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CISG CASE PRESENTATION

Germany 29 May 2012 District Court Köln (Printed work case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/120529g1.html]

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

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Case identification

DATE OF DECISION: 20120529 (29 May 2012)

JURISDICTION: Germany

TRIBUNAL: LG Köln [LG = Landgericht = District Court]

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: 88 O 57/11

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

CASE HISTORY: 2d instance Oberlandesgericht Köln 24 April 2013; 3d instance Bundesgerichtshof 07 January 2014

SELLER'S COUNTRY: Italy

BUYER'S COUNTRY: Germany

GOODS INVOLVED: Printed work


Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 3(1) ; 8(2) ; 25 ; 33(a) ; 45(1)(b) ; 49(1)(a) ; 74 ; 75 ; 77 ; 78 ; 79

Classification of issues using UNCITRAL classification code numbers:

1B1 [Parties in different Contracting States (art. 1(1)(a))];

8B [Interpretation based on objective standards (art. 8(2))];

33A [On date fixed by or determinable from contract];

49A2 [Seller does not deliver or refuses to deliver];

74A1 [Includes loss of profit]

Descriptors: Acceptance of offer ; Avoidance ; Damages ; Delivery ; Fundamental breach ; Interest ; Letters of credit ; Profits, loss of

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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://www.globalsaleslaw.org/content/api/cisg/urteile/2476.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

District Court Cologne (Landgericht)

Buyer (plaintiff) vs. Seller (dependant)

29 May 2012 [88 O 57/11]

Translated [*] by Niclas Höhle

RULING

The [Seller] is to pay the [Buyer] 109,858.56 € along with interest in the amount of 5 percentage points over the base interest rate from the 14.12.2011 (pendency).

The [Seller] bears the cost of the proceedings.

The verdict is provisionally enforceable against a security deposit in the amount of 110% of the sum to be enforced.

FACTS

The [Buyer] sued the [Seller] for damages for failing to meet a fixed commercial date.

The [Buyer] is a publisher, the [Seller] is an Italian printing company mainly conducting its printing orders in China.

After negotiations between a free commercial broker and the [Buyer] in German, the [Buyer] sent a letter in German containing an unsigned offer for the printing of 124,104 guide books for different regions and a net price of 0.475 € and a total net price of 58,949,40 € to the trade broker. The offer included the following phrases: “15.07.2011 FOB fixed commercial date [15.07.2011 FOB handelsrechtlicher Fixtermin]”, “place of jurisdiction is cologne. German law applies complementary. [Gerichtsstand ist Köln. Ergänzend gilt deutsches Recht]”

The letter ended with a request to “ … send a binding order confirmation until the 21.04.2011 [uns bis zum 21.04.2011 eine verbindliche Auftragsbestätigung zukommen]”

The president of the [Seller]’s company signed or initialled the offer of the [Buyer] on the right bottom of every page. The signed/marked offer was delivered to the trade broker by an employee of the [Seller]. The additional cover letter contained the phrase: “allego l’oridne firmato” (please find attached the signed offer). The trade broker relayed the signed offer to the [Buyer]. In his cover letter he wrote ”here is your order with a signature of the managing director of the [Seller] on every page to confirm.”

The background for the fixed date was the obligation of the [Buyer] to deliver the guide books to a supermarket in connection with a promotional offer.

The [Buyer] understood the signature of the [Seller] as acceptance of the offer. Thereafter, both parties began with the performance of the contract. Afterwards, communications were conducted in English.

The parties had carried out one printing order before the dispute began, which was based on an essentially similar offer to this case. Concerning this first order, the [Buyer] opened a letter of credit in favour of the [Seller] in the amount of the order. The parties are in disagreement over mutual claims arising out of this transaction.

Between the 30.05.2011 and the 09.06.2011 the printing templates were successively approved and as far as necessary, corrected. The [Seller] delivered sample boxes on the 13.06.2011.

On the 10.07.2011 the trade broker informed the [Buyer] that there would be delays due to a paper shortage and therefore delivery could only be guaranteed for the 12.08.2011 (FOB).

The [Buyer] demanded from the trade broker the compliance with the agreed delivery date and indicated in a letter from 11.07.2011 the possible liability for failure to meet the agreed-upon delivery date. The [Buyer] proposed to conduct the printing in Italy if the delivery date could not be met with the facilities in China.

