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CISG CASE PRESENTATION

Germany 5 March 2008 Appellate Court München (Stolen car case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/080305g1.html]

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

Case Table of Contents


Case identification

DATE OF DECISION: 20080305 (5 March 2008)

JURISDICTION: Germany

TRIBUNAL: OLG München [OLG = Oberlandesgericht = Provincial Appellate Court]

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: Unavailable

CASE NAME: German case citations do not identify parties to proceedings

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Germany (defendant)

BUYER'S COUNTRY: Itlay (plaintiff)

GOODS INVOLVED: Stolen car


UNCITRAL case abstract

GERMANY: Oberlandesgericht München 05 March 2008

Case law on UNCITRAL texts [A/CN.9/SER.C/ABSTRACTS/128],
CLOUT abstract no. 1233

Reproduced with permission of UNCITRAL

Abstract prepared by Ulrich Magnus and Jan Lüsing

The decision of the Higher Regional Court of Munich clarifies the requirements for the exemption provided for in article 79 CISG and emphasises the restrictive interpretation of the article.

The plaintiff, an Italian commercial car dealer, resold a car, previously bought from the defendant, a German commercial car dealer, to an Italian client. However, the car turned out to be stolen and was seized and returned to its rightful owner by the Italian police. The Italian final customer declared the contract avoided and the plaintiff had to pay back the purchase price.

The Italian car dealer sued the German seller for damages on the grounds of non-performance of the obligation to transfer the property, demanding restitution of the purchase price, compensation for the loss of profit, and reimbursement of the attorney’s fees. The defendant relied on the exemption rule under article 79 CISG, stating that it had ascertained that the car had not been stolen by inquiring at the motor vehicle registration office.

While on first instance the Regional Court dismissed the action, the Higher Regional Court reversed the decision upholding the plaintiff’s claim. The Court stated that article 79 CISG does not shift the burden of contractual risks. The liability of the seller derives from its obligation to deliver goods according to the contract and to transfer the property in the goods. The exemption from the consequences of non-performance under article 79 CISG is possible only if the impediment is beyond the seller’s control; further the concept of seller’s liability must be given an extensive interpretation. In the case at hand, the court found that the seller’s lack of ability to transfer the property was not due to circumstances beyond its control. The court held that the seller’s enquiries to the registration office were no reason for an exemption under article 79 CISG and that the seller had failed to prove that “[it] could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it or its consequences”. Instead, several circumstances should have alerted the seller as to the origin of the car.

For this reason the court granted the buyer damages pursuant to articles 45(1)(b), and 74 CISG, “which comprises lost profit but does not exceed the loss which the party in breach foresaw or ought to have foreseen at the time of the conclusion of the contract”.

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IHR headnote

Reproduced from Internationales Handelsrecht (6/2008) 254

"1. The buyer -- a used car salesman with its seat in Italy -- may claim damages, including lost profits, from the German seller under Arts. 45(1)(b), 74, if a car which was stolen in Germany is sold on to a third party acting in good faith and the car is later confiscated by the Italian authorities, causing the third party to demand repayment of the purchase price.

"2. The seller cannot escape liability under Art. 79 CISG by claiming to have acted in good faith when purchasing the car. The acts of the persons employed to purchase the car are to be attributed to him.

"3. If the third party who gained title to the car in good faith according to Italian law, rescinded the contract after the confiscation of the car and demanded repayment of the purchase price even though the third party was unable to return the car due to the confiscation, the buyer has a claim for damages against the seller."

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Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 4 ; 74 ; 79 [Also cited: Articles 30 ; 45 ]

Classification of issues using UNCITRAL classification code numbers:

4B2 [Scope of Convention (issues excluded): effect of contract on property];

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

79B [Impediments excusing party from liability for damages]

Descriptors: Scope of Convention ; Property in the goods ;Damages ; Exemptions or impediments

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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=1342&step=Abstract>

CITATIONS TO TEXT OF DECISION

Original language (German): CISG-online.ch website <http://www.cisg-online.ch/cisg/urteile/1686.pdf>; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=1342&step=FullText>; Internationales Handelsrecht (6/2008) 253-258

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation)

Appellate Court (Oberlandesgericht) München

5 March 2008 [7 U 4969/06]

Translation [*] by Institut für ausländisches und internationales
Privat- und Wirtschaftsrecht der Universität Heidelberg

Daniel Nagel [**]

JUDGMENT

  1. The [Buyer]'s appeal is honored. The judgment of the District Court of Munich is changed to "The [Seller] has to pay EUR 42,500 plus 8% interest above the base interest rate since 4 April 2006, Furthermore it has to pay EUR 653,10 due to pre-procedural attorneys' fees of the [Buyer]."

