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CISG CASE PRESENTATION

Germany 31 March 1995 Appellate Court Frankfurt (Test tubes case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/950331g1.html]

Primary source(s) for case presentation: Case text


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Case identification

DATE OF DECISION: 19950331 (31 March 1995)

JURISDICTION: Germany

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

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: 25 U 185/94

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

CASE HISTORY: 1st instance LG Kassel 14 July 1994 [reversed]

SELLER'S COUNTRY: Germany (plaintiff)

BUYER'S COUNTRY: Italy (defendant)

GOODS INVOLVED: Test tubes


Case abstract

GERMANY: OLG Frankfurt 31 March 1995

Case law on UNCITRAL texts (CLOUT), abstract no. 135

Reproduced with permission from UNCITRAL

The [seller], a German glass manufacturer, agreed to manufacture and deliver 220,000 test-tubes to the Italian [buyer]. During the course of negotiations, the appropriate glass type was the point of discussion as different types were mentioned. The [seller] finally delivered test-tubes in Fiolax quality and demanded payment. The [buyer] refused to pay and alleged to have ordered the better Duran quality.

The court found that the CISG was applicable (article 1(1)(a) CISG). According to articles 62 and 59 CISG, the seller can claim the price, if a contract has been concluded, i.e., if there is a valid offer and acceptance. The court found that the acceptance of the [seller's] offer was missing as the seller and the buyer did not reach an agreement towards a specific glass quality (articles 18(1), 19(1), 19(3) CISG). It was held therefore that the [seller] could not demand payment and the suit was dismissed.

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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 7 ; 8 ; 18 ; 19 ; 39(1) [Also cited: Articles 14 ; 54 ; 59 ; 62 ]

Classification of issues using UNCITRAL classification code numbers:

7A3 ; 7C221 [Principles of interpretation: observance of good faith; Recourse to general principles on which Convention is based: good faith];

8C [Interpretation in light of surrounding circumstances];

18A [Formation of the contract (acceptance: time and manner): criteria for acceptance];

19A ; 19C [Reply purporting to accept but containing additions or modifications; Modifications that are material];

39A [Requirement to notify seller of lack of conformity: buyer must notify seller within reasonable time]

Descriptors: Intent ; Reasonable person, understanding of ; Offers ; Acceptance of offer ; Counter-offer; General principles ; Good faith ; Notice of lack of conformity, timeliness

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Editorial remarks

Excerpt from Larry A. DiMatteo et al., 34 Northwestern Journal of International Law & Business (Winter 2004) 299-440 at n.282

"If the parties have not performed, there is a greater chance that courts will find no valid contract existed when material terms are in dispute. This was the decision in this case. The court held that no contract was formed where the parties' correspondence and oral communications failed to agree on the quality of glass for test tubes. Citing Articles 18(1), 19(1) and 19(3), the court found that there was no subsequent conduct of the parties showing the existence of the contract."

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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=149&step=Abstract>

Italian: Diritto del Commercio Internazionale (1997) 734-735 No. 147

Polish: Hermanowski/Jastrzebski, Konwencja Narodow Zjednoczonych o umowach miedzynarodowej sprzedazy towarow (Konwencja wiedenska) - Komentarz (1997) 276

CITATIONS TO TEXT OF DECISION

Original language (German): cisg-online.ch <http://www.cisg-online.ch/cisg/urteile/137.htm>; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=149&step=FullText>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

English: Spanogle/Winship, International Sales Law: A Problem Oriented Coursebook (West 2000) [offer and acceptance 90-102 (this case at 91)]; [2005] Schlechtriem & Schwenzer ed., Commentary on UN Convention on International Sale of Goods, 2d (English) ed., Oxford University Press, Art. 8 paras. 1, 47, 48, 51

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Case text (English translation)

Queen Mary Case Translation Programme

Court of Appeal Frankfurt am Main (Oberlandesgericht)

31 March 1995 [25 U 185/94]

Translation [*] by Dr. Peter Feuerstein [**]

Translation edited by Chantal Niggemann [***]

Facts

The parties argue about the validity of the conclusion of a contract.