The delivery date of the 15.07.2011 was not met. With a letter from the 15.07.2011, the trade broker urged the [Buyer] to establish a letter of credit to secure the claim of the [Seller]. The president of the [Seller]’s company rejected to deliver the guides from china via airmail with a letter from 18.07.2011. Production in Italy was conditioned on the payment of the previous order and the establishment of a letter of credit in favour of the [Seller] for the current order. The [Buyer] rejected this proposal with a letter from its attorney on the 18.07 and 20.07.2011.

With the letter of the 18.07.2011 the [Buyer] told the [Seller] that it was no longer interested in receiving the guide books and that the printing order was awarded to another company. Additionally the [Buyer] demanded compensation for the additional costs. With letter from the 19.07.2011 the [Buyer] ended all business relations between the parties and rescinded all remaining offers for additional transactions.

On the 21.07.2011, the [Buyer] awarded the printing order to a print shop in Germany with a net price of 166,000 €. For the establishment of a letter of credit the [Buyer] incurred an additional cost of 1,511.80 €.

Additionally the [Buyer] had pre-trial attorney fees in the amount of 1,760.20 € of which it demands 880.10 € and furthermore the compensation for the costs of sending examples and labels amounting to 396.06 €.

The [Seller] precautionary cancelled the contract with a letter from the 14.02.2012 arguing that the [Buyer] did not approve the printing templates.

The [Buyer] is of the opinion that the parties entered into a valid contract when the [Seller] returned the offer of the [Buyer] signed. The [Buyer] argues that the [Seller] was of the same opinion as it began to process the order. Concerning language difficulties referred to by the [Seller] the [Buyer] argues that the [Seller] did not reveal those and used a German trade broker.

The problems of the transaction were within the risk of the [Seller] as they arose from the supply problems in China.

The [Seller] demanded a letter of credit only after concluding the contract.

In the beginning the parties agreed that no letter of credit was provided. As the [Seller] conditioned an in time production in Italy on the unfounded demand of a letter of credit the [Buyer] had no alternative than to award the print order elsewhere. Prior to awarding it to another company the [Buyer] considered four offers namely from the companies O, T, B and C.

The [Buyer] requests:

1. To order the [Seller] to pay 2,807.96 € along with interest in the amount of 5 percentage points over the base interest rate since pendency.

2. To order the [Seller] to pay additional 107,050.60 € along with interest in the amount of 5 percentage points over the base interest rate from the pendency.

The [Buyer] did not argue on a precautionary motion contained in its written statement.

The [Seller] requests:

The action to be dismissed.

The [Seller] contests the jurisdiction of the court. The [Seller] argues that the offer in German could not be held against them as they did not understand it. The ability of the trade broker to understand German should not make a difference as he was not authorized to conclude a contract. The [Seller] argues that this problem exists regarding the place of jurisdiction clause as well as the rest of the contract. Furthermore no fixed commercial date is known in Italian law.

The [Seller] argues that the previous business relation cannot affect this because no custom was established between the parties.

Furthermore the signature of the general manager below the offer should be considered to be a notice of receipt.

The [Seller] is of the opinion that it was within the legal rights to demand a letter of credit for the processing of the offer. A letter of credit in favour of the print shop is considered customary therefore the [Buyer] could not have assumed that the [Seller] would not proceed with the contract without a letter of credit.

According to the details of the facts and the status of the dispute it is referred to the briefs and their annexes.

REASONING OF THE COURT:

The admissible claim is substantiated.

I. The district Court of Cologne has assumed jurisdiction. The parties have validly chosen Cologne as the place of jurisdiction.

1. The jurisdiction of the court stems from Council Regulation (EC) No. 44/2001 on jurisdiction and recognition and enforcement of judgments in civil and commercial matters from december the 22nd 2000 EuGVVO. The lawsuit is a commercial matter within the meaning of Art. 2 EuGVVO. The necessary cross border relation (Thomas/Putzo/Hüßtege, ZPO, 33rd ed., Vorbem EuGVVO, rec. 11) is fulfilled as the [Buyer] is based in Germany and the [Seller] is based in Italy.

