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CISG CASE PRESENTATION

Hungary 1992 Supreme Court (Interpreting machine case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/920000h1.html]

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

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Case identification

DATE OF DECISION: 19920000 (1992)

JURISDICTION: Hungary

TRIBUNAL: Legfelsobb Biróság [Supreme Court of Hungary], Gazdasági Kollégium [Economic Chamber]

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: Legf. Bír. Gf. I. 32 948/1992

CASE NAME: The decision does not identify parties to the proceedings except for the Defendant (ITCM GmbH, Grünwald, Germany), a third-party contractor, consignee of the Plaintiff Buyer

CASE HISTORY: 1st instance decision partly reversed

SELLER'S COUNTRY: Germany

BUYER'S COUNTRY: Hungary (plaintiff)

THIRD PARTY CONTRACTOR: Germany (defendant)

GOODS INVOLVED: Six-language interpreting machines [HEXAGLOTT-150]


Case abstract

HUNGARY: Legfelsõbb Brósg [Supreme Court of Hungary], Gazdasgi Kollégium [Economic Chamber] Legf. Br. Gf. I. 32 948/1992, 1992

Abstract prepared by Andrea Vinzce

The Plaintiff Buyer first contacted the Defendant in 1990 in order to buy interpreting machines of the type "HEXAGLOTT-150". As the Plaintiff Buyer was not legally authorized to enter into foreign trade contracts, it formed a preliminary commission contract with the Defendant who became obliged to arrange for the purchase of those interpreting machines. Later a proper import commission contract was entered into by the parties to the dispute. The contract, among other provisions, reiterated the wording of the order placed on 22 August 1990, and provided for the reciprocal liability of the Plaintiff Buyer and the Defendant consignee but simply by referring to the "relevant legal provisions in force" and with special regard to mitigation of loss. The Defendant, as a consignee of the Plaintiff Buyer, entered into a sale of goods contract with a German Seller appointed by the Plaintiff Buyer. The Defendant was thereby obliged to take delivery any time within a twelve months period, with the first installment of 5,000 pieces to be delivered at Plaintiff Buyer's place of business by 29 November 1990. The contract provided that in case of delay or frustration of the delivery due to force majeure, strike or other circumstances beyond the control of the Seller, the Defendant does not have the right to claim damages, and that avoidance of the contract shall be in writing. The Seller failed to deliver the first installment even within an additional period until 2 March 1991, the Plaintiff Buyer therefore avoided the contract on 4 March 1991. The Plaintiff Buyer's letter of avoidance was sent by the Defendant to the German Seller two days later and its claim for damages was also expressed. The German Seller objected to the avoidance by the Plaintiff Buyer and to the fact that the Plaintiff Buyer failed to open the required letter of credit, thereupon it claimed damages and also offered to deliver some of the machines. The German Seller stated that it was not liable for the non-delivery because its liability was excused by the relevant provision of the contract since non-delivery was due to a production failure at the producing company, which was beyond the Seller's control.

Before the Court of First Instance the Plaintiff Buyer stated that in the disputed contract the Defendant failed to include the guarantees provided for by the CISG, thereby the Defendant assured the German Seller guarantees which were much more favorable than those of the CISG. The Defendant objected to the latter and stated that the disputed contractual provision was in accordance with Article 79 CISG. The Court of First Instance did not deal with the issues related to the CISG but based its ruling on Art. 509(2) of the Hungarain Civil Code stating that liability of the consignee for damages could be substantiated only if the breach of contract by the German Seller would have been due to the conduct of the Defendant consignee. Ruling that the Defendant consignee acted reasonably, the Court of First Instance held that the Defendant consignee was not liable for the loss of profit suffered by the Plaintiff Buyer.

The Plaintiff Buyer appealed the decision stating that, pursuant to the CISG, a party has an objective liability for third parties, moreover, in the disputed contract the Defendant agreed to liability for damages based on the conduct of the German Seller.

