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CISG CASE PRESENTATION

Germany 26 September 2012 Supreme Court (Clay case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/120926g1.html]

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

Case Table of Contents


Case identification

DATE OF DECISION: 20120926 (26 September 2012)

JURISDICTION: Germany

TRIBUNAL: Bundesgerichtshof [Federal Supreme Court]

JUDGE(S): Dr. Milger, Dr. Achilles, Dr. Schneider and Dr. Buenger

CASE NUMBER/DOCKET NUMBER: VIII ZR 100/11

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

CASE HISTORY: LG Koblenz, decision of 27 March 2007 (4 HK.O 47/06); OLG Koblenz, decision of 24 February 2011 (6 U 555/07)

SELLER'S COUNTRY: Germany

BUYER'S COUNTRY: Netherlands

GOODS INVOLVED: Clay


Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 7 ; 35 ; 40 ; 45 ; 74 ; 77 ; 80 [Also Cited: 3 ; 38 ; 39 ; 79 ]

Classification of issues using UNCITRAL classification code numbers:

7A3 [Observance of good faith];

35B1 [Fitness for purposes for goods of same description (art. 35(2)(a))];

77A [Obligation to take reasonable measures to mitigate damages];

80A2 [As general principle]

Descriptors: Conformity of Goods ; Damages ; Good faith ; Mitigation of loss

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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 website <http://www.globalsaleslaw.org/content/api/cisg/urteile/2348.pdf>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

German: Schroeter, BGH EWiR Art. 35 CISG 1/13, 47-48

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Case text (English translation) [second draft]

The CISG Translation Network

Federal Supreme Court (Bundesgerichtshof)

26 September 2012 [VIII ZR 100/11]

Translation [*] by Nathalie Hofmann [**]

In the name of the people

Judgment

a)    In order to meet the requirements of fitness for its ordinary purpose under Art. 35(2)(a) CISG the delivered goods must be fit for their suggested uses in light of the material and technical specificities of the goods and reasonable market expectation.
 
b)    It is not expressly settled in the CISG how to treat cases in which both parties to the contract contributed to the damage by committing independent breaches of contract. Pursuant to Art. 7(2) CISG, this question has to be answered, in light of the general principles underlying Arts. 77 and 80 CISG. In case of dividable remedies, like damages, the respective party’s contribution to the damage has to be reasonably taken into account.

The VIIIth Civil Chamber of the Federal Supreme Court, based on the oral hearing of 23 May 2012, represented by the Presiding Judge Ball, the Judges Dr. Milger, Dr. Achilles, Dr. Schneider and Dr. Bünger held that:

Upon [Buyer’s] appeal on questions of law the judgment of the 6th Civil Chamber of the Appellate Court of Koblenz of 24 February 2011, as corrected by decision of 4 April 2011, is annulled.

Upon [Buyer’s] appeal on questions of fact the judgment of the 6th Civil Chamber of the Appellate Court of Koblenz of 24 February 2011 is partially revised, dismissing the further appeal. It is declared that [Seller] has to compensate [Buyer], or [Buyer’s] insurance company as far as such claims were passed to it, for any current and future damage caused by the delivery of clay containing dioxin, carried-out by [Seller’s] legal predecessor in the year 2004.

[Buyer’s] further appeal and [Seller’s] appeal on questions of law are dismissed.

Each party has to bear its own legal costs and half of the court costs.

According to the law

Facts of the case:

1. [Seller], having its place of business in Germany, is engaged in the extraction and distribution of mineral raw materials. On the basis of a longstanding business relationship, [Seller's] legal predecessors (in the following uniformly referred to as: [Seller]) delivered ground clay (kaolinite) named “Aardappelbescheidingsklei A 01” (Potato Separation Clay A 01) for the grading of potatoes to [Buyer], who has its place of business in the Netherlands. During the grading process the potatoes transit through a clay-water bath; where potatoes of lower starch content, because of their lower specific weight, are separated from potatoes with higher starch content needed for food processing. [Buyer] then sells all potatoes with lower starch content together with the waste peel of the potatoes with higher starch content to feed producers for use as animal feed.