The [seller] distributes glass containers for industrial purposes; the glass containers are manufactured according to the requirements of the customers in different qualities with different characteristics. As raw glass, the [seller] also uses Borosilicat glass of the hydrolytical class 1 with the following designations: DURAN, SUPREMAX, FIOLAX and SBW glass, manufactured by D., whereby these types of glass differ mainly by their linear expansion coefficient. The expansion coefficient in the highest quality level DURAN amounts to 3.3 and is comparable in quality to the raw glass PYREX, manufactured by the British manufacturer J. Bilby Products Ltd., Stone, Staffordshire [England]. With raw glass of lower quality, the expansion coefficient is higher and amounts to 4,1 for the glass type SUPREMAX, to 4,9 for FIOLAX and to 6,6 for SBW glass 6.6.

By letter, dated 21 July 1992, the [buyer] requested from the [seller], with whom the [buyer] already had a business relationship, the minimum price for the manufacturing of 220,000 test tubes with caps of further specified measure out of neutral glass with an expansion coefficient of not more than 5.5 x 10 - 7. At the same time, the [buyer] asked the price if PYREX glass were to be used instead. By fax, dated 24 July 1992, the [seller], under the then relevant company name, offered the "glass type SCHOTT", by reference to the description in the request from [buyer]. The [seller's] fax did not contain further offers.

Subsequently, by fax of 26 August 1992, the [buyer], expressly referring to the offer of the [seller], ordered 220,000 test tubes with caps made of uncolored DURAN type glass of Class 1 with an expansion coefficient of 5.5 x 10 - 7, according to enclosed drawings. By reference to a telephone conversation and by fax of 7 September 1992, the [seller] sent to the [buyer] the requested drawing for the approval of the [buyer's] customer. Furthermore, the [seller] requested confirmation that glass type SCHOTT of the hydrolytical Class 1 should be used and not PYREX/DURAN.

The [seller] sent another drawing with fax dated 21 September 1992. With fax of 29 September 1992, the [buyer] sent to the [seller] the production drawing with the changes marked by its customer. The material to be used is named there as "SCHOTT - Borosilicat glass with the expansion coefficient 3.3 x 10 - 5, first hydrolytical class". By fax, dated 30 September 1992, the [seller] thanked [buyer] for the order placed and announced the immediate beginning of production. In another fax of the same day, the [seller] referred to a "little confusion on the glass type [...] " and requested written confirmation of it's statement that "the glass type SCHOTT - 1st hydrolytical class (Borosilicate glass) is the correct one. Borosilicate glass 3.3 is DURAN-glass [...]".

By fax, dated 1 October 1992, the [buyer] responded: "We confirm our acceptance of the test tubes and caps construction with Schott glass 1. hydrolytical class." On this fax the witness noted: "Mr [], here is the confirmation from Italy that our glass type is the 'correct' one".

On 16 November 1992, the [seller] delivered the test tubes and caps in the glass quality of FIOLAX-glass to the [buyer] and invoiced the [buyer] at the same time for DM [Deutsche Mark] 123,380.00, without subsequently being able to obtain payment. The [seller] herewith claims payment of the purchase price.

[Seller's pleadings at first instance]

The [seller] pleads that a contract has been concluded between [seller] and [buyer] for the delivery of the glass test tubes and caps in FIOLAX quality. This results from the cited correspondence, the content of which has been supplemented by several telephone conversations between [seller's] employee B and witness S employed by [buyer]. It was repeatedly brought to [buyer's] attention that [seller] could not deliver DURAN glass.

The [seller] has requested that [buyer] be ordered to pay [seller] DM 123,800.00 plus 12.5% interest since 8 April 1992.

[Buyer's pleadings at first instance]

The [buyer] pleads that the [seller's] claim be dismissed and the [buyer] argues that the content of the contract concluded between the parties required the delivery of test tubes in the quality of DURAN glass. As it is undisputed that this glass quality was not delivered, and as it has been immediately objected orally (witness S), the [buyer] does not owe payment of the purchase price.

