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CISG CASE PRESENTATION

Germany 15 July 2010 Appellate Court Hamburg (Medical equipment case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/100715g1.html]

Primary source(s) of information for case presentation: CISG-online.ch website

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Case identification

DATE OF DECISION: 20100715 (15 July 2010)

JURISDICTION: Germany

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

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: 13 U 54/10

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

CASE HISTORY: 1st instance LG Hamburg 3 March 2010 [401 O 99/08]

SELLER'S COUNTRY: Germany

BUYER'S COUNTRY: Turkey

GOODS INVOLVED: Medical equipment


Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 1 ; 7(1) ; 8 ; 14 ; 19 ; 35 ; 39 ; 40 ; 48 ; 53 ; 57(1)(a) ; 58(1) and 58(2) ; 71 ; 85 ; 86(1) ; 95

Classification of issues using UNCITRAL classification code numbers:

1B2 [Private international law points to Contracting State (art. 1(1)(b))];

39A [Buyer must notify seller within reasonable time (art. 39(1))];

39A11 [Degree of specificity required];

39A2 [Within reasonable time (on dispatch of notice see art. 27)];

40B [Sanction: seller loses right to rely on articles 38 and 39];

58A [Buyer to pay when goods placed at buyer's disposition (art. 58(1))]

Descriptors: Lack of conformity known to seller ; Lack of conformity ; Specificity

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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

Unavailable

CITATIONS TO TEXT OF DECISION

Original language (German): CISG-online.ch database <http://globalsaleslaw.com/content/api/cisg/urteile/2448.pdf>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation) [first draft]

The CISG Translation Network

Hanseatic Higher Regional Court (OLG)

15 July 2010 [13 U 54/10]

Plaintiff and Appellant (Seller) v. Defendant and Appellee (Buyer)

Translated [*] by Carmen Schick

The Court has unanimously agreed to dismiss the Defendant`s appeal against the judgment from the regional court of Hamburg on the 3rd March 2010.

REASONS:

The Court found the requirements of Sec. 552 para. 2 ZPO (German Code of Civil Procedure) to be met therefore the appeal by the Defendant has no chance of success.

The regional court fully allowed the action by the Plaintiff.

I. It is correct that the regional court assumed to have jurisdiction. The jurisdiction of the court is to be reviewed ex officio (KG GRUR-RR 2006, 252). The rule of Sec 513 Para. 2 ZPO only concerns the subject matter - the local - and the functional jurisdiction, and does not preclude a review of jurisdiction in the appeal proceedings.

1. Indeed, it cannot be established, that the parties agreed upon a jurisdiction clause with regard to No. 10 of the Plaintiff’s Standard Terms and conditions (“terms and conditions”) (Annex K3).

No. 10 of the Plaintiff’s terms and conditions provides, that the German law, International private law exempted, should be applicable and place of jurisdiction shall be Hamburg when dealing with merchants.

      a. The validity of the jurisdiction clause is reviewed against Art. 23 para.1 s.1 EuGVVO (Brussels I Regulation). The article becomes effective when one party has its seat in a contracting state, whereas the other party has its seat in a non-contracting state (cf. EuGH NJW 2000, 3121, 3122). Neither the wording, nor the objective of Art. 23 EuGVVO requires an “internal market connection to community law”. (“gemeinschaftsrechtlicher Binnenbezug” cf. Gottwald, in: Münch.Komm. ZPO, Bd. 3, 3. Aufl. 2008, Art. 23 EuGVVO Rdnr.7). According to Art. 23. para. 1 S.3 lit. a EuGVVO, the conclusion of a jurisdiction clause requires that the clause was a result of a meeting of the minds between the parties (EuGH NJW 1977, 494 to the identical clause of the Art. 17 para. 1 EuGVÜ; OLG Oldenburg OLG-Report 2008, 694, 696; OLG Celle EuZW 2010, 118, 119).