2. The parties have validly agreed in writing on Cologne as place of jurisdiction according to Art. 23 para. 1 EuGVVO.

      a) The formal requirments of Art. 23 para. 1 EuGVVO shall ensure that an agreement by the parties is without any doubt in force. A written agreement within the meaning of Art. 23 para. 1 1st sentence lit a. first alternative EuGVVO, requires a written declaration of the intent of the parties. Deviating from Sec. 126 para. 2 BGB (German Civil Code), this may be contained in two different writings as far as it is evident that they are corresponding (BGH NJW 2001, 1731; Urt. V. 9. März 1994 – VIII ZR 185/92). It is sufficient to convey these declarations through modern communication channels which do not allow for a handwritten signing (Musielak/Stadler, ZPO, 9th ed., Art. 23 EuGVVO rec. 7; Zöller/Geimer, ZPO, 29th ed. Art. 23 EuGVVO, rec. 13).

It is not contrary to the assumption of a written agreement that the [Buyer] did not sign its offer and the president sent it back signed or initialled.

The OLG Karlsruhe (higher regional court) advocates (verdict from the 15.01.2009 – 4 U 72/07) that a handwritten signature of both parties is necessary as cited by the [Seller]. The BGH (German federal supreme court of justice) so far has left this question unanswered.

In the opinion of this chamber, a handwritten signature is not necessary as can be extracted as an argumentum e contrario from Art. 23 para. 2 EuGVVO. The electronic form could not be equivalent to the written form if a handwritten signature was necessary. Therefore the BGH generally accepts for the written form the submittal communication channels which do not allow for handwritten signature (BGH NJW 2001, 1731). The important aspect is the embodiment in a written text that allows to identify the author/originator. In accordance with intent and purpose of the written form requirement in the meaning of Art. 23 para. 1 3rd sentence lit. a 1st alternative EuGVVO, is to ensure that the parties actually agreed to a clause that deviates from the general rules of jurisdiction (Oberster Gerichtshof der Republik Österreich, Beschluss vom 07.02.2007, Az 2 Ob 280/05 y (Supreme Court of Justice of the Republic of Austria)).

      b) If one disregards the necessity of handwritten signature of both parties, the declaration of the parties as to the choice of the place of jurisdiction fulfils the requirement of the written form in the meaning of Art. 23 EuGVVO.

The [Buyer] expressed its intention to choose Cologne as the place of jurisdiction in its offer from the 19.04.2011. The letter was not signed but the author, namely the managing director, can be identified.

The president of the [Seller]’s company sent all pages of the agreement back signed including the page containing the choice of the place of jurisdiction. As a handwritten signature is not necessary, it is unimportant whether it was a signature or only initials.

      c) The [Seller] argues unsuccessfully another meaning of the signature or initials namely to show merely a notice of reception. The [Seller] sent the signed offer intentionally back to the [Buyer] without explaining this alleged meaning. In accordance with the decisive recipient’s horizon, the action of the [Seller] was an acceptance of the offer. The [Buyer] asked the [Seller] for a binding acceptance of the offer until the 21.04.2011. From the point of view of the [Buyer] it had to be regarded as an acceptance when the [Seller] sent the signed offer back without any further explanation. An understanding as notice of reception was improbable. Especially it is not explained why every page was signed or initialled if it was a meant as a mere notice of reception. Additionally the attached notes from the [Seller] to the trade broker (“Ti allegro l’ordine firmato”) an the correlating trade brokers phrase (“hier ist dein Auftrag mit Unterschrift von Valention Conte auf jeder Seite um zu bestätigen”[here is your order with signature from Valention Conte on every page to confirm]) could from the point of view of the [Buyer] only lead to the understanding of an acceptance of the offer.

      d) Without success, the [Seller] refers to the fact that its president did not understand the German language. The validity of the choice of place of jurisdiction is not contradicted by the fact that it was included in parts of the offer written in German. A written choice of place of jurisdiction is valid although one party that signs it does not understand the language it is written in. With its signature it indicates its consent with the offer to the opposing party, otherwise they should not have signed the agreement (OLG Hamm, Urt. v. 20.09.2005, Az. 19 U 40/05)

II. The lawsuit is founded pursuant to Art. 74, 25, 33, 45, 49 CISG.

1. The CISG (United Nations Convention on Contracts for the International Sale of Goods – CISG) from the 11th April 1980 (BGBl. 1989 II, S. 588) is applicable.

      a) The parties have validly subjected their contract to German law.

The applicable law is determined pursuant to Regulation (EC) No. 593/2008 of the European Parliament and the Council. According to Art. 1 para. 1 Rome I the regulation is applicable to contractual obligations in civil and commercial matters which show a relation to the law of different states. The parties concluded a contract for work and material and are seated in different states.

