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CISG CASE PRESENTATION

Switzerland 24 August 1995 Commercial Court St. Gallen (Cleaning products) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/950824s1.html]

Primary source(s) for case presentation: Case text


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Case identification

DATE OF DECISION: 19950824 (24 August 1995)

JURISDICTION: Switzerland

TRIBUNAL: HG St. Gallen [HG = Handelsgericht = Commercial Court]

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: HG 48/1994

CASE NAME: Unavailable

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Switzerland (plaintiff)

BUYER'S COUNTRY: Germany (defendant)

GOODS INVOLVED: Cleaning products


Case abstract

SWITZERLAND: Handelsgericht des Kantons St. Gallen 24 August 1995

Case law on UNCITRAL texts (CLOUT) abstract no. 329

Reproduced with permission from UNCITRAL

At their first meeting, representatives of a Swiss seller, plaintiff, and a German buyer, defendant, signed a standard form contract for the delivery of airfilters at a price of CHF 90,000. The buyer denied being bound by such contract, claiming that its representative had not verified the entries in the standard form agreement before signing it on the buyer's behalf. The buyer claimed that the parties had agreed only to the delivery of samples of the airfilters at a price of DEM 500, in order for it to be able to test the product.

The court held that the CISG was not applicable to the standard form contract, as it had been concluded on the basis of an error (article 4(a) CISG). As such, the court determined that the contract was governed by Swiss law in accordance with private international law provisions.

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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: Article 4(a)

Classification of issues using UNCITRAL classification code numbers:

4B1 [Scope of Convention (issues covered and excluded): mistake affecting the validity of the contract]

Descriptors: Scope of Convention ; Error or mistake ; Validity ; Standard terms and conditions

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Editorial remarks

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Citations to other abstracts, texts and commentaries

CITATIONS TO OTHER ABSTRACTS OF DECISION

English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=162&step=Abstract>

German: [2000] Schweizerische Zeitschrift für internationales und europäisches Recht 116

Italian: Diritto del Commercio Internazionale (1997) 746-747 No. 161

CITATIONS TO TEXT OF DECISION

Original language (German): Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=162&step=FullText>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

English: Ferrari, International Legal Forum (4/1998) 138-255 [225 n.785 (scope of CISG: validity isuues)]; Bernstein & Lookofsky, Understanding the CISG in Europe, 2d ed., Kluwer (2003) § 2-6 n.67; [2004] S.A. Kruisinga, (Non-)conformity in the 1980 UN Convention on Contracts for the International Sale of Goods: a uniform concept?, Intersentia at 201; Henschel, The Conformity of Goods in International Sales, Forlaget Thomson (2005) 135 et seq.

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Case text (English translation) [second draft]

Queen Mary Case Translation Programme

Handelsgericht [Commercial Court] of the Canton St. Gallen

24 August 1995 [HG 48/1994]

Translation [*] by Kirstin Stadtländer [**]

[...]

[RULING]

In the case of Plaintiff [Seller] (...), against Defendant [Buyer] (...), concerning a claim for receivables:

The relief sought by [Seller]:

[Buyer] shall be ordered by the court to acknowledge and pay [Seller] the amount of Fr. 91,750.00 plus interest at a rate of:

   -    8 % from 16 May 1993 to 6 October 1993,
   -    7.626 % from 7 October 1993 to 6 April 1994,
   -    7 % since 7 April 1994,

under consequences as to costs and compensation.

The relief sought by [Buyer]:

[Buyer]'s claim shall be rejected, under consequences as to costs and compensation for [Seller].

CONSIDERATIONS

I.  1. [Seller], (...) domiciled company, is concerned with the production and sale of technical products. Besides other items, it sells the air filter icleen against pollution dust. [Buyer], which is domiciled in Germany, runs a company for the cleaning of buildings with 120 employees.

In March 1993, [Buyer] received from [Seller] an advertisement with the following short message ([Buyer] act. 3):

"We are looking for cleaning companies which can take on additional service assignments. We provide a lucrative portion of proceeds to our service partner. By returning the enclosed card, you receive the calculation documents for the first and additional service."

[Buyer] showed its interest, and on 6 April 1993 a meeting took place on [Buyer]'s premises. On part of [Seller], the vice president (...) took place as well as (...) and the managing director of [Buyer] as well as (...). The negotiations which dealt with (...) were exclusively led by Mr. (...) and (...). At the end of the discussions, they signed two form contracts. The first bearing the title "Basic Regulations of the Handling of the Business" ([Seller] act. 2) und the second one, entitled "Order" ([Seller] act.1), dealt with the delivery of:

   -    500 (...) (price per item Fr. 131.00);
   -    200 (...) (price per item Fr. 69.00);
   -    100 (...) (price per item Fr.9.50); and
   -    500 (...) (price per item Fr. 23.00).