2. In 1999 it was discovered that clay extracted from clay pits in Westerwald contained high levels of natural dioxin, including the clay extracted from [Seller's} clay pit R. Following this, [Seller] was prohibited by administrative order to market its ground clay “for the purpose of using it as an additive in the production of feed”. Between July and October 2004 [Seller] delivered “Aardappelbescheidingsklei A 01” extracted from the clay pit R to [Buyer]. [Buyer] used this clay as described to separate potatoes and delivered the sorted potatoes together with the waste peel to animal feed producers. In Autumn 2004 elevated dioxin levels were detected in milk and milk products of Dutch production and an examination conducted in the beginning of November 2004 of the clay on [Buyer's] premises delivered by [Seller] showed dioxin levels far above the limit admissible in kaolinite clay and in other additives accepted in animal feed as binders, anti-caking agents and coagulants. [Buyer], in whose potato products elevated dioxin levels were not measured, notified [Seller] and complained about the high dioxin levels in the clay on 4 November 2004.

3. The district court has dismissed the action for declaration that [Seller] has to compensate [Buyer] and its insurance company for any current and future damage resulting from the delivery of clay containing dioxin to [Buyer] in the year 2004. Upon [Buyer's] appeal on questions of fact, the appellate court granted the claim with the restriction that [Seller's] duty to compensate cannot exceed the financial loss that [Buyer] would have suffered if [Buyer] had taken appropriate measures to keep the dioxin from getting into the animal feed in excessive amounts from the clay. With their appeals on questions of law admitted by the appellate court [Buyer] further pursues its claim for declaratory relief and [Seller] continues to pursue its motion to dismiss the claim.

Reasons of the decision:

4. The appeal on questions of law by [Buyer] is partially successful; [Seller's] appeal on questions of law is unsuccessful.

I.

5. The appellate court (Appellate Court of Koblenz, CISG-online Nr. 2301) essentially stated the following reasons for its decision:

6. In accordance with the United Nations Convention on Contracts for the International Sale of Goods (CISG) applicable to the contractual relationship, [Seller] was, in principle, liable for damage caused to [Buyer] by delivering clay containing dioxin. However, it could be left open, if the delivered clay – as it was undisputed between the parties before the court of first instance – might have been easily washed off the separated potatoes or if this was not the case pursuant to the new factual allegations of [Seller] in the appellate proceedings. Neither the question whether the delivered clay was an admissible additive for the purpose of grading the potatoes and therefore a conforming delivery under Art. 35 CISG, nor the question, important for the examination pursuant to Art. 38 CISG, if the lack of conformity relates to facts of which [Buyer] knew or could not have been unaware in the meaning of Art. 40 CISG were considered decisive. In any case [Seller] was liable under Art. 45 CISG for a breach of the obligation to warn [Buyer] about the dioxin content in the delivered clay, which follows from the principle of good faith under Art. 7(1) CISG.

7. The appellate court further held that [Seller] had breached this warning obligation, which is an obligation that exists besides the obligation to deliver conforming goods, if the seller realizes based on his own expertise that the goods are not fit for the envisaged purpose. Based on the official examination conducted in 1999 [Seller] had known that the clay extracted from the pit R and delivered to [Buyer], which according to the contractual nomination of the goods was to be used for food production, contained critical levels of dioxin. [Buyer], as [Seller] had known, had been unaware of this fact. Although [Buyer] should have known that clay from Germany could contain dioxin, it could not have been aware that the particular clay delivered to it from this specific clay pit was seriously contaminated with dioxin. In light of the generally known health risks associated with dioxin and the fact that the clay containing dioxin was supposed to come in contact with potatoes, [Seller] should have disclosed their superior knowledge to [Buyer]