    The appeal is dismissed and the dismissal of the claim is upheld for the remainder.

  2. The [Buyer] has to bear 14% and the [Seller] 86% of the costs of the proceedings.

  3. The judgment is provisionally enforceable. The [Seller] is entitled to prevent enforcement by depositing 110% of the amount to be enforced as a security payment, if the [Buyer] does not provide security in the same amount.

  4. Further appeal (Revision) is not admitted.

FACTS

The [Buyer] claims damages in the amount of EUR 49,000.00 due to the non-performance of a contract for the sale of a used car.

The parties, who are both professional car dealers, have had a long-term business relationship.

At the beginning of August 2004, the [Seller] was informed by the befriended Car Dealer S that a Mr. R.S. was willing to sell a car, type T R 5. The [Seller] showed interest, whereUPON Car Dealer S bought the car -- which had been offered within the District F, which was unknown to the [Seller] -- on behalf of the [Seller] on the very same day via contract of 3 August 2008 (compare appendix B1). On the same day, Car Dealer S delivered the car from F to the [Seller] in M and handed over the vehicle registration document upon request. The [Seller] had the vehicle registration document checked by the local police station and the registration office on the following day. The [Seller] approved of the sale and paid the purchase price of EUR 37,000 to Car Dealer S after the local police station had declared that the car was alright.

The [Seller] offered the car to the [Buyer], who is domiciled in Italy, on 8 September 2004 at a price of EUR 41,500. He applied for an export license plate at the registration office on the same day. The re-check whether the car had been stolen was negative. The [Buyer] picked up the export license plate and took the car to Italy on the very same day. On the occasion of a further visit of the [Buyer] to the [Seller] in M on 22 September 2004, a written contract, which is attached to the written submission of the [Buyer] of 29 October 2006, was concluded for the said car. The date was predated as being 29 October 2004.

The Italian police took possession of the car on 19 November 2004, after it turned out that the car had been stolen by an unknown thief between 24 and 27 July 2004 from branch V of Car Dealer K. The car has been handed back to its owner in the meantime.

POSITION OF THE PARTIES IN THE COURT OF FIRST INSTANCE

[Buyer]'s position

The [Buyer] alleged during the proceedings before the Court of First Instance that it had sold the car on 18 November 2004 to Customer B. In a letter of 22 November 2004, Customer B declared the avoidance of the contract after the car had been taken possession of by the Italian police on 19 November 2004. The [Buyer] had returned both the cheque, which had been handed over by Customer B and which had not been cashed, and the car Customer B had traded in, which had been estimated at EUR 8,000. The [Buyer] alleged that the [Seller] had breached its contractual obligations and was liable under CISG to pay damages and to reimburse lost profit and attorneys' fees in the amount of EUR 699.90.

[Buyer] requested that the [Seller] be held liable to pay EUR 49,699.90 plus 8% interest above the base interest rate in respect to EUR 49,000 since 5 August 2005.

[Seller]'s position

The [Seller] requested the dismissal of the claim.

It alleged that it had acquired the car in a bona fide manner due to the number of checks it had initiated in respect to the origin of the car and due to the fact that the vehicle registration document had been a forgery printed on original documents. Hence, property had effectively been transferred to the [Buyer]. Thus, it had fulfilled its contractual obligation, wherefore the [Buyer] would not be entitled to claim damages.

