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CISG CASE PRESENTATION

Germany 28 November 1990 Supreme Court [ULIS precedent] (Stamping machine case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/901128g1.html]

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

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Case identification

DATE OF DECISION: 19901128 (28 November 1990)

JURISDICTION: Germany

TRIBUNAL: Bundesgerichtshof [Federal Supreme Court]

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: VIII ZR 362/89

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

CASE HISTORY: 1st instance LG Zweibrücken (6 O 25/82) 14 May 1986; 2d instance OLG Zweibrücken (1 U 142/86) 3 November 1989

SELLER'S COUNTRY: Germany (defendant)

BUYER'S COUNTRY: Italy (plaintiff)

GOODS INVOLVED: Stamping machine and printing machine


Classification of issues present

APPLICATION OF CISG: No, this is a ULIS Article 82 case. Presented because CISG Article 74 was taken from ULIS Article 82 and sits within the CISG in the same manner as ULIS Article 82 sits within ULIS

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Article 74

Classification of issues using UNCITRAL classification code numbers:

74A [General rules for measuring damages: loss suffered as consequence of breach]

Descriptors: Damages

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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): Der Betrieb (DB) [1991] 437-438; Entscheidungen zum Wirtschaftsrecht (EwiR) [1991] 163-164; Lindenmaier-Möhring, Nachschlagewerk des Bundesgerichtshof (LM) No. 16 zu EKG; Monatsschrift für Deutsches Recht (MDR) [1991] 525; Neue Juristische Wochenschrift (NJW) [1991] 639-640; Recht der Internationalen Wirtschaft (RIW) [1991] 151-152; Wertpapier-Mitteilungen (WM) [1991] 409-412; Zeitschrift für Wirtschaftsrecht (ZIP) [1990] 28-31

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

English: [2005] Schlechtriem & Schwenzer ed., Commentary on UN Convention on International Sale of Goods, 2d (English) ed., Oxford University Press, Art. 74 para. 53

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Case text (English translation) [second draft]

Queen Mary Case Translation Programme

Federal Supreme Court (Bundesgerichtshof)

28 November 1990 [VIII ZR 362/89]

Translation [*] by Veit Konrad [**]

FACTS OF THE CASE

Entering into a sales contract 20 December 1979 / 21 January 1980, the Defendant [seller], a German machine factory, sold a stamping machine to the Italian Firm I., which paid the purchase price of DM [Deutsche Mark] 375,000.00. In June 1980, the machine was installed in the Plaintiff's factory, which is seated in the area of Verona. Firm I. had leased the stamping machine to the Plaintiff, and had assigned to the Plaintiff its titles against the [seller] founded in the sales contract.

[For purposes of this case presentation, Plaintiff is hereinafter referred to as "[buyer]"]

In the meantime a printing machine was delivered to the Plaintiff [buyer] by the Italian Firm M. Again, the printing machine had been sold to Firm I. and was given as leasehold to the Plaintiff [buyer]. It was planned by the [buyer], that the printing machine and the stamping machine should be joined into one circuit of production. Until November 1980 technical engineers of both firms, M. and the [seller]'s firm, tried to adapt the two machines to each other, but they did not succeed. In a letter to the [seller] dated 21 November 1980, the [buyer] insisted on performance within a time limit of 15 days. Otherwise it would consider the sales contract to be avoided. On 26 November 1980, the [seller]'s technical engineers stopped their unsuccessful attempts to connect the two machines. By letter of 9 December 1980, the [buyer] registered a complaint about the machines still not working properly and notified the [seller] that it would sue for a declaratory judgment concerning the avoidance of their contract. After proceedings for conservation of evidence have been conducted and after attempts to settle the dispute out of court failed, on 19 January 1982 the [buyer] asked the [seller] for reimbursement of the purchase price.

The [buyer] is now suing for payment of DM [Deutsche Mark] 375,000.00 plus 15% interest since 1 February 1982 either to it or to Firm I. The Court of First Instance allowed the [buyer]'s claim and held the [seller] liable to payment. On first appeal (Berufung) of the [seller], the Appellate Court ordered the [seller] to pay DM [Deutsche Mark] 375,000.00 to Firm I. plus interest of 1% above the discount rate of the German Federal Bank (Deutsche Bundesbank) since 1 February 1982 versus return of the stamping machine. Further remedies were refused. The [seller]'s second appeal is directed against the appellate judgment as far as it concerned payment of higher interest. The appeal has been accepted as far as the appellate judgment orders payment of interest of 1% above the discount rate from 1 February 1982 until 15 July 1986 (the day the [seller] fulfilled the first instance judgment of the District Court by paying the amount due including interest). As far as the appeal has been accepted, the [seller] keeps to its pleadings of the first appeal. The [buyer] pleads to dismiss the appeal.

