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CISG CASE PRESENTATION

Germany 10 February 1994 Appellate Court Düsseldorf [6 U 119/93] (Fabrics case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/940210g2.html]

Primary source(s) for case presentation: Case text


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Case identification

DATE OF DECISION: 19940210 (10 February 1994)

JURISDICTION: Germany

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

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: 6 U 119/93

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

CASE HISTORY: 1st instance LG Düsseldorf 22 March 1993 [affirmed] [CISG overlooked]

SELLER'S COUNTRY: Italy (plaintiff)

BUYER'S COUNTRY: Germany (defendant)

GOODS INVOLVED: Fabrics


Case abstract

GERMANY: OLG Düsseldorf 10 February 1994 [6 U 119/93]

Case law on UNCITRAL texts (CLOUT) abstract no. 82

Reproduced with permission from UNCITRAL

The defendant, a German buyer, refused to pay the purchase price asserting that parts of the fabrics delivered by the plaintiff, an Italian seller of textiles, were of a colour different from that specified in the contract. The first instance court held in favour of the plaintiff.

The appellate court held that the fact that some of the textiles delivered were of a different colour did not amount to non-conformity with contract specifications, since the textiles were not unfit for the purpose for which they were bought (article 35(2)(b) CISG). The court held that such a delivery constituted partial non-performance, as a result of which the [buyer] was entitled to exercise the rights prescribed in articles 46 to 50 of the CISG (article 51 CISG). However, it was found that the [buyer] failed to fix an additional period of time of reasonable length for performance by the [seller], and consequently, it was held that the [buyer] could not exercise those rights (articles 39, 47(2) and 49(1)(b) CISG). The only right that the [buyer] had not lost as a result of its failure to fix an additional period of time for performance by the [seller] was the right to demand payment of damages for breach of contract by the [seller] (article 45 CISG).

However, the court found that the [buyer] had not demanded such damages. In addition, it was held that the [buyer] had lost the right to declare the contract avoided on another ground, namely that the [buyer] had sold further the goods bought, thus having made restitution of the goods impossible (article 82(1) CISG).


Abstract of ruling on rate of interest, Volker Behr

Reproduced with permission of 17 Journal of Law and Commerce (1998) 263 at 279-280

In a German-Italian sale of tissues at a price of 6,749.21 German Marks, CISG was applicable (probably by virtue of Article 1(1)(a)). The German buyer lost his right to avoid the contract under Article 82 CISG, and the Italian seller claimed the price plus interest. Landgericht, the court of first instance, had awarded 5% interest.

"5% interest awarded by Landsgericht and which is not attacked by buyer is justified under Article 78 CISG, 352 HGB (German Commercial Code) and 291 BGB (German Civil Code). Article 78 CISG states that seller is entitled to interest in case buyer does not pay the price. The rate of interest, however, is not fixed. This rate is to be fixed according to the respective national law found by virtue of private international law. By both parties pleading German law, they have impliedly chosen German law to be applicable law according to Article 27(1), (2) EGBGB. Thus, defendant owes commercial interest at a rate of 5%. There would be no difference in case Italian law was applicable by way of Article 28(1), (2) EGBGB. According to Article 1282 and 1284 I Italian Codice Civile, the rate of legal interest is 5%, as well." (citations omitted)

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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: Articles 35(2)(b) ; 39 ; 47 ; 49(1)(b) ; 51 ; 78 ; 82 [Also cited: Articles 25 ; 45 ; 46 ; 48 ; 49 ; 50 ; 53 ; 74 ]

Classification of issues using UNCITRAL classification code numbers:

35B2 ; 35D [Conformity of goods to contract: fitness for particular purpose made known to seller; Other issues concerning conformity of the goods: delivery of goods of another kind vs. conforming goods];

39C [Requirement to notify seller of lack of conformity: notice required even though goods delivered are of a different kind];

47A [Buyer's right to fix additional period of performance];

49B [Buyer's loss of right to declare avoidance after delivery];

51A [Delivery or conformity of only part of goods];

78B [Interest on delay in receiving price or any other sum in arrears: rate of interest];

82A1 [Restitution: effect of inability to return goods on right to avoid contract];

Descriptors: Conformity of goods ; Notice of lack of conformity, timeliness ; Avoidance ; Restitution ; Interest

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Editorial remarks

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Citations to other abstracts, case texts and commentaries

CITATIONS TO OTHER ABSTRACTS OF DECISION

English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=53&step=Abstract>

French: Revue de Droit des Affaires Internationales/International Business Law Journal (1995) 751-752

