Germany 8 March 1995 Appellate Court München (Copper-nickel electrolyte cathodes case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/950308g1.html]
Primary source(s) for case presentation: Case text
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 7 U 5460/94
CASE HISTORY: 1st instance LG München (13 HKO 17330/93) 2 August 1994 [partly reversed]; review denied BGH (VIII ZR 179/95) 17 April 1996
SELLER'S COUNTRY: Finland (plaintiff, also from Finland, is assignee of seller)
BUYER'S COUNTRY: Germany (defendant)
GOODS INVOLVED: Copper and nickel electrolyte cathodes
Reproduced with permission from UNCITRAL
A Finnish company sold 3,000 tons of electrolyte nickel/copper cathodes to the [buyer] for about 17 million US dollars. Only the [buyer] signed the written contract form. The metal was delivered but not paid for. The [seller] then assigned the payment claim to the plaintiff who demanded payment. The [buyer] denied the jurisdiction of the German court because of an arbitration clause and the valid conclusion of a sales contract.
Concerning the arbitration clause, the court found that the form requirements of the applicable article 2 (2) of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 had not been satisfied, since the parties had not signed the agreement containing the arbitration clause and the Finnish company had not received the standard form which contained the clause.
Concerning the payment claim, the court applied the CISG since both parties to the sales contract had their places of business in different CISG Contracting States, namely in Finland and in Germany. It was held that a contract had been effectively concluded between the [buyer] and the [seller] and that the plaintiff's claim for payment was justified under articles 53 and 62 CISG.
Even though Finland had declared that it would not be bound by Part II of the CISG concerning the "Formation of the Contract", an effective contract could still have been concluded. According to the CISG other forms of consent are possible as long as they can be regarded as a mutual binding arrangement and the subject-matter of the contract is comparable to articles 14-24 CISG. In an obiter dictum, the court explicitly excluded recourse to the governing contract law. The [buyer] signed a contractual document thus showing its approval of the contract and also accepted the goods upon arrival. The [seller] indicated assent to the contract by its conduct, namely through the delivery of the goods. A written contractual agreement is not necessary to evidence the parties' consent (article 11 CISG).
Go to Case Table of Contents
APPLICATION OF CISG: Yes [Article 1(1)(a)]
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue: Articles
Classification of issues using UNCITRAL classification code numbers:
92A [Declaration not to be bound by Part II (Formation of
92A [Declaration not to be bound by Part II (Formation of Contracts)]
CITATIONS TO OTHER ABSTRACTS OF DECISION
English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=119&step=Abstract>;  1 Forum des Internationalen Rechts/The International Legal Forum (English language edition) 216
Italian: Diritto del Commercio Internazionale (1996) 645-646 No. 117
Polish: Hermanowski/Jastrzebski, Konwencja Narodow Zjednoczonych o umowach miedzynarodowej sprzedazy towarow (Konwencja wiedenska) - Komentarz (1997) 275-276
CITATIONS TO TEXT OF DECISION
Original language (German): cisg-online.ch <http://www.cisg-online.ch/cisg/urteile/145.htm>; Die deutsche Rechtsprechung auf dem Gebiete des internationalen Privatrechts im Jahre (IPRspr) 1995 No. 187; Recht der Internationalen Wirtschaft (RIW) 1996, 854-856; Neue Juristische Wochenschrift-Rechtsprechungs-Report Zivilrecht (NJW-RR) 1996, 1532-1533; Versicherungsrecht (VersR) 1996, 216-218; ;  Wirtschaftsrechtliche Beratung (WiB) 1180-1181; Forum des Internationalen Rechts/ The International Legal Forum (1996) 216-218; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=119&step=FullText>
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