The Plaintiff initially asserted that the jurisdiction clause in the terms and conditions was printed on the back of its commercial papers, and on its “Order Confirmation” from May 9th, 2007 and August 7th, 2007 (Annex K1 and K2). However, the attached copies of the “Order Confirmation” do not contain any terms and conditions. Instead they contain a reference to the applicability of the Plaintiff’s terms and conditions on the last page that they are available on request and can be found on the internet. This reference only makes sense when the terms and conditions do not form part of the “Order Confirmation”. A mere reference to the terms and conditions applicability – which are not contained in the document ­– does not satisfy the prerequisites of Art. 23 para. 1 S.3 lit a EuGVVO (cf. OLG Celle EuZW 2010, 118, 119). This way it is not guaranteed that the other party in fact agreed to the jurisdiction clause.

      b. A different result does not arise if, regarding the meeting of a minds concerning the inclusion of terms and conditions, the contractually agreed law is considered instead of the autonomous interpretation of Art. 23. 23 para. 1 S.3 lit a EuGVVO, but the contractually agreed law. The sole reference to the applicability of the terms and conditions which are available on request or can be found on the Plaintiff’s webpage, would not suffice in either case. According to Art. 31 para. 1 EGBGB (Introductory Act to the Civil Code), which is applicable to the contract conclusion in dispute as per Art. 28 Rom I Regulation, the law which shall be applied according to the clause, is decisive. In this case, German law.

The referral to German law leads to the applicability of the United Nations Convention on Contracts for the International Sale of Goods (CISG), even though Turkey is not contracting partner to the convention. It is sufficient that the Republic of Germany, for which the CISG came into force on the October 1st, 1991, is a contracting partner to the convention, and that it was a contracting partner to the convention at the time the contract in dispute was concluded. This leads to the application of Art. 1 para. 1(b) CISG, which concerns the applicability of the CISG onto the contract relations in dispute between the parties “when the rules of private international law lead to the application of the law of a contracting state.” Pursuant to this clause, the CISG shall be applicable to contracts of sale of goods, even if under the rules of international private law the law of a contracting state is deemed applicable. The Republic of Germany did not declare a reservation under Art. 95 CISG, which would lead to the non-applicability of Art. 1 para. 1(b) CISG (cf. Huber, in: Münch.Komm. BGB, Bd. 3, 5 Aufl. 2008, Art. 97 CISG Rdnr. 2).

The contract in dispute constitutes a sales contract over goods, and not distribution contracts, as alleged by the Defendant. Even if assumed in favor of the Defendant, that the authorization from the June 6th, 2007 produced by Defendant, contained a distribution agreement. The Defendant as distribution partner of Plaintiff was supposed to resell the products in Turkey, the execution of the distribution contract concluded sales contracts would fall under the scope of the CISG (cf. OLG Koblenz RIW 1993, 934, 936; H. P. Westermann, in: Münch.Komm. BGB, Bd. 3, 5 Aufl. 20008, Art. 1 CISG Rdnr. 6).

Applying the CISG as follows, according to Art. 8, that the recipient of a contract offer, which is underlined by terms and conditions, must have the opportunity to take note of them in a reasonable manner (BGHZ 149, 113, 117). It is required, next to the recognizable will of the user of the terms and conditions in uniform sales law, to include them by either sending the text or to make them otherwise available (BGHZ 149, 113, 117). According to non-harmonized German law, the terms and conditions can become part of the contract between merchants even when the customer does not know them, but had reasonable opportunity to gain knowledge (BGHZ 117, 190, 198). This responsibility to inquire in good faith for the entrepreneurial active contracting partner is not transferable in the same manner to international trading (BGHZ 149, 113, 118). Taking into account the considerable differences between the individual national regulations and the application of the CISG between merchants and non-merchants (Art. 1 para. 3 CISG), it would contradict the principle of good faith in international trade (Art. 7 para.1 CISG) as well as the common cooperation and information-sharing obligation of the parties. To impose the contracting partner with a responsibility to inquire regarding unsent contractual documents would burden him with the risks and disadvantages of unknown opposing terms and conditions (BGHZ 149, 113, 118).

      c. It was concluded that the Plaintiff did not demonstrate that a valid jurisdiction clause according to Art. 23 para.1 s.3 lit. c EUGVVO based on international trade customs existed. It is apparent that the inclusion of non-delivered terms and conditions into the contract by mere reference meets any international trade customs (cf. OLG Oldenburg OLG-Report 2008, 694, 697; OLG Köln, Order from the 21st December 2005, 16 U 47/05).