JUDGMENT OF THE COURT OF FIRST INSTANCE

The Court of First Instance, which took notice of the inquiries of the public prosecutor Wuppertal (reference number 50 Js 2980/05) in respect to the theft of the car, dismissed the [Buyer]'s claim. It is true that it held that the [Seller] had not transferred property of the car to the [Buyer]. However, it held that the [Seller], who was generally liable to pay damages according to Article 45(1)(c) CISG in conjunction with Article 74 et seq. CISG, was exempt from liability according to Article 79(1) CISG, as the requirements of this provision -- which has to be interpreted in a very restrictive way -- had been met. The [Seller] had successfully proven that the breach of contract had been due to an impediment beyond his control and that it could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it or its consequences. The [Seller] had made sure both at the time of the purchase and at the time of the sale of the car that the car had been alright. It had thus done everything necessary to meet its obligations to inquire and to fulfil its contractual obligations. Therefore, it was justified to assume an exception of the liability -- which according to the CISG was generally guaranteed irrespective of the fault of the seller.

Appellate position of the [Buyer]

The [Buyer] appealed against the judgment of the Court of First Instance. It alleges that the Court of First Instance had erroneously assumed that the requirements of Article 79 CISG had been met. The [Seller] would have had to have doubts in respect to the origin of the car due to different circumstances. The fact that the [Seller] would have had doubts could already be inferred from the fact that it had initiated inquiries. In addition, the negligence of Car Dealer S could be attributed to the [Seller]. It would be obvious on the basis of the witness statements of Car Dealer S in the course of the inquiries of the public prosecutor, that the former should have had doubts in respect to the origin of the car and the trustworthiness of the seller. Article 79 CISG would only be applicable in respect to restricted exceptions, which wERE not present. The [Seller] would have failed to fulfil its obligation to transfer property to the [Buyer]. Hence, it would be liable to pay damages according to the provisions of the CISG.

The [Buyer] requests that the judgment of the Court of First Instance of 4 June 2006 (case docket number 10 HK O 5700/06) be revoked and the [Seller] be ordered to pay EUR 49,699.90 plus 8% interest above the base interest rate since 5 August 2005.

Appellate position of the [Seller]

The [Seller] requests the dismissal of the appeal.

The [Seller] alleges that the Court of First Instance rightfully dismissed the claim. The Court of First Instance rightfully assumed that Article 79 CISG had to be interpreted in a very restrictive way and that the respective requirements had been met. The [Seller] further alleges that there would not have been any reason to doubt Car Dealer S, that it would not have been aware of the circumstances of the sales contract between Car Dealer S and the initial seller as well as that these circumstances would not have cast any doubt on the origin of the car. In addition, the [Buyer] itself would have been aware of some circumstances in respect to the purchase, e.g., that the key had initially been missing.

Appellate proceedings

The Appellate Court discussed the factual and legal basis for this case with both parties during the oral hearings on 28 February 2007 and hinted to the fact that Italian law would be decisive in respect to the resale of the car by the [Buyer] in Italy as well as to the respective reverse transaction and the claim for damages. In particular, it was discussed whether Customer B might have acquired property in a bona fide manner according to Italian law (Codice civile), whether he was entitled to declare the contract avoided and whether the [Buyer] was thus obliged to accept the reverse transaction and could hence recover the damages from the [Seller].

The parties were given the chance to comment on the aforementioned hint. Reference is made to the written submission of the attorney of the [Buyer] of 18 April 2007 (compare p. 83/86). The Appellate Court passed a decision in respect to evidence on 16 May 2007 (compare p. 90/91 of the appendix) and obtained an expert opinion from expert witness Prof. Dr. K on the basis of the submissions of the parties and the submitted appendices in respect to Italian law and jurisdiction. The expert witness was asked to comment on the questions stated in the decision in respect to Italian law.

The expert witness submitted HIs expert opinion on 10 December 2007 (compare p. 110/131 of the appendix). This opinion has been extensively discussed during the oral hearings of 5 March 2008. The file on the inquiries of the Public Prosecutor Wuppertal (reference 50 Js 2980/05) has been introduced into the oral hearings before the Appellate Court as well.

Reference is made to the protocols of the oral hearings of the Court of First Instance and of the Appellate Court. In addition, reference is made to the written submissions of the parties plus the respective appendices, to the file on the inquiries of the public prosecutor Wuppertal (reference 50 Js 2980/05) and -- in particular -- to the expert opinion of expert witness Prof. Dr. K. of 10 December 2007 (compare p. 110/131 of the appendix).