The category "net amount in total" of the form was not completed; also the total amount for the delivery was not mentioned.

On 16 April 1993, [Seller] sent an invoice of the amount of Fr. 88,997.50 for the ordered goods to [Buyer], "payable in advance by the sending of a check to the forwarding agency Danzas" ([Seller] act. 3). [Buyer] rejected the invoice by writing of 27 April 1993 ([Seller] act. 4). [Buyer] wrote:

"It was agreed with your Mr. (...) that you would deliver a sample of the value of about Deutsche Mark [DM] 500.00 in order to get to know your product and test it. We did not talk about an order in that amount. Our Mr. (...) was a witness to that conversation. Mr. (...) did not check the completion of the order, as he trusted in your representative who only talked about a delivery of a sample. The facts show that we must conclude that we were fraudulently deceived. Hereby, we dispute the contract for fraudulent deceit and mistake. We are not willing to accept your goods."

      2. [Seller] insists on the performance of the contract of 6 April 1993. It demands by the present claim that [Buyer] be ordered to pay the price. [Seller] puts forward that the details of the contract were specifically negotiated and put down in writing. [Buyer] would assert against better knowledge that only the delivery of a sample in the value of DM 500.00 was discussed. Also the assertion that no total amount was fixed is irrelevant. You can expect of a registered trader with 120 employees that he can, on his own, evaluate the extent of the duties agreed on by himself.

[Buyer] emphasizes that the exclusive subject of meeting of 6 April 1993 was to get to know and test [Seller]'s product. An immediate order was at no time the topic, and under no circumstances in the alleged amount. It was at no time [Buyer]'s aim to sign a contract about a product which is completely unknown to it. [Buyer] only wanted to order a sample, no more than that. In that belief Mr. (...) did not exactly control what he signed at the end of the negotiations. A contract was therefore not concluded. On the contrary, [Buyer] was intentionally deceived; when signing, Mr. (...) was in error.

      3. For its statement of the facts, [Buyer] refers to the evidence of its employee (...) who was present in the negotiations, and its clerk (...) who had heard the discussion from her adjacent office. [Seller] named employees (...) and (...) as witnesses.

The four witnesses mentioned were interrogated on 11 April 1995 before the President of the Commercial Court, Commercial Judge Marcel Dvorak, and the Recorder of the Commercial Court. Witnesses (...) and (...) stated that a usual sales negotiation had taken place between the parties. The product was presented in detail and it cannot be spoken of lack of time ("Why should we have come under pressure of time, I do not know of that" ... "No, there was no hurry ... We could have talked for half an hour longer, thus there was no hurry."; record p. 7 and 8). Both of these witnesses contested several assertions of [Buyer] that only a sample delivery of a few hundred DM was agreed. (...): "For 250 or 500 DM I would not have concluded a bargain, for that sum we do not deliver, I would not have started that. I do not talk about samples in a sales negotiation"; record p. 9. (...):"A test delivery or a sample delivery was never talked about"; record p. 7).

Contrary to that, [Buyer]'s witness (...) stated that Mr. (...) had wanted a kind of sample collection, "so that he would know what he can do with it. This was a new area for him, he was just going to establish it" (record p.4). This witness elaborated as follows on the course of the negotiation (record p. 5):

"It took about one hour. Then an extremely hectic pace turned up on part of Mr. (...). They had an appointment and we were under pressure of time as well, we had an appointment in Konstanz. In the end everything went so fast, the order was completed very quickly and then, I do not know, looking back now, it is all a bit obscure on part of Mr. (...). Suddenly, he had a pen in his hand, he signed, once he went around on the left, once on the right, more or less, and then it was over. There was such a hectic pace that came up, and in my view that was intended. And as trustworthy as (...) is, and he also believed he was confronted with sincere people, and as trustingly as he conducts himself in his life, he acted and did not put any effort in controlling, but just signed."

And [Buyer]'s witness (...) stated that she had heard that negotiation from the adjacent room.

"I always listen a bit what is going on ... I must always know everything ... In the end I must know about everything. Then I already hear what is talked about" (record p. 4).

Concerning the conversation itself, this witness stated (record p. 4):

"They talked and showed interest in the product and they talked about a sample delivery, about DM 500. Then they said: 'Okay, we will do it for DM 500'. Then they talked about the product, if it can be used, that the addresses of doctors would be supplied, where one could go and the presentation of these filters for putting in and so on, and then the big end came."