English: Ferrari, International Legal Forum (4/1998) 138-255 [169 n.266 (effect of Art. 92 declaration)]; Honnold, Uniform Law for International Sales (1999) 137 [Art. 92 (rejection of part II, formation of contract)]; T.S. [Simons], Forum des Internationalen Rechts/ The International Legal Forum (1996-1) 217-219; Flechtner, 17 Journal of Law & Commerce (1998) 194 n.23 [Art. 92]; Spanogle/Winship, International Sales Law: A Problem Oriented Coursebook (West 2000) [contract formation, use of forms: parol evidence and confirmation letters 123-130 (this case at 123-124)]; Larry A. DiMatteo et al., 34 Northwestern Journal of International Law & Business (Winter 2004) 299-440 at n.123; CISG-AC advisory opinion on Examination of the Goods and Notice of Non-Conformity [7 June 2004] (this case and related cases cited in addendum to opinion);  Schlechtriem & Schwenzer ed., Commentary on UN Convention on International Sale of Goods, 2d (English) ed., Oxford University Press, Art. 11 paras. 7, 12 Intro. 14-24 para. 10 Art. 79 para. 53; Henschel, The Conformity of Goods in International Sales, Forlaget Thomson (2005) 88
Finnish: Huber/Sundström, Defensor Legis (1997) 747 [749 n.9]
French: Witz, Dalloz Sirey (1997) Som. 217-218
German: Piltz, Neue Juristische Wochenschrift (NJW) 1996, 2768 [2769 n.18]; T.S. [Simons], Forum des Internationalen Rechts/ The International Legal Forum (1996-1) 218-219; Schnelle,  Wirtschaftrechtliche Beratung (WiB) 1181-1182Go to Case Table of Contents
Queen Mary Case Translation Programme
8 March 1995 [7 U 5460/94]
Translation [*] by Jan Henning Berg [**]
Edited by Institut für ausländisches und internationales
Privat- und Wirtschaftsrecht der Universität Heidelberg
Daniel Nagel, editor [***]
Plaintiff [Seller's Assignee], a company which is seated in (...), claims from Defendant [Buyer] the purchase price for the delivery of metals in December 1991 and January 1992 on the basis of a claim which has been assigned to it by [Seller], the Finnish company (...). [Buyer] is mainly engaged in transnational trade with (...).
The dispute between the parties is mainly about the issue whether German courts have jurisdiction over the present dispute as well as the formation, validity and content of the contract of sale asserted by [Seller's Assignee].
According to a written contract dated 4 December 1991, which was signed by [Buyer] and the content of which is not in dispute, [Buyer] purchased from [Seller] about 3,000 tons of electrolyte nickel/copper cathodes. The liquidation rate of the London Metal Exchange was intended to form the basis for the price calculation in accordance with other specific details determined by the parties. Delivery was to occur in December 1991 / January 1992 by (...).
The payment terms provided that a telegraphic bank transfer should be processed within thirty days after arrival of the goods at the port of Rotterdam. [Buyer] should provide a bank guarantee in favor of [Seller] within five days after the latter indicated that the goods would be available.
The contract also provided for the inclusion of "standard terms of sale and purchase" as a fixed and necessary part of the contract. It is in dispute between the parties whether the contract document was signed on behalf of [Seller] by an authorized representative.
The contract contains the following additional provision:
"The object of the present and signed amendment is to alter the payment terms contained in the contract of 4 December 1991. Pursuant to this additional agreement, the buyer is obliged to pay the sum of US dollars [US $] 500,000 to the seller in advance by 14 January 1992. Payment must be made by way of telegraphic bank transfer according to the instructions given by the seller. The residual value of the contract will be used as a payment in order to cover the debts of (...) against (...) under contract no. 112-1810/91 of 18 October 1991 (exhibit K4)."
The companies (...) and (...) concluded another contract of roughly the same content as the contract of 4 December 1991 (concerning the quantity to be delivered, payment terms et seq.) (exhibit K9, contract no. 598/5814063/10325/-D).
According to the bills of lading of 31 December 1991, 17 January 1992 and 31 January 1992, the metals were delivered by company (...) as the shipper of (...) to Rotterdam, where they should be unloaded. These documents, which have been confirmed by [Buyer], refer to the contract between (...) and (...).
In its letter to [Seller's Assignee] dated 29 April 1993, [Buyer] estimated the contract value at US $17,665,945.25 under reference to the "copper-nickel contract". This letter invoices a number of other items.