The Supreme Court of Hungary ruled that Art. 79(1) CISG does not give an exhaustive list of the exemptions but provides that:

"A party is not liable for a failure to perform any of his obligations if he proves that the failure was due to an impediment beyond his control and that he could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it or its consequences."

Para (2) of the same provision was also cited by the Supreme Court.

The Court held that the Plaintiff Buyer baselessly argued that reasons of exemption of the foreign party, included in the contract, harmed the Plaintiff Buyer's interests on the ground that they were different from those included in the CISG. Although the sale of goods contract indeed does not include the text of the CISG, this shall not mean that the liability of the foreign party for third parties would have been excluded. In the sale of goods contract, the foreign party did not oblige itself to purchase the goods from a certain source but to sell them to the Defendant. Therefore, the Supreme Court held that, all intermediary traders and the producer of the goods were resorted to not in order to fulfil the original contract but within the foreign party's own sphere of business. Thus, an impediment within the sphere of interest of the "contributor" could not qualify as a ground for exemption. Furthermore, the Supreme Court stated that substantiation of the exact contents of the contract was not only the Defendant's but also the foreign party's task, moreover, the disputed contractual clause was not objected to by the Plaintiff Buyer. Furthermore, the Supreme Court came to the same conclusion as the Court of First Instance, i.e., that due to the lack of a breach of contract, the Defendant's liability for damages was not substantiated.

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Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Article 79(1) and (2)

Classification of issues using UNCITRAL classification code numbers:

79B1 ; 79C [Exemptions: impediment excusing party from damages; Non-performance attributable to third-party contractor]

Descriptors: Exemptions or impediments

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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 (Hungarian): Bírósagi Határczatok (1994/5), pp. 363-366

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation) [second draft]

Queen Mary Case Translation Programme

Supreme Court (Legfelsõbb Brósg) of Hungary, Economic Chamber (Gazdasági Kollégium)

1992 [no exact date provided] [Legf. Bír. Gf. I. 32 948/1992]

Translation [*] by dr. Andrea Vincze [**]

SUMMARY JUDGMENT OF THE SUPREME COURT

"I. Liability of the consignee [a third person the party has engaged to perform the whole or a part of the contract], even in cases of foreign trade contracts, is governed by Art. 509(2) of the Hungarian Civil Code. However, Hungarian law does not exclude that the parties agree upon such liability in a different way.

II. If the parties restricted the liability of the consignee to his defaults during the conduct of affairs, the court shall examine whether the consignee concluded the contract on foreign trade in an appropriate professional manner and with regard to the CISG [Art. 79 (1)-(2) CISG], Hungarian Civil Code [Art. 509(2)]."

FACTS OF THE CASE

[Plaintiff Buyer] contacted [Defendant consignee], ITCM GmbH, a company seated in Grünwald, Germany in order to purchase interpreting machines from a German company [Seller] and resell them in Hungary. [Plaintiff Buyer] chose the type of the machines as well. As [Plaintiff Buyer] was not legally authorized to enter into foreign trade contracts, it formed a preliminary commission contract with [Defendant consignee] who became obliged to arrange for the purchase of interpreting machines "HEXAGLOTT-150". Para. 4/2. of the contract provided that [Plaintiff Buyer] wishes to purchase the machines through the above mentioned German company and it also included the name of the contact person at the German company, i.e., "Á.K." [only initials are provided in the case text]. On 16 October 1990, an import commission contract for the purchase of 5000 "HEXAGLOTT-160" interpreting machines was entered into by the parties to the dispute [the case text includes "HEXAGLOTT-160" which might be a typo and "HEXAGLOTT-150" would have been the right expression]. The contract reiterated the wording of the order placed on 22 August 1990, and para. 2/1/e included that the consignee is obliged to arrange for the settlement of complaints between the initial [German Seller] and the Hungarian Buyer. In para. 8 of the contract, under the title "cooperation liability", the parties agreed that the mandator [Plaintiff Buyer] and the consignee [Defendant consignee] have a reciprocal liability in connection with their own acts and based on the "relevant legal provisions in force" and with special regard to mitigation of loss. [Defendant], as consignee of [Plaintiff Buyer], entered into a sale of goods contract with the [German Seller] appointed by [Plaintiff Buyer]. The contract was concluded in the name of the consignee but for [Plaintiff Buyer]'s purposes and on [Plaintiff Buyer]'s costs. [Defendant consignee] was thereby obliged to take delivery of the machines any time within a twelve months period and to the value of US $500,000. It was also provided in the contract that the first installment of 5,000 pieces was to be delivered at [Plaintiff Buyer]'s place of business by 29 November 1990. Para. 9(2) provided for the Seller's liability for damages and included that in case of delay or frustration of the delivery due to force majeure, strike or other circumstances beyond the control of the Seller, [Defendant consignee] does not have the right to claim damages. It was also agreed that avoidance of the contract must be in writing.

