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CISG CASE PRESENTATION

Belgium 4 November 1998 Appellate Court Antwerp (I.S. Trading v. Vadotex) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/981104b1.html]

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

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Case identification

DATE OF DECISIONS: 19981104 (4 November 1998)

JURISDICTION: Belgium

TRIBUNAL: Hof [Appellate Court] van beroep Antwerpen

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: 1995/AR/1558

CASE NAME: C.V. I.S. Trading v. B.V. Vadotex

CASE HISTORY: 1st instance Rb van koophandel te Hasselt 20 March 1995 [partly reversed]

SELLER'S COUNTRY: Netherlands (plaintiff)

BUYER'S COUNTRY: Belgium (defendant)

GOODS INVOLVED: Unavailable


UNCITRAL case abstract

BELGIUM: Hof van Beroep Antwerp (I.S. Trading v. Vadotex) 4 November 1998

Case law on UNCITRAL texts [A/CN.9/SER.C/ABSTRACTS/103],
CLOUT abstract no. 1018

Reproduced with permission of UNCITRAL

Abstract prepared by Rebecca Emory and Andrea Vincze

A Belgian buyer, the defendant, ordered goods from a Dutch seller, the plaintiff. The buyer noted deficiencies of the goods, only vaguely describing the defects and stating that it was forced to give considerable price reduction to its own buyers. The Court of Appeals held that the CISG was applicable to the case under Article 1 (1)(b).

The seller claimed that it never received the letter of complaint; however, the Court regarded it as proven that the buyer sent the letter and the seller did receive it within a reasonable time as required by Article 39 (1) CISG. The Court also found that despite the complaint being sent later than the standard deadline in the general conditions, it was timely under Article 39 CISG because application of the CISG was not excluded in the standard conditions.

The Court found that the buyer may not claim damages under Article 74 CISG because the underlying defects were not proved sufficiently.

The buyer did not claim delivery of substitute goods (Article 46 CISG), nor avoidance or partial avoidance of the contract (Articles 49 and 51 CISG) and therefore, was only entitled to reduction of the price. The Court held the seller properly reduced its price pursuant to Article 50 CISG. The Court ordered the buyer to pay the seller damages and interest under Article 78 CISG, in accordance with the relating provisions of the general conditions.

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Case outline

Reproduced with permission from CISG-Belgium database of Katholieke Universiteit Leuven

Application of CISG – Rules of Private International Law of the forum referring to law of Contracting State (Article 1 (1)(b)) - Convention on the Law Applicable to the Contracts for the International Sale of Goods (Hague PIL Conference, June 15, 1955, Article 3) -Dutch law applicable as law of the seller CISG part of Dutch law at time contract was concluded (October 1992) – CISG applicable (Article 1(1)(b)).

Conformity of the goods - Lack of conformity - Buyer’s obligation to give seller notice of conformity of goods – Buyer gave notice 20 days after delivery – General conditions of seller provide that notice must made done 14 days after delivery – Court finds notice timely because general conditions did not exclude application of Articles 38 and 39 CISG

Damages – Buyer already resold the goods and claims difference between price he received and price he owes – No evidence of damage suffered by buyer – no damages granted

Price reduction – Article 50 – Price reduced with amount corresponding to damaged goods

Interests – Article 78 CISG - General conditions of seller state interest rate of 12 % - contractual interest rata applied

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Classification of issues present

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

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles 38 ; 39(1) ; 50 [Also cited: Articles 46 ; 49 ; 51 ; 74 ; 78 ]

Classification of issues using UNCITRAL classification code numbers:

38A [Buyer's obligation to examine goods: time for examining goods];

39A2 ; 39A11 [Requirement to notify seller of lack of conformity: buyer must notify seller within reasonable time; Degree of specificity required];

50A [Buyer's right to reduce price for non-conforming goods]

Descriptors: Examination of goods ; Lack of conformity notice, timeliness ; Lack of conformity notice, specificity; Reduction of price, remedy of

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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=810&step=Abstract>

CITATIONS TO TEXT OF DECISION

Original language (Dutch): CISG-Belgium database of Katholieke Universiteit Leuven <http://www.law.kuleuven.ac.be/ipr/eng/cases/1998-11-04.html; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=810&step=FullText>>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

Dutch: Van Houtte, [1999] Revue de droit commercial belge / Tijdschrift voor Belgisch handelsrecht (RDC/TBH) 133-134

English: CISG-AC advisory opinion on Examination of the Goods and Notice of Non-Conformity [7 June 2004] (this case and related cases cited in addendum to opinion); [2004] S.A. Kruisinga, (Non-)conformity in the 1980 UN Convention on Contracts for the International Sale of Goods: a uniform concept?, Intersentia at 88; 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. 50 para. 4

French: Van Houtte, [1999] RDC/TBH 133

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Case text (English translation) [second draft]

Queen Mary Case Translation Programme

Hof van Beroep [Court of Appeals] Antwerp
C.V. I.S. Trading [Buyer] v B.V. Vadotex [Seller]

4 November 1998 [1995/AR/1558]

Translation [*] by Kristof Cox [**]

[...]