REASONING

The appeal of the [Buyer] is admissible and partially justified. The [Buyer] is entitled to claim damages from the [Seller] in the amount of EUR 42,500 according to ArticleS 45(1)(b), 74 CISG in conjunction with § 287 ZPO [*]. The [Buyer] is not entitled to claim further damages. Hence the appeal had to be dismissed and the dismissal of the claim had to be upheld in this respect.

The Court of First Instance rightfully assumed that the Convention on Contracts for the International Sale of Goods is applicable to the present case. The liability of the [Seller] has to be assessed according to the provisions of the CISG, as this Convention has to be applied according to its Article 1 to contracts of sale of goods between parties whose places of business are in different States when the States are Contracting States, as in the present case.

The [Buyer] is entitled to claim EUR 42,500 according to Articles 45(1)(b), 30, 74 CISG in conjunction with § 287 ZPO.

According to Article 45(1)(b) CISG, the buyer is entitled to claim damages according to Articles 74 to 77 CISG if the seller fails to perform any of his obligations under the contract or the Convention. According to the written contract, which has been predated to 29 October 2004, but which has been actually concluded on 8 September 2004 or 22 September 2004, respectively, the [Seller] sold and handed over a used car type T R 5, chassis number … The [Seller] handed over the said car to the [Buyer] in M. The [Buyer] paid the purchase price and transported the car to Italy. It turned out afterwards that the car had been stolen prior to the sale. The car was taken possession of by Italian authorities on 19 November 2004 and handed back to the initial owner (compare page 103, 106 of the file of the Public Prosecutor Wuppertal, 50 Js 2980/05).

Due to the contract the [Seller] was obliged to transfer property of the sold goods to the [Buyer] according to Article 30 CISG.

However, the [Seller] failed to fulfil this contractual obligation. [Seller] failed to transfer property, as the car had been stolen and as it is impossible to obtain property of stolen goods in a bona fide manner according to § 935(1) BGB [*]. According to Article 4(b) CISG in conjunction with Article 43, 28 EGBGB, [*] German property law has to be applied in respect to the transfer of property. The lex rei sitae is decisive in respect to the transfer of property, in particular, in respect to the requirements of an effective transfer. Hence, the question on whether it was possible to effectively transfer property of the car has to be assessed according to German law in the present case (cf. Schlechtriem, Kommentar zum Einheitlichen UN-Kaufrecht -- CISG -- , 4th edition, Article 4, margin numbers 29, 30).

Therefore, it was impossible for the [Seller], who did not own the car -- even though it acted in a bona fide manner as well -- to transfer property to the [Buyer] according to § 935(1) BGB.

As a conclusion to this, according to Article 45(1)(b) CISG, the [Buyer] is generally entitled to claim damages, which additionally comprises loss of profit, according to Article 74 CISG. The claim for damages according to Article 45(1)(b) is based on the principle that the seller has to guarantee for the fulfilment of his performances de lege lata. Hence, the liability does not depend on fault or explicit guarantees (Schlechtriem, Kommentar zum Einheitlichen UN-Kaufrecht -- CISG -- , 4th edition, Article 45, margin number 23, with further references).

Contrary to the assumptions of the Court of First Instance, the claim for damages is not precluded according to Article 79(1), as in due consideration of the circumstances of the present case the breach of contract has not been due to an impediment beyond the control of the [Seller] nor could it not have reasonably been expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it or its consequences.

First of all, it has to be stated that the exemption of Article 79 CISG does not lead to a change of the allocation of the contractual risks. According to the Convention on Contracts for the International Sale of Goods, the reason for the liability of the seller is based on the fact, that he obliges himself to hand over the goods and to transfer property to the buyer. According to Article 79 CISG, an exemption of the seller from the consequences of a breach of obligation is only possible if the breach cannot reasonably be attributed to him (compare BGH, NJW 1999, p. 2440). Thus, an exemption in the sense of Article 79 CISG can only be assumed if objective circumstances, which prevent the fulfilment of the contractual obligations, that show no connection to the person of the seller, are present. The opposite are personal circumstances that prevent the seller from fulfilling his obligations. (cf. Schlechtriem, Kommentar zum Einheitlichen UN-Kaufrecht -- CISG --, 4th edition, Article 79, margin number 11). The sphere of liability of the seller is interpreted as being extensive. It comprises in particular the financial ability which is necessary for the contractual performance, the risk in respect to acquisition, storing, manufacturing, and conformity as well as the risk in respect to personnel and organization (cf. Münchner Kommentar zum BGB, CISG, 4th edition, Article 79 margin number 7).

