Netherlands 28 January 2010 Gerechstof [Appellate court] Arnhem (Fruits case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/100128n1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 87379 / HAZA 07-716
CASE HISTORY: 1st instance Rb Zutphen 27 February 2008
SELLER'S COUNTRY: Spain
BUYER'S COUNTRY: Netherlands
GOODS INVOLVED: Fruits
APPLICATION OF CISG: Yes
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
38A [Buyer's obligation to examine goods]; 39A [Buyer must notify seller within reasonable time]; 45A [Summary of buyer's remedies for breach by seller]; 46A [Buyer's right to require performance]; 50A [Buyer's right to reduce price for non-conforming goods]; 67A [Risk passes on handing goods over to first carrier]; 74A [Loss suffered as consequence of breach]
38A [Buyer's obligation to examine goods];
39A [Buyer must notify seller within reasonable time];
45A [Summary of buyer's remedies for breach by seller];
46A [Buyer's right to require performance];
50A [Buyer's right to reduce price for non-conforming goods];
67A [Risk passes on handing goods over to first carrier];
74A [Loss suffered as consequence of breach]
CITATIONS TO ABSTRACTS OF DECISION
(a) UNCITRAL abstract: Unavailable
(b) Other abstracts
CITATIONS TO TEXT OF DECISION
Original language (Dutch): Website of the Dutch courts <http://www.rechtspraak.nl/>
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
UnavailableGo to Case Table of Contents
Case text (English translation) [second draft]
Queen Mary Case Translation Programme
28 January 2010 [87379 / HAZA 07-716]
Translation [*] by Anne Hemmink [**]
1. Proceedings in the first instance
For the course of the proceedings in first instance the court of appeal refers to the judgments of November 15, 2007 (interim decision) and February 27, 2008 (final decision) pronounced by the district court Zutphen between at present appellant as defendant in claim, plaintiff in conditional counterclaim, and at present respondent as plaintiff in claim, defendant in conditional counterclaim. A photocopy of the final decision is attached to this decision. Appellant shall hereinafter be named as [appellant] and respondent as [Seller].
2. The appellate procedure
2.1 [Buyer] announced appeal of the final decision by official document sent to [Seller] on May 8, 2008, and the summoning of [Seller] before this court, served pursuant the requirements of the European Service Regulation [Seller] on July 14, 2008.
2.2 In its written memorandum [Buyer] has forwarded and explained six complaints to challenge the judgment, offered evidence and brought productions in the proceedings, with the conclusion that the court of appeal immediately enforceable:
|Primary:||€21.464,99 plus legal interest under Article 119a Dutch Civil Code (hereinafter: "DCC") on this amount, at least over €15.102,72 from July 1, 2008 until the day of total payment,|
|Subsidiary:||€14.316,72, plus legal interest under Article 119a DCC over €5.487,723 from March 1, 2005 until the day of total payment plus judicial interest over €8.828,99 from April 1, 2005 until the day of total payment;|
2.3 In its responding memorandum [Seller] challenged [Buyer]'s complaints, offered evidence and concluded that the court of appeal will confirm the challenged decision immediately enforceable and thus orders [Buyer] to bear the costs of appeal.
2.4 Finally the parties have submitted documents to the court to pronounce a decision
3. The established facts; jurisdiction
Since the district court has found the facts of the case as provided in the final judgment under juridical ground 2 as established, and no complaints or objections are raised, the court will assume those facts in appeal.
The district court assumed its jurisdiction in this case, undisputed in appeal, pursuant to Article 2 of the Council Regulation No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters because [Buyer] is domiciled in the Netherlands. The court of appeal adds that the district court had jurisdiction in the counterclaim pursuant to Article 6 under 3 of that Regulation.
4. Grounds of decision in appeal
4.1 The case is as follows. [Buyer] purchased lemons and mandarins in January 2005 at a price of €13.998,20. The ordered lemons had to be the quality I extra, the highest quality. This first batch was delivered to [Buyer] on January 17, 2005. Initially [Buyer] did not pay the relevant invoice of [Seller] of January 18, 2005 amounting to €13.998,20, and has paid on May 2, 2005 an amount of €8.510,55 deducted from that. According to [Buyer] the lemons of this first batch were not of the ordered quality and [Seller] agreed to credit for an amount of €5.487,73. [Seller] disputed both arguments.