Thus far, [Buyer] has not paid this sum. On 15 March 1993, [Seller] and [Seller's Assignee] concluded the following agreement with reference to the contract of 4 December 1991 between [Seller] and [Buyer]:
"1. [Seller] assigns all rights and the entire liability arising out of this contract to [Seller's Assignee]. The parties to the contract declare that the contract of 4 December 1991 does not lead to any monetary or property claims.
2. Company (...) has agreed with [Buyer] that the revenue is to be transferred directly to the account of (...) under bypass of (...) (exhibit K14)."
POSITION OF THE PARTIES BEFORE THE COURT OF FIRST INSTANCE
Position of [Seller's Assignee]
[Seller's Assignee] alleged that the petitioned court had territorial jurisdiction to adjudicate the claim for the purchase price that had been validly assigned to [Seller's Assignee], based on a place of general jurisdiction (allgemeiner Gerichtsstand).
Jurisdiction of the court further followed from recital no. 5 of [Seller]'s terms of sale and purchase, provided that these had been validly included in the contract.
[Seller's Assignee] has argued in relation to the relevant transaction and its entitlement to bring the claim that it had purchased the metals from the producer, company (...) in the area of (...). It had also paid for the goods. In the light of statutory provisions in force at that time in (...), it had solely been possible to process the export transactions via the export trading company (...). In order to carry out the relevant transaction, [Seller's Assignee] had delegated the sale of metals to company (...) in the latter's own name, but on account of [Seller's Assignee], and company (...) had sold the metals to the Finnish company (...).
[Buyer] -- who is itself a shareholder of [Seller's Assignee] -- had been aware of the background of the business transactions and had agreed to purchase the metals via [Seller]. It had purchased the nickel/copper cathodes by contract of 4 December 1991. Delivery had been effected in Rotterdam by company (...) with the purpose to perform the contract of 4 December 1991 on behalf of [Seller]. This would be proved by the shipping documents, the receipt of which had been confirmed by [Buyer]. The purchase price had been due on 3 March 1992.
Performance of the contract of sale and maturity of the claim had also been approved by [Buyer]'s CEO during a board meeting of [Seller's Assignee] on 18 and 19 February 1993 in (...). Performance had been promised to occur within five days. However, [Buyer] had failed to make any payment.
The declaration of assignment, between [Seller's Assignee] and [Seller] of 15 March 1993 was valid, both companies had legal capacity. The agreement had also been signed by the respective authorized persons.
[Seller's Assignee] has requested the court to order [Buyer] to pay US $17,665,945.35.
Position of [Buyer]
[Buyer] has requested the court to dismiss the action.
[Buyer] has asserted in its defense that an arbitration agreement existed. It has submitted In this respect that the relevant terms of sale and purchase of [Seller] contained an arbitration clause at recital no. 5, which determined the Chamber of Commerce of Stockholm or Helsinki as the competent court of arbitration. [Buyer] alleged that the different recital no. 5 of the terms of sale and purchase submitted by [Seller's Assignee] were forged.
[Buyer] also alleges that [Seller's Assignee]'s claim is not justified. A valid contract had neither been concluded between company (...) and company (...) nor between [Buyer] itself and [Seller]. Instead, [Buyer] had purchased the goods in question via its partner (...). There had been a proposal by company (...) to employ the Finnish company (...) in order to bypass the export restrictions in (...), given that the export ban had not been in force for Finland. The documents submitted by [Seller's Assignee] had solely been intended to facilitate the export of goods by means of company (...). None of these contracts would actually be valid.
Moreover, the sales contract of 4 December 1991 had not been properly signed on behalf of [Seller].
[Buyer] denies that it had accepted the existence of the claim for the purchase price vis-à-vis [Seller's Assignee]. Insofar as the letter of 29 April 1993 mentioned the value of the sale, it would not have any bearing on the questions of maturity of, and entitlement to the claim. Furthermore, [Buyer] asserts that it had paid the purchase price to the producer of the metals by virtue of two cheques for EUR 1,000,000, and had also made a direct payment of EUR 500,000 to company (...).
