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CISG CASE PRESENTATION

Germany 27 July 1995 Appellate Court Rostock (Plants case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/950727g1.html]

Primary source(s) for case presentation: Case text


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Case identification

DATE OF DECISION: 19950727 (27 July 1995)

JURISDICTION: Germany

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

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: 1 U 247/94

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

CASE HISTORY: 1st instance LG Schwerin 30 June 1994 [CISG overlooked] [affirmed in part] [reversed in part]

SELLER'S COUNTRY: Denmark (plaintiff)

BUYER'S COUNTRY: Germany (defendant)

GOODS INVOLVED: Plants


Case abstract

GERMANY: OLG Rostock 27 July 1995

Case law on UNCITRAL texts (CLOUT) abstract no. 228

Reproduced with permission from UNCITRAL

A Danish seller, plaintiff, delivered bedding plants to German buyers, defendants. When the buyers did not pay the invoices, the seller engaged the services of a debt collection agency. However, the debt collection agency was unable to recover from the buyers the sum concerned. The seller's claim for the purchase price and interest as well as for the expenses incurred by the debt collection agency was granted by the lower court. The buyers appealed the decision.

The appellate court held that the buyers were bound to pay the purchase price (article 53 CISG), the CISG being applicable under its article 1(1)(a), since Denmark and Germany were both Contracting States, and also under article 1(1)(b) CISG. But, Denmark had made a reservation under article 92(2) CISG such that it was not bound by Part II (Formation) of the CISG. Therefore, under the German rules of private international law, the formation of the parties' contract was governed by Danish law, according to which a binding contract existed between the parties.

Furthermore, the appellate court also held that interest on the purchase price was owed (article 78 CISG). The only condition on the obligation to pay interest was that the purchase price under the contract must be due and payable (article 58(1) CISG). And, as the CISG does not regulate the rate of interest, this rate was determined according to national law selected under the rules of private international law, which resulted in the application of Danish law.

Lastly, the appellate court overturned the lower court's decision regarding the expenses incurred by the debt collection agency inasmuch as such expenses do not fall within the ambit of the CISG.

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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 74 ; 78 ; 92(2) [Also cited: Articles 14 ; 50 ; 51 ; 53 ; 58(1) ]

Classification of issues using UNCITRAL classification code numbers:

74A [General rules for measuring damages (loss suffered as consequence of breach): cost of retaining a collection agent];

78A ; 78B [Interest on delay in receiving price: accrual of ; Rate of] ;

92A [Declaration not to be bound by Part II (Formation of contract)]

Descriptors: Damages ; Collection costs ; Interest ; Declaration, Art. 92

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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=204&step=Abstract>; [1999] Transportrecht, Beilage "Internationales Handelsrecht" (TranspR-IHR) 23

Italian: [1998] Diritto del Commercio Internazionale 1087-1088 No. 190

CITATIONS TO TEXT OF DECISION

Original language (German): cisg-online.ch <http://www.cisg-online.ch/cisg/urteile/209.htm>; Oberlandesgerichtsrechtsprechung (OLGR) Rostock 1996, 50-51 ; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=204&step=FullText>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

English: Ferrari, International Legal Forum (4/1998) 138-255 [169 n.267 (effect of Art. 92 declaration), 253 n.1079 (interest issues)]; Honnold, Uniform Law for International Sales (1999) 470 [Art. 78]; Flechtner, 17 Journal of Law & Commerce (1998) 194 n.23 [Art. 92]; Bernstein & Lookofsky, Understanding the CISG in Europe, 2d ed., Kluwer (2003) § 8-4 n.27 [cited as 21 July 1995]; 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. 1 para. 33 Art. 74 para. 20 Art. 78 para. 27 Art. 92 para. 3; Henschel, The Conformity of Goods in International Sales, Forlaget Thomson (2005) 89

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Case text (English translation) [second draft]

Queen Mary Case Translation Programme

Court of Appeal Rostock (Oberlandesgericht)

27 July 1995 [1 U 274/94]

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

Facts

The [seller] requests from [buyer 1 and buyer 2] payment for a sale.

