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CISG CASE PRESENTATION

France 26 April 1995 Appellate Court Grenoble (Alain Veyron v. Ambrosio) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/950426f1.html]

Primary source(s) for case presentation: Case text


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Case identification

DATE OF DECISION: 19950426 (26 April 1995)

JURISDICTION: France

TRIBUNAL: CA Grenoble [CA = Cour d'appel = Appeal Court]

JUDGE(S): Beraudo (président); Baumet, Fallet (conseillers); Combe (greffier)

CASE NUMBER/DOCKET NUMBER: 93/1613

CASE NAME: Enterprise Alain Veyron v. Société E. Ambrosio

CASE HISTORY: 1st instance Trib. com. Grenoble (No. 346004) 11 December 1992 [CISG overlooked] [affirmed in part]

SELLER'S COUNTRY: Italy (plaintiff)

BUYER'S COUNTRY: France (defendant)

GOODS INVOLVED: Candy


Case abstract

FRANCE: Court of Appeal of Grenoble 26 April 1995

Case law on UNCITRAL texts (CLOUT) abstract no. 151

Reproduced with permission from UNCITRAL

A commercial collaboration contract was concluded in 1989 between a company with its place of business in Italy and an individual resident in France. The latter thus became the sole representative and importer of confectionery exported by the [seller]. One year later, the [seller] broke off the collaboration agreement, which triggered the dispute.

The Court of Appeal found that the commercial collaboration contract pertained partly to sales and partly to representation, and that the part falling under sales law was governed by CISG since it had been concluded between a seller and a buyer based in Italy and France respectively, both States being parties to CISG (art.1(1)(a)).

The Court of Appeal considered the question of the possible liability of the [seller] for breach of contract regarding the part of the commercial collaboration contract pertaining to sales. The court based this finding on a provision of the collaboration contract whereby the contract was revokable without being open to objection on the part of the agent. The court also found that the [seller] was not obliged to make any payment for breach of contract. The court stressed that such a stipulation was not prohibited by CISG and that the parties were at liberty to agree that the seller could refuse to maintain the contractual relationship since it would not thereby be calling into question the performance of a previously concluded sales contract. The court noted that, in the case in point, it was not alleged that the decision to terminate the contractual relationship had resulted in a refusal to execute a previously placed order or in the incomplete execution of such an order. The court concluded therefore that the [seller] could not be held liable for breach of the part of the commercial collaboration contract pertaining to sales.

The Court of Appeal also ruled on the operation of article 55 CISG, which the commercial agent had used to his advantage. The latter had asserted that his successor had benefited from lower prices than those charged to him and requested the court to reduce accordingly the debt claimed by the [seller]. The court found that "the reference made by article 55 CISG to a market price, in as much as this article is applicable to the case, is overridden by a contrary agreement between the parties, such as the provisions of CISG in their entirety, with the exception of article 12 (art. 6)". The court also noted that the objections raised by the agent when the rates charged were increased in 1990 did not call into question the sales contract itself but merely expressed general grievances regarding the parties' business relationship and the difficulties encountered in the face of the competition. The court finally noted that, since the commercial agent had taken delivery of the goods without specifically questioning their purchase price, the [seller] was justified, under article 8(2) and (3) CISG, in interpreting the agent's behaviour as indicating acceptance of the rate charged.

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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 8(2) and 8(3) ; 55 [Also cited: Article 6 ] [Also relevant: Article 14 ]

Classification of issues using UNCITRAL classification code numbers:

8B ; 8C [Interpretation of party's statements or other conduct: interpretation based on objective standards; Interpretation in light of surrounding circumstances];

55A [Open-price contracts: enforceability of agreements that do not make provision for the price]

Descriptors: Intent ; Open-price contracts

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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 342

"[An] issue addressed by national courts with respect to Article 55 is the enumeration of the factors utilized to determine 'the price generally charged at the time of the conclusion of the contract for such goods sold under comparable circumstances in the trade concerned.'[225] Initially, at least one national court has concluded that the reference to market price in Article 55 is overridden by a contrary agreement of the parties as determined by application of the CISG in its entirety. [226] Based upon this opinion, the parties are free to list any number of factors that may be utilized to establish the price. Included on the list of acceptable factors are the price range established by the parties with respect to the goods at issue and individual pricing guidelines dependent upon the quality of the goods.[227] An additional relevant factor is the absence of objection by the buyer within a 'short time period' to the price set forth in invoices delivered by the seller.[228] In such a case, national courts assume the buyer's agreement that the price stated in the seller's invoice is the price generally charged under comparable circumstances in the trade concerned according to Article 55.[229]"

225. CISG, supra note 4, at art. 55.

226. See CA Grenoble, 93/1613, Apr. 26, 1995 (Fr.)...

227. See OGH Ob 547/93, Nov. 10, 1994 (Aus.), available at <http://cisgw3.law.pace.edu/cases/941110a3.html> [English translation by Martin Eimer, translation edited by Ruth M. Janal].