REASONING OF THE COURT OF FIRST INSTANCE
The District Court (Landgericht) allowed [Seller's Assignee]'s action. The petitioned court affirmed its own territorial and international jurisdiction pursuant to §§ 12, 17(1) ZPO [*], because [Buyer] has its seat in (...).
In particular, territorial jurisdiction also followed from [Seller]'s sale and purchase terms, on which the contract was based.
It was doubtful, whether [Buyer] had in fact wanted to raise the defense of existence of an agreement to arbitrate (Einrede des Schiedsvertrags). In any event, the defense would not be justified because the clause asserted by [Buyer] did not contain any indication as to which court of arbitration should be competent to adjudicate the dispute. Therefore, the clause would be ineffective under the German law of civil procedure.
The District Court also decided that [Seller's Assignee]'s claim was justified.
A contract had been concluded between [Seller] and [Buyer] on 4 December 1991 concerning the sale of the metals in question. It is undisputed that [Buyer] had signed the written contract. Despite the fact that the contractual document which had been submitted during the proceedings contained the signature of a non-authorized employee of [Seller], the witness (...) had credibly confirmed the existence of another, properly signed contractual document. This witness had also been authorized by its principal to sign the contract.
The contract concluded between the parties did not constitute a bogus transaction (Scheingeschäft). [Seller] had been involved as a means of bypassing the export provisions and there had been a common intention to be legally bound (Rechtsbindungswille). [Buyer] had also received the metals in question on the basis of the concluded contract. Delivery had been effected by way of company (...) as the responsible export trading company. The contract between company (...) and company (...) concerned the metals subject to the present dispute. It could be implied from the contract and from bills of delivery -- [Buyer] itself had confirmed that they had been handed over on 22 January 1992 and 1 February 1992 -- that [Seller] had properly performed its contract with company (...) as well as the contract with [Buyer]. [Buyer] had failed to submit that it had received different goods or that the delivery had been based on different contracts.
The claim for the purchase price had validly been assigned to [Seller's Assignee], and the assignment had been processed by an authorized representative of [Seller]. [Buyer] thus owed the purchase price, the amount of which is not in dispute. [Buyer] had failed to substantiate that it had made any payment on the purchase price.
POSITION OF THE PARTIES
Position of [Buyer]
[Buyer]'s requests that the judgment of the District Court be revoked and that the claim of the [Seller's Assignee] be dismissed.
[Buyer] reiterates its factual submissions which it had already made during the proceedings in the first instance. Furthermore, it argues that the District Court had incorrectly assessed the defense of an agreement to arbitrate, and that it had not been raised too late. [Buyer] had already clarified during the first instance proceedings that the standard terms of [Seller] had become part of the relevant contract and provided for the International Chamber of Commerce in Helsinki or Stockholm to be the competent court of arbitration. Thus, the court of arbitration had been sufficiently specified. The clause would also be governed by Finnish laws, which provide that a valid arbitration clause may be stipulated by means of standard terms.
Furthermore, the District Court had not sufficiently clarified that the arbitration clause had actually been contained in the standard terms -- in contrast to the choice of forum agreement as asserted by [Seller's Assignee]. The District Court had erroneously omitted to hear a number of witnesses appointed by [Buyer].
Moreover, even if no valid arbitration agreement had been concluded, Finnish courts in Helsinki would have jurisdiction on the basis of the place of performance.
[Buyer] further contests the evaluation of evidence by the District Court, in particular in respect to the statement made by witness (...). [Buyer] reaffirms its allegation that no contract had been validly concluded between itself and [Seller]. In addition, it argues that the relevant transactions were mere bogus contracts, which had been manipulated by [Seller's Assignee] in concurrence with the nickel producer and company (...), which had engaged the Finnish company in order to deceive (...) and the Finnish authorities. Instead, [Buyer] had acquired the relevant metals directly from company (...).