The [German Seller] failed to deliver the first installment even within an additional period until 2 March 1991, the [Plaintiff Buyer] therefore declared avoidance of the contract on 4 March 1991. The [Plaintiff Buyer]'s letter of avoidance was sent by [Defendant consignee] to the [German Seller] on 6 March 1991 and [Plaintiff Buyer]'s claim for damages was also forwarded. The [German Seller] regarded the contract as being still valid. It objected to the fact that the [Plaintiff Buyer] failed to open the required letter of credit, thereupon it claimed damages and also offered to deliver some of the machines. Based on para. 9(2) of the contract, the [German Seller] also denied its liability for damages. It stated that it was not liable for the non-delivery because its liability was excused by the relevant provision of the contract since non-delivery was due to a production failure at the producing company, which was beyond the Seller's control.

PLEADINGS OF THE PARTIES

As correspondence and negotiations between the parties did not result in a settlement of the dispute, [Plaintiff Buyer] filed its claim with the court on 1 April 1992. In its claim, [Plaintiff Buyer] requested the court to oblige [Defendant consignee] to pay Hungarian Forint [HUF] 14,632,369 damages, interest of 20 percent upon HUF 14,552,363 from 4 March 1991 until the date of payment, and interest at the same rate upon the remaining HUF 80,000 from 26 November 1991 also until the date of payment. As the legal basis of its claim, [Plaintiff Buyer] referred to Articles 509(2) and 511(2) of the Hungarian Civil Code. HUF 1,532,289 of the total sum requested represents [Plaintiff Buyer]'s costs (the fee paid to the consignee and other costs), HUF 180,000 represents the costs out of court, HUF 11,750,000 equals the loss of profit, HUF 1,170,000 is the penalty for non-performance which was paid by [Plaintiff Buyer] to its own buyer, and HUF 80,000 equals the costs of the proceedings. At a later point of time, [Plaintiff Buyer] raised the amount of the penalty paid for non-performance from HUF 1,170,000 to HUF 1,175,400. The claim for interest was also modified and [Plaintiff Buyer] requested the Court to oblige [Defendant consignee] to pay 44 percent interest upon the amount of HUF 1,175,400 from 6 May 1992 on and also 44 percent upon the amount of HUF 80,000 from 26 November 1991 on. [Plaintiff Buyer] stated that, pursuant to Article 509(2) of the Hungarian Civil Code, [Defendant consignee] was liable for the breach of contract committed by the [German Seller]. It further added that [Defendant consignee] was not excused from such liability by the fact that the [German Seller] was chosen by [Plaintiff Buyer] because it was [Defendant consignee] who was obliged to conclude a professional contract which would also be capable of ensuring the appropriate guarantees concerning [Plaintiff Buyer]'s claim of damages. In the disputed contract, [Defendant consignee] failed to include the relevant guarantees provided for by the CISG. Thereby [Defendant consignee] assured the [German Seller] guarantee provisions which were much more favorable than those of the CISG.

