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CISG CASE PRESENTATION

Switzerland 12 February 1996 Appellate Court Lugano (Copy paper case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/960212s1.html]

Primary source(s) for case presentation: Case text


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Case identification

DATE OF DECISION: 19960212 (12 February 1996)

JURISDICTION: Switzerland

TRIBUNAL: Cantone del Ticino, La seconda Camera civile del Tribunale d'appello [Appellate Court ] [Lugano]

JUDGE(S): Cocchi (president), Chiesa, Zali

CASE NUMBER/DOCKET NUMBER: 12.95.00300

CASE NAME: B. S.p.A. v. T. SA, Pambio Noranco

CASE HISTORY: 1st instance Pretura Lugano (No. 1315) 16 October 1995 [CISG overlooked] [partly reversed]

SELLER'S COUNTRY: Italy (plaintiff)

BUYER'S COUNTRY: Switzerland (defendant)

GOODS INVOLVED: Copy paper


Case abstract

SWITZERLAND: Cantone del Ticino, Tribunale d'appello 12 February 1996

Case law on UNCITRAL texts (CLOUT) abstract no. 335

Reproduced with permission from UNCITRAL

An Italian seller, plaintiff, sued a Swiss buyer, defendant, for payment of the purchase price for printing paper. The buyer alleged that it was not the proper party, since it had acted as agent for a Bulgarian company. Although both parties pleaded Italian law, the court held that the CISG was applicable to the case. However, as the CISG contains no rules on agency agreements, the court applied Swiss law, pursuant to the Swiss conflict of law rules.

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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 4 ; 78

Classification of issues using UNCITRAL classification code numbers:

4B [Issues covered and excluded (issues excluded): agency issues];

78B [Interest on delay in receiving price: rate of interest (domestic rate applied)]

Descriptors: Scope of Convention ; Agency issues ; Interest

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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 [Apellationsgericht Tessin] <http://www.unilex.info/case.cfm?pid=1&do=case&id=238&step=Abstract>

German: Schweizerische Zeitschrift für Internationales und Europäisches Recht (SZIER)/ Revue suisse de droit international et de droit européen (1997) 135-136

Italy: [1998] Diritto del Commercio Internazionale 1103 No. 206

CITATIONS TO TEXT OF DECISION

Original language (Italian): Unavailable

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

English: Ferrari, International Legal Forum (4/1998) 138-255 [226 n.791 (scope of CISG: agency issues), 253 n.1079 (interest issues)]; Thiele, 2 Vindobona Journal (1998) 3-35, citing this case [n.59] and 42 other interest rulings; Liu Chengwei, Recovery of interest (November 2003) n.162; [2005] Schlechtriem & Schwenzer ed., Commentary on UN Convention on International Sale of Goods, 2d (English) ed., Oxford University Press, Art. 78 para. 27

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Case text (English translation) [second draft]

Queen Mary Case Translation Programme

Tribunale d'appello Lugano 12 February 1996

Translation by Francesco G. Mazzotta [*]

The Second Civil Chamber of the Court of Appeal
Composed of: Cocchi (president), Chiesa and Zali
Court Clerk: Petrini

Sitting to decide over the appealable ordinary claim # 1315 of the Pretura [Trial Court or Court of First Instance] of the Lugano District, Third Section, brought by means of a claim dated 20 December 1991 by:

B. S.p.A., (Italy) [plaintiff] [hereinafter "seller"], represented by []
v.
T. SA, Pambio Noranco [defendant], represented by []

The [seller] sought to have the defendant obliged to pay fS [Swiss francs] 28,560, plus other ensuing legal consequences, for the price of the sale. The defendant sought rejection of the claim, which instead was granted by the Pretore of Lugano on 16 October 1995.

The defendant brought an appeal dated 8 November 1995, seeking the reformation of the Trial Court decision asking for the rejection of the claim. The [seller], by means of notes, dated 14 December 1995, asked for the rejection of the appeal along with the court expenses and other recoverable expenses.

Having read and examined the exhibits, the following issues were to be decided:

1. Whether the appeal should be granted;
2. Court expenses and other recoverable expenses.

As to the facts

      A. [Seller], in response to a phone order, supplied 1,400 boxes of paper for xerox purposes for the total amount of ITL [Italian Lire] 23,800,000. The [seller], arguing that he received the order from the defendant, but was not paid for it, with the present action seeks to have the defendant pay the amount of fS 28,560, plus interest.