According to Art. 3 para. 1 Rome I, a contract is subject to the law chosen by the parties. The choice of law has to be explicit or unambiguously determinable from the circumstances of the case. The parties have explicitly agreed on the choice of German law including the CISG (On the application of the CISG in case of the choice of German law: BGH, NJW 1997, 3309, 3310).

      b) The evaluation of the case is according to Art. 1 para. 1 lit a, Art. 3 para. 1 CISG determined by the provisions of the United Nations Convention on Contracts for the International Sale of Goods. The convention applies to sales contracts regarding goods between parties that are seated in different states when these states are contracting states to the CISG. Art. 3 CISG provides that contracts regarding the delivery of goods that are to be manufactured or produced are equated to sales contracts except where the purchaser has to supply an essential part of the substances necessary for the manufacture or production or the preponderant part of the parties’ obligation that delivers the goods are services.

The [Buyer] is seated in Germany and the [Seller] is seated in Italy. Germany and Italy are contracting states to the CISG. The Parties concluded a contract for work and materials. The [Seller] was obliged to deliver guide books printed in accordance with the specifications of the [Buyer]. The necessary material was to be acquired by the [Seller].

      c) The application of the provisions of the CISG does not lead to essential deviations to the legal consequences following the application of the HGB (German Commercial Code).

2. The [Buyer] has a claim for damages due to the failure to meet the fixed date transaction according to Art. 74, 25, 33, 45, 49 CISG in the amount of 109,858.56 €.

      a) The parties agreed on the delivery of 124,104 guide books with a net price of 0.475 € and a net total of 58,949.40 €. With the signature below the offer was, as already explained, accepted by the general manager of the [Seller] from the determining point of view of the recipient following Art. 8 para. 2 CISG.

      b) The [Buyer] is pursuant to Art. 74 CISG entitled to 107,050.60 € in damages for additional cost stemming from a hedging transaction.

            aa) The [Seller] did not meet the agreed fixed date and contravened its delivery obligation of Art. 3 lit. a CISG. This breach of duty entitles the [Buyer] according to Art. 45 para. 1 lit. b CISG to damages following Art. 74 – 77 CISG.

It is a fundamental breach of duty in the meaning of Art. 49 para. 1 lit. a, 25 CISG.

A breach of duty is pursuant to Art. 25 CISG fundamental if it results in such a detriment to the other party as substantially to deprive him of what he was entitled to expect under the contract. Art. 25 CISG is precluded when the [Seller] did not foresee and a reasonable person of the same kind in the same circumstances would not have foreseen such a result.

The default on the FOB delivery date on the 15.07.2011 only constitutes a fundamental breach of contract if the delivery date was evidently of centrality and the [Buyer] had no or little interest in later delivery. This had to be evident for the [Seller] at contract conclusion (OLG Düsseldorf, Urt. v 21.04.2004, Az. I – 15 U 88/03, CISG-online Nr. 915; OLG Hamm, Urt. v. 12.11.2001, Az. 13 U 102/01, CISG-online No. 1430)

The parties have explicitly and for the [Seller] noticeably agreed on the July 15, 2011 15.07.2011 as a fixed date of delivery. The offer that was signed by the general manager of the [Seller] contained the provision “15.07.2011 FOB fixed commercial date”. Even if the general manager was unaware of Sec. 376 HGB can the meaning of the word “Fixterim [fixed date]” not be mistaken in the German language which was accepted by the [Seller] and fixed-date clauses are common in the International printing business (HG des Kantons Zürich, Urteil vom 25.06.2007, Az. HG 050430/U/ei, CISG-online No. 1564).

            bb) Therefore the [Buyer] is entitled to compensation for the resulting losses including loss of profit. Art. 75 CISG explicitly provides that this includes compensation for hedging transactions. Even though Art. 75 CISG cannot be applied in this case as the [Buyer] did not express that it wanted to terminate the contract which is a precondition of Art. 75 CISG. It cannot be drawn from the letter from the 18.07.2011 which corresponds with the point of view of the [Buyer]. It, however does not hinder the [Buyer] to demand these costs on the context of Art. 74 CISG as Art. 74 CISG is applied as a superordinated compensation provision next to Art. 75 CISG (Schlechtriem/Schwenzer/Stoll/Gruber, CISG, Art. 75, Rdnr. 2).