[Defendant consignee] requested dismissal of the claim, objected to the legal base of its liability but did not object to the amount claimed. [Defendant consignee] argued that during the course of concluding and fulfilling the contract of foreign trade it acted reasonably. It further stated that para. 9(2) of the contract which is objected to by [Plaintiff Buyer], harmonizes with Article 79 CISG. [Defendant consignee] contended that it warned [Plaintiff Buyer] in time about the possibility of filing a claim with the Court. It did not contest that the [German Seller] practically excluded its liability in the contract but that contract was also signed by the representative of [Plaintiff Buyer]. Referring to Article 509(2) of the Hungarian Civil Code, [Defendant consignee] stated that, pursuant to the latter, provision the liability of the consignee is adjusted to liability of the [German Seller] because, based on the contract which had also been approved of by [Plaintiff Buyer], the German party is not liable for the non-performance of the contract in the instant case and therefore [Defendant consignee]'s liability cannot be substantiated either.

DECISION OF THE COURT OF FIRST INSTANCE

The Court of First Instance obliged [Defendant consignee] to pay HUF 1,329,532 damages, upon HUF 1,204,532 of which interest of 20 percent from 6 March 1992, upon HUF 125,000 and interest of also 20 percent from 20 April 1992 until the date of payment and the costs of the proceeding shall also be paid. [Plaintiff Buyer]'s claims exceeding the latter amount were dismissed by the Court. The Court of First Instance ruled that the liability of the consignee for damages, pursuant to Article 509(2) of the Hungarian Civil Code, could be substantiated only if the breach of contract by the [German Seller] would have been the result of [Defendant consignee]'s conduct. In the instant case, however, [Defendant] as a consignee acted reasonably in the circumstances; therefore, the Court held that [Defendant consignee] is not liable for the loss of profit in [Plaintiff Buyer]'s business. As the contract of foreign trade was not fulfilled, [Defendant consignee] was not entitled to the commission fee, thus the Court of First Instance ruled that [Defendant consignee] is obliged to repay the commission fee in the amount of HUF 125,000. [Defendant consignee] was also obliged to pay interest in the amount of HUF 1,204,532 on the basis that [Defendant consignee] handled on its own account the amount provided by [Plaintiff Buyer] for the purposes of opening the letter of credit and therefore [Defendant consignee] was party to an unjust enrichment.

APPEAL AGAINST THE FIRST-INSTANCE DECISION - PLEADINGS OF THE PARTIES

[Plaintiff Buyer] in its appeal of the first-instance decision requested reversal of the judgment and repeated its original claim. It contended that pursuant to the CISG, a party has an objective liability for third parties, in spite of that, however, [Defendant consignee] accepted the contractual liability clause based on the wrongful conduct of the [German Seller]. In addition, [Defendant consignee] committed a breach of contract even when after the additional period had expired it failed to take any steps concerning declaration of avoidance in writing and did not make an effort to resolve the legal dispute. [Plaintiff Buyer] also objected to the reasoning of the Court of First Instance concerning Article 509(2) of the Hungarian Civil Code and the interpretation of [Defendant consignee]'s liability for damages and reiterated its point of view presented in the first-instance proceedings.

[Defendant consignee], in its appeal, requested total dismissal of the claim. It contended that a one-time commission fee of the amount HUF 100,000 is due even in the case where the contract was not fulfilled for a reason that is beyond [Defendant consignee]'s control. [Defendant consignee] alleged that the parties are free to agree upon that; consequently, it is not obliged to repay the commission fee to [Plaintiff Buyer]. In addition, [Defendant consignee] objected to the finding of the Court of First Instance that it handled on its own account the amount provided by [Plaintiff Buyer] for the purposes of opening the letter of credit. [Defendant consignee] filed documents with the Court in order to prove that [Plaintiff Buyer]'s money was not handled on [Defendant consignee]'s own account and the bank did not pay interest upon that amount.