228. BG St. Gallen, SZ 84-85, Jul. 3, 1997, available at [<http://cisgw3.law.pace.edu/cases/970703s1.html>] (involving an oral contract for the sale of textiles by a Dutch seller to a Swiss buyer).

229. Id.

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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=127&step=Abstract>

Italian: Diritto del Commercio Internazionale 1996, 649-650 No. 121

Polish: Hermanowski/Jastrzebski, Konwencja Narodow Zjednoczonych o umowach miedzynarodowej sprzedazy towarow (Konwencja wiedenska) - Komentarz (1997) 285-286

CITATIONS TO TEXT OF DECISION

Original language (French): CISG - France ("http://Witz.jura.uni-sb.de/CISG/decisions/2604952v.htm"); Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=127&step=FullText>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

English: Honnold, Uniform Law for International Sales (1999) 157 [Art. 14 (goods received in spite of failure to agree on price)], 189 [Art. 19 (contract based on conduct)]; Koneru, 6 Minnesota Journal of Global Trade (1997) 148-151 [comments on open-price issues in this case and other cases]; Kazimierska, Pace Review of the Convention on Contracts for the International Sale of Goods (1999-2000) n.426; Pilar Perales Viscasillas in Ferrari, Flechtner & Brand ed., The Draft UNCITRAL Digest and Beyond, Sellier / Sweet & Maxwell (2004) 279; [2005] Schlechtriem & Schwenzer ed., Commentary on UN Convention on International Sale of Goods, 2d (English) ed., Oxford University Press, Art. 8 para. 36 Art. 55 para. 7; Spaic, Analysis of Fundamental Breach under the CISG (December 2006) nn.346-347

Finnish: Huber/Sundström, Defensor Legis (1997) 747 [749 n.6]

French: Witz, Emptio-Venditio Internationales, Neumayer ed. (Basel 1997) 430

Spanish: Castellanos, Autonomia de la voluntad y derecho uniforme en la compraventa internacional, thesis, Carlos III de Madrid (1998) 109 n.236

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Case text (English translation) [second draft]

Queen Mary Case Translation Programme

Court of Appeals of Grenoble 26 April 1995
Entreprise VEYON v. Société AMBROSIO

Translation by Charles Sant 'Elia [*]

R.G. no. 93/1613

REPUBLIC OF FRANCE
In the name of the French People

Court decision of Wednesday, 26 April 1995

PARTIES AND COUNSEL: Alain Veyon, whose principal place of business is 13 avenue d'Uriage in Gieres (38610) [France], appealing from a judgment rendered by the Commercial Court of Grenoble on 11 December 1992 following declaration of appeal on 26 February 1993, represented by the SCP d'Avoués Grimaud, vs. The E. Ambrosio company, Via S. Leonardo numero 20 80047 S Giusseppe Vesuviano (Italy), Appellee, represented by the SCP d'Avoués Perret & Pougnand, assisted by Dalla-Zanna, barrister.

COMPOSITION OF COURT / HEARINGS: During the arguments and deliberations: Mr. Beraudo, Président; Mr. Baumet, Conseiller; Mr. Fallet, Conseiller; assisted during the arguments by Mrs. Combe, court clerk. At public hearing on 22 March 1995, the Solicitors were heard on their briefs, and the Barristers on their pleadings. The ruling was rendered at the hearing of Wednesday 26 April 1995.

[FACTS AND PLEADINGS]

On 21 November 1989 there was formed between the AMBROSIO company, established in Italy, and VEYON, domiciled in France, a commercial collaboration contract making the latter the representative and exclusive importer for France of AMBROSIO brand confections.

- The contract provides for, on one hand, the sale by VEYON of AMBROSIO's products, and on the other, the representation of those products by means of a commission of 3% on the concluded sales and a guarantee of the payment of 50% of the value of the goods purchased.
- On 21 November 1990, the AMBROSIO company broke-off the commercial collaboration agreement with retroactive effect to 1 October l990.

It results from the evidence produced and the findings made by the challenged judgment that the resale activity had generated for VEYON a sum of 170,819 F [French francs] on transactions between l December 1989 and 30 November 1990, and that the activity as representative earned him 59,073 F as commissions for the same period.