     B. The defendant, in its response, dated 2 March 1992, objected to the request arguing that there was no contract with the [seller]. In fact, according to the [seller], the defendant entered into a contract with R.G. of Montagnola [Italy]. As a result, the defendant, in the dealings with the [seller], acted as an agent of R.G., not for itself.

     C. With the decision herein appealed, the Trial Court, in light of Articles 32 et seq. CC [Civil Code of Switzerland], held that the defendant, in its relationship with the [seller], did not act as an agent of a third party. Consequently, the Trial Court granted the [seller]'s claim. Except for this point of law, the defendant did not object to the [seller]'s action.

     D. With this appeal, the defendant seeks reformation of the Trial Court's decision sustaining the agency relationship, evidence of which arises from exhibits 3, 5, 6, 7, 9 and 12, which exclude a direct contractual relationship between the parties to the present dispute. In the event that the Appellate Court rejects the appeal, the defendant asks for a reduction of the interest rate, which should be equal to 5%, and that the amount of damages should be calculated in Italian Lire.

     E. The [seller], by means of the notes dated 14 December 1995, asked the rejection of the appeal on grounds that will be later referred to, as needed.

As to the law

1. The law applicable to the present dispute is not Italian law, as argued by both parties, but the United Nations Convention on Contracts for the International Sale of Goods adopted on 11 April 1980, effective in Switzerland as of 1 March 1991. (cf. art. 1(1)(a) of the Convention).

2. Although the Convention deals with contract formation issues, it does not have provisions as to contracts concluded by an agent. (See Article 4(a) of the Convention that explicitly excludes validity issues from its scope; Bucher, Ueberblink in die Neuerung des Wiener Kaufrecths, in Wiener Kaufrecht, Berna, 1991, page 45 and 46). Thus, as to the issue of agency, the rules on conflict of laws will apply (Bucher, id. at 45).

3. LDIP Article 126, cpv. 2, provides that the effects of acts done by an agent against a third party are governed by the law of the place where the agent has its business. In the present case, therefore, the issue of the existence of the agency relationship between the defendant and R.G. must be decided under Swiss law.

4. As correctly stated by the Trial Court, under Article 32, cpv. 1 CC, the elements of direct agency are the document conferring the authority to act on behalf of the principal and actually acting on behalf of the principal, excluding the case, not applicable in the present instance, where the third party is not concerned with with whom it is concluding the contract (Article 32, cpc. 2, end, CC).

It is commonly accepted that the defendant, according to Article 183 CPC, has the burden of proof as to the existence of the alleged authority. The Court will then evaluate such evidence (Article 90).

5. Contrary to defendant's assertions, the evidence does not give any proof as to the occurrence of the elements mentioned.

      5.1 As per defendant's admission (conclusions, page 1), the oral testimony did not corroborate its arguments as to the existence of the agency agreement, the existence of which is proven, according to the defendant, by the offered exhibits.

      5.2 Exhibit 3, which the defendant considers as very important (appeal, page 8-11), is a fax communication from the [seller] to the defendant (and, through the defendant, to Mr. G.) dated 9 April. It is true that this communication refers to Mr. G, with whom some dealings were conducted over the phone, but the mere referral to this person in this particular circumstance does not warrant a conclusion that an agency agreement existed. Actually, by reading the text of this communication, it should be concluded that G. acted as an agent of the defendant, which shows that the defendant was a party to the agreement.

     5.3 Exhibit 5 is a telefax message from the defendant to a company from Sofia sent to the attention of R.G., also dated April 9. Since this document should be a communication between the alleged agent and the alleged principal, and for this reason should be unknown to the third party, its probative value is only limited to the existence of the authority conferred by G. to the defendant (even in this case it would be a unilateral statement of the alleged agent), and does not include the proof that the defendant notified the [seller] as to its intent of acting as an agent.

In any event, contrary to the defendant's arguments, there is no part of this document that can be understood as conferring any authority by G. to the defendant. Actually, it can be inferred that the defendant was not the final addressee of the merchandise because it was meant to be sold to the Bulgarian company on behalf of which G. was acting.

It seems that the billing of the resale of the merchandise was fictitious (we need details as to the amount of the bill), and that the defendant was supposed to get an amount equal to 3% of its performance in consideration of appearing as the actual buyer and for being available for the fictitious billing of the merchandise.

