Brazil 24 April 2008 Appellate Court of São Paulo (Mortgage loan case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/080424b5.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 379.981-4/0
CASE HISTORY: 1st instance Comarca de Guarulhos, SP (reversed)
SELLER'S COUNTRY: Brazil (plaintiff)
BUYER'S COUNTRY: Brazil (defendant)
GOODS INVOLVED: Mortgage loan
BRAZIL: Tribunal de Justiça do Estado de São Paulo - 4ª Câmara de Direito Privado
(Appellate Court of the State of São Paulo - 4th Civil Division) 24 April 2008
(José Henrique S. N. de Souza and other v. Construtora Costa Norte Empreendimentos Imobiliários SC Ltda.)
Case law on UNCITRAL texts [A/CN.9/SER.C/ABSTRACTS/122]
CLOUT abstract no. 1180
Reproduced with permission of UNCITRAL
Abstract prepared by Marcelo Boff Lorenzen
This is a case between two parties from Brazil which contains a dicta reference to Article 72 CISG. The case deals primarily with the exceptio non adimpleticontractus doctrine, acknowledging that a party who commits a fundamental breach of contract is not entitled to compel the other party to fulfil its counter obligations.
A home builder [i.e. the seller] entered into a contract with the buyers for the sale of an apartment. Upon failure to pay some instalments of the mortgage loan related to the sale, the seller brought suit before the District Court of Guarulhos for payment. In their defence, the buyers claimed that the seller failed to timely complete its part of the bargain as previously agreed upon. Consequently, they refused payment of the remaining instalments due to the fundamental breach of contract. The District Court rendered judgment for the seller, forcing the buyers to pay the remaining amount plus a 10 per cent penalty.
On appeal, the Appellate Court of the State of São Paulo held that it was uncontroversial that the apartment was not delivered on time. The Court also observed that the buyers also failed to comply with their main obligation, which was to timely pay the corresponding price, but acknowledged that they did so because, prior to the date for performance, it was clear that the seller would not be able to fulfil its obligations. Applying the doctrine of exceptio non adimpleti contractus, the Court referred to the provisions contained in Article 72 CISG to state that a party who breaches its own obligation has no right to compel the other party to perform its counter obligation. The judgment was reversed in order to exempt the buyers from payment and to compel the seller to pay court expenses.Go to Case Table of Contents
APPLICATION OF CISG: No. Dicta reference to CISG (Article 72)
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions mentioned:
Classification of issues using UNCITRAL classification code numbers:
CITATIONS TO OTHER ABSTRACTS OF DECISION
CITATIONS TO TEXT OF DECISION
Original language (Portuguese): Click here for text of case; see alsoDiário de Justiça do Estado de São Paulo (DJE), Appellate Court of São Paulo, case no. 379.981-4/0, 4th Civil Division, Justice Enio Zuliani, published on 21 May 2008. Available at: <http://www.tjsp.jus.br>
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
UnavailableGo to Case Table of Contents
Case text (English translation)[summary]
Queen Mary Case Translation Programme
Translation [*] by Luiz Gustavo Meira Moser [**]
FACTS OF THE CASE
Plaintiff [Seller] requested from the Defendant [Buyer] the remaining payment of the mortgage loan related to the sale of an apartment in Guarulhos.
In its defense, [Buyer] alleged that the Seller failed to comply with its central obligation (delivery of the goods at the time established in the contract), and then refused to pay for the remaining price of the contract, due to the fundamental breach.
ON THE ABOVE
The Court of First Instance rendered a decision favorable to the [Seller], compelling the [Buyer] to pay the remaining amount, plus a 10% penalty as well as the court expenses as a result of the non-payment of the contract. [Buyer] appealed the decision, reinforcing the reasons previously stated in its defense.
The Appellate Court held that the [Seller] failed to comply with its core obligation - delivery of the goods at the time prior accorded in the contract. Therefore, as a party who breaches its own obligation, [Seller] cannot request the performance of the counterparty obligation by the [Buyer]. The Court applied the doctrine of exceptio non adimpleti contractus to the case, in the line of thought of art. 72(1) of the CISG, that authorizes the avoidance of the contract if, prior to the date of performance of the contract, it is clear that one of the parties will commit a fundamental breach of the contract.
ON THIS GROUND
The Court reverses the judgment of the lower Court, exempting the [Buyer] from payment any amount related to the contract, on the basis of the doctrine of exceptio non adimpleti contractus, and compels the [Seller] to pay the court expenses.
* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff is referred to as [Seller]; Defendant is referred to as [Buyer].
** Luiz Gustavo Meira Moser is a member of the Brazilian Arbitration Committee, YIAG, Association Suisse d'Arbitrage (ASA), ICDR, International Law Association - Brazilian Committee, Queen Mary Translation Programme and Global Sales Law Project.Go to Case Table of Contents