8. In its further reasoning the appellate court found that [Seller] could not rely on [Buyer] discovering the high dioxin level without indication by [Seller]. While in its own interest [Buyer] should have examined the clay with regards to a possible dioxin contamination, [Seller] nevertheless had to envisage that such examination may not take place or may not be conducted with sufficient care. This is especially so, because [Buyer] could only have discovered the dioxin content of the delivered clay by conducting relatively complex laboratory tests while [Seller] already had had secure knowledge which it could have communicated by simple notice without. [Seller] could also not rely on the potatoes being thoroughly washed after grading by [Buyer] to free them from dioxin residues. [Seller] rather had to consider that [Buyer], in ignorance of the dioxin contamination would not pursue the cleaning with sufficient care.

9. According to the appellate court, [Seller] was also not excused by the fact that the danger emanating from the delivered clay only actualized in the waste for animal feed and not in the potatoes for human consumption in [Buyer’s] production. In this respect, it did not matter whether the dioxin contamination later discovered in milk products was caused by the clay residues on the potato peels or, as alleged by [Seller], by [Buyer’s] giving the additional clay-water bath to the animal feed production because [Seller] had known that the delivered clay was to be used for the grading of potatoes in the context of food production. [Seller] further could have realized that the waste was not destroyed but used to make a profit, with use as animal feed having been one of the most probable, which did not allow for inadmissible dioxin levels.

10. The appellate court further reasoned that the damages payable according to Art. 45(1)(b) CISG were neither excluded under Art. 79 CISG nor was [Buyer] barred from invoking [Seller’s] breach of their obligation to warn pursuant to Art. 80 CISG. [Buyer] had not contributed to this breach of obligation, since it was neither obliged to ask [Seller] whether the goods possibly contained dioxin nor to inform [Seller] that the production waste would be resold without prior cleaning. In its own interest, it would have been sufficient for [Buyer] to examine the clay after delivery with regards to dioxin without prior notice to [Seller]. In any event, Art. 80 CISG would not come into play because [Seller] was found responsible for the main reason for breach of contract.

11. However, the appellate court found that the compensatory damages under Art. 74 CISG and foreseeable by [Seller] was to be reduced pursuant to Art. 77 CISG to the extent that [Buyer] had failed to take measures appropriate in light of the circumstances to mitigate the damage. It had to be taken into account that [Buyer], before using the clay, had not verified if any danger would result from use for the food to be processed and the animal feed to be produced. If [Buyer] knew about the discovery of high levels of dioxin in clay from German production in 1999 with the consequence of lack of fitness for animal feed production, [Buyer] would have been responsible to take protective measures against the contamination of not only the food produced but also of the waste destined to be used as animal feed. If [Buyer] did not know of this possibility, it was nevertheless to blame for not having been informed about the potential danger related to the use of the potato separation clay with help of the generally available sources of information. Especially as a food producer [Buyer’s] product responsibility entailed the obligation to be and remain informed about questions of food safety and disposal and reuse of waste.

12. The appellate court found that, in order to comply with this obligation to be and remain informed, [Buyer] should have verified that the clay delivered by [Seller] was not dangerous. To this effect [Buyer] should have asked [Seller] for additional information on the innocuousness of the clay since the information received did not concern the dioxin content of the clay and further that [Buyer], on its own accountability, should have undertaken sample tests to control the clay with regards to a potential disrespect of the admissible maximum dioxin level which would have been possible without much effort according to the expert evidence heard. The appellate court rejected [Buyer’s] argument that this would have been unusual in its branch of trade as being an insufficient excuse.

13. According to this reasoning, [Buyer] could not successfully request compensation for the damage that occurred because of the unexamined use of the clay containing dioxin and the contamination of animal feed caused thereby. These damages would only have been granted if [Buyer] had met its obligation to mitigate the damage for example by disposal of the potato separation clay.

14. The appellate court further rejected any claims based on culpa in contrahendo or tort besides the claim based on Art. 45 CISG. The CISG was considered to be exhaustive in this regard and to supersede national law.

