Austria 11 September 1997 Supreme Court (Carpets case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/970911a3.html]
DATE OF DECISIONS:
CASE NUMBER/DOCKET NUMBER: 6 Ob 187/97m
CASE HISTORY: 1st instance Bezirksgericht Graz (GZ 24 C 2203/96w-7) 19 December 1996); 2d instance Landesgericht Graz (GZ 6 R 94/97f-15) 24 March 1997
SELLER'S COUNTRY: Germany [plaintiff]
BUYER'S COUNTRY: Austria [defendant]
GOODS INVOLVED: Carpets
AUSTRIA: Oberster Gerichtshof 11 September 1997
Case law on UNCITRAL texts (CLOUT) abstract no. 307
Reproduced with permission from UNCITRAL
A German seller, plaintiff, sold carpets to an Austrian buyer, defendant. Upon the buyer's failure to pay the price, the seller declared the contract avoided, and, based on its reserved title on the carpets, claimed the restitution thereof.
The court found that the seller failed to fix an additional period of time for performance by the buyer, before it effectively declared the contract avoided as provided by articles 63(1) and 64(1)(b CISG. However, the contract was avoided, due to the buyer's implicit agreement as to the avoidance of the contract.
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APPLICATION OF CISG: Yes [Article 1(1)(a)]
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue: Articles
Classification of issues using UNCITRAL classification code numbers:
63A [Notice fixing additional final period for performance]; 64A [Seller's right to avoid contract: grounds for avoidance (implicit agreement as to avoidance)]
63A [Notice fixing additional final period for performance];
64A [Seller's right to avoid contract: grounds for avoidance (implicit agreement as to avoidance)]
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Excerpt from analysis of Austrian case law by Willibald Posch & Thomas Petz*
* "Austrian Cases on the UN Convention on Contracts for the International Sale of Goods", 6 Vindobona Journal of International Commercial Law and Arbitration (2002) 1-24, at 19-20.
Avoidance ; Nachfrist. "On 11 September 1997 and on 28 April 2000, the Austrian Supreme Court rendered decisions on the fixing of an additional period of time for performance. In the earlier decision [this case], it held in ambiguous language that CISG, which is applicable on the merits of the case, 'also' required that an additional period of time for performance was fixed and the contract declared void according to Articles 63(1) and 64(1)(b) CISG.
"In the [28 April 2000] decision [see <http://cisgw3.law.pace.edu/cases/000428a3.html>], the Court stated that, according to Article 63 CISG, the seller was entitled to fix an additional period of time of reasonable length for performance, and, if the buyer either failed to pay the purchase price within this additional period or refused to pay at all, the seller might unilaterally declare the contract void. The Court emphasized that there are no formal requirements for this declaration of avoidance and that it must not fix a time limit. What has to be clearly expressed, however, is that neither party shall remain bound by the contract."
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CITATIONS TO OTHER ABSTRACTS OF DECISION
English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=475&step=Abstract>
German: Österreischische Zeitschrift für Rechtsvergleichung (1997) 245, No. 83;  ecolex - Fachzeitschrift für Wirtschaftsrecht 331
CITATIONS TO TEXT OF DECISION
Original language (German): CISG-Austria website <http://www.cisg.at/6_18797m.htm>; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=475&step=FullText>; Juriststiche Blätter (2000) 729
Translation (English): Excerpt from text presented below
CITATIONS TO COMMENTS ON DECISION
English: Willibald Posch & Thomas Petz, 6 Vindobona Journal of International Commercial Law and Arbitration (2002) 1-24, at 19-20 [English translation of German commentary cited below] [Go to these commentaries for an excellent comprehensive analysis of Austrian case law on the CISG]; Pilar Perales, Case cited at n. 12 in Presentation on Nachfrist at September 2005 seminar in Singapore
German: Willibald Posch & Ulfried Terlitza, Internationales Handelsrecht (2001) 47-56, at relevant pageGo to Case Table of Contents
Queen Mary Case Translation Programme
11 September 1997 [6 Ob 187/97m]
Translation by [*] Dr. Peter Feuerstein [**]
Edited by Jan Henning Berg [***]
[Buyer purchased carpets from seller and did not fully pay for them. Seller unsuccessfully sought return of the unpaid carpets. This translation is an excerpt limited to CISG issues associated with buyer's appeal of a ruling in favor of the seller.]