2. Without a valid jurisdiction clause, the jurisdiction is to be measured according to Sec. 12 et seq. ZPO. In absence of any contractual agreements between Germany and Turkey, Sec. 29 ZPO is the applicable test to determine jurisdiction (OLG Munich, Judgment from the 13th January 2009, 5 U 2283/08). The determination of the place of performance is made after the lex causae, hence the Art. 27 et seq. EGBGB (cf. Art. 28 Rome I Regulation). According to Art. 28 para.1 and 2 EGBGB German law is applicable. The parties did not include a choice of law clause, so that the sales contracts between the parties falls under the law of the state with which they have the closest connection. After finding a contract under Art. 28 para.2 EGBGB, in commercial entrepreneurship such as the one in this case, the closest connection is the seat of business in which the party who exercises performance has. Applying this principle, between the parties, the closest connection is the Republic of Germany, because the delivery of the goods – in this case, the delivery of medical equipment by the Plaintiff – constitutes the characteristic performance in the sales contacts (in lieu of all Martin, in: Münch.Komm. BGB, Bd. 10, 4 Aufl. 2006, Art. 28 Rdnr. 136). Also, at the time the contract was concluded, the Plaintiff was seated in Germany. Therefore German law is decisive and thus the CISG applies (see above I. 1. b.).

Under the applicability of the CISG ,the place of jurisdiction results from Art. 57 para.1(a) CISG, and stipulates the seller’s seat of business for the payment claim as that place (in lieu of all P. Huber, in: Münch.Komm. BGB, Bd. 3, 5.Aufl. 2008, Art. 57 CISG Rdnr. 26). According to this rule, the buyer has – also in this case –, unless otherwise agreed, the buyer is to pay the purchase price at the seller’s place of business. This payment place, accruing from Art. 57 para.1(a) CISG establishes the place of performance and under Sec. 29 para. 1 ZPO, the place of jurisdiction as well (cf. BGH NJW-RR 1997, 690, 691). The argument made in the appeal as to the place of performance according to Sec. 269 BGB (German Civil Code) (Bl. 175 d.A.) fails to recognize the CISG as part of the national German law and lex specialis for the international sales of goods, precedes the German non-harmonized sales law (cf. BGH 96, 313, 322; 149, 113, 116).

II. The high court rightly awarded the Plaintiff the remainder of the purchase price for the medical equipment bought by Defendant as per Art. 53 CISG. There is no dispute as to whether the remaining price corresponds with the agreed upon payment amount under the agreement from the 29th of April 2008 (Annex K8). The Defendant can not raise further objections.

1. The Defendant has no right of retention as to non-conforming delivered goods by Plaintiff according to Art. 35 CISG. Although the CISG does not contain any regulation, which allows a party a general right of retention in case of a breach of contract by the opposing party; the existence of a general right of retention can be derived out of the CISG when overviewing individual rules (esp. Artt. 58 para.1 s. 2, para.2, 71, 85 s. 2, 86 para.1 s. 2 CISG) (cf. G. Hager/Maultzsch, in: Schlechtriem/Schwenzer, Kommentar zum einheitlichen UN Kaufrecht, 5. Aufl. 2008, Art. 58 Rdnr. 13). When the delivered good is in non-conformity with the contract, the buyer has the opportunity to invoke the lack of compliance with the due date with regard to his obligation to pay. According to Art. 58 CISG, the payment requires conformity of the goods with the contract which were provided to the buyer (cf. Müller-Chen, in Schlechtriem/Schwenzer, Kommentar zum einheitlichen UN Kaufrecht, 5. Aufl. 2008, Art. 45 Rdnr. 22).

