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Germany 21 January 1998 Appellate Court München (Insulating materials case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/980121g1.html]

Primary source(s) of information for case presentation: Case text

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Case identification

DATE OF DECISIONS: 19980121 (21 January 1998)


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

JUDGE(S): Unavailable


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

CASE HISTORY: 1st instance LG München (18 HKO 11092/96) 15 April 1997 [affirmed] [CISG overlooked]

SELLER'S COUNTRY: Italy (plaintiff)

BUYER'S COUNTRY: Germany (defendant)

GOODS INVOLVED: Thermal insulation material

Case abstract

GERMANY: Oberlandesgericht München 21 January 1998

Case law on UNCITRAL texts (CLOUT) abstract no. 297

Reproduced with permission from UNCITRAL

An Italian seller, plaintiff, sued a German buyer, defendant, for the unpaid purchase price for delivery of thermal insulation material. The buyer refused to pay the price arguing that the seller had granted a non-interest-bearing credit on goods for an indefinite time.

The court held that a non-interest-bearing credit on goods as mentioned above had to be regarded as an agreement modifying the provisions of article 58 CISG. According to article 58 CISG, the buyer shall pay the price when the seller places either the goods or the documents controlling their disposition at the buyer's disposal. In the court's view, the credit on goods had to be regarded as an indefinite extension of the time for payment granted by the seller, which the seller was not allowed to terminate unilaterally.

Nevertheless, the court allowed the claim. It held that the parties had jointly terminated the extension agreement. Therefore, payment was due in accordance with article 59 CISG.

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Classification of issues present

APPLICATION OF CISG: Yes [Article 1(1)(a)]


Key CISG provisions at issue: Articles 8 ; 9 ; 58 ; 59 [Also cited: Article 53] [Also relevant: Article 6 ]

Classification of issues using UNCITRAL classification code numbers:

8C [Interpretation in light of surrounding circumstances];

9B [Implied agreement on international usage: commercial letters of confirmation];

58A [Time for payment: buyer to pay when goods placed at buyer's disposition];

59A [Payment due at time fixed or determinable by contract or Convention: no need for request or other formality]

Descriptors: Intent ; Usages and practices ; Commercial letters of confirmation ; Burden of proof ; Price

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Editorial remarks

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Citations to other abstracts, case texts and commentaries


English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=297&step=Abstract>


Original language (German): cisg-online.ch <http://www.cisg-online.ch/cisg/urteile/536.htm; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=297&step=FullText>

Translation (English): Text presented below


English: [2005] Schlechtriem & Schwenzer ed., Commentary on UN Convention on International Sale of Goods, 2d (English) ed., Oxford University Press, Art. 4 para. 21 Art. 58 para. 2

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Case text (English translation) [second draft]

Queen Mary Case Translation Programme

Court of Appeal (Oberlandesgericht) München

21 January 1998 [7 U 3506/97]

Translation [*] by Veit Konrad [**]


Plaintiff [Seller] of Italy is involved in foreign trade in insulating materials. Defendant [Buyer] trades in such materials in Munich. The parties have engaged in business relations since 1989 / 1990.

[Seller] claims for the outstanding purchase price for insulating materials [Seller] had delivered in response to [Buyer]'s orders between 1993 and 1995. According to [Seller], a total amount of DM (Deutsche Mark) 356,192.17 had become due for these deliveries.

In 1991, [Seller] had granted a credit (Warenkredit) of DM 300,000.00 for [Buyer]'s purchases for an unlimited period of time. However, by 1993, this credit had been terminated and [Seller] sought to have [Buyer] pay its debts.

Proceedings in the first instance

Before the Court of First Instance, [Seller] claimed payment of:

   -    DM 356,192.17 for goods delivered;
   -    5% interest on the amount of DM 290,139.04 since 29 January 1996; and
   -    5% interest on the amount of DM 66,053.13 since 1 October 1996.

[Buyer] sought the dismissal of the [Seller]'s claim.

[Buyer] admitted an open debt of DM 328,636.29. [Buyer] alleged that the difference between this amount and [Seller]'s claim was due to payments made as well as set-offs, which were not taken into account by [Seller].

Although [Buyer] acknowledges an outstanding indebtedness of DM 328,636.29, [Buyer] denies that payments are due. In support of this, [Buyer] submitted the following:

      Due to [Buyer]'s plan to expand its business of distributing insulating materials within the German market, [Seller] in the summer of 1991 granted [Buyer] an interest-free credit (Warenkredit) of up to DM 300,000.00 for [Buyer]'s purchases. The credit was given for an indefinite period of time. At the same time, [Seller] granted [Buyer] a commission of 1.5 to 3% on all deliveries to German wholesalers arranged by [Buyer]. Between 1991 and 1994, [Buyer] arranged for [Seller]'s transactions of this kind in a total volume of more than 24 Million DM. Applying the minimum commission rate of 1.5 %, this amounts to commissions of at least DM 360,000.00.