[Court of First Instance]

The Landgericht of Kassel [Court of First Instance] held that the [seller's] claim was established, except for a fraction of the interest claim. The Court of First Instance reasoned that the contract was concluded through the correspondence of the parties on 29/30 September 1992. According to the content of the contract, the [seller] was to deliver the test tubes and caps in FIOLAX quality. The [seller] has performed this obligation; therefore, the [buyer] owes the payment of the purchase price.

[Pleadings of parties on appeal]

Against this decision, served on 3 August 1994, the [buyer] filed an appeal on 2 September 1994 and substantiated the appeal on 14 October 1994. The [buyer] repeats its argument at first instance that by its order, dated 26 August 1992, a contract was concluded for the delivery in DURAN glass quality. This glass quality - and not FIOLAX glass quality - had been the subject matter of the [buyer's] request of 21 July 1992. This results from an appropriate interpretation of that letter, especially from the fact that [buyer] had asked alternatively for the price of PYREX glass quality. By this, the [buyer] had wanted to give [seller] the opportunity to offer a quality of a different manufacturer comparable to the quality of DURAN glass. If one adopts the opinion of the Court of First Instance, i.e., that the [buyer's] order of 26 August 1992 does not correspond with the [seller's] offer of 24 July 1992, then there was no conclusion of a contract. In this order of 26 August 1992, as in all subsequent correspondence, the glass quality was stated as DURAN type; such an offer was not accepted by the [seller] with its two letters of 30 September 1992. In particular, if the [seller's] second fax of 30 September 1992 is interpreted in such a way, the [buyer] withdraws its declaration in the fax of 1 October 1992.

The [buyer] pleads that the judgment of the Court of First Instance of 14 July 1994 be reversed and [seller's] claim dismissed, and the [seller] pleads that the [buyer's] appeal be dismissed. The [seller] defends the appealed judgment by repeating the pleadings made at first instance.

Pertaining to the additional arguments of the parties, reference is made to the content of the brief on appeal dated 13 October 1994 and the reply of 21 December 1994.

The Court of Appeal has heard evidence by examination not under oath of witnesses B and S. For the result of the hearing of evidence, reference is made to the content of the record of the trial of 10 March 1995.

Reasons

The [buyer's] appeal is admissible as well as otherwise allowed and also factually justified.

The [seller] does not have a claim for the payment of the purchase price for the delivered test tubes and caps, as the conclusion of a binding contract for the delivered test tubes is missing.

As the Court of First Instance undisputedly and correctly has pointed out - and to which, to avoid repetition, reference is made under ZPO [*] 543 - the German law of the [seller] and the provisions of the CISG, which is enacted in the States of both contracting parties, are applicable to the legal relationship between the parties.

According to this, the [seller] has a claim for the agreed purchase price in case of delivery of the ordered goods, under Articles 59 and 62 CISG. A delivery of ordered goods is missing in the present case, as the parties did not agree on the quality standard of the test tubes, which was of significant importance for the transaction. The result of the negotiations is to be found in the content of the written documents and the agreements made orally.

Accordingly, first of all it must be assumed, as the Court of First Instance did, that at any rate there was no valid conclusion of the contract before 30 September 1992.

Based on the written request of the [buyer] in the letter of 21 July 1992, the [seller] on 24 July 1992 offered to sell uncolored test tubes of the glass manufacturer with certain dimensions according to the [buyer's] drawing and ensured that this product complies with the conditions of the description in the request. A price offer for PYREX glass was not enclosed. It follows from the above that the [seller] had offered only FIOLAX glass quality, as only this type was in accordance with the expansion coefficient 5.5 x 10 - 7 required by the [buyer]. Whether the [buyer] in the letter, by the reference to glass of PYREX quality, merely wanted to inquire about the price for this glass quality does not need any clarification; the content of the inquiry depends decisively on the understanding that a reasonable addressee of the declaration would have had, in good faith and taking into account the circumstances (cf. Palandt, BGB [*], 54th ed., 133, Annotation 9 with further evidence). Such a reasonable addressee of the declaration would have turned his attention to the inquiry of [buyer] for the identification of the glass quality with the relevant type of the expansion coefficient, since all other characteristics of the glass mentioned therein are common to glass types DURAN and FIOLAX. Thus, it follows from the [seller's] promise included in its offer, that the requested conditions would be met, that [seller] would deliver glass type SCHOTT, manufactured with the expansion coefficient 5.5 x 10 - 7 stated in the [buyer's] inquiry; but this is glass quality FIOLAX.