... The final appeal by [Buyer] is rejected.
FACTS AND PRIOR JUDGMENTS
... In May 1996, [Seller] of Germany sold carpets to [Buyer] of Austria for DM [Deutsche Mark] 70,193.85 ... The first two installments of the purchase price were not paid by [Buyer] when they became due. [Seller] declared the avoidance of the contract and requested the return of 209 carpets. Some of the carpets were returned to [Seller]. The remaining carpets were not sent back. [Buyer] had sold part of the carpets, having an equivalent purchase value of DM 3,000. On 17 October 1996 [Seller] received a partial payment of DM 5,000.
The understanding of the Court of First Instance ... was that the ... [Seller], after the nonpayment of the promissory notes at the time of presentation, had requested ... immediate payment of the due amount of DM 45,000. As [Buyer] was unable to pay this amount, [Seller] declared the avoidance of the contract and requested the return of the carpets. Carpets with a face value of DM 32,229.15 were returned. The remaining carpets with a face value of DM 37,964.70 were supposed to be sent to [Seller], but this did not happen. Therefore, [Seller] again declared the avoidance of the contract. Also the amount of the third promissory note of DM 25,193.85, with a due date of 15 October 1995, was not paid. Only on 17 October 1996 an amount of DM 5,000 was credited to the account of [Seller]. ...
The Court of Appeals decided that the value of the items is above 50,000 sA [Austrian Schillings] and that the orderly final appeal is permissible.
REASONING OF THE FEDERAL SUPREME COURT OF AUSTRIA
[The Supreme Court dismissed the final appeal by Buyer.]
[Seller] is a company having its place of business in Germany, [Buyer] is a company having its place of business in Austria. It has to be examined which substantive law ... has to be applied. According to § 36 IPRG [*], the relevant law is the law of the State in which the party who is not a monetary debtor is domiciled. This would lead to the application of German law. But Germany and Austria are Contracting States to the CISG (BGBl. 1988(96) (= Federal Law Gazette). According to Art. 1(1)(a) of the Convention, the CISG is to be applied to contracts for the sale of goods between parties whose places of business are in different Contracting States. The CISG has thus to be applied.
The legal prerequisites and legal effects of an avoidance of the contract for default by the debtor are regulated in Austrian law (§§ 918, 921 ABGB [*]) mainly the same way as in German law (§§ 326 BGB [*]). An effective avoidance requires among other things the setting of a deadline, a threat of the avoidance and the declaration of the avoidance after the ineffective expiration of the set deadline. Also, the applicable CISG requires for the avoidance by the seller an additional period of time for performance by the buyer and a declaration of avoidance by the seller (Art. 63(1), 64(1)(b) CISG). A fixing of an additional period of time by the seller as well as the threat of an avoidance could not be found. On the contrary, it seems that there was an immediate declaration of avoidance after the default. However, by this, nothing is gained in favor of [Buyer], as the Court of First Instance (at least plausibly) found an approval by the [uyer] to the declaration of avoidance and to the recission of the contract of sale of goods ... By this, the right to claim restoration is certified ... Also, the part payment effected after the accepted avoidance is not able to change this appreciation. ...
Due to the lack of legal issues the appeal by the [Buyer] has to be dismissed.
* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Plaintiff / Respondent of Germany is referred to as [Seller], and the Defendant / Appellant of Austria as [Buyer]. Monetary amounts in German currency (Deutsche Mark) are indicated by [DM].
Translator's note on other abbreviations: ABGB = Allgemeines Bürgerliches Gesetzbuch [Austrian Civil Code]; BGB = Bürgerliches Gesetzbuch [German Civil Code]; IPRG = Gesetz über das Internationale Privatrecht [Austrian Code on Private International Law].
** Peter Feuerstein is an International Legal Consultant. He conducted his post graduate studies at Cambridge University, England, where he researched at Clare College in preparation of his Doctoral Dissertation. He received his Dr. jr. from Philipps-University of Marburg, Hessia, Germany.
*** Jan Henning Berg is a law student at the University of Osnabrück, Germany, who participated in the 13th Willem C. Vis Moot with the Osnabrück team. He has coached the team of the University of Osnabrück for the 14th Willem C. Vis and the 4th Willem Vis (East) Moot.Go to Case Table of Contents