JUDGMENT

I. The Appellate Court concluded:

The contract upon which the [buyer] based its claim upon falls under Art. 1(1)(a), Art. 6 ULIS. The [buyer]'s claim for reimbursement was justified: The stamping machine delivered by [seller] did not conform with the contract (Art. 33(1) ULIS), as it did not include a cutter. This defect felt within the [seller]'s responsibility. The [seller] failed to give evidence supporting its plea, that it had been agreed with [buyer] that the cutter should have been provided by firm M. The missing cutter constituted a fundamental breach of contract under Art. 43 ULIS. The [buyer] notified the [seller] within the time limit of Art. 39(1) ULIS and, in a letter from 21 November 1980, set an appropriate additional deadline for performance, following Art. 44(2) ULIS. In its letter of 9 December 1980 the [buyer] declared the contract avoided (Art. 41(1)(b) ULIS), which according to Art. 78(1) and (2) ULIS made the [seller] liable to reimbursement of the purchase price. However, as Art. 81 only granted compensation for undue enrichment on the [seller]'s side, but did not compensate for damages suffered by the [buyer], interest could only be allowed up to 1% above the discount rate of the German Bundesbank, Arts. 81(1), 83 ULIS.

II. The [buyer]'s appeal is justified.

     1. The appeal can be allowed, although the Appellate Court, disregarding 546 II 1 of the German Code of Civil Proceedings (Zivilprozessordnung; ZPO), did not determine the damages the [buyer] claims to have suffered from its judgment. The Appellate Court's view, which according to 546 II 2 of the German Code of Civil Proceedings has no binding effect on our decision, does not recognize that the decision on interest is viable to appeal as far as the claim for interest is not accessory to the principal claim. When this is the case, a dismissed claim for interest can be subject to appeal, 4 I of the German Code of Civil Proceedings (see BGH judgment of 10 May 1990 - IX ZR 246/89 = WM 1990 page 1642). The [buyer]'s dismissed claim for interest goes beyond DM 40,000.

     2. The Appellate Court's dismissal of the [buyer]'s claim for interest for the time from 1 February 1982 to 15 July 1986 cannot be maintained.

a) Yet, the [buyer]'s appeal is unsuccessful as far as it concerns the Appellate Court's application of Arts. 81, 83 ULIS.

      aa) The Appellate Court correctly concluded that [buyer] declared the avoidance of the contract according to Arts. 43, 33, 41(1)(b) ULIS.

      bb) Hence [buyer] can claim for reimbursement of the purchase price under Art. 78(2), sentence one, ULIS and for interest under Art. 81(1) ULIS. Art. 83 ULIS grants the seller interest for the time the buyer is in default. The interest rate is determined at 1% above the National discount rate of the seller's domicile. In our opinion (also: Soergel/Lüderitz, BGB, 11th ed. , Art. 81 No. 2; Mertens/Rehbinder, Internationales Kaufrecht, Art. 83 No. 3; Staub/Koller, HGB, 4th ed., Vor 373 No. 566; Beß, Die Haftung des Verkäufers für Sachmängel und Falschlieferungen im Einheitlichen Kaufgesetz, 1971, page 115) Art. 81(1) ULIS also refers to the seller's domicile. This follows from the wording, which directly refers to the "interest rate determined in Art. 83 ULIS". The opposite opinion (Dölle/Weitnauer, Kommentar zum Einheitlichen Kaufrecht, 1976, Art. 83 No. 3) argues that Art. 81 is intended to compensate the buyer's losses due to payments to the seller. This opinion fails to recognize that Art. 81, due to its position within the system of the ULIS, is meant to compensate undue enrichment on the side of the seller (i.e., possible benefits the seller draws from payments of the buyer) rather than damages suffered on the side of the buyer. Art. 81 ULIS is the equivalent to 347 3 of the German Civil Code (Bürgerliches Gesetzbuch, BGB) (see Stötter, Internationales Einheitskaufsrecht 1975, page 362), which grants the buyer interest up to the discount rate ( 246 German Civil Code, 352 I 1 German Commercial Code) for the case that the contract has been revoked (see Soergel/Hadding ibidem 347 No. 5).

b) The appeal is justified as far as the Appellate Court did not take into account submissions of the [buyer] about its losses of interest, which go beyond the interest granted by Art. 83 ULIS ( 286 German Code of Civil Procedure (Zivilprozessordnung; ZPO)).

