Greece 2009 Decision 8161/2009 of the Single-Member Court of First Instance of Athens (Mops case) [editorial analysis available]
[Cite as: http://cisgw3.law.pace.edu/cases/090000gr.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 8161/2009
CASE HISTORY: Unavailable
SELLER'S COUNTRY: China (defendant)
BUYER'S COUNTRY: Greece (plaintiff)
GOODS INVOLVED: Mops
APPLICATION OF CISG: Yes [Article 1(1)(a)]
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
EDITOR: Dionysios P. Flambouras [*]
In December 2008, the Defendant [Seller] of China sold to the Plaintiff [Buyer] of Greece mops for the amount of €22,020.20. For the payment of the purchase price, the Buyer instructed its bank [the "Bank"] to open an irrevocable letter of credit ["L/C"] in favor of the Buyer. The Buyer received the goods on 7 April 2009 in Marathon (Greece) and realized that 7,680 mops (320 boxes) of a value equal to €7,680 were defective and did not possess the agreed qualities. The Buyer informed the Seller on the same day as to the defects and of its intention to return the defective mops, and asked the Seller to dispatch new mops without defects. The Seller has not delivered mops conforming to the agreement.
Under the terms of the LC, the Bank was obligated to pay the purchase price within 60 days as of the time of shipment (shipment: 27 February 2009; payment of the purchase price by the Bank: 28 April 2009).
The Buyer filed suit against the Seller and the Bank requesting the Court to order (as an injuction) suspension of the payment of the purchase price (or at least of the amount of €7,680) by the Bank under the L/C (since part of the goods under the contract of sale were defective). Buyer pleaded that payment of the purchase price to the Seller by the Bank under the L/C would be abusive, against good faith and business morals since the goods were defective and the Seller intentionally did not perform the contract of sale.
2.1 Application of the CISG
Although the Court cites the CISG, it does not expressly mention whether the CISG is applied by virtue of art. 1(1)(a) or 1(1)(b) [the main subject of the proceeding was not the contract of sale but the contract of L/C]. It is suggested that the CISG is applicable under both provisions.
2.2 Statements of the Court in connection with the CISG
Referring to various provisions of the CISG, the court summarized the law as follows:
- The CISG falls into the category of international conventions that create law and constitutes a directly enforceable international convention. Therefore, it contains no rules of private international law (conflict rules), but directly enforceable substantive rules, which supersede the relevant provisions of national laws (art. 28 § 1 of the Greek Constitution of 1975). Thus, in the States that have adopted the CISG, international sales of goods that fall in the sphere of application of the CISG are governed by its provisions, while all other sales are governed by the provisions of national law determined by the rules of private international law of the forum refer [citations omitted].
- The CISG adopts a unified form of remedy for non-performance, establishing a general aspect of liability which covers all cases of breach under the Greek Civil Code. Moreover, the liability for contractual breaches under the CISG is present regardless of the fault of the person in breach [citations omitted].
- If the goods do not conform to the sale contract (see CISG art. 35), the buyer is entitled to the following remedies:
(i) If the lack of conformity constitutes a fundamental breach (see CISG art. 25), to claim the replacement of the non-conforming goods with substitute goods (see CISG arts. 45(1)(a) and 46(2) (specific performance - replacement); or
(ii) If the lack of conformity does not constitute a fundamental breach, to request the seller to remedy the lack of conformity by repair, unless this is unreasonable having regard to the circumstances (see CISG arts. 45(1)(a) and 46(3) (specific performance -repair); or
(iii) If the lack of conformity does not constitute a fundamental breach, to request the reduction of the price regardless of whether the price has already been paid or not (see CISG art. 50) (reduction of price); or
(iv) If the lack of conformity constitutes a fundamental breach (see CISG art. 25), the buyer may declare the contract avoided (see CISG art. 49(1)(a)); and/or
(v) Claim damages The buyer is not deprived of any right he may have to claim damages by exercising other remedies he might have (see CISG 45(1)(b), 45(2), 74-77) (damages) [citations omitted].
The legal remedies of the buyer for lack of conformity of goods with the contract (see CISG art. 35) may be exercised, only if the buyer has previously complied with the duties provided by the CISG, that is:
- To examine of the goods within as short a period as is practicable in the circumstances (CISG art. 38(1);
- To give notice to the seller specifying the nature of the lack of conformity within a reasonable time after he has discovered it or ought to have discovered it. A period of one month is deemed reasonable (CISG art. 39(1) and, in any event, such period may not exceed two years as of the time of actual delivery of goods to the buyer (CISG art. 39(2) [citations omitted].
2.3 Judgment in connection with the L/C
The court rejected the Seller's application and did not grant the requested injuction [suspension of payment of the purchase price].
The Court held that the Bank should pay the purchase price to the Seller irrespective of any defects of the goods under the contract of sale since:
(a) The L/C was irrevocable;
(b) Under Greek law, an L/C is deemed autonomous vis-à-vis the basic contractual relationship pursuant to which it is issued (contract of sale) [articles 25 - 34 of Legislative Decree 17.7/23 August 1923, art. 876 of the Greek Civil Code, art. 877 of the Greek Civil Code, UCP 500 Articles of Documentary Credit ICC 1993: principle of autonomy]; and
(c) A valid contract of sale existed and therefore the purchase price was owed [due to the fact that the Buyer had requested specific performance (CISG art. 45(1)(a), 49(1)(a)) instead of avoiding the contract, i.e., there was no fundamental breach of contract].
2.4 Other citations
Excerpt from commentary by Dionysios P. Flambouras "Case Law of Greek Courts for the Vienna Convention (1980) for International Sale of Goods" (publication forthcoming in the Nordic Journal of Commercial Law).
* Adjunct Lecturer (PD 407) in Civil Law, University of Athens (Dep. of Economics); Advocate of the Athens Bar, Solicitor in England & Wales; Member of M. & P. Bernitsas Law Offices. LL.M. (Bristol), M. Stud. (Oxford), Dr. jur. in Civil Law (Athens). For comments: <firstname.lastname@example.org>Go to Case Table of Contents
CITATIONS TO ABSTRACTS OF DECISION
(a) UNCITRAL abstract: Unavailable
(b) Other abstracts
CITATIONS TO TEXT OF DECISION
Original language (Greek): unpublished
CITATIONS TO COMMENTS ON DECISION
UnavailableGo to Case Table of Contents