The Court of First Instance has accurately explained the [Seller]'s claim. The Court therefore refers to that.

The Court of First Instance did not accept the [Buyer]'s defense since the [Buyer] did not prove that it sent its letter of protest of 18 November 1992 against the invoice of 30 October 1992 and that [Seller] received this notice. The invoice was considered to be accepted.

In so ruing, the Court of First Instance applied Belgian law. The parties have not explicitly disputed the applicability of Belgian or Dutch law in their memoranda in the first instance. [Seller] did, however, specifically refer to the applicability of [Seller]'s general conditions on the invoice, without explicitly stating that these general conditions provide for the applicability of Dutch law.

It is not disputed that the contract between the parties is for an international sale of goods.

[THE APPLICABLE LAW]

First of all, the law applicable to the contract between the parties has to be determined.

   -    For the first time on appeal, [Buyer] states that the Hague Sales Convention of 1 July 1964 [ULIS] is applicable.
 
   -    [Seller], relying on the Hague Convention of 15 June 1955, states that Dutch law is applicable but that, as [Seller] stated at the hearings of 9 September 1998, ULIS was no longer part of the substantive Dutch law at the time the contract was concluded, and therefore the CISG must be applied as part of the substantive Dutch law. The [Buyer] agrees that Dutch law is applicable. Moreover, lacking any choice of law by the parties, this law is indicated by the choice of law rule in Article 3 of the Hague Convention of 15 June 1955 since the order was received by [Seller] at its place of business in the Netherlands;
 
   -    The contract was dated October 1992 (the goods were delivered on 29 October 1992 and the invoice sent on 30 October 1992). The Netherlands withdrew from the ULIS Convention on 1 January 1991 so that, according to Article XII, § 2, it ceased being applicable in the Netherlands on 1 January 1992 and, on 1 January 1992, the CISG entered into force in the Netherlands (see J. Meeusen, "De internationale koopovereenkomsten en het overgangsrecht", case not under Commercial Court Hasselt 30 March 1994, R.W. 94-95, 264). Accordingly, on the date the contract between the parties was concluded, the CISG was part of the substantive Dutch law.

The CISG is therefore applicable to the case at hand.

[THE MERITS OF THE PROCEEDING]

[Buyer] alleges that:

   -    On 18 November 1992, [Buyer] sent a letter of protest to [Seller] about the goods that were delivered on 29 October 1992 and for which an invoice was sent on 30 October 1992; and that
 
   -    This letter stated that the entire delivery was sent to the customer of [Buyer] and that shortages (quantity not high enough), differences (differences in material) and faults (damaged and dirty goods) were found.

[Seller] alleges that it has not been able to track this letter of protest in its administration. [Seller] further states that it may be doubted whether this letter of protest was ever sent. However, since all other correspondence in this case was in fact received by [Seller] or its credit insurer, it seems that [Seller]'s administration is a bit sloppy ([Seller] initially relied on the general conditions, as to which it is now conceded that these only became applicable a long time after the contract between the parties. [Seller] no longer has the carbon copy of the order of [Buyer]). This Court regards it as proven that [Buyer] did send the letter of protest and that [Seller] did receive it;

Under Article 38 CISG, the buyer must examine the goods within as short a time as is practicable under the circumstances and, under Article 39(1) CISG, the seller must give notice within a reasonable time after the discovery of the non-conformity;

[Seller] has shown a copy of the front of the order of the disputed delivery, together with an original order from another customer of a few months later.

   -    The comparison between these two documents shows that the lay-out is identical in every detail;
 
   -    Therefore, it is assumed that the latter document contains the same summary of the general conditions on the backside as those that were present on the back of the order signed by [Buyer];
 
   -    Moreover, both documents refer explicitly and in the same wording on the front to the general conditions on the back;

These general conditions provide that protest must be made known within fourteen days after delivery/invoice. In this case, the protest was dated, respectively, twenty days after delivery and nineteen days after the invoice. This limited exceeding of the times provided in the general conditions is not of the kind that it ought to deny [Buyer] all rights to protest, now that it does not seem clearly from these conditions that they are subject to strict application.