Italian: Diritto del Commercio Internazionale (1995) 230 No. 48

Polish: Hermanowski/Jastrzebski, Konwencja Narodow Zjednoczonych o umowach miedzynarodowej sprzedazy towarow (Konwencja wiedenska) - Komentarz (1997) 250-251

CITATIONS TO TEXT OF DECISION

Original language (German): cisg-online.ch <http://www.cisg-online.ch/cisg/urteile/115.htm>; Recht der Internationalen Wirtschaft (RIW) 1994, 1050-1051; OLG Report Düsseldorf 1994, 72-73; Neue Juristische Wochenschrift - Rechtsprechungs-Report (NJW-RR)1994, 506-507; Die deutsche Rechtsprechung auf dem Gebiete des internationalen Privatrechts im Jahre (IPRspr) 1994 No. 27 [70]; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=53&step=FullText>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

English: Ferrari, International Legal Forum (4/1998) 138-255 [238 n.921 (notice of lack of conformity), 253 n.1079 (interest issues)]; Behr, 17 Journal of Law and Commerce (1998) 266-288 [abstracts and comments on 29 interest rulings from 10 countries (this case presented at 279-280)]; Karollus, Cornell Review of the CISG (1995) 51 [67-68, 69-71, 75] [comments on notice of non-conformity, avoidance and rate of interest issues in the context of German case law on the CISG]; Lookofsky, Understanding the CISG in Scandinavia (1996) 89 n.68; Bernstein/Lookofsky, CISG/Europe (1997) 92 n.66; Veneziano, Revue de Droit des Affaires Internationales/ International Business Law Journal (1997) 39 [42]; Huber, ibid, [Art. 47 (criticism of case: buyer may fix additional period of time, not buyer must fix such a period)] 399 n.27a; [Art. 49] 418 n.18a, 419 n.56a, 421 n.44a; Eberstein/Bacher, ibid, [Art. 78] 596 n.31, 598 n.43; Mullis, Avoidance for Breach under the Vienna Convention: Critical Analysis of Some of the Early Cases (1998) nn.81, 98, 118; Koch, Pace Review of Convention on Contracts for International Sale of Goods (1998) 247 n.236 [fundamental breach: unwillingness of performance]; Boghossian, Pace Review of the Convention on Contracts for the International Sale of Goods (1999-2000) n.496; for analysis of the remedy of avoidance citing this and other cases, go to Kazimierska, Pace Review of the Convention on Contracts for the International Sale of Goods (1999-2000) n.n.125, 203; Article 78 and rate of interest: Mazzotta, Endless disagreement among commentators, much less among courts (2004) [citing this case and 275 other court and arbitral rulings]; [2005] Schlechtriem & Schwenzer ed., Commentary on UN Convention on International Sale of Goods, 2d (English) ed., Oxford University Press, Art. 25 para. 21 Art. 35 para. 10 Art. 39 para. 6 Art. 47 paras. 14, 17 Art. 49 paras. 6, 8, 15, 16 Art. 82 para. 28 Art. 74 para. 20 Art. 78 para. 27; Henschel, The Conformity of Goods in International Sales, Forlaget Thomson (2005) 155, 174; Spaic, Analysis of Fundamental Breach under the CISG (December 2006) nn.293, 320; Peter Huber, CISG: The Structure of Remedies, 71 RabelsZ (2007) n.7

Finnish: Huber/Sundström, Defensor Legis (1997) 747 [755 n.37]

French: Witz, Les premières applications jurisprudentielles du droit uniforme de la vente internationale (L.G.D.J., Paris: 1995) 95, 106 n.115; Veneziano, Revue de Droit des Affaires Internationales/ International Business Law Journal (1997) 39 [42]

German: Huber, Art. 47 No. 18 n.27a; Art. 49 Nos. 13 n.36a, 19 n.42a, n.44a; Karollus, [österreichisches] Recht der Wirtschaft (öRdW) 1994, 387; Magnus, Juristische Schulung (JuS) 1995, 870-872; Piltz, Neue Juristische Wochenschrift (NJW) 1996, 2768 [2771 n.59, 2773 n.103]; Schlechtriem, Internationales UN-Kaufrecht (1996) 71 n.25, 186 n.317; Schwenzer in von Caemmerer/Schlechtriem, Kommentar zum Einheitlichen UN-Kaufrecht (2d ed. 1995) 324 n.35 [Art. 35], 359 n.22a [Art. 39]; Staudinger-Magnus (1994) Art. 47 No. 13; Art. 49 No. 30

Spanish: Perales, Cuadernos Jurídicos 3 (1996) No. 43, 5 [and n.29] [commentary on Article 78: determination of rate of interest under the CISG (review of case law)]

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Case text (English translation)

Queen Mary Case Translation Programme

Appellate Court (Oberlandesgericht) Düsseldorf 10 February 1994 [6 U 119/93]

Translation [*] by Ruth Janal [**]

Translation edited by Camilla Baasch Andersen [***]

REASONS FOR THE DECISION

The [buyer]'s appeal is unsuccessful. The District Court correctly granted the [seller]'s claim for payment of the purchase price in the amount of 6,120.13 DM [Deutsche Mark] (under correct calculations the claim is for 6,120.12 DM).