II.

15. These findings do not withstand the test of legal review in all points.

16. According to the applicable United Nations Convention on Contracts for the International Sale of Goods (Art. 1(1)(a) CISG, Art. 3(2) sentence 1 EGBGB) [Seller] has to pay damages to [Buyer] under Arts. 45(1)(b), 74 CISG. It breached the obligation to deliver goods in conformity with the contract because the separation clay delivered did not meet the requirements of the contract in the meaning of Art. 35(1) and (2)(a) CISG. However, [Buyer] is not entitled to the full amount of damages claimed, because [Buyer] itself seriously dishonoured its responsibility with regards to the trading of (pre)products for animal feed production and thereby contributed itself to the occurrence of the damage.

17.  1.  On the basis of its finding, the appellate court wrongly left the question of the conformity of the delivered separation clay unanswered.

18.       a) However, the appellate court correctly found that the ground clay (kaolinite) ordered by [Buyer], a food producer according to its denomination “Aardappelbescheidingsklei A 01”, without any further concretisation or conditions with regards to the quality, had to be fit for the technical use as separator for potatoes, and because of its foreseen use as additive in food processing the clay had to comply with food legislation and regulations pursuant to Art. 35(1) and (2)(b) CISG. Given that, according to the appellate court’s unchallenged findings, it is common that potatoes sorted out as unfit for food processing are used as animal feed together with the waste peel, the concurrent use of the separation clay for the treatment of (pre-)products for animal feed production is a purpose which also is an ordinary purpose under Art. 35(2)(a) CISG, next to the purpose stated in the name of the product. Therefore the clay also had to comply with animal feed legislation and regulations.

19.       b) The appellate court wrongly assumed that this was [not] [1] the case because the clay could have easily been fully and completely washed off after the potato grading process as submitted by [Seller]. This reasoning restricts the requirements for the fitness for the ordinary purpose under Art. 35(2)(a) CISG too much in light of the limited usability connected to the dioxin contamination.

20.              aa) According to Art. 35(2)(a) CISG, except where the parties have agreed otherwise, the goods only conform with the contract if they are fit for the purposes for which goods of the same description would ordinarily be used. Therefore, the goods only meet the requirements of the ordinary purpose under this provision if they generally fulfil the expectations which an average user would have, based on an objective standard and common circumstances of use (Staudinger/Magnus, BGB, revised edition 2005, Art. 35 CISG para. 18 with further references). The goods, in order to fulfil these user expectations, do not have to be fit for all theoretically perceivable forms and possibilities of use, but only for such uses, that suggest themselves in light of the material and technical specificities of the goods and reasonable market expectation based thereon. If, however, such a self-suggesting possibility of use is not covered by the uses and purposes for which the goods are suitable, then the goods are not fit for the ordinary purpose under Art. 35(2)(a) CISG, unless the seller revealed such limited usability (Achilles, Kommentar zum UN Kaufrechtsübereinkommen, 2000, Art. 35 para. 4; further Staudinger/Magnus, op. cit., Art. 35 para. 20; Piltz, Internationales Kaufrecht, 2nd ed., para. 5-45; Kröll in Kröll/Mistelis/Viscasillas, UN convention on Contracts for the International Sale of Goods, 2011, Art. 35 para. 69; Gruber in Münchener Kommentar zum BGB, 6th ed., Art. 35 CISG para. 16; all with further references).

21.              bb) This applies to the present dispute. Contrary to the view of the appellate court the delivered clay failed to meet the market expectation already because of the extra effort related to its use due to the necessity for final cleaning of the separated potatoes, which, even according to [Seller], was indispensable due to the dioxin contamination. A user of potato separation clay of the kind delivered may, as a rule, generally expect the clay to contain neither impurities nor additives which are undesirable under food or animal feed law and for safe use would require additional measures like a final washing process of the separated potatoes. In particular and contrary to [Seller]’s appeal, this additional cleaning requirement is not already mandatory under food or animal feed law and thus not characteristic for the intended use. Rather, as confirmed by the listing under number E 559 of the Annex to the Commission Regulation (EC) No 2439/1999 of 17 November 1999 on the conditions for the authorisation of additives belonging to the group “binders, anti-caking agents and coagulants” in feedingstuffs (OJ L 297, 11), kaolinite clay is an additive generally admissive in animal feed, as long as the stipulated limits for dioxin are not exceeded in the individual case.