Against this background, the failure of the [Seller] to transfer property to the [Buyer] has to be seen as a personal circumstance of the [Seller], which has not been due to an impediment beyond its control.

As the exemption of Article 79 CISG does not lead to a change of the allocation of the contractual risks, the [Seller] cannot successfully rely on the fact that it has taken every necessary step in order to comply with its contractual obligations by asking the police and the registration office several times. This also applies to the fact that the seller and the owner of the car was the same person according to the vehicle registration document and that a forgery had been presented.

Contrary to the assumptions of the Court of First Instance, the fulfilment of the obligation to inquire whether a seller is entitled to transfer property of a car dealer of used cars does not meet the requirements of Article 79 CISG. The Supreme Court case which has been cited by the Court of First Instance (BGH, NJW 1992, p. 310) dealt with the issue -- which is irrelevant in the present case -- whether an immoral and thus void receiving of stolen goods is present, if the buyer of a stolen car does not fulfil his duties to inquire whether the seller was entitled to transfer property and thus acts in gross negligence.

In addition, the Appellate Court is not convinced that the [Seller] could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it or its consequences if it takes the circumstances of the present case into account. The [Seller] bought the car with the help of Car Dealer S, thus, the knowledge and the acts of the latter can be attributed to the [Seller]. The following circumstances emphasize that there could have been doubts or that the [Seller] had doubts, respectively, in respect to the origin of the car and the authority of the initial seller:

According to the experience of the Appellate Court, there is a high danger of theft if one takes the type car into account. The purchase price was very low in respect to the mileage and the model of the car. The [Seller] itself initiated several inquiries in respect to the origin of the car. Car Dealer S who was acting on behalf of the [Seller] told the public prosecutor in the course of a questioning that he had seen the car on a parking lot in District F -- the characteristics of which he did not recall -- where several expensive cars had been offered for sale. The seller, who had been in aN on-site building hut, had declared that he would not be willing to sell the T as he was just offering it on behalf of a customer. The said car had had a price-tag showing the VAG-sign and stating the purchase price at EUR 38,900. In addition to this, the price tag had solely included a mobile phone number. He had already been successful in reducing the price to EUR 37,000 during the first negotiation via telephone. He had then purchased the car from the seller, who had turned up in the meantime, for EUR 37,000. The first name of the seller had been different from the first name in the vehicle registration document. When he had pointed to this, the seller had produced a written authority of his father and had told him that he was acting on behalf of his father.

As the [Seller] failed to prove that the failure to perform its contractual obligation, namely to transfer property to the [Buyer], was due to an impediment beyond its control or that it could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it or its consequences, it is not exempt from liability. Hence, the [Seller] has to pay damages according to Article 74 CISG.

The claim for damages is not barred by the fact that the loss did not occur due to the breach of contract but due to additional circumstances. The claim for damages according to Article 74 CISG requires that the breach of contract is causal for the loss. This chain of causality could be interrupted in the present case if the [Buyer] had transferred property to Customer B according to Italian law and had thus not been obliged to agree to a reverse-transaction and to reimburse the purchase price.

The Appellate Court is convinced that the [Buyer] and Mr B concluded a valid contract for the sale of the said car due to the submission of the written contract of 18 November 2004. The additional appendices show that Customer B handed over a cheque of EUR 41,000 to the [Buyer] and traded in a car make Toyota, which was estimated at EUR 8,000 by the contracting parties. The Appellate Court does not doubt that Customer B has declared the contract avoided and that the [Buyer] has reimbursed him and returned the Toyota car (compare the appendices to the written submission of the attorney of the [Buyer] of 9 June 2006). The Appellate Court assumes that both the [Buyer] and Customer B have acted in a bona fide manner in the course of this transaction.

Italian law has to be applied to the legal relationship between the [Buyer] and Customer B. The Appellate Court heard expert witness Prof Dr. K in respect to the aforementioned, disputed and decisive legal questions. The expert witness compiled a precise, detailed, convincing and comprehensible expert opinion, which has not been contested by the parties.