["Buyer 1" and "Buyer 2" are hereinafter referred to simply as the "buyer" unless indicated otherwise.]

The [seller] is a Danish company with its place of business in Odense, Denmark. The [buyer] operates a flower wholesale business [] in Parchim and a market stand in Rostock, Germany. In 1992, the [buyer] ordered goods from the [seller]. The [seller] delivered the goods to the [buyer]. The [seller] has sent to the [buyer] a total of four invoices. This concerns the following invoices:

[]

Total amount: DM [Deutsche Mark] 19,260.

Pertaining to the invoice of 19 November 1992, the [seller] issued to the [buyer] a credit for DM 10,015.20 on 26 November 1992. The [seller] also granted the [buyer] another price reduction of DM 10 per tree, due to a complaint. As there were 480 trees, the price reduction amounted to DM 4,800 net; with 7% Value-Added-Tax included the price reduction was DM 5,163. The claim of the [seller] according to the invoice of 19 November 1992 was [.] DM 10,146.99.

By letters of 31 October 1992 and 30 November 1992, the [seller] sent to the [buyer] two statements of account showing the [seller's] claim. The [seller] then engaged the services of a debt collection agency to enforce the claim against the [buyer]. The [buyer] did not react to a reminder by the collection agency, dated 3 December 1992. The [seller] incurred costs for the services of the collection agency in the amount of DM 843.83. On 12 January 1994, the [buyer] paid to the [seller] DM 1,000 on the main claim.

The [seller] has stated that:

[Seller] alleges that [buyers 1 and 2] are jointly and severally liable to pay DM 15,283.99 plus 12% interest since 1 December 1992 as well as an additional amount of DM 843.83.

[Buyers 1 and 2] have pleaded to dismiss the complaint. They have stated that the [seller] has assigned the claim. They acknowledge that they owe an amount of DM 11,537.19.

The Landgericht [Court of First Instance] of Schwerin has ordered [buyers 1 and 2], as jointly and severally liable debtors, to pay to the [seller] DM 15,283.99 plus 12% interest since 1 December 1992 as well as DM 843.83 minus DM 1,000 paid on 18 January 1994.

The Court of First Instance has reasoned that the claim of the [seller] is undisputed due to the deliveries of the goods. The Court of First Instance held that [buyer] also had to pay the costs for the services of the collection agency. To the extent that the [buyer's] brief of 28 June 1994 contained new facts, this brief was not to be taken into consideration according to 296 a ZPO [*]. The [buyer] opposes that ruling with this permissible appeal. The [buyer] contends that the [seller] stated the claim incomprehensibly.

The [buyer] pleads to have the judgment remanded and the complaint dismissed.

The [seller] pleads to dismiss the appeal. The [seller] defends the first instance decision and points out that the [buyer] had acknowledged the claim in the amount of DM 11,537.19. The [buyer] had not revoked the acknowledgment.

Reasons for the decision

A. The appeal of the [buyer] is partly justified.

     1. The [buyer] is obligated to pay the [seller] DM 9,146.99 in accordance with Art. 53 CISG.

         a. The Convention is applicable according to Art. 1(1)(a) CISG. The Convention applies to contracts of sale of goods between parties whose places of business are in different States where these States are Contracting States. The [seller] has its place of business in Denmark, the [buyer] resides in the Federal Republic of Germany. Both countries have adopted the CISG (von Caemmerer/Schlechtriem, Appendix 1 to [...] CISG, 2nd ed.).

The Convention also applies according to Art. 1(1)(b) CISG. Pursuant to this provision, the Convention applies when parties who have their places of business in different States have concluded a contract for the sale of goods when the rules of private international law lead to the application of the law of a Contracting State.

According to Art. 28(1), (2) EGBGB [*], the law of Denmark would apply, as the [seller] who has to perform the characteristic contractual obligation has its place of business there. But Denmark has declared in the course of the ratification of the Convention, according to Art. 92(2) CISG, that Part II of the Convention is not binding on Denmark. Part II of the Convention, which consists of Arts. 14-24 CISG, regulates the formation of the sales contract. As these provisions do not apply here, according to Arts. 31(1); 28(1), (2) EGBGB, Danish law is to be applied.

         b. According to 1 -9 Aftl. (Aftaleloven [Law on Agreements and Other Legal Transactions on the Sector of Property Law]), a sales contract comes into existence by offer and acceptance (Handbuch des Kaufvertragsrechts in den EG-Staaten [Manual of the Sales Law in the EU-States], Graf-von-Westphalen-Steinrcke, Dänemark [ Denmark], Annotation 1-6).

