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CISG CASE PRESENTATION

Netherlands 9 July 2008 District Court Maastricht (Agristo N.V. v. Macces Agri B.V.) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/080709n1.html]

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

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Case identification

DATE OF DECISION: 20080709 (9 July 2008)

JURISDICTION: Netherlands

TRIBUNAL: Rb Maastricht [Rb = Arrondissementsrechtbank = District Court]

JUDGE(S): Dethmers, Russel and Verhoeven

CASE NUMBER/DOCKET NUMBER: 120428 / HA ZA 07-550

CASE NAME: Agristo N.V. v. Macces Agri B.V.

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Belgium (plaintiff)

BUYER'S COUNTRY: Netherlands (defendant)

GOODS INVOLVED: Potatoes


Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Article 79

Classification of issues using UNCITRAL classification code numbers:

79B [Impediments excusing party from liability for damages]

Descriptors: Exemptions or impediments

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Editorial remarks

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Citations to case abstracts, texts, and commentaries

CITATIONS TO ABSTRACTS OF DECISION

(a) UNCITRAL abstract: Unavailable

(b) Other abstracts

English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=1388&step=Abstract>

CITATIONS TO TEXT OF DECISION

Original language (Dutch): Netherlands case law website <http://www.rechtspraak.nl/>; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=1388&step=FullText>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation) [second draft]

Queen Mary Case Translation Programme

District Court (Rechtbank) Maastricht

9 July 2008 [120428 / HA ZA 07-550]

Translation [*] by Thorsten Tepasse [**]

The chamber, concerned with civil matters, has handed down the following judgment in the dispute between

Agristo N.V.[*],
seated in Hulste-Harelbeke, Belgium,
Plaintiff in main claim, Defendant in counterclaim
authorized proxy Mr. J.L.H. Holthuijsen;
hereinafter referred to as [Buyer]

vs.

Macces Agri B.V.[*],
seated in Maastricht, the Netherlands,
Defendant in main claim, Plaintiff in counterclaim,
authorized proxy Mr. W.C.M. Coenen.
hereinafter referred to as [Seller]

1.  The course of the proceeding

The course of the proceeding consists of the following case files:

   -    The writ of summons of 25 May 2007 with appendices;
   -    [Buyer]'s record with another appendix;
   -    The responding memorandum in main claim and the memorandum of Plaintiff in counterclaim with appendices;
   -    The responding memorandum in counterclaim;
   -    The transcript of the appearance before court on 28 November 2007 in which setting the case on the cause list was ordered to hand down a judgment.

2.  The disputes in main claim and counterclaim

      2.1.  [Buyer] is a company processing potatoes to sell as deep frozen potato products. Pursuant to its own statements, [Buyer] handles about 6 million kilos of potatoes per week to make pre-baked deep-frozen products of them. To provide itself with the potatoes needed, [Buyer] concludes forward contracts with potato growers. In doing so, [Buyer] covers 60 % of its demands of potatoes. The other 40 % of the potatoes needed are bought on the free market.

      2.2.  [Seller] is the company under which Mr. [name] runs a farming company in the surrounding area of Maastricht as CEO and main shareholder. Grain, corn and potatoes are cultivated on 110 hectares of available ground. In 2006, ten hectares were available for growing potatoes. The harvest should normally be 44 tons of potatoes per hectare, thus 440 tons on ten hectares. [Seller] and [Buyer] concluded a contract on 1 March 2006. They agreed that [Seller] should deliver to [Buyer] 440 tons potatoes of the type Bintje from the harvest in 2006. Delivery should take place during weeks 10 to 13 in 2007 (5 March 2007 until 1 April 2007). The parties agreed on a price of 7.80 EURO per 100 kilo for the first 220 tons and a variable price, depending on the quotation of Belgopam and Rotterdam, between 6.80 EURO and 9.80 EURO per 100 kilo for the remaining 220 tons. The contract is laid down in a model contract originating from [Buyer] in which specific attributes from the seller, type and amount were inserted (forwarded as appendix 1with writ of summons). Mr. [name] acted as representative of [Buyer].

      2.3.  In 2006, extreme weather circumstances occurred, causing a lower amount and quality of potatoes harvested. [Seller] submits that it had about 440 tons of potatoes harvested ready for delivery to [Buyer] around October 2006. Due to the inferior quality, the ability to stock the potatoes was considerably limited, so that [Seller] tried to dispose of the potatoes on very short date during an inspection by [name of representative] at the end of October 2006. [Buyer] denied acceptance of the potatoes at this point in time since other growers also announced delivery of potatoes, so it could not process or stock all at the same time. As recently as 22 and 26 November 2006 [Buyer] was ready to accept the potatoes. Until then, the quality of the potatoes was more than reasonable affected.