According to this expert opinion, Customer B acquired property of the car. This acquisition in a bona fide manner lost its basis retrospectively, as Customer B exercised its right to declare the contract avoided and to request reimbursement after the car was taken possession of by Italian authorities. This right was not barred by the fact that Customer B was not able to return the car due to the confiscation. The decisive issues are regulated as follows:

The acquisition of property in a bona fide manner is regulated by the third book of the Italian Civil Code, Articles 815, 1153, 1147, 1156, 1162, 1376 and 1470. According to Article 1153 Codice civile, it is possible to acquire property of stolen goods in a bona fide manner as a result of possession, thus stating a legislative decision in favor of the protection of circulation. The provision refers to movable, non-registered goods; in its sphere of application the provision additionally comprises goods that have to be registered, such as cars (Article 815 Codice civile). The requirement is a valid contract, the actual handing over of the goods and that the buyer is acting in a bona fide manner in respect to the authority of the seller at the time the handing over takes place.

As stated above, the Appellate Court assumes that these requirements have been met in the present case. The registration of the car does not bar an acquisition of property in a bona fide manner according to Articles 1156(1), 815 Codice civile. According to Italian law of licensing, cars have to be registered at the general direction of the M.C.T.C (authority for the civil traffic) and have to have a registration document ("carta circolazione"). Furthermore, according to Article 93(5) Codice della Strada there is a document of property for cars, the so-called "certificate di proprietá", which will be issued by the car register (Publicco Registro Automobilistico) within 60 days after the receipt of the registration document upon request.

Customer B would not have acquired property despite the fact that he acted in a bona fide manner, if he had acted in gross negligence in the course of the purchase. In the present case, the acquisition of property is not barred by the fact that Customer B acted in gross negligence, as he did not cross-check the identity of the [Buyer] with the registered proprietor or as he did not ask for a property document even though the car was sold in Italy but not registered there. According to the leading doctrine which is supported by the Corte di Cassazione (compare judgment number 9174 of 6 October 1997), the buyer of a car, which is not registered according to the Publicco Registro Automobilistico can acquire property in a bona fide manner according to Article 1153 Codice civile, as the bona fide acquisition is not barred by the fact that documents are missing, that are necessary for the public use of a car. This is due to the fact that registration is a mere declaratory act.

Customer B, who acquired property in a bona fide manner, was entitled to avoid the contract according to Article 1479 in conjunction with Article 1483(1) Codice civile. According to these provisions, the buyer is entitled following an eviction, which is present both in the case of a valid action for restitution of a third party and in the case that the police authority takes possession of the goods -- as in the present case -- according to Article 1484(1) Codice civile, according to the provisions of Articles 1453 to 1469 Codice civile. Thus the declaration of avoidance is valid ex tunc and leads in the case of contracts for sale with consequences in rem (Article 1376 Codice civile) to the recreation of the initial state of property. Performances received have to be returned according to the law of unjust enrichment (Articles 1458 (1), 1463 Codice civile). In case the police authority takes final possession of the goods -- as in the present case -- the so-called executed eviction is present. Due to the fact that the right to declare the contract avoided is based on the fact that the possession has been interfered with, a return of the goods is impossible. A respective right of the seller ceases to apply.

The right of the buyer to avoid the contract according to Article 1479 Codice civile is not barred by virtue of the fact that the requirements of Article 1153 Codice civile have been met and the buyer has acquired property in a bona fide manner. The relationship between Article 1479 Codice civile and Article 1153 Codice civile is in dispute. It has partially been stated that the right to declare the contract avoided according to Article 1479 Codice civile would be barred if the requirements of Article 1153 Codice civile were met, as the buyer has acquired property in the end, even though solely in a bona fide manner according to Article 1153 Codice civile. Hence, there was no regulatory need for a right to declare the contract avoided.