The relationship between the parties is governed by the United Nations Convention on Contracts for the International Sale of Goods (CISG), which entered into force in Italy on 1 January 1988 and in Germany on 1 January 1991 (cf. MüKo/Martiny, attachment II to Art. 28 EGBGB [*] n. 2). Under Art. 53 CISG, the [buyer] is obligated to pay the purchase price for the unreturned fabric at a price of 13.45 DM per meter (undisputedly, this is the price the parties agreed upon), minus the 629.09 DM already paid. Taking into account the amount of fabric that was returned by the [buyer] (153.3 m), [buyer] was left with (655.1 m - 153.3 m =) 501.8 m of textiles worth (501.8 m x 13.45 DM =) 6,749.21 DM. After subtraction of the 629.09 DM paid, this leads to a remaining claim for payment of the purchase price in the amount of 6,120.12 DM.

The [buyer] raises "the objection of the possibility of rescission", meaning that [buyer] wants to rely on a right to refuse performance similar to that available under 478 BGB [*], because [buyer] allegedly gave notice of the lack of conformity before it claim for a remedy became time-barred. In truth, however, [buyer] argues that the [seller]'s delivery was incomplete and therefore altogether unfit for the purpose envisaged by the contract. [Buyer] fails to conclusively argue for its purported right to refuse performance under the provisions of the CISG.

Under Art. 35(2)(b) CISG, the goods do not conform with the contract unless they are fit for any particular purpose expressly or impliedly made known to the seller at the time of the conclusion of the contract. The [buyer] does not substantiate its claim that the goods were altogether unfit for the purpose envisaged by the contract for the reason that a part of the 153.3 m of plain-colored fabric had been returned due to the wrong color and that a substitute delivery of the respective amount in the right color ordered by the [buyer] had not been effected. The [buyer] insofar breaches its duty of truth during the legal proceedings: According to [buyer]'s earlier submissions, it was forced to sell only a remaining amount of 331.1 m considerably under price. After [buyer] had returned the 153.3 m, it was evidently able to make proper use of a part of the remaining 501.8 m in the amount of (501.8 - 331.1 =) 170.7 m at a price of (170.7 x 13.45 =) 2.295.92 DM. An overall breach of contract is therefore not proven.

Furthermore, such a breach does not exist with regard to the remaining fabric in the amount of 331.1 m, which was sold below price according to the [buyer]'s initial pleading. Not even the [buyer] itself has claimed that it explicitly told the [seller] or [seller]'s agent G. at the time of the conclusion of the contract that the checked fabrics and the plain fabrics could only be used in the combination ordered. The sole fact that the [buyer] ordered the fabrics so that it could combine them is not sufficient. This does not exclude the possibility that the fabrics could or should have been combined with the fabrics of other manufacturers.

Insofar as the [seller] delivered textiles in a color not ordered by the [buyer], [seller] effected the delivery of an aliud, which led to a partial non-performance. According to Art. 51 CISG, Articles 45 to 50 apply in respect of the part of the goods which is missing or which does not conform. Under Art. 47(2) CISG, the buyer may not resort to any remedy for breach of contract before the expiry of an additional period of time of reasonable length for performance by the seller of its obligations, unless the buyer has received notice from the seller that it will not perform within the period so fixed. Following the corresponding provision of Art. 49(1)(b) CISG, the buyer is only entitled to declare the contract avoided if the seller does not deliver the goods within the additional period of time fixed by the buyer in accordance with paragraph (1) of Art. 47 or if seller refuses delivery. The [buyer] failed to fixed an additional period of time for performance by the [seller] when [buyer] returned the goods that had been delivered in the wrong color.

The fixing of an additional period of time was not dispensable because [seller] informed [buyer] by fax of 8 July 1992 that it was unable to deliver the ordered goods at the time being and only offered a partial delivery -- one piece in a different color. [Seller]'s behavior did not constitute a serious and definite refusal of performance, which would have made the fixing of an additional period of time dispensable. Strict standards need to be applied for the conclusion of a serious and definite refusal of performance. These requirements are not met if the debtor solely declares to be unable to deliver for the time being, as is the case here. The [buyer]'s behavior in the following period shows that it was not interested in a substitute delivery. As is revealed by its letter of 12 October 1992, [buyer] was experiencing financial difficulties and therefore requested to be allowed to return the remaining textiles in the amount of 331.1 m.