      2.4.  The weight notes show that [Seller] delivered 257,100 kilos of potatoes on the dates named. Pointing to the bad quality of the potatoes, [Buyer] requested that the potatoes be washed before delivery. After the washing process at the laundry De Kruisberg, 155,240 kilos of potatoes were left. [Buyer] refused to accept a potato delivery in the amount of 36,340 kilos. From the rest of 119,080 kilos gross weight, a total net amount of 92,538 kilos was left after discount of the tare weight, which was then accepted by [Buyer].

      2.5.  [Buyer] requested delivery of the remaining 347,462 kilos from [Seller] by letters of 5 December 2006, 5 February 2007 and 8 March 2007 with reference to the forward contract concluded. Since delivery did not take place, [Buyer] terminated the contract on 11 May 2007. [Buyer] submits that it had to conduct a cover purchase to replace the potatoes not delivered by [Seller] and that it had to expend 70,999.25 EURO more than it initially owed [Seller]. [Buyer] seeks payment of this sum as damages suffered plus interest since 17 May 2007 in its main claim.

      2.6.  [Seller] rejects [Buyer]'s claim. It first argues that [Buyer] accepted 257,100 kilos of potatoes without protest or further notice. Second, concerning the remaining amount of potatoes, [Seller] invokes that delivery did not take place due to circumstances beyond its sphere of influence, which justifies referring to a case of force majeure. Subsidiary, [Seller] challenges [Buyer]'s claim for damages and requests reduction of that claim. The Court will discuss the submissions as far as decisive for this case in detail.

      2.7.  In the counterclaim, [Seller] requests the purchase price for the potatoes already delivered. Given a delivered amount of 257,100 kilos of potatoes, the purchase price would be 19,682.80 EURO plus judicial commercial interest since 25 January 2007. Subsidiary, [Seller] claims payment for 92,538 kilos of potatoes, which is 7,217.96 EURO plus judicial commercial interest since 25 January 2007. [Buyer] concedes that the potatoes accepted with a total amount of 92,538 kilos were left unpaid. However, it argues that a much lower purchase price than agreed upon has to be estimated, as the potatoes were delivered much earlier and that therefore stock- and decay costs for [Seller] were lower than they would have been, if the potatoes were delivered later to [Buyer]. [Buyer] submits that it would therefore shoulder a sum of 5,000.00 EURO. It requests a set-off against the sum claimed in main claim.

3.  The reasoning in main claim and counterclaim

      3.1.  The United Nations Convention on Contracts for the International Sale of Goods concluded in Vienna on 11 April 1980 (hereinafter CISG) contains provisions concerning formation and performance of sales contracts concluded between parties from different Contracting States. Since the contract at hand was concluded between a buyer from Belgium and a seller from the Netherlands and Belgium as well as the Netherlands are parties to the CISG, the CISG has to be applied to the instant case pursuant to Art. 1 CISG.

      3.2.  It is a fact that [Seller] did not fulfill its obligation to deliver in accordance with the sales contract of 1 March 2006. The parties do not agree whether this breach of contract can be brought to account for [Seller] or not. Art. 79 CISG states that a party is not liable for a breach of contract "if he proves that the failure was due to an impediment beyond his control and that he could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract [...]".

      3.3.  [Seller] submits that it could not fulfill its duty to deliver the potatoes due to extreme weather circumstances. The weather circumstances were the reason that a large amount of the harvest failed, so that the potatoes could not be stored up to the delivery date without perishing. Pursuant to [Seller]'s submission, the weather conditions and its consequences for the harvest were beyond its control and since those severe circumstances only appear seldom, [Seller] could not reasonably have been expected to have taken this impediment into account at the time of the conclusion of the contract.

      3.4.  [Buyer] rejects [Seller]'s argument. It argues that weather circumstances and any consequences for the harvest (like lower quality or amount of the harvest than contractually agreed upon), are to the account and risk of [Seller]. [Buyer] further submits that the weather conditions were not so serious that the obligation to deliver the potatoes could not be fulfilled. It arrives at this conclusion from the fact that the majority of potato growers it had forward contacts with could fulfill their obligations and that it was able to buy the potatoes needed for production all year long. In this context, [Buyer] argues that [Seller] in fact had potoatoes according to the agreement at its disposal, but sold a part of them to third parties. Moreover, [Seller] could have minimized its risk resulting from a lower harvest by not selling the whole harvest expected under good conditions in advance but only a part of the expected crop to reserve another part for unforeseen events as they now occurred. Finally, [Buyer] invokes that potatoes are indeterminate obligations and that therefore performance was not absolutely impossible for [Seller], since it could have bought potatoes in replacement elsewhere.