22.  2. [Buyer] did not lose the right to rely on a lack of conformity of the goods under Art. 39 CISG because they did not give notice to [Seller] specifying the nature of the lack of conformity within a reasonable time after they discovered it or ought to have discovered it.

23.       a) In a different context, the appellate court found that [Buyer] should have verified that the clay was not dangerous and to that effect could have examined the clay with regards to its potential to exceed the acceptable dioxin limits. Nevertheless, it may be left undecided whether [Buyer] disrespected an obligation under Art. 38 et seq. CISG to examine the goods and to give notice of the non-conformity, which only exists in the interest of the parties to clarify the non-conformity of the goods as soon as possible and the claims derived (cf. Staudinger/Magnus, op. cit., Art. 39 para. 3; Schwenzer in Schlechtriem/Schwenzer, Kommentar zum Einheitlichen UN-Kaufrecht, 5th ed., Art. 38 para. 4). This question may be left open because, in any case, [Seller], pursuant to Art. 40 CISG, is not entitled to rely thereon because the dioxin contamination of the delivered clay and the consequential additional necessity to clean the separated potatoes, which limits the fitness for the ordinary purpose of the potato separation clay under Art. 32(2)(a) CISG, are facts of which [Seller] could not have been unaware and which it did not disclose to [Buyer].

24.       b) The appellate court found, to this extent unchallenged by the appeal, that [Seller], because of the tests conducted in 1999, had been aware of the considerable dioxin contamination of the clay extracted from the pit R and also had known of [Buyer’s] unawareness of said dioxin contamination. [Seller] should not have kept quiet about this dioxin contamination, as rightly concluded by the appellate court. Rather, [Seller] should have disclosed this circumstance to [Buyer], giving [Buyer], if it had nevertheless accepted the clay, the possibility to take appropriate safety measures like washing of the separated potatoes after passing through the clay-water bath to avoid a contamination of the derivative products by the dioxin, a measure sufficient according to [Seller’s] submissions.

25.       c) This finding is not undermined by the fact that [Seller], according to the appellate court, was not expressly aware of the process followed by [Buyer] with regards to grading the potatoes in the clay-water bath and the subsequent use of the potatoes and peels treated this way without washing. To the contrary, this missing knowledge in particular with regards to [Buyer’s] safe use of the delivered separation clay should have caused [Seller] to employ caution. For this reason, an appropriate safety warning would have been warranted to prevent the realization of any danger by the dioxin contaminated separation clay in the subsequent animal feed processing.

26.  3. Consequently, pursuant to Arts. 45(1)(b), 74(1) CISG, [Buyer] is to be compensated for any existing and future damage caused by [Seller], who breached its obligation under Art. 35(2)(a) CISG to deliver potato separation clay that meets the contractual requirements set out above under II 1 b bb and thereby caused an unusual danger related to the use of the clay given the dioxin content that ought not to have been anticipated by the common user (cf. Staudinger/Magnus, op. cit., Art. 35 CISG para. 18). However, the damages payable are to be reduced, because [Buyer] itself seriously dishonoured its product responsibility with regards to the trading of pre-products for animal feed production and thereby contributed itself to the damage due to the recourse claims caused by the delivery of the non-conforming goods.

27.       a) As rightly held by the appellate court, [Buyer] was responsible to ensure by appropriate means that the animal feed or the pre-products traded by it did not create any danger for the health of humans or animals in the food chain. [Buyer] did not fulfill this duty.