As these commissions were yet to be set-off against [Buyer]'s outstanding debts -- as had been agreed by the parties -- [Seller] was not entitled to claim payment for its deliveries to [Buyer].

Moreover, [Seller] was liable to damages in an amount of DM 37,500.00. Contrary to a guarantee given to [Buyer] securing the right to exclusive supply of the Bavarian Market with certain insulating materials, since 1995, [Seller] had delivered a volume of at least DM 150,000.00 of these items to the Guttenberg firm in Bavaria. [Seller] is liable for [Buyer]'s resulting lost profits of DM 37,500.00.

[Buyer] alleged that [Seller]'s claim for payment for deliveries should be set-off against its claims for commissions and damages.

[Seller] denied the existence of [Buyer]'s claims for commissions and damages. [Seller] alleged that neither commissions of 1.5 to 3% nor the right to exclusive supply as concerns certain goods had been agreed.

The Court of First Instance (judgment of the District Court (Landgericht) of Munich I of 15 April 1997 (18 HKO 11092/96)) granted [Seller]'s claim in the amount of DM 355,215.67.

The Court reasoned as follows:

      Except for an amount of DM 976.50, [Seller] was entitled to the purchase price claimed for deliveries to [Buyer]. A set-off could only be declared in the amount of DM 976.50.

In its letter of 26 January 1996, [Seller] withdrew the credit of DM 300,000.00 that had been granted for [Buyer]'s orders. Consequently, by 29 April 1996 payment for [Buyer]'s purchases became due under 609(2) of the German Civil Code (Bürgerliches Gesetzbuch; BGB).

[Buyer] was not able to substantiate that the parties had agreed on commissions of the named kind. Neither could [Buyer] prove that [Seller] had contractually provided a guarantee securing to [Buyer] the right to exclusive supply of insulating materials for the Bavarian Market.

These findings are questioned in [Buyer]'s appeal (Berufung). [Buyer] acknowledges owing payment for deliveries received up to the amount granted in the first instance. However, [Buyer] denies that payment of this amount was due as it can be set-off against the damages and commissions [Buyer] claimed.

[Buyer]'s appeal (Berufung)

[Buyer] seeks to have the judgment of the Court of First Instance set aside and [Seller]'s claim dismissed. [Seller] seeks to have the First Instance's judgment upheld and the [Buyer]'s appeal dismissed.

[Seller] maintains its submissions before the Court of First Instance. In particular, [Seller] insists that [Buyer] was not able to substantiate its claims for commissions and damages for lost profits.

The Court of First Instance summoned Mrs. Schütter, Mrs. Berger, and Dr. Wieser as witnesses. Their testimonies have been recorded in the protocol of 11 March 1997 (Bl. 43/50).



[Buyer]'s appeal (Berufung) is unjustified. [Seller] is entitled to payment of DM 355,215.67 as the purchase price for delivered goods. This amount has become due. [Buyer] cannot declare this outstanding debt set-off with alleged commissions or damages for lost profits.

      1. The transactions between [Buyer] and [Seller] are governed by the CISG as both parties are seated within Contracting States to the Convention (Art. 1(1)(a) CISG).

Under Art. 53 CISG, [Buyer] is obliged to pay the price for insulating materials, which unquestionably had been delivered and invoiced. Payment of the indicated amounts has become due and [Buyer]'s obligation to pay the purchase price has not been suspended by contractual agreement:

The credit granted for purchases of up to DM 300,000.00 must indeed be interpreted as suspending payment for an indefinite period of time, thus deviating from Art. 58 CISG, which provides that payment is due at the time of delivery, respectively, at the time when the seller places the controlling documents at the buyer's disposition. This is indicated in [Seller]'s submission "having granted an indefinite suspension for an amount of up to DM 300,00.00 in 1991." The subsequent transactions were based on this agreement. [Seller] was not entitled to unilaterally revoke this contractually agreed credit, without reason -- as [Seller] had tried in 1993. [Seller]'s argument at the time, i.e., that [Buyer] was not performing its contractual duties anymore, has been rebutted by [Seller]'s own records, as submitted in [Seller]'s letter of 26 January 1993. [Seller]'s figures indicate that in 1993 [Buyer] had paid a total amount of DM 270,749.96 for deliveries received.

However, in October 1994 the credit agreement was modified by mutual consent of both parties. From that time, payment for ordered goods was due at the time of delivery. Hitherto accumulated debts could be discharged gradually. [Buyer] has never questioned these consensual modifications submitted by [Seller]. They are supported by the testimonies of Witnesses Berger and Schütter. Witness Berger declared that in a meeting on 26 October 1994 [Seller]'s managing director and [Buyer]'s owner discussed the squaring of [Buyer]'s debt and the way to execute future transactions. The outcome of this discussion had been sent to [Buyer] in a fax on 27 October 1994. Witness Schütter confirmed that since 1994 or 1995 [Seller] was pressing for the clearance of [Buyer]'s accumulated debt. All of this indicates that, during the negotiations on 26 October 1994, a contractually binding consensus was reached to adjust the business relations in a way that allowed for the continuation of deliveries to [Buyer], on the one hand, and, on the other hand, provided for a gradual squaring of the outstanding payments. Under commercial custom, [Buyer]'s remaining silent on receiving [Seller]'s fax, which summarized the changes made, also implies [Buyer]'s consent.