[Buyer] furthermore lost the right to declare avoidance of contract under Art. 82(1) CISG, because it is unable to make restitution of the goods following its reselling of the textiles. None of the exceptions of paragraph (2) of Art. 82 are met. Insofar as [buyer]'s attorney declared in the course of the oral hearing that the goods still existed -- as it had found out during the preparation of that hearing -- this is insignificant. Before the start of the legal proceedings, [buyer] told the [seller] by fax of 19 October 1992 that it sold the remaining 331.1 m textiles for DM 629.09. Soon after, [buyer] sent the [seller] a crossed check over this amount. The [seller] took over [buyer]'s account of events in [seller]'s statement of claim, without the [buyer] ever objecting to this presentation during the course of the proceedings. [Buyer] thus upheld its explanation made before the start of the legal proceedings that it sold the remaining fabrics for 629.09 DM.

Whether [buyer]'s behavior constitutes an anticipatory confession with the effects of 288, 290 ZPO [*] does not need to be decided. In any event, [buyer] was acting contrary to good faith -- a principle that also applies to procedural law -- if [buyer] untruthfully asserted before the initiation of legal proceedings that it sold the remainder of the fabric, then did not correct that matter during the proceedings and let [seller] treat this fact as undisputed, only to declare at the end of the second instance that the goods were still in [buyer]'s possession after all. 290, 532 ZPO apply to such a case at least by analogy. According to these provisions, a confession that does not correspond to the truth can only be revoked in the appellate proceeding if it was caused by a mistake, not if it was based on a conscious misrepresentation of the facts. The [buyer] has not made any submissions that it was under a mistake in the above-mentioned manner, even though the Court during the hearing urgently drew [buyer]'s attention to the contradiction and to [buyer]'s dishonest conduct before the start of the legal proceedings.

In any event, [buyer] has not lost its entitlement to damages under Art. 45(1) and (2) CISG in connection with Art. 74 et seq. CISG as a result of its failure to fix an additional period of time for a substitute delivery -- supposing [buyer] gave a timely notice of non-conformity in accordance with Art. 39 CISG. [Buyer] would possibly have been able to raise such claims, i.e. for loss of profit, by way of set-off. This is a path [buyer] did not choose to follow.

The interest granted by the District Court at a rate of 5% from 27 November 1992 (date of service of the claim), the amount of which is not disputed by the [buyer], is founded under Art. 78 CISG in connection with 352 HGB [*] and 291 BGB [*]. Under Art. 78 CISG, if the buyer fails to pay the purchase price, the seller is entitled to interest on it. The interest rate is not provided for in the Convention, but is to be settled in conformity with the law applicable by virtue of the rules of private international law (cf. v.Caemmerer/Schlechtriem, CISG-Kommentar, Munich 1990, Art. 78 n. 3). As both parties rely on German law for the legal dispute, they have formed an implicit agreement on the applicability of German law (Art. 27(1) sent. 2 EGBGB [*]). The [buyer] is therefore obliged to render the commercial interest rate of 5% from the time of the service of the claim ( 352 HGB, 291 BGB).

The result would not be any different if -- due to a lack of choice of law -- Italian law was to apply to the sales contract following Art. 28(1) and (2) EGBGB [*]. According to Art. 1282, 1284(1) Cc [*] the legal interest rate for sums in arrears is also 5%.

[Buyer]'s appeal is therefore unsuccessful with [buyer] bearing the cost of the legal proceedings under 97(1) ZPO [*].


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Plaintiff-Appellee of Italy is referred to as [seller], and the Defendant-Appellant of Germany is referred to as [buyer]. Amounts in German currency (Deutsche Mark) are indicated as [DM].

Translator's note on other abbreviations: BGB = Bürgerliches Gesetzbuch [German Civil Code]; Cc = Codice civile [Italian Civil Code]; EGBGB = Einführungsgesetz zum Bürgerlichen Gesetzbuche [German Code on the Conflict of Laws]; HGB = Handelsgesetzbuch [German Commercial Code]; ZPO = Zivilprozessordnung [German Civil Procedural Code].

** Ruth M. Janal, LL.M. (UNSW) is a PhD candidate at Albert-Ludwigs-Universität Freiburg. She has been an active participant in the CISG-online website of the University of Freiburg.

*** Camilla Baasch Andersen is a Lecturer in International Commercial Law at the Centre for Commercial Law Studies, Queen Mary, University of London, and a Fellow of the Institute of International Commercial Law of the Pace University School of Law. She is currently finishing her PhD thesis on uniformity of the CISG at the University of Copenhagen.

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