In March 2005 [Buyer] purchased lemons and oranges at a price of €12.673,71. This batch is loaded by [Seller] in Spain on March 10, 2005 and arrived, after transport by order of [Buyer], on March 14, 2005 at [Buyer]'s place of business and is partly transited to Rotterdam.
According [Buyer] it appeared on arrival that the batch had an excessively high temperature. An expert, hired by [Buyer]researched the batch on March 15, 2005 and established that this batch had been partly affected by "Blue/Green mould rot, White mould rot" and by "Blister rot".
Initially [Buyer]left the relevant invoice of [Seller] of March 11, 2005 amounting to €12.673,71 unpaid. [Buyer] paid an amount of €3.808,72 on June 1, 2005. According to [Buyer]this batch was defective because the batch was already cooled insufficiently during loading.
4.2 The district court has considered in the disputed decision regarding the first batch in juridical ground 7.4 that [Buyer] had substantiated the argument insufficiently after [Seller]'s counterclaim disputing that [Buyer] had complained about the quality of the delivered lemons shortly after arrival of that batch. The court considered furthermore that the alleged written complaint of January 29, 2005 was made in a period of twelve days, which in view of the (perishable) character of the purchased goods and the fact that the alleged lack of conformity was easy to establish should not be considered to be reasonable within the meaning of Article 39, first paragraph CISG. The district court thus found that [Buyer] had lost the right to appeal on non-compliance referring to that batch because it did not complain to the [Seller] in time.
According to paragraph 7.5 the district court passed over the alleged agreement to settle because that argument was insufficiently established in the light of the circumstances that it turned out - from an e-mail of April 5, 2005 from [A.] acting on behalf of [Buyer], who made the agreement and its realization and a letter from [Buyer] of April 18, 2005 - that in April 2005 [Buyer] considered the entire amount of the invoice due.
4.3 [Buyer] stands against these decisions of the district court with complaint 1. First [Buyer] claims that it immediately complained motivatedly about the far too low quality of the lemons through [A] in a telephone conversation with an employee from [Seller] after receiving the batch on January 17, 2005 and that it has repeated that complaint by fax on January 29, 2005. [Buyer] tenders relevant evidence.
Secondly [Buyer] argues with that complaint that the district court wrongfully concluded that a period of twelve days can not be regarded as reasonable within article 39, first paragraph CISG, since citrus fruit was properly preserved by [Buyer]. Citrus fruit which is well refrigerated can easily be stored for twelve days. [Buyer] tenders evidence regarding the manner of storage.
Lastly [Buyer] is of the opinion that it met the obligation to furnish the facts according to the explanation on the complaint that it with regard to the agreement that [Seller] would provide a credit invoice for €5.487,73. At this point [Buyer] repeats its offer of evidence from the first instance.
4.4 The court decides on this matter as follows.
Article 39, first paragraph CISG prescribes that the [Buyer] loses the right to rely on a lack of conformity of the goods if it does not give notice to the [Seller]specifying the nature of the lack of conformity within a reasonable time after it has discovered it or ought to have discovered it.
The district court decided according to the complaint about the quality of the lemons that a period of twelve days cannot be considered as a reasonable time, in view of the fact that it concerns perishables and the lack of quality was easy to establish. [Buyer] does not dispute the latter. This also follows from the fact that itclaims to have complained about the lack of quality of the lemons on the day of arrival of the batch. That lemons under good conditions are suitable for long-term storage, does not alter the fact that it concerns perishables.
Since the [Seller] has an interest to find out within reasonable time after delivery if the supplied answers the purchase agreement in order to investigate the complaint and take measures and because investigation with perishables, even in case of proper storage, tends to be complicated after a period, it could have been expected of [Buyer] after finding out on January 17, 2005 that the lemons were not of the highest quality that it would inform [Seller] considerably earlier than on January 29, 2005. If this was the first notification, [Buyer] has lost its right to rely on a lack of conformity of the goods.