DECISION OF THE SUPREME COURT AND GROUNDS FOR THE DECISION

The Supreme Court ruled that [Plaintiff Buyer]'s appeal is inadmissible, [Defendant consignee]'s appeal is partially admissible.

[Plaintiff Buyer] appealed on two grounds. Firstly, it requested the Supreme Court to find that [Defendant consignee] is liable for third parties as well, namely, pursuant to Article 509(2) of the Hungarian Civil Code, in cases where the German Seller fails to perform its obligations. On the other hand, [Defendant consignee] stated that in the instant case, [Defendant consignee] failed to comply with its own obligations as well because at the conclusion of the contract of foreign trade [Defendant consignee] acted against [Plaintiff Buyer]'s interest when it assured the German Seller with guarantees concerning liability for damages in a manner that exceeds the scope of the CISG.

Therefore, upon [Plaintiff Buyer]'s appeal, the Supreme Court analysed the following issues: firstly, whether [Defendant consignee] is responsible for having the [German Seller]'s performance be in conformity with the contract (citing: Article 509(2) of the Hungarian Civil Code); and secondly, whether [Defendant consignee] was negligent in its conduct during the conclusion and fulfilment of the contract of foreign trade and in connection with the enforcement of [Plaintiff Buyer]'s rights (citing: Articles 507, 474 and 475 of the Hungarian Civil Code).

Upon [Defendant consignee]'s appeal, the Supreme Court also examined whether [Defendant consignee] is legally entitled to the commission fee (citing Article 511(1) of the Hungarian Civil Code) and whether [Defendant consignee] is obliged to pay interest.

In the instant case, a special type of commission contract is involved, it is a commission contract concerning foreign trade which was originally governed by the Decree of the Government of Hungary No. 32/1967 (IX.23) but at the time of conclusion of the contract the latter Decree was not in force anymore. Therefore, the instant dispute can be resolved by taking into account the agreement of the parties dated 1 August 1990, the commission contract of 16 October 1990 and, in issues not settled by the parties, Chapter XLII of the Hungarian Civil Code.

Pursuant to Article 507, under a commission contract the consignee shall conclude a sale of goods contract in its own name and for the purposes of the mandator. Pursuant to Article 474(2), the consignee shall act upon the orders and according to the interests of the mandator. Article 509(2) provides furthermore that the consignee is liable for the fulfilment of all obligations of third contracting parties.

[Plaintiff Buyer] rightly pointed out in its appeal that liability of the consignee is two-sided according to the Hungarian Civil Code because, on the one hand, it is liable for any breach of contract which occurs in consequence of its own conduct and, on the other hand, for the fulfilment of the obligations of third contracting parties. Such a liability stands very close to the liability for a so-called "assistant in fulfilling the contract". The purpose of the relevant legislation was to encourage the consignee to conclude the contract with a person who is able to fulfil its contractual obligations. This legislation enhances the risk of the consignee and reduces its mediatory role. With regard to Article 200 of the Hungarian Civil Code, however, the parties are not precluded from determining the sphere and the extent of the consignee's liability in the contract and thereby its mediatory role or own assumption of risk can be strengthened or weakened.

Therefore, the starting point in examining [Defendant consignee]'s liability is the analysis of the contents of the contracts involved in the legal dispute.

In the instant case, the parties agreed, among others, that the [German Seller], with whom [Defendant consignee] had to conclude the sale of goods contract, shall not be chosen by [Defendant consignee] but by [Plaintiff Buyer]. It is not realistic that [Defendant consignee] should be responsible for the appropriate performance of the contract by a foreign Seller which was not even selected by [Defendant consignee] itself. The consignee shall be liable for a person which was not chosen by itself in cases where the consignee had expressly or implicitly accepted the obligation to do so. Obligations provided for in para. 8, i.e., liability for the consignee's own conduct and 2/1/e) are both related to the course of the consignee's conduct. If the express intent of the parties had been to make [Defendant consignee] liable for any breach of contract committed by the foreign Seller, then bringing a legal action against the latter would not have been made dependant upon such an order by [Plaintiff Buyer] and upon advance payment of the costs of the proceedings. The above arguments lead to the conclusion that the parties derogated from Article 509(2) of the Hungarian Civil Code in their contract and therefore [Defendant consignee] is liable only if it caused damages to [Plaintiff Buyer] with its own conduct.

