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CISG CASE PRESENTATION

Germany 26 June 1980 Appellate Court Hamm [ULIS precedent] (Shoes and bags case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/800626g1.html]

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

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Case identification

DATE OF DECISION: 19800626 (26 June 1980)

JURISDICTION: Germany

TRIBUNAL: OLG Hamm [OLG = Oberlandesgericht = Provincial Court of Appeal]

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: 2 U 28/80

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

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Italy (plaintiff)

BUYER'S COUNTRY: Germany (defendant)

GOODS INVOLVED: Shoes and bags


Classification of issues present

APPLICATION OF CISG: No, however, ULIS issue is present that is also relevant to the CISG

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Article 74 can be said to be at issue because analysis of ULIS Article 82 is relevant to interpretation of CISG Article 74

Classification of issues using UNCITRAL classification code numbers:

74B [General rules for measuring damages]

Descriptors: Damages ; Currency issues

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Editorial remarks

EDITOR: Albert H. Kritzer

The parallel language of ULIS Article 82 and CISG Article 74. ULIS Article 82 states that "damages shall not exceed the loss which the party in breach ought to have foreseen at the time of the conclusion of the contract in the light of the facts and matters which then were known or ought to have been known to him, as a possible consequence of the breach of the contract."

CISG Article 74 states that "damages may not exceed the loss which the party in breach foresaw or ought to have foreseen at the time of the conclusion of the contract in the light of the facts and matters of which he then knew or ought to have known, as a possible consequence of the breach of contract."

Use of ULIS jurisprudence as an aid to interpreting the CISG. Citing century old precedent to the effect that where a term is used in one statute, a subsequent statute that incorporates the same term in a similar context must be construed so that the term is interpreted according to the meaning that has been previously assigned to it, Mann adds: "It is simply common sense that if the Convention adopts a phrase which appears to have been taken from . . . where it is used in a specified sense, the international legislators are likely to have had that sense in mind and to intend its introduction into the Convention." F.A. Mann, Uniform Statutes in English Law, 99 Law Quarterly Review (1983) 382-383 [citations omitted]. In the same vein, Audit states: "The international character of the Convention should encourage courts to refer to the Convention's legislative history and prior instruments (i.e., the ULIS . . .) in order to ascertain the most likely intent underlying the wording of a given provision." Bernard Audit, The Vienna Sales Convention and the Lex Mercatoria, in: Thomas E. Carbonneau ed., rev. ed., Lex Mercatoria and Arbitration (Juris Publishing 1998) 188.

For examples of other case law interpretations of ULIS Article 82, go to the Match-up of ULIS Article 82 with CISG Article 74 and the section of that presentation entitled, ULIS case precedents aiding in interpretation of CISG Article 74. The ULIS citations presented are taken from the chapter on CISG Article 74 by Hans Stoll in Peter Schlechtriem ed., Commentary on the UN Convention on the International Sale of Goods (Clarendon Press: Oxford 1998) 552-572.

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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): Schlechtriem/Magnus, Internationale Rechtsprechung zu EKG und EAG [International case law on ULIS and ULF], Baden-Baden: Nomos (1987) Art. 82 EKG No. 17, 426-428

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation)

Queen Mary Case Translation Programme

Oberlandesgericht Hamm 26 June 1980

Translation by Jarno Vanto [*]
University of Turku, Finland

Translation edited by Ruth M. Janal [**]
University of Freiburg, Germany

The Italian [seller] had delivered several consignments of shoes and bags to the German buyer and issued seven invoices. The [buyer] reprimanded the lack of conformity of two orders, reduced the price and declined to pay one invoice altogether. In addition, the buyer demanded reimbursement for costs resulting from freight and establishment of a letter of credit. The claimant, who is seller’s assignee, demanded payment of the outstanding invoices. Further, it claimed for costs of packaging of a consignment, damages for loss resulting from exchange rate fluctuations, and interest on arrears.

The Court of First Instance rejected the claim. The appeal by [seller’s assignee] was successful in part.

The Court of Appeals affirmed the applicability of the Uniform Sales Law in the legal relations between the [buyer] and the [seller]. The claim for payment of the outstanding purchase price followed from ULIS Article 56. Regarding the individual claims, the Court of Appeals held:

"The [seller], and consequently [seller’s assignee], is not entitled to 11,000 Italian Lire for packaging costs. According to ULIS Article 90, the seller is liable for packaging costs if nothing else has been agreed on or the circumstances do not indicate otherwise […]. [Seller’s assignee] has not brought forward sufficient proof of existence of a corresponding trade usage (Art. 9(1) and (2) ULIS). Contrary to the submission of [seller’s assignee], Article 39 is not applicable, because it solely refers to breaches of contract in the meaning of Article 33.

"The [buyer] wrongly requests reimbursement of the freight costs […]. As [seller’s assignee] correctly submitted, the sale in the present dispute involved the carriage of the goods and according to ULIS Articles 19(2) and 23, the buyer is responsible for freight costs in such a sale unless the parties have agreed otherwise. Contrary to [buyer’s] opinion, such other agreement cannot be said to exist on grounds that [seller’s assignee] had taken care of the freight of the first delivery to the Swiss border.”