There is nothing that leads to a finding that there was an agreement according to which the defendant was acting as an agent of G. or the Bulgarian company. Even the mention of (see Exhibit 3) direct agreements between the [seller] and G. leads to such a conclusion, because such a conclusion cannot prevail over the other, which is more plausible, according to which G. acted as an agent of the defendant, since it is irrelevant that it was the final addressee of the merchandise.

     5.4 Exhibits 6 and 7 do not have any relevance since they are just letters exchanged between G. and the Sofia office as to shipping of the merchandise. Similarly exhibits 9 and 12 are not relevant, respectively, the bill of the defendant to the Bulgarian company for the mentioned merchandise, and a note from the Bulgarian company which notified a change of address to the defendant.

      5.5 It should be concluded that the defendant did not prove, and did not even make plausible, the existence of an agency relationship.

6. The defendant, in the event that the appeal would have been rejected, as it happened, claimed that the debt was not to be determined in Swiss currency but in Italian Lire. The claim is groundless, or, in any event, does not have any practical impact. The conversion in Swiss currency of the debt as of the day of the request of enforcement is, in fact, unobjectable (II CCA 9 July 1991 in re C./C.) and, in any event, as the [defendant] appellant [buyer] correctly observes, it does not prevent that the obligation may be performed also paying in a foreign currency (Rep. 1983, page 286: II CCA 13 February 1995 in re C. S.rl./L. SA).

Therefore, the Trial Court ruling does not need to be changed since the defendant [buyer] can perform its obligation by paying ITL Lire 23,800,000.

7. The Trial Court decision must be reformed as to the applicable interest rate, which has been determined to equal to 12%. The defendant [buyer], although it did not explicitly object to the rate, asked for a total rejection of the claim. In addition, the defendant [buyer] was not able to formulate a more precise objection because the [seller] omitted to specify the factual and legal background for asking for default interest (II CCA 21 September 1994 in re G./S.). As a result, the claim should be rejected because not grounded, instead of being granted because not objected to.

8. Article 78 of the CISG provides that the buyer, if it fails to pay the price, must pay interest accrued on it. Interest is due since the price is due and not only when a demand for payment has been made (Weber, Vertragsverletzungsfolgen, in: Wiener Kaufrecht, Berna, 1991, page 208).

The CISG is silent on the issue of default interest, which results in the application of the law that would otherwise apply absent the Convention (Weber, id.). In the present case, since the parties did not choose the applicable law, the connection criterion must be applied, which leads to the application of the law of the seller (article 117, cpv. lit a LDIP), that is, the Italian law.

According to Article 1284 Cc [Civil Code of Italy], as modified as of 16 December 1990, the legal interest rate is equal to 10% per year. As a consequence of the above, we approve a partial granting of the appeal and a reform of the appealed decision. However, the court expenses and other recoverable expenses will be held as determined by the Trial Court, and, therefore the defendant [buyer] will be deemed to have lost on this matter also.

For the above-mentioned reasons, having regard of Articles 148 CPC and the TG:

The Court holds:

I. The appeal, dated 6 November 1995 brought by [defendant] is partially granted. As a result, the decision of the District of Lugano Pretura, dated 16 October 1995, third section, has been reformed as follows:

     1. The appeal is partially granted. As a result [defendant][buyer] is ordered to pay in favor of [seller] fS 28,560, plus interest at 10% starting from 17 June 1991.

     2. The objection to PE n. 211863 of the Lugano UE, dated 21 October 1991 is removed for the same amount.

     3. Unchanged.

II. Court expenses, determined as follows:

a. Tax       fS  850.--
b. Expenses       fS    50.--
TOTAL       fS  900.--

already paid by the appellant [defendant] [buyer], will be born by the [buyer].
The [buyer] will refund [seller] fS 1,500 for recoverable expenses for the appeal.

III.    Notice:   - Law Office -------------- Bellinzona;
                        - Law Office ---------------Lugano.

          Notification to the Pretura of the Lugano District, Third Section.

On behalf of the Second Civil Chamber of the Court of Appeal
Chief                      Secretary


FOOTNOTE

* Francesco G. Mazzotta is an Associate in the New York office of Zini & Associates and Associate of the Institute of International Commercial Law of the Pace University School of Law.

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

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Pace Law School Institute of International Commercial Law - Last updated December 6, 2006
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