The [seller] has stated its case sufficiently by presenting the invoices that the [buyer] has ordered goods from the [seller] and that the [buyer] accepted the order.

         c. It is undisputed that the sales price was DM 10,146.99. This Court has taken into consideration the claims of the [buyer] according to Arts. 50, 51 CISG for a reduction in the sales price - the [seller] has credited the [buyer's] account, etc.

         d. With the undisputed payment of DM 1,000 on the purchase price debt, the claim of the [seller] was partially satisfied. The remainder of [seller's] invoice claim is thus DM 9,146.99.

         e. []

     2. In accordance with Art. 78 CISG, the [seller] can request from the [buyer] the payment of 7% interest on the purchase price debt since 1 December 1992.

The only prerequisite for the obligation to pay interest is that the purchase price is due (cf. von Caemmerer/Schlechtriem/Eberstein/Bacher, op. cit., Art. 78, Annotation 9). According to Art. 58(1) CISG, the purchase price in the amount of DM 10,146.99 became due not later than 1 December 1992.

Due to the absence of a different regulation in the CISG, the interest rate is regulated by the national law to which the rules of the private international law refer (cf. von Caemmerer/Schlechtriem/Eberstein/Bacher, op. cit., Art. 78, Annotations 26, 27). According to Art. 32(1) (No. 3) EGBGB [*], Danish law has to be applied. Under this law, the interest rate while in default amounts to 6% p.a. above the respective discount rate of the Danish National Bank ( 3, 5 Renteloven [Law on Interest]). The [seller] has not stated how high the discount rate of the Danish National Bank has been since 1 December 1992. The [seller] also did not prove that the claimed default damage of 12% occurred. The Court estimates that the discount rate of the Danish National Bank was at least 1%, so that a unified interest rate of 7% exists since 1 December 1992.

The [buyer] owed the [seller] DM 10,146.99 for the period from 1 December 1992 until 12 January 1994; DM 10,146.99 and 7% interest has to be paid on this amount. Since the partial payment of the purchase price on 12 January 1994, the obligation of the [buyer] amounts to DM 9,146.99, so that 7% interest has to be paid on the debt since 13 January 1994.

     3. The [seller] cannot request reimbursement of the costs for the collection agency amounting to DM 843.83 according to 30 Kbl (Lov om kob [Sales Law]). According to Art. 32(1) (No. 3) EGBGB [*], Danish law applies due to the default. The CISG does not contain a provision pertaining to the requested damages for the costs of the collection agency.

Under 30 Kbl, the seller can request reimbursement of the damages suffered from the default (Handbuch des Kaufvertragsrechts in den EG-Staaten [Manual of the Sales Law in the EU-States], Graf-von-Westphalen-Steinrcke, Dänemark [Denmark], Annotation 111).The prerequisites of default are provided to 28 Kbl: the [buyer] is in default if he does not pay the purchase price in time. As already stated elsewhere, the purchase price was due on 1 December 1992. But the [seller] can only request as damages those expenses which were necessary to enforce the claim. In the opinion of this Court, the use of a collection agency was not necessary. The [seller] contended at this time to have a main claim of DM 1,283.99. As the claim is now much lower, as is now undisputed, it was predictable that the [buyer] would not pay on the payment request of the collection agency.

B. The decision on the costs is based on 92(1) ZPO [*]. The additional side decisions result from 708 No. 10, 711, 713, 546(2) ZPO.


FOOTNOTES

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

Translator's note on other abbreviations: EGBGB = Einführungsgesetzbuch zum Bürgerlichen Gesetzbuche [German Code on the Conflict of Laws]; 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 1997.

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Pace Law School Institute of International Commercial Law - Last updated December 5, 2005
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