[Buyer] further asserts that, in any case, it would owe a maximum sum of US $500,000 as provided in the amendment to the contract, because the residual amount had been supposed to cover [Seller's Assignee]'s debts vis-à-vis [Buyer] which had arisen out of contract no. 112-1810/91 of 18 October 1991. In the context of the additional agreement, [Buyer] had been informed that this agreement sought to prevent company (...) from deriving claims against [Buyer] for the purchase price on the basis of the sales contract document.
According to the amending agreement, [Buyer] had also paid US $500,000 to company (...).
It would also follow from the content of the agreement between [Seller's Assignee] and company (...) of 15 March 1993 that no residual debt existed.
[Buyer] requests the Court to:
Position of [Seller's Assignee]
[Seller's Assignee] requests the Court to dismiss [Buyer]'s appeal and to order the latter to bear all costs of the proceedings.
[Seller's Assignee] also mainly reiterates its submissions in the proceedings in the first instance. It argues in addition that the defense of an agreement to arbitrate had been raised too late (§ 282(3) ZPO [*]) and that no agreement to arbitrate had been concluded between the parties by virtue of the contract of 4 December 1991.
[Buyer] had failed to pay the agreed purchase price. No set-off had been possible in accordance with the additional agreement to the contract of 4 December 1991 because the contract referred to (the contract of 18 October 1991) had not been performed and [Buyer] itself had been involved in the cancellation of this contract.
The District Court (Landgericht) has taken evidence in accordance with its order of 1 February 1994 by its hearing of witness (...). Reference is made to pp. 92/95 of the file for the outcome of the taking of evidence.
Concerning the details of the present dispute, reference is made to the parties' submissions and the respective exhibits, the factual basis of the judgment by the Court of First Instance, and the content of the entire file.
REASONING OF THE COURT
[Buyer]'s admissible appeal is partially successful and leads to a dismissal of the action on the merits with respect to the sum of US $500,000.
Following a valid assignment by [Seller], [Seller's Assignee] is entitled to claim from [Buyer] the sum of US $17,165,945.35 as the purchase price.
I. [Seller's Assignee]'s action is admissible.
1. The general place of jurisdiction for [Buyer] follows from § 17 ZPO. [Buyer] has its seat in (...). The court of (...) has territorial and international jurisdiction (cf. inter alia BGH [*] NJW [*] 1991, 1492). There are no other exclusive places of international jurisdiction, meaning that [Seller's Assignee] was entitled to exercise its right of choice under § 35 ZPO.
2. The defense of an agreement to arbitrate is not justified. It may remain undecided whether [Buyer] has failed to raise this objection against admissibility (Zulässigkeitsrüge) during the first instance proceedings in due time on the basis of gross negligence (§§ 282(3), 296 ZPO). The objection is admissible in the present proceedings as the judgment of the Court of First Instance shows that the delay has not been examined by the District Court in accordance with § 282(3) ZPO. In any event, [Buyer] has not received an opportunity to justify the delayed objection.
However, [Buyer] has not demonstrated the existence of a valid agreement to arbitrate.
The asserted agreement to arbitrate including Helsinki or Stockholm as the place of arbitration is governed by the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (New York Convention). The principles underlying this Convention have to be considered at the stage of proceedings which is concerned with the issue of defenses (cf. Zöller / Geimer, ZPO, 19th ed., § 1027 margin number 20). At the time of conclusion of the contract, the Federal Republic of Germany and Finland had already acceded to the New York Convention (cf. Reithmann / Martiny, Internationales Vertragsrecht, 4th ed., Anhang, margin number 1412).
According to Art. 2 of the New York Convention, the validity of an agreement to arbitrate is dependent on the observance of the form requirements contained in Art. 2(2) New York Convention. If the respective agreement -- as asserted by [Buyer] -- is contained in the standard terms of sale and purchase of [Seller], the written form is only complied with if the standard terms have been added to the contractual document which has been signed by representatives of both parties, or if the terms have been connected to the contract as an appendix and have been exchanged with the contract and if the wording of the contract makes an express reference to the standard terms and the other party has also signed or accepted the contract in writing. It is therefore decisive that the party introducing the standard terms has made the other party sufficiently aware of the arbitration clause contained in the standard terms at the time of the conclusion of the contract. Hence, it is insufficient to merely refer to standard terms which contain the asserted arbitration clause, as long as these terms have not been attached to a contractual document which has been signed by both parties (cf. Reithmann / Martiny, margin number 1331; Zöller / Geimer, § 1027 margin number 20).