- [Pleadings by Veyon]

VEYON argues that his appeal be granted and the judgment of the Tribunal de Grande Instance de Grenoble of 11 March 1993 be modified; that the Court:

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Dismiss AMBROSIO's claims;
Accept VEYON's counterclaim;
Hold that AMBROSIO breached its contractual obligations relating to the territorial exclusivity of which VEYON was to benefit, and moreover hold that VEYON was the victim of discriminatory practices;
Fix the damages suffered by VEYON on account of this at 400,000 F;
Further hold that AMBROSIO breached its commercial relations with VEYON without respecting the customary notice and fix at 500,000 F the damages suffered by VEYON on account of that;
Consequently, order AMBROSIO to pay VEYON, the sum of 900,000 F;
Further order AMBROSIO to pay 10,000 F by application of Article 700 of the New Code of Civil Procedure and trial and appellate court costs and authorize SCP d'Avoués GRIMAUD to recover them directly from AMBROSIO.

VEYON asserts, essentially, in his reply briefs of 27 January 1994, that AMBROSIO still engages in important commercial relations with some groupings of wholesalers whereas VEYRON was to be the sole person to introduce AMBROSIO's product.

- [Pleadings by Ambrosio]

AMBROSIO argues that:


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VEYON should be ordered to pay the invoice of 670,384.29 F with lawful interest counted from 23 May 1991;
VEYON further be ordered to pay the sum of 500,000 F to AMBROSIO as damages and interest;
VEYON be ordered to pay all court costs and on the basis of Article 700 of the New Code of Civil Procedure to pay the sum of 7,000 F.

AMBROSIO asserts that there was no abrupt breach on its part but a legitimate rescission for a manifest lack of payment.

REASONING OF THE COURT

- [Applicable law]

The commercial collaboration between the parties includes one part sale and one part representation.

- The sales part is governed by the [CISG] having been concluded between a seller and a buyer respectively having their principal places of business in Italy and in France, States parties to the Convention (Article 1(1)(a));
- The representation part is, by application of the Hague Convention of the 14 March 1978 on the Law Applicable to Agency, governed by French law, as "the internal law of the State where, at the time of formation of the agency relationship, the agent has his business establishment or, if he has none, his habitual residence" (article 6).

By letter of 28 March l995, the parties were informed of the applicability of the Vienna Convention [CISG] to the part of their relations involving the law of sales and French law [internal] for the part of their relations the law of representation:

- They were invited to make known before 13 April 1995 whether they intended to offer briefs on these points. It was made clear to them that their silence would be interpreted as a waiver of submitting briefs.
- AMBROSIO made known, by a letter of 10 April l995 that the [CISG] and the Hague Conventions could be applicable. On 19 April 1995, VEYON did not enter a response. The Court deduces from this silence his waiving the submission of a brief.

- [Liability for break-off of relations]

On AMBROSIO's possible liability for the break-off of relations of which it gave notice on 21 November 1990, with respect to the sales part of the commercial collaboration contract, Article 8 of the commercial collaboration contract provides:

"The present framework agreement is revocable on the part of the AMBROSIO company without the possibility of a challenge on your part. In such a case, the AMBROSIO company is not obligated to pay any sum, for any reason whatsoever and the relations are automatically given notice of."

Such a stipulation is not prohibited by the [CISG]; the parties may freely agree in their relations following the sale that the seller could refuse to continue the relationship since it does not call into question the performance of a previously concluded sales contract.

- It is not alleged that the decision to break-off relations announced by AMBROSIO on 21 November 1990 effective 1 October 1990 is to be construed as a refusal to perform or an incomplete performance of a previously received order;
- No fault therefore is imputable to AMBROSIO in a breach of the sales part of the commercial collaboration contract.

As to AMBROSIO's possible liability from the breach of the representation part of the commercial collaboration contract, the breach occurred while the profession of commercial agent was governed by the [French] decree of 23 December 1958:

- Article 3 of that law provides an indemnity for the agent, regardless of any clause to the contrary, in the case of rescission by the principal, "if it is not justified by a culpable act by the agent";
- But in the relations between AMBROSIO and Mr. VEYON, the representation part is not the primary activity; Mr. VEYON had, in effect, gained a revenue three times greater by his business activity as a buyer and reseller;
- The relations between the parties were formed and undone while the [European] community directive of 18 December 1986 on commercial agents which was the basis of the French law of 25 June 1991 was already published in the Official Journal of the European Community;
- The ruling C 91/92 of 14 July 1994 of the Court of Justice requires the Judges of the Member States "in applying national law, where provisions prior to or subsequent to the directive are involved... (of) .., to interpret it ... as far as is possible in light of the text and the finality of the directive to obtain the result envisioned by the latter and to thus conform to Article 189, paragraph 3 of the treaty".

It follows that, in the case at bar, a breach clause without indemnity, agreed on by the parties for a principal activity of sales, where it is valid, produces the same effect for the representation relationship pursuant to the provisions of Article 2 of the l8 December l986 directive incorporated into Article 15 of the 25 June l991 law.