28.              aa) [Buyer], according to the appellate court’s findings, marketed the separated potatoes and waste peels for use as animal feed without first ensuring the irreproachability of the clay as an additive under the relevant animal feed regulations which the case required pursuant to food and animal feed legislation and regulations (cf. Meyer in Meyer/Streinz, LFGB-BasisVO, 2007, Art. 17 to Directive 178/2002/EG, paras. 21 et seq.; Wehlau, LFGB, 2010, Introduction to § 58 paras. 72, 79 et seq.). As rightly held by the appellate court, [Buyer] would have had reason for such prior assurance, because the potential dioxin contamination of the clay delivered by [Seller] could not have remained concealed, had [Buyer] taken sufficient care. Not only did the media report about this, also EU-regulation in the field relevant to [Buyer]’s business took up the issue of dioxin contamination of kaolinite clay extracted in Germany (cf. recitals 1 and 8 of Commission Regulation (EC) No 2439/1999 as referred to above), which led, as [Seller] also mentions in its appeal, to a multitude of legislative projects, measures and recommendation (e.g. Proposal for a Council Directive amending Council Directive 1999/29/EC on the undesirable substances and products in animal nutrition of 28 August 2011, COM [2001] 493 final [O.J. C 332 E,242]; Commission Recommendation of 4 March 2002 on the reduction of the presence of dioxins, furans and PCBs in feeding-stuffs and foodstuffs [O.J. L 67, 69]; recitals 5 and Art. 1 in conjunction with the Annex to Commission Directive 2003/57/EC of 17 June 2003 amending Directive 2002/ 32/EC of the European Parliament and of the Council on undesirable substances in animal feed [O.J. L 151, 38]).

29.              bb) Without success [Buyer] argues in its appeal, that it had not had any reason to undertake such examination of the delivered clay, because [Seller] provided a safety data sheet with the toxilogical information “non toxic”, which [Buyer] considered to be a declaration that the clay was free of dioxin and therefore harmless. The safety data sheet does not contain such declaration. The safety data sheet contained information on dangerous substances to be provided pursuant to section 14 of the Regulation on Dangerous Substances (GefStoffV) in the version of Art. 2 No. 8 of the Regulation of 4 July 2002 (BGBl. I p. 2514), which already, in light of its purpose, did not allow the drawing of any proper conclusions on the content of ingredients or impurities relevant under food and animal feed law. The law on dangerous substances is different from the food and animal feed law and not targeted at the safety of the food and food chain in view of the consumption of the ingredients (cf. Weinmann/Thomas/Klein, GefStoffV, status 2003, section 2 comment 3.2.2 to No. 1). It rather aims at avoiding dangers in the handling of such substances in the production or utilization or other activities in their danger zone (cf. section 19 of the Law on Chemicals [ChemG] in the new version of 20 June 2002 [BGBl. I p. 2090], sections 1, 2(2) GefStoffV). Consequently, the safety data sheet served only the purpose of providing professional users with the data and recommendations of use necessary for the handling and preparation of the substances, in order to enable them to take appropriate measures for work place security and environment protection (Nr. 4(1) of the Technical Rules on Dangerous Substances [TRGS] 220, published in Weinmann/Thomas/Klein, op.cit., part 2, volume 2/1; Weinmann/Thomas/Klein, op. cit. § 14 para. 2.5).

30.       b) To the extent of the influence of its own breach of a duty of care [Buyer] is not entitled to rely of [Seller’s] breach of duty by delivering non-conforming clay, which is why the claim for damages is to be reduced accordingly.