[Buyer] has not demonstrated that the above requirements are fulfilled in the present case.
[Buyer] has actually denied that a contractual document has been signed by representatives of both parties and argued that the contract presented by [Seller's Assignee] (exhibit K3) had been signed by an employee of [Seller], Mr. (...), who had not been authorized to represent his principal, which has also been confirmed by witness (...). The other version of the contract, which has been presented by [Seller's Assignee] and which bears the signature of witness (...) who has power of authority, has been rejected by [Buyer], who expressly asserted that it had been forged and therefore implies a malicious conduct on the part of [Seller's Assignee]. Moreover, there is no factual submission to the effect that [Buyer] has been made aware of the terms of sale and purchase of [Seller] along with the contractual document.
[Buyer] has not relied on the most-favored-nation rule of Art. 7 New York Convention. Its argument that an agreement to arbitrate by way of standard terms would be possible under Finnish law corresponds to the substantive law stipulated by international contracts. This argument, however, does not imply that the applicable domestic law does not know any -- or less demanding -- form requirements for arbitration agreements. Moreover, a valid inclusion of an arbitration agreement into a contract by means of standard terms is only possible under Finnish lawby virtue of a particular reference on the contractual document (Jaakko Motila, The Finnish Legal System, p. 143). On the basis of the contract presented, which merely makes a general reference to the terms of sale and purchase, no such specific reference or indication has been given.
II. [Seller's Assignee]'s action is justified in the amount of US $17,165,945.35
1. The relationship between the parties to the relevant contract of sale is governed by the provisions of the United Nations Convention on Contracts for the International Sale of Goods (CISG).
Both parties have their places of business in different countries, namely in Finland and the Federal Republic of Germany. At the time of the conclusion of the contract, both countries were Contracting States to the CISG, while Finland has declared the reservation that it would not be bound by Part II of the CISG concerning the formation of the contract.
2. [Buyer] is obliged to pay the purchase price for the delivered metals pursuant to Arts. 53 and 62 CISG.
The contract between [Seller] and [Buyer] has been validly concluded.
The reservation declared by Finland not to be bound by Part II of the CISG concerning the formation of the contract, which governs the consensual conclusion of a contract by declarations of offer and acceptance, does not exclude that a valid contract has in fact been concluded in the present case. The CISG does not rule out the possibility that contracts may be concluded if the mutual consensus is reached by other means. It may not be geared to the applicable domestic law (Herber / Czerwenka, Internationales Kaufrecht, 1991, Art. 14 margin number 16). A contract may thus be validly concluded, provided that the conduct by the parties sufficiently demonstrates a consensus and thus the intention to enter into a binding contract and that the content of their agreement is similar to contracts concluded under Art. 14 et seq. CISG.
The parties would also have concluded a valid contract if domestic Finnish law were applicable. According to the Finnish law of contract, a conclusion of contract occurs if there is a specified offer and if the other party performs a corresponding act of performance and if the circumstances demonstrate that both parties wanted this contract to be effective (cf. Juha Püyhünen, An Introduction to Finnish Law, pp. 66 et seq.; Jaakko Motila, pp. 140 et seq.).
a) In the opinion of the Court, [Buyer] and [Seller] have reached an agreement concerning the sales transaction on which [Seller's Assignee]'s claim is based. This follows from the contractual document which has been signed by [Buyer], the processing of the transaction by the parties as well as the subsequent conduct of the [Buyer].
b) It is undisputed that [Buyer] has signed the contract of 4 December 1992, the content of which has not been contested, except for the standard terms. This demonstrates that [Buyer] had the intention to accept the contract and its conditions.