The Supreme Court examined to what extent the contract of foreign trade concluded by [Defendant consignee] was of professional nature and whether non-performance of the contract was a result of [Defendant consignee]'s wrongful conduct. The Supreme Court held that the Court of First Instance rightly ruled that [Defendant consignee] had not committed any failure during the course of its conduct.

Article 79(1) of the UN Convention on the International Sale of Goods (which was implemented into Hungarian law by the Law-Decree No. 20 of 1987) does not give an exhaustive list of the exemptions but provides that:

"A party is not liable for a failure to perform any of his obligations if he proves that the failure was due to an impediment beyond his control and that he could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it or its consequences."

Para 2 of the same provision regulates the case where the party's failure is due to the failure by a third person he has engaged to perform the whole or a part of the contract. In the latter case, the party is exempt from liability only if he is exempt under paragraph (1); and the person he has so engaged would be so exempt if the provisions of paragraph (1) were applied to him.

The Court held that the [Plaintiff Buyer] baselessly argued that provisions of exemption of the foreign party included in the contract harmed the [Plaintiff Buyer]'s interests on the ground that they were different from those included in the CISG. Although the sale of goods contract indeed does not include the text of the CISG, this shall not mean that the liability of the foreign party for third parties would have been excluded. In the sale of goods contract, the foreign party did not oblige itself to purchase the goods from a certain source but to sell them to [Defendant consignee]. Therefore, the Supreme Court holds that, all intermediary traders and the producer of the goods were resorted to not in order to fulfil the original contract but within the foreign party's own sphere of business. Thus, an impediment within the sphere of interest of the "contributor" could not qualify as a ground for exemption. Furthermore, the Supreme Court stated that substantiation of the exact contents of the contract was not only [Defendant consignee]'s but also the foreign party's task, moreover, the disputed contractual clause was not objected to by the [Plaintiff Buyer].

The foreign party to the dispute, on the other hand, objected to the fact that the contract was to be performed within a twelve months period and [Plaintiff Buyer] or its instant contractual partner, i.e., [Defendant consignee] was not entitled to avoid the contract on the ground that one single installment was delayed because the Buyer was obliged to take delivery of the machines anytime within the performance period at the value of US $500,000. It stands beyond doubt that the contract, besides transferring the ownership of the goods, had provided [Plaintiff Buyer] with additional rights as well, e.g., the right of sole distributorship, therefore it is questionable whether the avoidance of the contract was lawful. The risk of bringing an action against the [German Seller], as included in the joint protocol of 8 February 1991, was that the German party would object to the legality of the avoidance. As provided for in the protocol, the [German Seller] rejected [Plaintiff Buyer]'s offer to conclude a new contract because it objected to the legality of the avoidance. As far as [Plaintiff Buyer]'s point of view that the avoidance was lawful and that it was not afraid of the submission of a possible claim by the [German Seller], [Plaintiff Buyer] should have instructed [Defendant consignee], as provided for in the contract, to bring a legal action against the [German Seller] and should have made advance payment of the costs of proceedings. However, [Plaintiff Buyer] did not do so. [Plaintiff Buyer]'s argument that [Defendant consignee] was not sure about the outcome of such proceedings, is inadmissible. Only the decision of the Court could have substantiated beyond doubt what the consequences would have been had the [Plaintiff Buyer] or [Defendant consignee] lost the case and the conduct of which party led to the loss of the case.

Under such circumstances, [Defendant consignee] is not liable for not having brought a lawsuit against the [German Seller] because [Plaintiff Buyer] failed to instruct [Defendant consignee] to do so and also failed to make advance payment of the cost of the proceedings.