31. However, contrary to the appellate court’s reasoning, such reduction of the damages payable to [Buyer] because of its contribution to the causing of the damage by the breach of a duty of care, described above under section II 3(a)(aa) of this decision, cannot be based directly on Art. 77 CISG. Under this provision, the party in breach may claim a reduction in the damages by the amount that the loss should have been mitigated in cases where a party fails to take such reasonable measures to mitigate the loss resulting from the breach of contract. However, the provision only applies to cases where the party entitled to damages failed to take appropriate measures in order to mitigate the damage caused by the other party’s breach or to avoid causing the damage after learning of the potential for damage (cf. Judgement of this Chamber of 24 March 1999 – VIII ZR 121/98, BGHZ141, 129, 135 et seq.; Staudinger/Magnus, op. cit. Art. 77 paras. 5, 8, 11; Piltz, op. cit., para. 5-555). Neither did the appellate court assert such knowledge of the potential for damage, which would have required [Buyer] to intervene in the process by employing mitigating measures, nor is there any other indication of it.

32. As rightly assumed by the appellate court, a reduction of the damages can also not be based on Art. 80 CISG, according to which a party may not rely on a failure of the other party to perform, to the extent that such failure was caused by the first party's act or omission. [Buyer] did not contribute to [Seller]’s breach of contract, which is to be seen in the delivery of non-conforming clay. [Buyer] did not further specify the requirements for the clay to be delivered and did not expressly refer to the necessity of an absence of dioxin is not a contribution to be taken into account, since it was just as obvious to [Seller], that the clay ordered for the purpose described was not allowed to contain dioxin and therefore did not warrant any mentioning.

33.              bb) It is not expressly settled in the CISG how to treat cases in which both parties to the contract contributed to the damage by committing independent breaches of contract. Pursuant to Art. 7(2) CISG, this question has to be answered in light of the general principles underlying Arts. 77 and 80 CISG. In case of dividable remedies, like damages, the respective party’s contribution to the damage has to be reasonably taken into account.

34.                     (1) It is the general opinion that both provisions are an expression of the duty under Art. 7(1) CISG to safeguard good faith in international trade (Staudinger/Magnus, op. cit., Art. 77 CISG para. 2, Art. 80 CISG para. 2; Schwenzer, op. cit., Art. 77 para. 1; Huber in Münchener Kommentar zum BGB, op. cit., Art. 77 CISG para. 1, Art. 80 CISG para. 2; Brunner, UN-Kaufrecht, 2004, Art. 77 para. 1, Art. 80 para. 1; Rathjen, RIW 1999, 561, 565). Thereby Art. 77 CISG is based on the general underlying principle, that a damage, which could have reasonably been avoided, is not to be compensated (Schwenzer, op. cit.; Staudinger/Magnus, op. cit., Art. 77 CISG para 2; Huber in Münchener Kommentar zum BGB, op. cit., Art. 77 CISG para. 1; Brunner, op. cit., Art. 77 para. 1), while Art. 80 CISG is an expression of the bar on contradictory behavior, formulating the general thought, that an obligee shall not benefit from its own damage causing behavior (Staudinger/Magnus, op. cit., Art. 80 CISG para. 2; Brunner, op. cit., Art. 80 para. 1; Huber in Münchener Kommentar zum BGB, op. cit., Art. 80 CISG para. 1; Rathjen, op. cit). Moreover, both provisions show (Art. 77 CISG: “a reduction in the damages in the amount by which the loss should have been mitigated”; Art. 80 CISG: “to the extent that such failure was caused by the first party's act or omission.") that the consequence of the contribution to the damage by the obligee should not be the loss of the claim, but that in case of mutual causing of the damage and dividable remedies like damages the respective contributions to the damage have to be reasonably taken into account in the assessment, weighing and balancing of interests (Schwenzer, op. cit., Art. 80 para. 7; Staudinger/Magnus, op. cit., Art. 80 CISG para. 14; Huber in Münchener Kommentar zum BGB, op. cit., Art. 80 CISG para. 6; Atamer in Kröll/Mistelis/Viscasillas, op. cit., Art. 80 para. 17, Rathjen, op. cit.; all with further references).