      a. The Defentandt lost the right to invoke a lack of conformity with the contract according to Art. 39 para. 1 CISG. Under Art. 39 para. 1 CISG the buyer loses the right to invoke a lack of conformity of the goods, if he fails to point this out in a reasonable time after discovery and giving notice to the Seller with the specific lack of conformity. In this case, the Defendant did not fulfill the specificity requirement. Whilst the Plaintiff’s bill from the 24th August 2007 accurately shows which equipment with which serial number was delivered. The Defendant’s states in its email from November 26th 2007 only that roughly 250 devices are problematic, and that a meeting would be needed. Such a vague description does not enable the Plaintiff to carry out the required subsequent fulfilment (rectification or replacement delivery), which is inter alia one aim of Art. 39 CISG. Defendant fails to substantiate that it declared a sufficient reprimand in a reasonable time in any other way. The allegation in its brief from August 31st 2009, that witness B notified of defects in October, is missing any substantiation like place, fashion of the notification, recipient on claimant’s side or anything else.

      b. The Plaintiff did not lose the right, to invoke a violation of the responsibility to objection. Under Art. 40 CISG, the seller cannot invoke a lacking notification, if the lack of conformity is based on “facts which he knew or could not have been unaware and which he did not disclose to the buyer.” With the call-back letter from November 2008 (Annex B7) the Plaintiff did document its knowledge about the defectiveness regarding the delivered equipment of the type SOMNOcomfort 2e and CPAP 20e. At the same time it revealed the danger of a defect to the Defendant. Plaintiff asked the Defendant to signal its willingness to undergo measurements for correction through a signature on the attached document. The measurements for correction then should have been finished until the 31st May 2009. The lack of reaction on the Defendant’s side with regard to the call-back letter in a reasonable time limit can only be received as an approval of the non-conformity from the recipient’s horizon. The above-mentioned email of the respondent from November 26th 2008 neither contains a hint to reject the equipment nor any wish for a subsequent fulfilment. It only refers to a joint effort to tackle the problems, to avoid negative repercussions for the parties’ reputation. The principles of good faith impose the buyer with an obligation to clearly express his wish for subsequent fulfilment. It would have been easy to comply with the Plaintiff plea to send back the list with the defective equipment, and in a second step to send back the defective equipment to the Plaintiff or at least to ask Plaintiff to pick up the equipment at their situs. As far as the Defendant alleges in its appeal arguments that it would have been impractical to send the defective equipment to Germany and that there was the danger that its customers would have changed to competitors, which would have been the commercial death of the Defendant. It is not clear what advantages the Defendant had by keeping the defective equipment.

2. The Defendant has no right of retention due to the alleged breach of the Plaintiff to establish a technical customer service.

      a. The Plaintiff has no obligation to establish a customer service in Turkey. The higher court correctly assumed that the witness evidence offered by the Defendant would lead to inadmissible discovery. An inadmissible discovery is the presentation of evidence, which would only serve facts established by a shot into the dark (cf. Greger, in: Zöller, ZPO, 28 Aufl. 2010, Vor Sec. 284 Rdnr.5). The Defendant alleged with its brief from the 16th of April 2009, that the Plaintiff pledged and promised the establishment of a customer service in Ankara for the purchase of medical equipment (different, see above P.2). On this point it offered evidence by witness testimonial. Under the ZPO the hearing of a witness is only admissible over concrete facts, which were alleged by one party. Lacking a sufficiently substantiated allegation, it also lacks a body of evidence. A witness testimonial cannot evidently have the purpose to substitute the missing concrete submittal of facts (cf. OLG Köln VersR 1973, 130, 131). However, this is the case at hand.

