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CISG CASE PRESENTATION

Bulgaria 24 January 1994 Arbitration Case 39/93 [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/940124bu.html]

Primary source(s) for case presentation: Case text

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Case identification

DATE OF DECISIONS: 19940124 (24 January 1994)

JURISDICTION: Arbitration ; Bulgaria

TRIBUNAL: Bulgarian Chamber of Commerce and Industry [BTTP (Bulgarska turgosko-promishlena palata)]

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: 39/93

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Bulgaria

BUYER'S COUNTRY: Greece

GOODS INVOLVED: Unavailable


Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issues: Article 71

Classification of issues using UNCITRAL classification code numbers:

71A [Apparent that a party will not perform substantial part of obligations]

Descriptors: Anticipatory breach ; Installment contracts ; Suspension of performance

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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 (Bulgarian): Praktika Bulgarska turgovsko-promishlena palata (BTPP) 1989-1995 No. 122 [148-151]

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Unavailable

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Case text (English translation)

Queen Mary Case Translation Programme

Arbitration Tribunal of Bulgarian Chamber of Commerce & Industry
Case No. 39/93 of 24 January 1994

Translation [*] by Bojidara Borisova [**]

Translation edited by Vessela Velkova [***]

SUMMARY

As a rule, a commission agent does not carry the risk in cases when the third party (the contracting party to the executive dealing) fails to perform his obligations. This principle has two exceptions: a commission agent carries this risk in cases of so-called transactions on credit where the commission agent knew that the third party is insolvent (art. 295(1) Bulgarian Obligations Contract and Law (BOCL)); and where there is a del credere clause (art. 295(3) BOCL).

In all other cases the commission agent does not generally carry this risk. The provisions of the law mean objective commercial risk. However, when a commission agent by his conduct creates premises for risk, the commission agent -- who is obligated to fulfill his obligations in good faith (art. 296(1) BOCL) -- is responsible according to the general legal prescriptions.

CASE DECISION

The claimant and the respondent concluded a commission contract. The respondent's obligation under the contract had been to conclude international commercial contracts for distribution of the goods that the claimant produces, at his expense.

The fact that the claimant [seller] fulfilled his obligations under the contract is indisputable. He dispatched the goods and paid the required commission to the respondent [commission agent]. The [commission agent] claims that he also fulfilled his obligations under the contract. The [commission agent] asserts that his main obligation is to conclude executive dealings according to the order that he had made for the conclusion of the international commercial contract.

It is true that the principle is that the commission agent does not carry the risk when the third party (the contracting party to the executive dealing) fails to perform his obligations. However, this principle has exceptions. The exceptions are stated in the law or can be formulated in the course of its interpretation. The first exception can be found in article 295(3) of the Bulgarian Obligations Contract Law (BOCL), a del credere clause. A second exception can be found in article 295(1) BOCL, so-called transactions on credit. According to article 295(1) BOCL, the commission agent is responsible for the fulfillment of the obligations of the third party (the contracting party to the executive dealing), if he knew or ought to know that the third party is insolvent.

In other cases, the commission agent does not carry the risk. The provisions of the law mean objective commercial risk. However, we are faced before a completely different situation when the commission agent by his own conduct creates premises for the accomplishment of the risk. The commission agent must fulfill his obligations in good faith (Article 296(1) BOCL) This means that the debtor must exert such efforts, which in the particular case the good husband would manifest, i.e., the required conduct and care must be equivalent to the care that he would manifest for the management of his own affairs. The commission agent has not manifested such care.

First, the international commercial contract was concluded without providing any warranties that the buyer will fulfill its obligations concerning the contractual price.

Second, there is no evidence that the commission agent put some efforts to collect the payment.

Third, the [commission agent] had the opportunity to make an objection for default of the buyer to the international commercial transaction. The commission agent had the possibility to suspend the performance of his contractual obligations after informing the [seller], instead his behavior was in [seller]’s detriment. This was in contradiction with the prescription of article 71 of the CISG, which is the applicable law, because both Bulgaria and Greece have ratified the CISG. This article of the Convention regulates the so-called predictable breach of contracts for successive deliveries. The seller has the right to suspend the performance of his obligations, if after the conclusion of the contract, it becomes apparent that the other party will not perform a substantial part of his obligations as a result of impossibility to perform, insolvency or impossibility to prepare to perform.

The lack of the required care is evident from the inaction of the [commission agent], who did not protect his right following from the executive dealing. After the debtor became in arrears the commission agent was obliged to protect his rights, including through starting a trial - in this case to bring a claim to the Arbitral Tribunal of the BCCI, because the international commercial contract includes an arbitration clause.

The guilty inaction of the [commission agent] created the premises which led to the [seller]’s detriment - the [seller] suffered material damages. The fact that the commission agent did not performed part of his obligations gives the right to the [seller] to repudiate the contract and to claim damages.

The Arbitral Tribunal enacted similar decisions in Case No. 1/93 and Case No. 30/93.


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Claimant is referred to as [seller] and the Respondent is referred to as [commission agent]

** Bojidara Borisova is a candidate for the degree of Ph.D. in Law at Sofia University “ST.Kl.Oxridski”, Bulgaria.

*** Vessela Velkova, LL.B., is a participant in the LL.M. programme, Queen Mary, University of London.

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Pace Law School Institute of International Commercial Law - Last updated January 22, 2004
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