Since para. 8 of the commission contract restricts [Defendant consignee]'s liability to failures upon its own conduct, and [Defendant consignee] had not committed any such failure, the Court of Second Instance came also to the conclusion that due to the lack of breach of contract [Defendant consignee]'s liability for damages cannot be substantiated either.

[Defendant consignee] proved before the Court of Second Instance that the bank did not pay interest upon the foreign currency funds until 1 January 1991 and there was no information on whether [Defendant consignee] handled the HUF funds of the foreign currency deposit on its own account, therefore in lack of unjust enrichment, the Court of Second Instance did not oblige [Defendant consignee] to pay interest.

[Defendant consignee]'s appeal is baseless concerning the commission fee. Article 511(1) of the Hungarian Civil Code provides that the consignee is entitled to the commission fee only if the sale of goods contract was performed. As the sale of goods contract was not performed in the instant case, [Defendant consignee] is not entitled to the commission fee. [Defendant consignee] is not entitled to receive the one-time commission fee of HUF 100,000 either because the parties provided for the legal consequences of the non-performance of the contract only between themselves but did not agree upon the question of what happens if the contract of foreign trade is frustrated in consequence of the [German Seller]'s fault. In the case at hand, it was the breach of contract committed by the foreign party which led to non-performance of the contract. The agreement on the one-time commission fee of HUF 100,000 does not extend to the latter case.

Upon the above arguments the Court of Second Instance, based on Article 253(2) of the Hungarian Code of Civil Procedure and as provided in the above text, partially reversed the decision of the Court of First Instance, reduced the sum of damages to be paid by [Defendant consignee] to HUF 125,000, other aspects of the first-instance decision remain intact.

[Defendant consignee] won the case in a proportion of more than 90 percent, thus pursuant to Art. 81(1) of the Hungarian Code of Civil Procedure and considering the proportion of winning and losing the case, the Supreme Court ruled on the costs of the proceedings. Consequently, the Court raised the partial costs of proceedings to be paid by [Plaintiff Buyer] to [Defendant consignee] to HUF 140,000. The sum of the partial costs of proceedings to be paid by [Plaintiff Buyer] to [Defendant consignee] was calculated at HUF 15,000 (attorneys' fees), the partial costs of proceedings to be paid by [Defendant consignee] to [Plaintiff Buyer] at HUF 170,880 (HUF 35,880 appeal tax and HUF 155,000 attorneys' fees). In order to simplify the payments, the partial costs of proceedings to be paid by [Defendant consignee] to [Plaintiff Buyer] were reduced by the partial costs of proceedings to be paid by [Plaintiff Buyer] to [Defendant consignee] (i.e., HUF 170,880 - HUF 15,000 = HUF 155,880).

The Supreme Court obliged the parties to pay the appeal tax of HUF 150,000, which had not been complied with by [Plaintiff Buyer] due to its right to postpone the payment of it, according to their proportion of winning or losing the case (citing: Article 65 of Act of the Parliament No. 93 of 1990 which provides that Article 13(2) of the Decree of the Ministry of Justice No. 6/1986. (VI. 26.) is applicable to the latter.).


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For the purposes of this translation, the Hungarian buyer of the goods is referred to as [Plaintiff Buyer], the consignee German company [ITCM GmbH] is referred to as [Defendant consignee] and the company that sold the goods is referred to as the [German Seller]. Amounts in Hungarian currency (Forint) are indicated as [HUF] and amounts in US currency (US Dollars) are indicated as [US $].

** Dr. Andrea Vincze is a Fellow of the Institute of International Commercial Law of the Pace University School of Law. She received her law degree from the University of Miskolc, Hungary, in 2002. Currently, she is a Ph.D. candidate at the same university, working on her research project on international commercial arbitration and ICSID arbitration. She has also dealt with cross-border and Internet-related copyright issues.

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Pace Law School Institute of International Commercial Law - Last updated February 15, 2007
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