An acceptance on the part of [Buyer] further follows from the facts submitted by [Buyer]. It operates a permanent business for the trade in metals. [Buyer]'s participation as a shareholder in company (...) is mainly determined by its interest in purchasing metals at domestic prices. In this respect, [Buyer] has also submitted that acquisition and export of metals from (...) would be possible without custom duties and export license only by virtue of contracts between the export trading company (company (...)) and company (...), on the one hand, as well as contracts between [Seller] and [Buyer], on the other hand. In the course of the contractual negotiations, there had also been a proposal towards [Buyer] "by company (...)" to engage company (...) in order to bypass the export restrictions. Therefore, [Buyer] has been aware of and appreciated the particular processing of the relevant sales transaction.
Finally, [Buyer] has accepted the goods without any reservation under the conditions stated in exhibit K3 -- delivery in December 1991 / January 1992 CIF Rotterdam. [Buyer]'s argument that it had not wanted an agreement in the way demonstrated by the contractual document (exhibit K3) is not credible with due consideration given to all circumstances.
The witness (...) -- formerly an authorized representative of company (...) -- has confirmed the acceptance of the contract by [Seller]. It is therefore not necessary to rely on a written contract (signed by witness (...)) in order to assume the existence of a legally binding agreement between the parties. Art. 11 CISG provides that contracts of sale governed by the CISG are not subject to any form requirement and may be concluded orally or impliedly. These contracts would not require any particular form -- even under Finnish laws (cf. Juha Püyhünen, cited above; Jaakko Motila, cited above). The conclusion of contract may be proved by any means.
3. The contract has also been performed. Company (...) has delivered the goods owed under the contract. This is shown by the bills of lading (exhibits K1-K14 of the submission of 12 October 1993, pp. 14/20 of the file). As already set out above, [Buyer] has also accepted delivery of the goods.
[Buyer]'s argument before the District Court (Landgericht), that different goods had been delivered, is not sufficiently substantiated. Moreover, it has never raised a complaint towards the other party about an alleged delivery of an aliud.
4. [Buyer] owed a purchase price in the sum of US $17,165,945.35. According to the letter dated 29 April 1993 (exhibit K12), [Buyer] itself estimated the contract value at US $17,665,945.25. [Buyer] has not disputed that the purchase price displayed in exhibit K3 corresponded to this value. [Buyer] has merely stated that the mentioning of a contract value would be without any bearing on the entitlement to the claim and its maturity.
5. [Buyer] has not proved a reduction of the purchase price to US $500,000 and a corresponding agreement to declare a set-off of the residual amount in accordance with the contract amendment of 4 December 1991.
Both the amendment and the main contract itself (exhibit K3) have been signed by Mr. (...) who undisputedly lacked the power of authority to represent company (...). [Buyer] has thus not demonstrated the existence of a mutual agreement with company (...).
[Seller's Assignee] has contested [Buyer]'s submission concerning the conclusion of the amendment, that "[Buyer] would be sufficiently safe by way of the amendment, not to be subject to the claim for the purchase price arising out of the contract". [Buyer] has not offered any evidence for its assertion.
Furthermore, [Seller's Assignee] has submitted that the corresponding contract of 18 October 1991 had been cancelled.
The performance of the contract and any claims on the part of [Buyer] which would be subject to a set-off have not been properly substantiated. [Buyer] has not offered any evidence in order to show that it would be entitled to claims arising out of the contract.
6. [Buyer] bears the burden to prove that it has performed its obligation to pay the purchase price (cf. von Caemmerer / Schlechtriem, Kommentar zum einheitlichen UN-Kaufrecht, Art. 79 margin number 50).
[Buyer] has only succeeded in proving its performance with respect to a partial sum of US $500,000. According to the bank transfer and direct debit documents (exhibits B6 and B7) -- which have not been contested by [Seller's Assignee] --, [Buyer] has made a payment of US $500,000 in favor of company (...) on 13 January 1992 with reference to "payment purpose: delivery of 340 tons of copper and 1,630 tons of nickel".