The Defendant’s allegations, that the Plaintiff legally binded itself by pledging to the establishment of a customer service, is not substantiated by a concrete submittal of facts. The Defendant explains that the named witness was present at a meeting in March 2007 and told a representative of Plaintiff that the establishment of a customer service was important to the Defendant (different, see above P.5). However, she did not show that the Plaintiff agreed to such an obligation in presence of the named witness.

The lack of substantiation was known to the Defendant. The Plaintiff unmistakably explained in its brief from the 20th August 2009, that “the Defendant submissions lack any substantiation regarding that point” (different, see above P.2). An indication according to Sec. 139 ZPO was not necessary under these circumstances.

      b. Also in the authorization from the 6th June 2007 (Annex B1) shows that there is no hint for such an obligation. Declarations are to be interpreted in a way, as they would have been understood by a reasonable person in the position of the recipient. This is an objective recipient’s horizon decisive. The higher court correctly interpreted the writ in a way, that the Plaintiff was the only one allowed to execute a reparation service, as soon as it founded an own branch in Turkey. The higher court dismissed any further legal obligations from that writ. For a will on Plaintiff’s side to be legally bound to establish a customer service substantiated clues are missing. The knowledge about the need the respondent of a customer service operated by Plaintiff does not substitute the requirement of a recognizable will to vouch for that.

Even further circumstances, like the email from the 26th April 2007 produced by respondent (Annex B2), does not support the conclusion of a will to be legally bound. The Defendant alleges the email shows that the “if” was no longer in question, but that the “how” of the establishment of a customer service by Plaintiff was apparent. The court can not follow this interpretation. The email only speaks, that there are “developments” in connection with the customer service. Obviously further measurement must be taken, such as the email which mentioned shipment of material, before such a service could be established. The email does not contain a binding time schedule with regard to the further proceedings and as to the representative of Plaintiff, only issues a suggestion. It is to be noted, that first steps in Germany were designated. Finally it is the question “whether the service could be established [in the Defendant’s facility]” formulated in the conjunctive. If, and when under which circumstances a customer service should be established by Plaintiff was thus still open in the produced email.

Anyhow, the purchase of equipment without a customer service provided by claimant in turkey would still not be futile – as the higher court correctly indicated. The Plaintiff is in principle obligated under the sales law warranty of Art. 48 CISG to subsequent fulfillment in case of defective goods.

      c. [...]

      d. Finally the Defendant fail to explain why the obligation of the Plaintiff to establish a customer service should have continuance even after the Defendant agreed to unconditional payment with the payment agreement. After its unambiguous wording were all earlier agreements between the parties replaced. Contrary to the Defendant’s allegations from the appeal arguments, were not only the payment modalities replaced, but also the reverse transaction of specific goods and the possibilities to participate at technical training by the Plaintiff regulated. The obligation in dispute should thus have been included into the payment agreement.

3. Offsettable damages are not due to the Defendant. Possible damages due to a defectiveness of the delivered goods are precluded according to Art. 39 para. 1 CISG (see II 1.). Also damages because of a violation of the obligation to inquire are not existent. The call-back actions in October 2007 did not concern the Plaintiff’s equipment, but the Plaintiff’s competitor’s equipment. In what way the Plaintiff is supposed to avouch for that, was not shown by Defendant. The Defendant has neither right to damages due to the lacking establishment of a customer service from the Plaintiff. Such an obligation does not exist (see II.2.).

III. The awarded accessory claims by the higher court are neither objectionable. The interest claim results from Sec. 228 para. 2, 286 para. 3 BGB; the fee damages are to be compensated by the damages resulting from the delay of performance according to Sec. 280 para. 1, 2, 286 BGB. The interest during pendency of legal actions counted onto the delay damages are to be determined after Sec. 291, 288 para.1 s.2 BGB.

The Defendant receives opportunity to a statement within three weeks from delivery of this order.


FOOTNOTE

* All translations should be verified by cross-checking against the original text.

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