4.5 [Buyer] has made a sufficient argument under 4.3, second sentence, that it complained to [Seller] on January 17, 2005, and thus within a reasonable time after discovering that the lemons were not of the highest quality. [Seller] does not only dispute that this announcement is made, but also pointed out (statement of defense in counterclaim, page 4) that [Buyer] did not gave notice of specifying the nature of the lack of conformity. The court of appeal considers the subsequent statement that [Buyer]'s complaint was insufficient on on January 17, 2005 and was too vague in this context, just like the argument in appearance in first instance in the pleading notes of Mr. van Dijk that [A] indicated the nature of lacks at that time. Even though this notice do not have to meet stringent requirements, [Buyer] has failed - even after [Seller] pointed out that this notification was missing - to state on which ground it then gave notice to [Seller] why the supplied lemons did not meet the definition 'Quality I extra". Therefore the [Buyer]'s argument still fails and thus it cannot offer evidence for that argument. So also this stated notification of January 17, 2005 cannot prevent that [Buyer] has lost her right of complaint.
4.6 The court of appeal also points out that in accordance with Article 45, first paragraph CISG the [Buyer] can exercise the rights provided in Articles 46 to 50 and/or claim damages as provided in Articles 74 to 77 if the [Seller]fails to perform any of its obligations under the contract. The right to declare the contract avoided belongs to the first mentioned rights.
It is not clear whether [Buyer] used one of the rights under Articles 46 to 50. The contract is not declared avoided by [Buyer], so the obligation to pay to [Seller] remains notwithstanding in full force.
Partly according to the pleading notes of Mr. Van Dijk at appearance before the district court, [Buyer] intends to settle its claim regarding the damage which it allegedly suffered as a result of its lack of quality of the lemons and which it has estimated at €5.487,73 with the purchase price which it is due to [Seller], at least to order [Seller] to pay the named amount if settlement is not possible.
Since the claim rests on the disputed argument that the lemons did not meet the agreed quality requirements, the evidence of this argument lies with [Buyer].
Furthermore it could have been expected that [Buyer] supported its complaint by letting the lemons get examined by an expert whether or not in or after consultation with [Seller].
That is stated nor proved. From the fax of January 29, 2005 (a client complains about some rot in the lemons) and the invoicing of February 15, 2005 on the sales results (production 2 by statement of defense in claim and at the same time the statement of claim in conditional counterclaim) it follows that the lemons are resold and supplied by [Buyer]. Because of this [Buyer] made it practically impossible to determine whether the lemons complied with the agreement, at least gravely complicated that evidence. [Buyer] apparently has no other evidence than hearing [A.] and [B.], which ithad offered. This implies that the merit of this defense is not easy to determine, especially since [Seller] has disputed the calculation of the damage in appeal. Also for those reasons the defense of [Buyer] had to be rejected in claim.
4.7 It can not be said that [Buyer] based itsstatement insufficiently factual regarding the agreement to provide a credit note regarding this party. [Buyer] has also offered for this argument evidence by witnesses.
[Seller] comments that this argument is inconsistent with the content of the letter of April 18, 2005 in which [Buyer] promised payment and from which letter in appeal not contested judgment of the district court it turned out that [Buyer] then was of the opinion that it was due the entire invoice amount. This comment is countered by [Buyer] with the argument that [Seller] first wished payment and only then would provide a credit note.
It can only mean that, as the promise of the credit note is established, the amount of that credit note could not be settled with the purchase price for the first batch, which also in the eyes of [Buyer]. [Buyer] has also not stated that it is agreed that the amount of that credit note should be paid to it on any time, if settlement would not take place.
From this it follows that the argument that with [Seller] is agreed that it would provide a credit note to [Buyer], could not lead to a proper defense against the payment claim regarding the remainder of the purchase price, nor could function as a basis for the counterclaim. [Buyer] does not get to evidence of that argument.
4.8 As far as [Buyer] relies on price reduction under Article 50 CISG, [Buyer] has lost this right by not complaining in time.
4.9 From the foregoing it follows that complaint 1 fails.
4.10 With regard to the second batch the district court decide that the risk for loss or damage shifts from the carrier to [Buyer] after delivery of the sold goods. (legal ground 7.6), that the reasonable time within Article 39 CISG started at March 10, 2005 because [Buyer] was obliged to examine the fruit before transport in pursuance of Article 38 CISG (legal ground 7.8) and that notification to [Seller] on March 14, 2005 that the temperature was too high at arrival was not made within a period which may be considered reasonably, since it involves perishable citrus fruit and the decay accelerates if the fruit is not stored under the right conditions (legal ground 7.9)
4.11 Against these decisions the complaints 2 and 3 will be discussed.
According [Buyer] the shift of risk took place in accordance with the agreement by delivery of the goods in the Netherlands on March 14, 2004. But even if the district court would be followed in its decision about the transfer of risk, there is still sufficient evidence that the decay of the fruit is caused by circumstances prior to the delivery of the fruit to the carrier. Additional evidence is offered by [Buyer]. The district court also ignores that it does not follow from Article 38 that in the present case, in which was not agreed with the seller that the seller would take care of the delivery of the goods, the inspection had to take place before transport. [Buyer] was, so she argues, on time with its complaint which she made known to [Seller] on March 14, 2005.