[Seller's Assignee] has not argued that this payment concerned a different commercial transaction between company (...) and [Buyer].
However, [Buyer] has failed to prove its asserted payment of another US $1,000,000 in favor of [Seller's Assignee] as a means of settlement of the purchase price debt. The submitted bank transfer documents (exhibits B3 and B4) cannot support [Buyer]'s argument. These documents identify (...) as the beneficiary and do not state any purpose of payment.
Moreover, [Seller's Assignee] has purported with reference to a loan contract concluded between the parties on 2 December 1991 that the payment of US $1,000,000 on 11 December 1991 had been performed by [Buyer] as a means of performing this latter contract. [Buyer] has not sufficiently objected to this argument,
7. [Buyer] has not offered any evidence to support its allegation raised before the Court, according to which it had made this amount of money available to [Seller's Assignee] in order to afford the purchase of metals under a different commercial relationship. According to [Buyer], the achieved profit, reduced by the expenses incurred for the whole transaction, should have been shared in equally portions. This has also been contested by [Seller's Assignee].
8. The agreement of 15 March 1993 is valid. [Buyer]'s respective assertions that the agreement would not give rise to a claim for the purchase price is unjustified. It has been set out above (II.2) that [Seller's Assignee] is entitled to claim the purchase price from [Buyer]. The latter's defense, namely that the agreement had been signed by non-authorized representatives, is readily rebutted by the documents submitted by [Buyer]. According to exhibits K18 and K19, Mr. (...), board member of company (...) and its CEO have been involved. The contract has been signed on behalf of [Seller's Assignee] by its managing director. [Buyer] has not conclusively argued that these persons lacked a power of representation at the time when the contract had been signed.
[Buyer]'s assertion, that the wording of the agreement led to the conclusion that [Seller's Assignee] would no longer be entitled to claims arising out of the contract of 4 December 1991, is not supported by the document referred to. Rather, the declaration by the parties (at recital no. 1) implies that no reciprocal claims may be derived from the contract. It is evident from recital no. 2 that [Buyer] was supposed to perform its obligations directly to company (...).
III. Any new factual submissions or pieces of evidence which are contained in [Buyer]'s submission of 7 February 1995 are inadmissible pursuant to § 527 ZPO [*], because they have not been brought before the Court in due time as provided by § 519 ZPO. This is because they have not been contained in the initial submission on appeal (§ 519(3) ZPO). The proceedings would be delayed if [Buyer]'s additional submissions were admitted. [Buyer] has failed to justify the delay.
[Buyer]'s declaration of a set-off against [Seller's Assignee]'s claim has not been allowed by the latter party in court. This submission by [Buyer] is also not immediately relevant to the merits of the dispute (§ 530(1) ZPO), because it is a submission of entirely new facts and claims. This would unduly prevent the Court from adjudicating the present dispute on the basis of the existing submissions (BGH [*] MDR [*] 1977, 310).
IV. The ancillary decisions are based on §§ 92, 708 No. 10, 711, 546(2) ZPO.
* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff of Finland is referred to as [Seller's Assignee] and Defendant of Germany is referred to as [Buyer]. The Finnish seller is referred to as [Seller]. Amounts in the currency of the United States of America (U.S. dollars) are indicated as [US $]. Amounts in the former currency of Germany (Deutsche Mark) are indicated as [DM]
Translator's note on other abbreviations: BGH = Bundesgerichtshof [German Federal Supreme Court]; MDR = Monatsschrift für Deutsches Recht [a German law journal]; NJW = Neue Juristische Wochenschrift [a German law journal]; ZPO = Zivilprozessordnung [German Code on Civil Procedure].
** Jan Henning Berg has been a law student at the University of Osnabrück, Germany and at King's College London. He participated in the 13th Willem C. Vis Moot with the team of the University of Osnabrück. He has coached the team of the University of Osnabrück for the 14th Willem C. Vis and 4th Willem C. Vis (East) Moot.
*** Ph.D. candidate Daniel Nagel has studied law at the University of Heidelberg and at the University of Leeds.Go to Case Table of Contents