      aa) These submissions were relevant, because [buyer] was entitled to claim compensation for its actual losses of interest that go beyond Arts. 81, 83 ULIS. When [buyer] declared the contract avoided (Art. 41(1)(b) ULIS), it was entitled to claim reimbursement of the purchase price and to claim damages under Art. 41(2) ULIS. What this claim may cover is determined by Arts. 84-86 ULIS in case the purchased goods have a market value, otherwise Art. 87 ULIS applies. The question whether the stamping machine has market value (Art. 12 ULIS) does not need to be answered.

             aaa) In case Art. 87 applies, Art. 82, sentence one, ULIS grants damages as far as they were foreseeable consequences of the breach of contract in the view of a reasonable observer in the position of the [seller] (Art. 13 ULIS). This does also include interest losses due to delay of performance. Just as under 82 ULIS, the [seller] would be entitled to claim damages due to delay of [buyer]'s performance that go beyond Art. 83 ULIS, the same must apply in [buyer]'s case. (See Stötter, ibidem, Art. 83 No. 2; Dölle/Weitnauer, ibidem, Art. 83 No. 3; Soergel/Lüderitz, ibidem, Art. 83 No. 1)

             bbb) The same applies in case of Arts. 84-86 ULIS: Art. 86 ULIS entitles [buyer] to fully recover all its actual losses. [Buyer] is not required to having claimed back the difference between market value and purchase price of the stamping machine under Art. 84 ULIS, nor does Art. 86 ULIS require a claim for lost profit due to resale (Art. 85 ULIS) (see Staub/Koller, ibidem No. 579). A claim for interest damages cannot be denied just for reason of there being no claim for further damages under Art. 84 ULIS or Art. 85 ULIS. Again (as concerns Art. 87, see above: II. 2. b) aa) aaa)), as under Art. 82 [seller] is entitled to recover damages due to delay of performance that go beyond Art. 83, the same rule must apply to [buyer]'s damages due to delay of reimbursement of the paid price. This interpretation of Art. 86 ULIS follows from Art. 17 ULIS, which constitutes the principle of full recovery, that can only be modified in terms of unforseeability of damages (see Döll/Weitnauer, ibidem Vor Art. 82-89, No. 19; Schultze-v. Lasaulx, Die Vertragsaufhebung im Haager Einheitlichen Kaufgesetz, 1977, page 41 f.). Accordingly, this court has ruled in a judgment of 2 June 1982 (VIII ZR 43/81 = WM 1982, page 846 under III.), where it confirmed the Appellate Court's opinion (Oberlandesgericht Hamburg, judgment of 30 December 1980 in: Schlechtriem/Magnus, Internationale Rechtsprechung zu ULIS und ULF, 1987, Art. 86 ULIS No. 5) that interest damages due to payment of the purchase price must be recoverable under Arts. 84, 86 ULIS.

      bb) Hence the Appellate Court should have taken into account [buyer]'s submission that [buyer] and Firm I. were forced to take up a loan with an interest rate of over 15% p.a. due to their spendings on the stamping machine (proof: confirmation of the bank (creditor) given by Dr. L. R.; bank director, offered by Firm I.). [Seller] disputed this in its appeal.

             aaa) The mere offer to submit documentary evidence does not suffice 420 German Code of Civil Procedure (Zivilprozessordnung, ZPO), which requires actual submission of documentary evidence (see BGH, Judgment of 20 January 1986 - II ZR 56/85 = DB 1986 page 798).

             bbb) However, [buyer]'s submission can be interpreted as the calling of Dr. L as a witness under 373 German Code of Civil Procedure (Zivilprozessordnung, ZPO). As the parties' submissions in first instance remain relevant throughout the proceedings (see Judgment of the German Constitutional Court, NJW 1982, page 1636 under 2. a.), the [buyer] was not required to renew its offer of submitting evidence during the appellate proceedings. The fact that within the appellate proceedings [buyer] referred to all its submissions given in first instance as a whole does not give raise to criticism (see BGH, judgment of 13 March 1981 - I ZR 65/79 = MDR 1982, 29 under I.2.). If the Appellate Court was in doubt about [buyer]'s submissions, the court would have been obliged to ask the [buyer] whether it kept to its former submissions (see Judgment of the German Constitutional Court, ibidem; Zöller/Stephan, ZPO, 16th ed., Vor 284 No. 3).

III. As a consequence the case must be redirected to the Appellate Court which has to come to a decision that takes into account the [buyer]'s submissions concerning its actual losses of interest.


FOOTNOTE

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

** Veit Konrad has studied law at Humboldt University, Berlin since 1999. During 2001-2002 he spent a year at Queen Mary College, University of London, as an Erasmus student.

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