[Buyer]'s submission that the agreed repayment plan only concerned [Buyer]'s debt overreaching the amount of DM 300,000.00 is not supported by the testimony of the cited witnesses: Witness Schütter testified that Mr. Berger demanded that "the credit be cleared". Given her earlier submissions that a credit had been granted up to an amount of DM 300,000.00, this can only mean that Berger wanted [Buyer]'s entire debt to be repaid. The testimony of Mrs. Berger also does not suggest that repayment of the debt had only been intended to a limited extent. [Seller]'s fax of 27 October 1994 (attachment A 4) does not support [Buyer]'s version of the facts either.

Due to the modified contract, [Buyer] owes payment of DM 87,389.89 for the deliveries received in 1994, 1995, and 1996. According to Art. 59 CISG, this amount becomes due without the need of any request from [Seller].

Given [Buyer]'s explicit refusal to pay back the money, [Seller] may also demand the outstanding debts of 1993; [Buyer] thus cannot rely on the agreement of 26 October 1994 stipulating a gradual settlement.

      2. [Buyer]'s claim that [Seller]'s outstanding payments were to be set-off against promised commissions cannot be followed: The evidence taken does not establish beyond doubt whether such an agreement about commissions for transactions arranged with German wholesalers had been concluded in the summer of 1991. The testimony of Witness Schütter, given before the Court of First Instance, does indeed suggest that during the relevant conversations [Seller]'s managing director uttered strong interest in establishing contacts with German wholesalers through [Buyer]. It is, however, not conclusive as to whether [Seller] had actually asked [Buyer] to arrange such contacts and whether [Seller] proposed a commission to [Buyer] for that. Mrs. Schütter declared that the word "commission" had been dropped during the conversations: It was said that if [Buyer] arranged for transactions of a certain volume, commissions could be discussed. Mr. Berger had offered to talk about commissions after [Buyer]'s owner had asked for it first. It was agreed that commissions might be granted for the arrangement of future transactions. Their exact rate, however, had not been discussed. These inconclusive negotiations do not prove that [Seller] bindingly agreed -- either explicitly or implicitly -- to pay [Buyer] a commission for arranging transactions with German wholesalers. [Buyer]'s owner was not entitled to conclude from the vague proposal of [Seller]'s managing director that [Seller] had offered commissions in any legally binding way. The fact that [Buyer] never asked for records of commissions concerning transactions arranged since 1991 suggests that [Buyer] itself did not presume that commissions had been bindingly stipulated.

Witness Schütter need not be questioned again on these points. The Court of First Instance's taking and evaluation of evidence is correct and conclusive. A summoning of the parties to testify is also considered unnecessary.

[Buyer]'s claim for damages of DM 37,500.00 does not materialise, either.

[Buyer] was not able to prove that [Seller] guaranteed [Buyer] the right to exclusive supply of the Bavarian Market as concerns certain insulating materials. Hence, [Seller]'s deliveries of these items to the Bavarian firm Guttenberg do not entitle [Buyer] to damages of any kind. This is true irrespective of whether before 1995 it had been [Buyer] who had exclusively supplied this customer.

[Buyer]'s request for a questioning of the parties as provided under 445 of the German Code of Civil Procedure (Zivilprozessordnung; ZPO) cannot be granted because [Buyer] failed to precisely name the facts that such evidence would sustain. The broad presumption that [Seller] had guaranteed [Buyer] the right to exclusive supply of its Bavarian customers (Bl. 94) -- without specifying the concrete circumstances under which such agreement might have been reached -- does not suffice to initiate a new taking of evidence: Through its undistinguished submissions, [Buyer] cannot use the Court to inquire into facts, for which [Buyer] bears the burden of proof (Verbot des Ausforschungsbeweises).

      3. The interest due is determined by 352 and 353 of the German Commercial Code (Handelsgesetzbuch; HGB).

      4. In all other points, the Court's decision relies upon 97, 546(2), 708 No.10, 711 of the German Code of Civil Procedure (Zivilprozessordnung; ZPO).



* All translations should be verified by cross-checking against the original text. For purposes of this presentation, the Plaintiff-Appellee of Italy is referred to as [Seller]; the German Defendant-Appellant is referred to as [Buyer].

** Veit Konrad has studied law at Humboldt University, Berlin since 1999. During 2001-2002 he spent a year at Queen Mary College, University of London, as an Erasmus student.

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