      3.5.  [Seller] denies having sold potatoes to third persons. [Buyer] did neither substantiate in any further way that [Seller] did so, nor was evidence offered. As a result, the Court therefore holds that [Seller] did not sell potatoes to third persons.

      3.6.  [Buyer] rejects the submission that the weather circumstances were so extreme that this led to the fact that [Seller] could only offer partial and premature delivery. However, it can be deduced from news articles which were brought into this proceeding as appendix 2 of the responding memorandum, that there was a much lower harvest of potatoes in 2006 due to severe weather conditions. Further, the fact that the price for potatoes was three times as high as under typical circumstances indicates that there was a considerable shortage of potatoes. The high price in combination with the forwarded news articles are a sufficient basis for the Court to assume that there were climate conditions which were very difficult for growing potatoes. However, the Court postpones any definite ruling on this issue in anticipation of the report of an appraiser, who will be named later on.

      3.7.  [Seller] submits that the bad weather conditions were the reason for the lower amount and inferior quality of the harvest. [Buyer] did not forward any further argument besides sale to third persons -- which was scrapped by the Court - as to how the lower and inferior harvest on the part of [Seller] happened or could have happened. The Court will therefore act on the assumption that [Seller]'s failure to deliver the potatoes was somehow caused by the poor weather conditions for growing potatoes.

      3.8.  Regarding [Seller]'s submission on the weather circumstances as an impediment beyond its control, the Court refuses [Buyer]'s argument that an impediment beyond control cannot be assumed solely due to the fact that potatoes are indeterminate obligations and that thus [Seller] could have bought the potatoes it could not deliver from its own stock elsewhere. This reasoning misjudges the fact that [Seller] is not a trader but a mere grower of potatoes. It only guarentees for itself when entering into a forward contract like the one at hand that it can sell the harvest expected from its own land for a fixed price. It is vice versa also a fact that [Buyer] obviously did not choose for contracts with sole potato traders but with individual potato growers to cover its demands. Although the sole text of the contract, which was drafted by [Buyer], does not give a clear answer on this issue, some detailed clauses inserted in the contract point at specific growers behind the seller of potatoes. It was further substantiated that [Buyer] conducts inspections of the farms, to see if the growers abide by the prerequisites of the forward contracts in a correct manner. As a result, the Court holds that the essence of the contract was individualized by the parties and that thus the obligation to deliver was limited to those potatoes grown by [Seller].

      3.9.  The above-mentioned must not lead to the assumption that the forward contract only requires the grower take any reasonable efforts and act in due care to deliver the amount of potatoes agreed upon in the contract. If parties would have had that in mind, they would have concluded another kind of agreement. The contract at hand therefore contains a performance guarantee, with the restrictions described in the paragraph above. This leads to the starting point that [Seller] was obliged to fulfill the duty to deliver in any case, unless it proves that the failure was due to an impediment beyond its 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.

      3.10.  It is a common fact that the weather can be unsettled and that the outcome of a growers' products (regarding the amount as well as the price) highly depends on the weather circumstances during the season. It can be expected from a diligent grower that he considers the variations of weather and its possible consequences for the quantity of harvest achieved, when he concludes a forward contract. This diligence finds its expression in [Buyer]'s submission that it was [Seller]'s fault to sell the whole expected potato harvest afore without taking into account that the amount harvested could be lower due to bad weather conditions. If [Seller] had sold, e.g., only half of the amount of potatoes expected afore, it could, pursuant to [Buyer]'s point of view, still have fulfilled the main part of its contractual obligations even in case of severe weather circumstances.

      3.11.  The Court subscribes to [Buyer]'s arguments in general. It can be expected from a diligent grower that he considers the weather circumstances when entering into a sales contract concerning future harvest insofar that he can fulfill his duty to deliver in 90% of the cases. This means, in the instant case, that [Seller] can only rely on an impediment beyond control, if the harvest stayed behind the minimum of crop achieved in 90% of the years.

      3.12.  The Court considers it desirable to ask for a detailed expertise from an independent appraiser concerning the aspects discussed above. The Court would like to ask the expert the following questions:

            1.  Can the expert determine the averaged harvest of potatoes per hectare in the last 20 years in the surroundings of Maastricht, where [Seller] realized its yield?

            2.   The Court has posited that a diligent grower may only sell the amount of crop in forward contracts it could have actually delivered in 90% of the years. Does the expert know another percentage generally used or does he furthermore have another advice?

            3.  Can the appraiser determine which harvest per hectare could be in any case achieved and delivered by potato growers in the area surrounding Maastricht in 90% (or any other percentage found by the expert) of the cases?

            4.  Is it of any relevance for your answers in which week of the season the potatoes are to be delivered? If so, can you quantify your findings in more detail?