It is unclear how [buyer] has understood this offer made by [seller]. At any rate, the [buyer] did not accept it, as the [buyer's] order of 26 August 1992 is contradictory. In that order, the [buyer] orders namely DURAN glass with an expansion coefficient of 5.5, i.e., a glass quality which is not manufactured by the company. Thus, the [buyer's] order is in itself contradictory and contains a modification of the [seller's] offer with regard to the glass quality to be delivered and, thus, there is no acceptance of the offer in accordance with Articles 18(1), 19(1) and 19(3) CISG.

The [seller] has also recognized the inconsistencies in the [buyer's] letter of 26 August 1992. This is demonstrated by the [seller's] fax of 7 September 1992, with which the [seller] had a drawing to the [buyer] to be discussed with [buyer's] customer. In that fax, [seller] furthermore requested a confirmation that the glass quality to be processed should be glass of the hydrolytical class 1 of the company [], and not PYREX/ DURAN.

The [seller's] fax of 21 September 1992 and the sending of another drawing for the [buyer's] customer also served the seller for further clarification. Also, the ambiguities were not removed in the [buyer's] fax of 29 September 1992 and the [seller's] offer therein was not accepted. In this fax, the [buyer] refers expressly to the modifications inserted by its customer in the enclosed drawing and makes these changes to the content of its contractual intention. From the changes, it resulted unequivocally that the thermal expansion coefficient of the desired glass should be 3.3, corresponding undisputedly to the DURAN quality produced by company []. Therein is, thus a difference in the glass quality compared to the FIOLAX quality offered by [seller] with an expansion coefficient of 5.5.

The [seller] has also recognized this, as the content of its second fax of 30 September 1992 proves. Therein is stated that there was confusion regarding the glass quality and confirmation is again requested that the glass type "SCHOTT 1st. hydrolytical class (Borosilicatglas)" is the correct one, whereas "Borosilicatglas" with an expansion coefficient of 3.3 signifies DURAN glass type. This inquiry, at least according to the wording of the [buyer's] fax of 1 October 1992, has not been answered by the [buyer] in the relevant sense requested by the [seller]. Therein the [buyer] only confirms that the test tubes with caps are to be manufactured with "SCHOTT-Glas I. hydrolytical class".

Thereby agreement between the parties about the glass quality to be used was not achieved, as the characteristics mentioned in the [buyer's] confirmation are undisputedly common to glass types DURAN and FIOLAX. For this reason, the note made by witness P on the fax from the [buyer], dated 1 October 1992 and concerning the [buyer's] consent that the glass type envisaged by [seller] is "the correct one" is incorrect with regard to the content of the correspondence between the parties.

This notice also does not confirm an oral agreement between the parties. Although, the [seller] contends that the parties, in addition to the content of the correspondence, had agreed in phone conversations between the witnesses that the test tubes and caps to be delivered should be manufactured with FIOLAX glass, [seller] has not proven this. However, witness S has confirmed this and testified that he, on behalf of the [seller] and in his capacity as commercial chief negotiator, had repeated telephone conversations with witness B, who was working for [buyer], concerning the glass quality to be used for the manufacturing of the test tubes and caps. The desired expansion coefficient was never discussed. [Witness S] repeatedly told witness B that [seller] was unable to deliver DURAN glass; FIOLAX glass would be delivered. He also asserted that in the course of a telephone conversation on 1 October 1992, the parties had agreed on the glass quality. The production manager, [Mr ], had requested written confirmation from the [buyer] and after that was presented, on 1 October 1992, [seller] had commenced the production.