According to the leading doctrine and the jurisprudence, the right to declare the contract avoided according to Article 1479 Codice civile is not barred by an acquisition of property in a bona fide manner according to Article 1153 Codice civile, as Article 1153 Codice civile represents a protection of the buyer and the circulation. Therefore, the buyer is entitled to waive the consequences of the acquisition of property in a bona fide manner and declare the contract avoided according to Article 1479 Codice civile. The avoidance of the contract leads to the fact that the requirements for an acquisition of property in a bona fide manner cease to exist retrospectively. According to the judgment of the Corte di Cassazione, section II of 6 December 1988, number 6626, the transfer of property of stolen goods in a bona fide manner does not represent a fulfilment of the contractual obligation, as the goods which have been handed over are different from those which have been contractually agreed on. The object of a contract would usually be goods, which have been acquired in an honest way, not stolen goods. Only the assumption that the contract can still be avoided would support the recreation of lawful situations. Therefore, the relationship between Article 1479 Codice civile and Article 1153 Codice civile had to be seen as follows: Article 1153 Codice civile does not bar the buyer from declaring the contract avoided if he prefers the avoidance of the contract as a legal consequence following the knowledge that the goods have been stolen. The buyer is thus entitled to waive the acquisition of property in a bona fide manner according to Article 1153 Codice civile by declaring the contract avoided and thus causing that that the requirements for an acquisition of property in a bona fide manner cease to exist retrospectively.

As a conclusion to this, Customer B was entitled to declare the contract avoided and to request the [Buyer] to reimburse the purchase price. The buyer also has to be reimbursed in case that he is no longer able to return the car due to an eviction.

Therefore, the [Buyer] is entitled to claim damages according to Articles 45(1)(b), 74 CISG, which comprises lost profit but does not exceed the loss which the party in breach foresaw or ought to have foreseen at the time of the conclusion of the contract, Article 74 phrase 2 CISG.

The Appellate Court does not doubt that the damage of the [Buyer] amounts to EUR 41,500 due to the purchase price it had to pay to the [Seller]. In respect to further damages as a loss of profit in the amount of EUR 7,500 the Appellate Court generally agrees that the claim for damages comprises lost profit, namely any profit that has been barred by the beach of contract (Schlechtriem, Kommentar zum Einheitlichen UN-Kaufrecht -- CISG -- Article 74 margin number 22), according to Article 74 phrase 2 CISG.

However, the Appellate Court doubts whether the purchase price, which has been agreed on in writing in the submitted contract can be used as a basis for the calculation of the loss of profit. This is in particular due to the fact that, according to the submissions of the [Buyer], a Toyota car has been traded in in addition to the payment of EUR 41,000. It is true that the parties estimated the value of the car at EUR 8,000 according to the contract. Nevertheless, the [Buyer] failed to prove that the Toyota was actually worth EUR 8.000. As precise details in respect to this car are missing, which would have been necessary in order to estimate the damage according to § 287 ZPO [*], the Appellate Court has to estimate the minimum damage (compare Zöller, ZPO, 26th edition, § 287 margin number 1,7; BGH, NJW 2005, page 3348).

The Appellate Court estimates the value of the Toyota car at EUR 1,500. This leads to a loss of profit of EUR 1,000. In addition, the [Buyer] is entitled to claim the pre-procedural attorneys' fees of EUR 653,10 (compare Schlechtriem, Kommentar zum einheitlichen UN-Kaufrecht -- CISG -- Article 74 margin number 22).

The [Buyer] is entitled to claim interest for default as requested since the legal proceedings have been initiated according to §§ 291, 288 BGB [*].

The decision on costs is based on §§ 92, 97 (1) ZPO. The decision on the provisional enforceability is based on §§ 708 No. 10, 711 ZPO.

The requirements to admit further appeal (Revision) have not been met according to § 543(2) ZPO. The dispute is not of fundamental importance. Neither the interpretation of law nor the safeguarding of uniform jurisprudence leads to the need for a judgment by the Supreme Court.


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Plaintiff-Appellant of Italy is referred to as [Buyer] and the Defendant-Appellee of Germany is referred to as [Seller]. Amounts in the uniform European currency (Euro) are indicated as [EUR].

Translator's note on other abbreviations: BGB = Bürgerliches Gesetzbuch [German Civil Code]; EGBGB = Einführungsgesetz zum Bürgerlichen Gesetzbuche [German Code on the Conflict of Laws]; NJW = Neue Juristische Wochenschrift [German law journal]; ZPO = Zivilprozessordnung [German Code on Civil Procedure].

** 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 June 6, 2013
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