II. 1. The jurisdiction of the Commercial Court of the Canton St. Gallen, before which [Seller] brought the matter with reference to the choice of forum clause of the sales contract from 6 April 1993, is not contested. [Buyer] entered an appearance to the present proceedings. As to the subject matter, the Commercial Court is undoubtedly competent as both parties are registered in the Commercial Register, the dispute results out of a common business of the parties, and the jurisdictional value exceeds Fr. 30,000.00 (Art. 14(1) ZPO [*]).

      2. The disputed "Order" of 6 April 1993, concerning the delivery of (...) products, falls under the law of sales, although the title is a bit misleading. Plaintiff appeared as the seller of the item in question and it is obvious that no order of service was agreed. In an international relation which is given here, generally the CISG is to be applied (which here would have been expressly excluded had the contract been valid; [Seller] act. 1 no. 3). The disputed question of the present case, whether the contract was concluded without any error, is not dealt with in the CISG (Art. 4(a) CISG); according to the domestic law of Switzerland, the applicable law is the law of that country in which the seller has its usual residence (Art. 117 f. IPRG [*]). In the present case, the disputed question is to be determined by the Swiss Law of Obligations.

      3. [Buyer] refers to an erroneous expression of intention at the time of the conclusion of the contract and considers the contractual documents, especially the order of (...) products, signed on 6 April 1993 not to be binding, as it was in error or [Buyer] was deceived. According to the statement of [Buyer], only a sample delivery was discussed during the negotiations and (...) signed the order with (...) items in the amount of about Fr. 90,000 put down in the contract without seeing it and while being in error.

             a) [Buyer] especially refers to the fact that it was in error. According to Art. 23 in connection with Art. 24 No. 1 OR, [*] a contract is not binding on that party who was in error concerning a fundamental element of the contract at the time of the conclusion of the contract. The party that asserts an error at the time of the conclusion of the contract, implicitely acknowledges the existence of two bilateral expressions of intention which are consistent with each other (Art. 1(1) OR), which leads to the result that in general a contract was concluded (see BGE [*] 105 II 26).

In this context, it is spoken of a normative consensus. Such a consensus is especially assumed by the Federal Court in case of a document that was signed without reading as asserted in this case. The partner of the signing party can generally believe that the counterpart agreed to the signed content of the contract and that it wanted it. However, if a party to a contract alleges that its intention to contract is not equivalent to the text of the signed agreement, this error must be proved by that party (Kramer, Berner Commentary, N 126 et seq., especially N129 to Art. 1 OR [*]; Gauch/Schluep, Swiss OR, General Part, I, N 934 et seq., Bucher, Swiss OR, General Part, 2d ed., p. 198; Karl Oftinger, The document that is signed without being read and relating situations, in: Commemorative Volume for August Simonius, Basel, 1955, p. 263 et seq.). According to the rulings of the Federal Court, the reference to a mistake in the declaration itself is only excluded (in rare cases), if it must be assumed "that the declaring party submits itself to everything the other party wants while being aware of its own ignorance of the content of the declaration" (BGE [*] 49 II 182, 34 II 532, 90 II 453; Gauch/Schluep, see above, N935; Oftinger, see above, p. 271; Bucher, see above, p. 198).

             b) Based on the submitted files and by considering the statements of the witnesses, [Buyer] is in the present case able to prove that (...) signed the completed form order in ignorance of its actual content and that [Buyer] did not want the disputed order. From all of the witness' statements, it is established that the total (great) extent of the order and especially the total amount of the price, which was about Fr. 90,000.00, was not mentioned during the negotiation of the sale, nor were the net amounts in total listed in the written order. Witnesses (...) and (...) state that, on the contrary, only a sample delivery was talked about. Moreover, witness (...) describes very clearly that at the end of the negotiations a certain hectic pace came up and that (...) signed without further control. The statements of these two witnesses seem credible. The statements of the employees of [Seller] are not able to rebut this. It can be deduced from the elaborations of (...) that a fairly intensive sales negotiation took place. The product was presented to the interested party, and also technical information was supplied by a detailed catalogue. The representative of [Seller] further informed about questions of calculation and advertising. But the Basic Regulation and the Order that were finally signed constitute a fairly complicated contract. It seems credible that a certain pressure of time came up under which (...) signed the order without further control. If the representatives of [Seller] who have undertaken such negotiations on a daily basis did not feel a pressure of time, this is not relevant. That (...) signed without looking at the contract in detail may be considered as quite negligent. But this negligence does not bar a reference to an error (Gauch/Schluep, see above, N 935). Finally, it is not a prerequisite that the representatives of [Seller] noticed the error or would have had to notice it according to the circumstances. If they had, which they insistingly deny, noticed that [Buyer] only wanted a sample delivery, the disputed sales contract would not have come into existence from the beginning (see Gauch/Schluep, see above, N 934 et seq.).