Moreover, the nonpayment by VEYON to AMBROSIO of the sums he received from clients, up to 670,384.29 F, constitutes a culpable act of the kind that justifies rescission of the commercial agency contract by the principal. Consequently, the judgment must be modified in that it ordered AMBROSIO to pay VEYON compensation for lack of notice and compensation for loss of the business's goodwill contrary to the law of the parties. VEYON's demand for 500,000 F as damages and interest based on a breach without notice must likewise be dismissed.

- [Claims for damages by Veyon]

As to the sum of 400,000 F demanded by VEYON as damages and interest for not honoring the exclusivity clause and discriminatory practices, VEYON asserts that:
- On the day of the breach, AMBROSIO had already circulated a catalogue of price-lists and; on the other hand, had directly taken orders from clients based in France;
- Article 8 of the commercial collaboration contract which authorizes the breach at AMBROSIO's initiative does not provide for a possible retroactive application;
- AMBROSIO thus disregarded the exclusivity of the commercial collaboration agreement by concluding with third parties some contracts of the same kind as those envisioned by the agreement, if they were to take effect before its revocation.

VEYON has produced an invoice for the amount of 34, 910 F, sent on 14 November 1990 to the Etablissements BENASSAR at Chasse sur Rhône clarifying that the shipment of the goods began, at Naples, on 14 November 1990 at 15 H 45. It is thus certain that the goods arrived at their destination in France before 30 November. VEYON has likewise produced a document featuring the AMBROSIO products distributed in France by DJ FRANCE SA, at least, since 20 November 1990 since the indicated prices run from that date.

VEYON has thus established that AMBROSIO had, on two occasions, with two different persons, ignored the obligation of exclusivity which it agreed upon. The concentration of contractual breaches in the month preceding the breaking-off of relations leads the Court to set at the damages and interest owed to VEYON at 50,000 F.

- [Issues involving Article 55 CISG]

Whereas, on the reduction of the invoice pricing by AMBROSIO, VEYON relies in his briefs on Article 55 of the Vienna Convention [CISG] to assert that in the case of an undetermined price, "the parties are considered, in the absence of any indication to the contrary, to have impliedly made reference to the price generally charged at the time of the conclusion of the contract for such goods sold under comparable circumstances in the trade concerned."

- VEYON indicates that his successor, the DJ FRANCE company, enjoyed prices 8% less, on average. He asks the Court to reduce AMBROSIO's demand to 317,354.16 F. But the reference to the market price in Article 55 of the [CISG] -- as much as it is applicable in the case -- is cast aside in the face of a contrary agreement by the parties governed by the totality of the provisions of the [CISG] subject to Article 12 (Article 6).
- Moreover, the objections made by VEYON as to the timing of a price increase on l October 1990, instead of 1 January 1991, did not call into question the sales contract itself. These objections expressed some general grievances in the business relations of the parties and in the difficulties with respect to competition.

In light of the taking delivery of the goods ordered by VEYON, without challenging in a precise manner their sale price, AMBROSIO could have, pursuant to Article 8, paragraphs 2 and 3 of the [CISG], interpreted VEYON's behavior as an indication of acceptance of the price. The grounds, moreover, are not supported in the briefs; they must therefore be rejected. VEYON must thus be ordered to pay AMBROSIO the sum of 670,384.29 F corresponding to unchallenged accounts since the demand for a reduction in the price of 8% had been rejected.

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As to the sum of 500,000 F demanded by AMBROSIO as damages and interest, since AMBROSIO does not indicate the legal basis of its demand and does not justify its amount, this demand must be rejected.

As to the sums sought by the parties under Article 700 of the New Code of Civil Procedure, VEYON fails in his appeal. He must thus be ordered to pay AMBROSIO the sum of 7,000 F.

RULING OF THE COURT

For the above reasons, the Court, ruling publicly and after a full hearing, having deliberated pursuant to the law:

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Modifies the appealed judgment;
Orders VEYON to pay AMBROSIO the sum of 670,384.29 F;
Orders AMBROSIO to pay VEYON the sum of 50,000 F as damages and interest for not honoring the exclusivity clause;
Dismisses the parties on the remainder of their claims on the merits;
Orders VEYON to pay AMBROSIO the sum of 7,000 F under Article 700 of the New Code of Civil Procedure;
Orders VEYON to pay the fees of SCP d'Avoués Perret & Pougnand pursuant to Article 699 of the New Code of Civil Procedure.

HELD publicly by Mr. Beraudo, Président who has signed with Mrs. Combe, Court Clerk.


FOOTNOTES

* Charles Sant 'Elia has a B.A. in Political Science and Italian Literature from New York University and studied Political Science at the Universitá degli Studi di Firenze. He received his J.D. from Pace University School of Law and is admitted to the Bar of the States of New York and Connecticut.

All translations should be verified by cross-checking against the original text.

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