The Court of Appeals declined to award the [buyer] the right to reduce the purchase price based on an alleged lack of conformity of the goods:

"The [buyer] has not set forth that it notified [seller] of the non-conformity within a short period of time (Art. 11 ULIS) after it ought to have discovered the non-conformity (Art. 39 ULIS). The most frequent non-conformity allegedly consisted in the fact that the leg of the shoe broke off the sole of the sandals. It is inconceivable that such a non-conformity should not have been detected during inspection after the shoes had arrived. But even if one follows [buyer’s] view that the non-conformity represented a hidden defect, its submission does not show that it notified [seller] of the lack of conformity within a short period of time after discovery […]. In the Court of Appeals, the [buyer] submitted that it formed an agreement with [seller] according to which they would settle its complaints at the end of the season. Such an agreement, modifying Article 39, would have been permissible under Article 3 ULIS. However, the [buyer] did not conclusively bring forward the conclusion of such an agreement. Silence on the part of [seller] does not constitute acceptance of [buyer’s] proposal. As to the payment of invoice No. 674, the [buyer] brings forward that it had not ordered the amount delivered and that the bags were non-conforming in the sense that the finish was too dark. The [buyer], however, lost its right to rely on these non-conformities according to Article 39. The lack of conformity could have been discovered during an inspection of the bags.”

Further, the Court of Appeals stated that the [buyer] was to bear the cost incurred by establishing the letter of credit herself. Regarding [seller’s assignee’s] claim for interest, the Court held:

“[Seller’s assignee] is entitled to interest on the sum awarded to it. In absence of an agreement to the contrary, the due date (Art. 60 ULIS) is the time of delivery of the goods […].”

The Court held that the claim for payment of the purchase price (Art. 56 ULIS) consisted in the Italian currency, as the contract involved carriage of the goods (Art. 19(2) ULIS) and the [buyer’s] obligation to pay the purchase price was consequently to be effected at the seller’s place of business (Art. 59 ULIS). Therefore, § 244 BGB [***] was not to be applied. The Court continued:

“[Seller’s assignee] is furthermore not entitled to damages at the inferior exchange rate, which in effect would constitute payment in the German currency. Admittedly, such damages may represent a compensable damage under Art. 82 ULIS […]. The Court agrees with the precedents set by the BGH [****] (WM [****] 1976, 352; WM 1977, 478 (479)) and the RG [****] (RGZ [****] 109, 61) that it is a matter of the losses incurred, in particular the extent of such losses, whether the different exchange rate has an effect on the creditor’s wealth (a diverging opinion is set forth by the OLG [****] München, which handles the matter as a question of causation). A different exchange rate alone does not lead to damages in case of debts which are payable in a foreign country and in that country’s currency. Despite the inferior exchange rate, the creditor obtains the amount payable to it in the corresponding currency. It is not obvious whether and to which extent this sum is of less use to it in its own country now than before the drop of the exchange rate. Whether and to which extent the different exchange rate leads to price changes in the foreign country cannot be assessed. The creditor is furthermore able to pay off its own debts within its country without being unfavorably affected by the debtor’s delay in payment. The delay itself is compensated with the right to interest on the debt. Following Art. 83 ULIS, the interest rate depends on the discount rate of the creditor’s place of business. The Court consequently does not agree with the opinion of the OLG [****] München (and the further decisions cited therein) that the depreciation of a currency 'at least generally' leads to a loss on the part of the creditor.

"Such a loss can only be affirmed if it is certain that the creditor – had it received the open amount timely – would have used it in a particular way and that the unfavorable exchange rate therefore has a direct impact on it. This would be the case, i.e., if the creditor would have used the amount receivable in its own currency to repay its own debts in a different currency, which is now valued at a higher rate.

"Contrary to the decision of the OLG [****] München (and the decisions cited therein), the creditor bears the burden of submission and proof of such losses. This Court is of the opinion that such losses do not necessarily occur, nor do they occur as a general rule. Therefore, the principle stands that the creditor must submit and prove the damages it suffered. This is all the more important as the debtor generally does not possess insight in the management and the state of property of its foreign creditor […].”


FOOTNOTES

* Jarno Vanto is an LL.M student at the University of Turku, Finland. He is currently working on his thesis on damages under the CISG.

** Ruth M. Janal, LL.M. (UNSW) is a Phd candidate at Albert-Ludwigs-Universität Freiburg.

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

*** Note: Under § 244 BGB [German Civil Code] a claim for payment which is expressed in a foreign currency, but payable within Germany, may be paid in the German currency, unless the parties expressly stipulate otherwise.

**** Note on abbreviations: BGH = Bundesgerichtshof [Federal Court, the highest German court in civil and criminal matters]; OLG = Oberlandesgericht [Court of Appeals]; RG = Reichsgericht [Empire Court, the highest German court in civil and criminal matters until 1945]; RGZ = Entscheidungen des Reichsgerichts in Zivilsachen [Official Reporter on the decisions of the Reichsgericht in civil matters]; WM = Wertpapier-Mitteilungen [German law journal]

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Pace Law School Institute of International Commercial Law - Last updated September 14, 2006
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