The restrictions of Art. 74 2nd sentence CISG, according to which the damages can not be higher than foreseen, is not applicable in this case. The [Seller] was aware, that the order was “fixed”, as there was a following delivery obligation toward the Discounter Aldi. [Seller] had to be aware of the high contractual penalties of the [Buyer] towards Aldi in case of a late delivery, which made it necessary from the [Buyer’s] point of view, to ensure the delivery, even to much higher conditions than which came here into force. Additionally, [Seller] was aware that a covering purchase would cause much higher costs due to the short remaining time frame. The calculated costs here which approximately double, in comparison to the order, were foreseeable to the [Seller].

      b) The [Seller] was not allowed to refuse the execution of the order on the basis that the [Buyer] refused to issue a letter of credit. The issue of a letter of credit was not agreed upon. There are no indicators to assume an implicit agreement on a letter of credit. This demand was raised at a later time which shows that it was not agreed upon at the time of contract execution.

      c) The problems relating to the supply of paper do not release the [Seller] from its liability pursuant to Art. 79. According to Art. 79 CISG the [Seller] would not be liable for the breach of the delivery duty if it was proven that the delay was caused by circumstances beyond its control and at the time of contract conclusion therefore could not have been reasonably expected to have been taken into account or to be avoided or overcome it or its consequences. It is not demonstrated that the [Seller] or its subcontractors could not have timely stocked up with paper.

      d) The damage is evidenced by the invoice of company O.

      e) In connection with the hedging transaction the [Buyer] bore additional costs for a letter of credit in the amount of 1,511.80 €.

Pursuant to Art. 74 CISG the [Buyer] additionally can claim its frustrated expenditures of 396.06 € and its reasonable pre-trial lawyer fees in the amount of 880.10 €.

According to Art. 74 CISG the [Buyer] can claim all costs that it in reliance on the performance of the contract could reasonably spent which now seem useless (frustrated expenses).

The shipping of the samples and labels from the [Buyer] to the [Seller] resulted in costs in the amount of 396.06 €. These costs were foreseeable for the [Seller] as the shipping of samples and labels was in accordance with the agreement of the parties.

Furthermore prosecution costs can be compensated as far as they are reasonable (Honsell/Schönke/Koller, UN-Kaufrecht, 2. Aufl., Art. 74, Rn. 32 ).

The prosecution of its rights resulted for the [Buyer] in pre-trial lawyer fees in the amount of 880.10 € for legal advice and lawyers correspondence for the termination of the contract after defaulting on the FOB delivery date on the 15.07.2011.

      f) The [Buyer] did not breach its duty under Art. 77 CISG to mitigate the loss.

            aa) Especially since the [Buyer] could not be expected to accept the offer of the [Seller] for production in Europe with its new conditions.

According to Art. 77 CISG the [Buyer] is obliged to take all reasonable measures to mitigate the losses resulting from the breach of a contract of the other party. Had the [Buyer] neglected this duty, the [Seller] could have demanded the reduction of the damages in the amount that should have been prevented.

The reasonable measures efforts of the [Buyer] have failed.

The [Buyer] offered the [Seller] in its letter from the 11.07.2011 that the [Seller] could print in Italy instead of China if otherwise the date of delivery could not be met. In its letter from the 18.07.2011 rejected the general manager of the [Seller] to deliver the goods via airmail from China. A production in Italy was conditioned on the payment of the previous transaction and the establishment of a letter of credit in favour of the [Seller]. The [Buyer] did not have to accept this.

            bb) Also under the obligation of Art. 77 CISG to mitigate the loss, no fault of the [Buyer] can be found in awarding a new order to company O.

The [Buyer] conducted a reasonable hedging transaction with an offeror with a net price of 166,000 €. The costs of this hedging transaction are sufficiently evidenced by the invoice. As far as the [Seller] contests that the [Buyer] sought offers or comparison, the [Seller] was not able to show that the [Buyer] did not choose a favourable and comparably secure alternative.

3. The [Buyer] can claim interest during pendency according to Art. 78 CISG in conjunction with Sec. 291 BGB in the amount of 5 percentage points above the base interest rate since 14.12.2011. Art. 78 CISG does not contain autonomous provisions concerned with interest. The conditions of payment default are fulfilled since pendency. The interest rate is set by Sec. 291 BGB which can be applied due to the choice of German law.

III. Ancillary Decisions based on Sec. 91 para. 1, 709 ZPO (German Code of Civil Procedure)

Amount in dispute: 107,050.60


FOOTNOTE

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

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Pace Law School Institute of International Commercial Law - Last updated December 8, 2014
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