            5.  Were the weather circumstances in the area surrounding Maastricht in 2006 so poor for the cultivation of potatoes that the harvest stayed below the harvest achieved in 90% (or the percentage found by the expert) of the cases?

            6.  Given the case the appraiser answers question 4 positive: Is it the case that stockpiling the potatoes was so difficult due to their inferior quality that they could even completely go off as it was obviously the case for [Seller]?

            7.  Are the lower harvest and quality problems [Seller] faced supported by general statistics you can rely on? If no, is there any explaination for that difference?

      3.13.  [Seller] submitted that it offered 257,100 kilos of potatoes to [Buyer] and that it would be incomprehensible that [Buyer] finally accepted only 92,538 kilos. [Buyer] argued that after washing the potatoes at the laundry De Kruisberg, 155,420 kilos of potatoes were left, from which [Buyer] refused a further 36,340 kilos. After deduction of tare weight (22%), a total amount of 92,538 kilos remained. Since the delivery of "clean" potatoes is a duty of the party delivering the potatoes and no hint is given that the works of the laundry De Kruisberg fall within [Buyer]'s sphere of risk, the Court holds that [Buyer] is not liable for the selection of potatoes which took place at the laundry De Kruisberg. The initial point is thus an amount of 155,420 kilos of potatoes actually delivered to [Buyer]. The selection report for the refused part of potatoes (report no. 557) shows sufficiently that this part of the delivery was not in conformity with the contract. Since [Seller] did not challenge the content of this report the Court acts on the assumption that this report is correct. This leads to the conclusion that [Seller]'s plea against the amount of 92,538 kilos of potatoes finally accepted by [Buyer] has to be rejected.

      3.14.  [Seller] submitted that [Buyer] was not entitled to let the refused potaotes be destroyed, but should have either made them available for transport back to [Seller] or turned them into money by selling them as forage. [Buyer] invokes that [Seller]'s fax machine did not work properly and that an attempt to get in contact via telephone was unsuccessful. Before ruling on this defense, the Court submits the following question to the appraiser:
  
            8.  Is it supposable that the refused part of potatoes could have generated money if resold and if so, what would the sum generated approximately be?

      3.15.  [Seller] submitted that, in any case, the value of 92,538 kilos of potatoes delivered in week 48 of 2006 has to be considered pursuant to the sum agreed upon in the forward contract, which is 7.80 EURO per 100 kilos and in total 7,217.96 EURO. [Buyer] conceded that those potatoes were left unpaid to date and that they were also not yet considered in the main claim for damages. However, [Buyer] argues that a lower price has to be applied than the price the parties agreed upon in the forward contract, since delivery should have taken place during weeks 10 to 13 of 2007, but in fact took place in week 48 of 2006. [Buyer] is poised to accept a sum of 5,000.00 EURO due to the principle of good faith and to set-off this sum against the main claim for damages.

      3.16.  The Court holds that the ruling on the amount of potatoes delivered earlier than agreed upon has to be seen in connection with [Seller]'s reference to force majeure. As a result the following questions will be addressed to the appraiser:
  
            9.  Can the appraiser determine what the difference in daily prices for potatoes was in week 48 of 2006 and between:

                  (a)   the price of a cover purchase taking place in the week before the purchase in weeks 10 to 13 of 2007; and
                  (b)   the daily price of potatoes in weeks 10 to 13 of 2007?

            10.  Can the expert relate the differences found in question 9 to his answer found for questions 3 to 6?

      3.17.  The Court will give the parties opportunity to forward further questions for the appraiser and to make suggestions for the person to be named as expert for this proceeding as well as for the amount of money prepared as an installment, which the appraiser can request to be paid on his honorarium. The Court holds that the installment has to be paid by [Seller], since it bears the burden of proof for the facts and circumstances which could constitute an impediment beyond control for [Seller]. For the rest any decision is set on hold.

4.  The judgment

The Court, in main claim and counterclaim:

   -    Refers the case to the court-session of 6 August 2008 to give the parties opportunity to forward memoranda on the issue stated in para. 3.17 of this judgment; and
 
   -    Sets any further decision on hold;

Judgment handed down by Mr. Dethmers, Mr. Russel and Mr. Verhoeven in public and in presence of the clerk of the court.


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff of Belgium is referred to as [Buyer]; Defendant of the Netherlands is referred to as [Seller]. Amounts in European currency are indicated as [EURO].

Translator's note on other abbreviations: BV = Besloten Vennootschap met beperkte aansprakelijkheid [limited liability company under Dutch law]; NV = Naamloze Vennootschap [corporation under Belgian Law].

** Thorsten Tepasse is a law student at the University of Osnabrück, Germany and participated in the 12th Willem C. Vis Moot with the team of the University of Osnabrück.

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