35.                     (2) In accordance with these general principles [Buyer]’s damage here is to be allocated in the way that [Buyer] has to bear half of the damage alone. This does not necessitate further factual findings of the trial judge, enabling this Chamber to decide on the allocation itself, since the appellate court already made the required findings regarding the parties’ individual contributions to the damage and their respective weight and only mistakenly felt bound by the legal consequence of Art. 77 CISG, as it was considered to apply directly, when granting [Buyer] compensation limited to such damage that would also have occurred if [Buyer] had taken the necessary steps to mitigate the damage.

36. When weighing and balancing the respective contributions as required, it is to be taken into account to the disadvantage of [Seller] that the clay delivered by it not only was non-conforming as described but also that [Seller] left [Buyer] in ignorance of the dioxin content known to [Seller] with the serious consequence of increasing the risk of misuse by [Buyer]. On the other hand, it has to be considered that [Buyer] itself failed to take any care with regards to the handling of the clay which was made use of in animal feed although the danger of a dioxin contamination and the risks involved could not have remained unknown to [Buyer]. Hence, both parties committed similarly serious breaches of duty, independently contributing to the damage, which justifies an equal split of damages, which is a question to be decided at this liability phase of the proceedings (cf. Judgement of this Chamber of 24 March 1999 – VIII ZR 121/98, op. cit.).

37.  4. The further question referred to the Chamber’s review by [Buyer]’s appeal, whether and to what extent national tort law applies with regards to the damages claimed in addition to the remedies provided for the breach of contractual duties in the CISG (controversy portrayed in Staudinger/Magnus, op. cit, Art. 5 CISG paras. 11 et seq.; Piltz, op. cit, paras. 2-139 et seq.; Ferrari in Schlechtriem/Schwenzer, op. cit., Art. 5 para. 12, all with further references), does not have to be decided. In the case at hand, this normative relationship does not need any analysis, because any potential damages claim of [Buyer] based on tort would require the same allocation of damage as described above based on section 254 BGB.

III.

38. Consequently, the appealed judgment cannot be upheld and is to be annulled (section 562(1) ZPO). The dispute being ready for final decision with regards to the factual findings as shown, the Chamber has to make a decision on the merits (section 563(1) sentence 1 ZPO). This leads, in revision of the judgment of the court of first instance, to the allocation of the damage as declared.

Ball        Dr. Milger        Dr. Achilles
  Dr. Schneider       Dr. Bünger       


FOOTNOTES

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

** Nathalie Hofmann is a doctoral student at European University Viadrina in Frankfurt/Oder (Germany). She passed her Second State Examination in Law in February 2013, following her traineeship (Referendariat) at the Appellate Court of Berlin. She studied law at Humboldt University Berlin and at the University of Geneva and participated in the 15th Willem C. Vis International Commercial Arbitration Moot Court. In 2008, she won the Clive M. Schmitthoff Essay Competition.

[Translation Note: Basis-VO =Basisverordnung [Parliament and Council Directive (EC) No 178/2002 of 28 January2002 on the general principles and requirements of food law]; BGB = Bürgerliches Gesetzbuch [German Civil Code]; BGBl. = Bundesgesetzblatt [German Federal Law Gazette]; BGHZ = Entscheidungen des Bundesgerichtshofs in Zivilsachen [Official Reporter for decisions by the Federal Supreme Court]; ChemG = Chemikaliengesetz [German Law on Chemicals]; EGBGB = Einführungsgesetzbuch zum Bürgerlichen Gesetzbuches [German Code on Private International Law]; GefStoffV= Gefahrstoffverordnung [German Regulation on Dangerous Substances]; LFGB = Lebensmittel und Futtermittelgesetzbuch [German Code on Food and Animal Feed Law]; O.J. = Official Journal of the European Union, TRGS = Technische Regeln für Gefahrstoffe [Technical Rules on Dangerous Substances]; ZPO = Zivilprozessordnung [German Code of Civil Procedure].]

1. Inclusion by the translator. The missing negation appears to be a typographical error in the judgment.

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Pace Law School Institute of International Commercial Law - Last updated May 7, 2013
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