This testimony of the witness is not suited to prove that the [buyer] also agreed, on 1 October 1992, with the processing of the FIOLAX glass quality. The witness' testimony is already not consistent with the content of the correspondence between the parties, as in that correspondence and, from the beginning, the size of the expansion coefficient of the desired glass type was in the foreground. This is not opposed by the fact that the [buyer], at first, had stated an expansion coefficient of 5.5, which is too high for the desired glass quality DURAN, since at least with the receipt of the drawing enclosed to the fax of 29 September 1992 it was noticeably recognizable by the [seller] that the desired glass quality should not be FIOLAX, but DURAN.

The witness has admitted in the course of his testimony that the opposite could not be known from the confirmation of the [buyer] on 1 October 1992, as the characteristics mentioned there are common to both glass types [DURAN and FIOLAX]. The witness could not state intelligible reasons why he was nevertheless of the opinion that the [buyer] had now agreed to the FIOLAX glass type. His explanation - that he was satisfied with the content of the [buyer's] fax of 1 October 1992, as he had had a good relationship with the witness on the phone, and that he was convinced that everything would be okay - does not justify the assumption of the [buyer's] consent for the production of the test tubes and caps with FIOLAX glass. That this was not the case was testified by the witness. The witness testified that he remembers that with the fax of 29 September 1992, he sent the drawing of his client to the [seller], in which the expansion coefficient 3.3 was stated for the desired glass type. The witness could not remember whether he talked on the phone on 1 October 1992 with the witness [] about the glass quality. Even if this had been the case, in no way he would have confirmed that the glass type FIOLAX was sufficient; the [buyer] had wanted DURAN glass.

The fact that [buyer] did not object to the delivered glass quality right away, but had only objected to an insufficient labeling of the shipment, is also not sufficient as proof of the alleged agreement between the parties on FIOLAX glass quality. Besides the fact that such initially omitted notice of non-conformity is only an indication of the alleged agreement, but not the proof of it, the witness has explained the omitted notice of non-conformity understandingly. To this he has testified that he had obtained certificates pertaining to the delivery by [seller] before the end of November 1992. When starting to read these documents he had noticed that a place in East Germany, which undisputedly did not correspond with the contractual arrangements, was stated therein as a production place. Thus, he did not continue reading these documents and used the mentioned place of production as a reason to return the documents to the [seller]. When the documents with the specification of the FIOLAX glass type were later received again at the [buyer], he himself was absent from the work place due to a long lasting exhibition.

According to all this, the [seller] did not prove successfully the conclusion of a contract for the FIOLAX glass quality that he had delivered. Therefore, the [seller's] claim for the payment of the purchase price must be dismissed with the costs borne according to ZPO [*] 91. The decision on the temporary enforceability of the judgment and the authority of the [seller] to avoid the enforceability are based on ZPO 708 No. 10, 711.

For purposes of assessment of the cost of the proceedings, the value of the judgment has been assessed in accordance with ZPO 546(2).


FOOTNOTES

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

Translator's note on other abbreviations: BGB = Bürgerliches Gesetzbuch [German Civil Code]; ZPO = Zivilprozessordnung [German Civil Procedure Code].

** Peter Feuerstein is an International Legal Consultant. He conducted his post graduate research at Cambridge University, England, where he studied at Clare College in preparation of his Doctoral Dissertation. He received his Dr. jur. from Philipps-University of Marburg, Hessia, Germany, in 1977. The second-iteration redaction of the translation was by Dr. John Felemegas of Australia.

*** Chantal Niggemann is an International Legal Consultant working at Allen & Overy, Frankfurt, Germany, in the corporate department. As a student she participated successfully in the Second Willem C. Vis International Arbitration Moot and assisted Prof. Dr. Dr. Peter Schlechtriem of the Albert-Ludwigs-Universität in Freiburg, Germany for about two years.

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