4.12 In this respect, the court of appeal considers as follows.
Between parties it is not in dispute that in this case the transfer of risk is decisive for whether the goods meet the demand requirements. The Articles 67 to 69 CISG bring along for each of the in that arranged cases that the transfer of risk took place on March 10, 2005 in Orihuela, so that the products traveled at [Buyer]'s risk.
Article 38 paragraph 1 prescribes that the buyer must examine the goods, or cause them to be examined, within a short a period as is practicable in the circumstances. Article 38 paragraph 2 adds that the examination may be deferred until after the goods have arrived at their destination if the contract involves carriage of the goods. It is established that the present contract does not involve carriage of the goods. [Buyer] does not appeal to that latter provision, but argues that the examination on March 14, 2005 at Apeldoorn is covered within the time referred to in paragraph 1 and that it was not obliged to examine the goods before transport.
The period within the examination had to take place, started on the time of delivery and transfer of risk on March 10, 2005 in Orihuela. The examination, whether the goods complied with the contract at that time, of perishables such as the citrus fruit at issue has to take place without delay, precisely because the goods can be exposed to damage or decay during the transport. The district court correctly decided that timely examination therefore is only possible before the commencement of transport. [Buyer] has lost its right of complaint since this did not happen and the examination preceding the transport could have proved the alleged shortcoming of [Seller] to achieve refrigeration of the goods. Therefore the court of appeal does not assess whether the lacks established on March 14 and 15, 2005 should be attributed to a cause which is[Seller]'s..
The complaints 2 and 3 brought forward fail.
4.13 With complaint 4 [Buyer] raises that the district court was not permitted to allocate the interest claim without [Seller] informing the district court about the method of calculating interest under Spanish law.
4.14 The court of appeal decides that this complaint finds no basis in the law. A dispute concerning the extent of interest to pay by [Buyer] over the sum total can be solved in an enforcement dispute, if necessary.
4.15 Complaint 5 relates to the partial allocation of the claim regarding the non legal expenses. [Buyer] does not dispute that [Seller] may be entitled to reimbursement of reasonable costs obtaining payment of the non legal expenses. [Buyer] disputes the reasonableness of the allocated amount and is under the impression that the allocated amount is not justified by some letters and that the costs of translation should be assessed as liquidation costs.
4.16 [Buyer] overlooks the fact that damages under Article 74 CISG is not subordinate to the limitation of the end of Article 6:96 paragraph 2 under c DCC. It is noted that the non legal activities concern twelve letters to [Seller] and a letter to a third party so it is not a matter of some letters. The costs for translation were made in 2005 and 2006 while the first proceeding was brought before the court in July 2007, so therefore there is no argument to qualify these costs as legal expenses.
This complaint also fails.
Given the complaints brought forward failed, the court of appeal shall affirm the challenged decision. The counterclaims of [Buyer] failed because it lost the right of complaint, provided that the counterclaim concerning the credit note is not attributable to the complaints mentioned in 4.7 above. [Buyer] bears the costs of this appeal since it lost. The claim for reimbursement of what [Buyer] under Court's order has paid must be rejected.
6. The decision
The court of appeal, hereby in appeal:
Orders [Buyer] to pay the costs for the appeal, on part of [Seller] thus far estimated at €570,00 expenses and €894 attorney's fee in accordance with the liquidate fee;
Declares the decision on the costs immediately enforceable;
Dismisses the further or else claimed.
This judgment is handed down by judges J.J. Makking, R.J.J. van Acht and B.J. Lenselink in presence of the recording clerk in a public proceeding on January 19, 2010.
* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Plaintiff of Netherlands is referred to as [Seller] and the Defendant of Germany is referred to as [Buyer].
** Anne Hemmink is finishing her Masters in Private Law at the University of Utrecht and is specializing in International Commercial Law and Corporate Law.Go to Case Table of Contents