             c) [Buyer] asserts that this was not the only case of this. [Buyer] referred to a judgment of the Court Commission of Rorschach of 9 December 1993 / 14 July 1994 / 21 November 1994 in the case of (...) against (...). This judgment was transferred to the Canton Court by appeal of the Defendant. The III. Civil Chamber decided on 4 July 1995; the case and especially the judgment of the Court Commission are therefore also known by the Commercial Court (Art. 90(3) ZPO [*]). In that judgment, the Court Commission of Rorschach referred to numerous further procceedings in which the other party asserted that it signed the written contract concerning the delivery of air filters under incorrect circumstances. These facts of judicial notice may not provide any direct proof for the facts stated by [Buyer] in the present case, so that further decisions with similar facts must not be referred to. However, these mentioned facts underline the credibility of the facts presented by [Buyer] in this case, as they give hints as to how [Seller] negotiated in other cases and how its statements were respectively understood by other contractual partners. To that extent, these facts have importance as an additional indication of the correctness of the presentation of [Buyer].

             d) According to Art. 31 OR [*], an error can only be put forward within the period of one year after its discovery. This was done by [Buyer] in its writing of 27 April 1993 ([Seller] act. 4), in which [Buyer] expressly declared that it disputes the contract due to fraudulent deceit and error. Therefore, [Buyer] asserts the invalidity of the contract. [Seller] is thus barred to claim the price.

      4. In conclusion, it results from this that the [Seller]'s claim must be rejected. Due to this result of the proceedings, the court expenses, consisting of the fee for the decision in the amount of Fr. 10,000.00 (No. 332 in connection with No. 304 GKT), and the compensation of witnesses in the amount of Fr. 860.00, must be burdened on [Seller]. The fee already paid for the submission of the claim in the amount of Fr. 600.00 must be counted against it (Art. 280 Code of Civil Procedure).

[Buyer] is entitled to compensation of its party costs (Art. 263 Code of Civil Procedure). The legal representative of [Buyer] did not submit a cost calculation. With regard to the present judicial value of about Fr. 92,000.00, the average fee would be Fr. 11.696,00 (Art. 14(d) HonO), which must be increased by 1/5 according to Art. 15 HonO, the result thus being Fr. 14,035.00. For the preparatory hearings undertaken with interrogations of witnesses, a sucharge of 30 % which is Fr. 4,210.00 seems adequate (Art. 18 section 1(a) HonO), which leads to a fee of Fr. 18,246.00 in total. To this fee the amount of Fr. 12,000.00, the value added tax, must be added (Art. 28 HonO), which is thus Fr. 780.00. [Seller] must therefore compensate [Buyer] in the total amount of Fr. 19,026.00 (including expenses).

The Commercial Court rules:

  1. The [Seller]'s claim is rejected.

  2. The court expenses, consisting of a fee for the decision of Fr. 10,000.00 and the compensation of witnesses of Fr. 860.00, are to be paid by [Seller], the fee of Fr. 600.00 for the submission of the claim being counted against it.

  3. [Seller] must compensate [Buyer] with Fr. 19,026.00.

St. Gallen, 24 August 1995

Judgment published in writing on 25 August 1995.

   -    Service on the representatives of the parties on 15 September 1995;
 
   -    Against this decision an appeal to the Federal Court and a plea of nullity to the Court of Cassation of the Canton St. Gallen are admissible. The appeal to the Federal Court can be submitted by writing to the chambers of the Commercial Court of St. Gallen, Klosterhof 1, 9001 St. Gallen within thirty days after the service. By appeal only a violation of federal law and of international contracts can be put forward. The challenged decision must be enclosed.


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff of Switzerland is referred to as [Seller] and Defendant of Germany is referred to as [Buyer].

Translator's note on abbreviations: BGE = Entscheidungen des Schweizer Bundesgerichts [Official Reporter of Cases of the Swiss Supreme Court]; IPRG = Gesetz über das Internationale Privatrecht [Swiss Code on Private International Law]; OR = Obligationenrecht [Swiss Law of Obligations]; ZPO = Zivilprozessordnung [Code of Civil Procedure of the Canton St. Gallen].

** Kirsten Stadtländer is a trainee lawyer at the Higher Regional Court of Düsseldorf. She studied law at Humboldt University Berlin and was a member of the team of Humboldt University at the 9th Willem C. Vis International Commercial Arbitration Moot 2001/02 and a coach of the team at the 10th Willem C. Vis International Commercial Arbitration Moot 2002/03.

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