Moreover and most importantly, these general conditions do not show that the parties agreed to exclude the CISG or some of its provisions. To the contrary, the general conditions explicitly state that the applicability of all other general conditions is excluded (which is not relevant in this case) and that "Dutch law is applicable excluding the Uniform Code of Sale (Code of 15 December 1971, C 780 and C 781)." The CISG does not fall under this exclusion. Accordingly, the general conditions in the provide for the applicability of Dutch law, including the CISG;

That which is mentioned further on under, i.e., "Liability" and "Publicity" is not phrased as applicable in exclusion of the provisions of the CISG. A contractual exclusion of the rules provided in a statute cannot be assumed. In the case at hand, the statutory provisions count when there is a conflict between the general conditions and the statutory conditions of Dutch law, in this case, the CISG.

The detailed protest of [Buyer] on 18 November 1992 conforms with the provisions of the CISG, because it was provided within as short a term as practicable under the circumstances specifying the nature of the lack of conformity.

Taking into account the amount on the invoice of 12,170.80 Dutch florins [NLG] and the payments amounting to 8,155.35 NLG, it is the position of [Buyer] that:

   -    The [Buyer] owes nothing more because - taking into account the defects - [Buyer] has already paid more than enough.
 
   -    The claim of [Seller] must be declined. As a result, the [Buyer] is entitled to price reduction/damages amounting to the difference between both amounts, being 4,015.45 NLG;

The damage that [Buyer] could suffer is a financial loss, since [Buyer] announced in its letter to the credit insurer of [Seller] that [Buyer]'s customer preferred to keep the delivery, but forced [Buyer] to grant a considerable price reduction given the defects in the delivery. However, in an earlier letter to [Seller] dated 28 April 1993, [Buyer] had stated that [Buyer]'s customer kept returning goods. No other description of the said defects to the goods was given other than the one in the original letter of protest. Thus, only the defects mentioned in that letter can be taken into account. The said taking back by [Buyer] of the goods of his customer cannot be taken into account either, since such a taking back is not proven and contradicts the later statements. Moreover, [Buyer] has never formulated any claim for taking back the goods by [Seller].

Taking into account the price of the goods that were lacking or defective, it is immediately clear that the price reduction / damages amounting to 4,015 NLG is not in balance with the price of those goods as mentioned on the invoice of [Seller]. Referring to the invoice and the amicable offer of [Seller], as described in the attachment to the letter of 13 July 1993 of the credit insurer of [Seller], it is found that the price of the lacking, non-conforming and damaged goods amounts to 1,029.22 NLG.

[Buyer] does not provide any proof of the reductions it had to give its customer, so that it is not even known what the exact amount is of the alleged damage of [Buyer].

[Buyer] cannot claim damages as provided in Article 74 CISG, which states that loss of profit can be taken into account.

That [Buyer] does not claim delivery of substitute goods (cf. Article 46 CISG), nor avoidance or partial avoidance of the contract (cf. Articles 49 and 51 CISG). That the only alternative is reduction of the price, so that the point of view of [Buyer] as described earlier on should be considered as a claim for price reduction.

Considering that the only reasonable and concrete norm for reduction of the prices charged by [Seller] can be found in the amicable offer of 13 July 1993, which was not accepted by [Buyer] because it contained a contribution of 300 NLG for costs and interest payable by [Buyer].

The offer was that the lacking goods would not be charged and that the non-conforming and damaged goods would be charged at half of the price, which results in a price reduction of 695.13 NLG. This conforms to the norm of Article 50 CISG for price reduction, namely, a reduction in the same proportion as the value that the goods actually delivered had at the time of the delivery.

That [Seller] has conceded the defects in the delivery by not rebutting the protest of [Buyer] and by its amicable offer.

The sum due to [Seller] is 4,015.45 - 695.13 = 3,320.32 NLG;

[Buyer] wrongly denies that interest and a fixed supplement to the amount of the invoice is due. The CISG provides for the possibility of interest (Article 78) and damages (Articles 74 to 77) for the seller in case the obligation to pay is not fulfilled.

The interest rate and supplement are determined in the general conditions that were accepted by [Buyer] by signing the order. That the conventional interest rate is 12 % per year Since [Seller] did not appeal this decision of the Court of First Instance; the supplement, reduced by [Seller] in the first instance to 10 %, should also remain accorded, since it appears from none of the elements that an originally higher supplement would be against the Dutch public policy and would not be subject to reduction.

[...]

FOR THOSE REASONS

THE COURT

[...]


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff of Netherlands is referred to as [Seller] and Defendant of Belgium is referred to as [Buyer]. Amounts in the former currency of Netherlands (Dutch florin) are indicated as [NLG].

** Kristof Cox is a researcher at the Institute for International Trade Law at the Catholic University of Leuven (Belgium). He is preparing a Ph.D. on the effects of an arbitration award on third parties. Further, he regularly publishes articles and case notes on the CISG and International Commercial Arbitration. Kristof Cox can be contacted at <Kristof.cox@law.kuleuven.be>.

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Pace Law School Institute of International Commercial Law - Last updated March 18, 2011
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