, in as far as according applications are filed in due time and form in the Cantonal procedure.

The federal right to the hearing of evidence is applicable to legally relevant facts and, in particular, does not exclude an anticipated evaluation of evidence. (BGE [*] 126 III 315 E. 4a p. 317; 122 III 219 E. 3c p. 223, with respective indications). In the present case it is questionable whether the allegation that a commission for the benefit of Y.Z. of 20% would have been "abstruse and meaningless" constitutes a legally relevant fact that is accessible for proof.

[Seller] does not state in its letter of appeal which motion for the admission of evidence [Seller] had made in the Cantonal procedure in due time and form, which the lower instance had allegedly disregarded. [Seller] merely refers to its submission of evidence on 29 January 2004, p. 18. The witnesses applied for were heard by the lower instance (Judgment p. 39; transcript p. 76 et seq. and 91 et seq.). [Seller]'s representative was able to ask supplementary questions. A violation of Article 8 ZGB [*] cannot be detected. Moreover [Seller] mixes the claim of a violation of Cantonal rules of evidence and of Article 8 ZGB in an inadmissible way. The Court will not consider the matter any further.

     7.7 As a conclusion to this, the Court cannot confirm the third of [Seller]'s allegations, in as far as [Seller]'s largely insufficiently substantiated claims can be considered at all. The lower instance has thus correctly affirmed [Buyer]'s amount claimed for set-off for commission US $4,081,580.

8. The appeal has to be dismissed. [Seller] is hence liable to pay the costs and compensation (Art. 156(1) and Art. 159(2) OR [*]).

DECISION

The Federal Supreme Court's decision:

   (1)   The appeal is dismissed;
   (2)   The court costs are fixed at SFR 25,000 and are to be borne by the plaintiff [Seller];
   (3)   [Seller] has to compensate [Buyer] for the federal proceedings with Swiss francs 30,000;
   (4)   This decision will be communicated to the parties and the Commercial Court of the Canton of Zürich in writing.

FOOTNOTES

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

Translator's note on abbreviations: BGE = Bundesgerichtsentscheid [Decisions of the Swiss Federal Supreme Court]; BGG = Bundesgerichtsgesetz [Swiss Federal Court Act]; OR = Obligationenrecht [Swiss Law of Obligations]; ZGB = Zivilgesetzbuch [Swiss Civil Code]; ZPO = Zivilprozessordnung [Swiss Code on Civil Procedure].

** Elisabeth Corcoran has been a student at Humboldt University, Berlin, since 1999. She has been a guest student at Oxford Brooks University, England, and Universitá degli, Studi, Florence.

*** Ph.D. candidate Daniel Nagel has studied law at the University of Heidelberg and at the University of Leeds.

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Pace Law School Institute of International Commercial Law - Last updated October 22, 2010
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