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CISG CASE PRESENTATION

Germany 24 March 1999 District Court Flensburg (Meat case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/990324g2.html]

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

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Case identification

DATE OF DECISION: 19990324 (24 March 1999)

JURISDICTION: Germany

TRIBUNAL: LG Flensburg [LG = Landgericht = District Court]

JUDGE(S): Unavailable

CASE NUMBER/DOCKET NUMBER: 2 O 291/98

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

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Germany (plaintiff)

BUYER'S COUNTRY: France (defendant)

GOODS INVOLVED: Meat


Case abstract

GERMANY: Landgericht Flensburg 24 March 1999

Case law on UNCITRAL texts (CLOUT) abstract no. 377

Reproduced with permission of UNCITRAL

A German seller, the plaintiff, delivered meat products to a French buyer, the defendant. When the buyer failed to pay the purchase price the seller sued. After the proceedings had started, the buyer paid part of the purchase price. It objected to the court’s jurisdiction and declared that the meat had been undetectably perished when it arrived and therefore had been returned by its customers. As to the delayed payment, the buyer argued that its cheque had been returned dishonoured. The seller reduced its demand and claimed damages for inadmissible delay instead.

The Court found to have jurisdiction according to article 5(1) of the Brussels Convention on Jurisdiction and Enforcement of Judgements in Civil and Commercial Matters. Thereunder jurisdiction is dependant upon the place of performance. The Court determined the place for payment under article 57(1)(a) CISG at the seller’s place of business in Germany. It refused to consider the place where the handing over of the goods took place under article 57(1)(b) CISG because payment had not to be made against the handing over of the goods or of documents in the case at hand.

The Court allowed the claim under article 53 CISG because the outstanding purchase price was due under article 58 CISG. The buyer was not entitled to reduce the purchase price under article 50 CISG for non-conformity of the goods. As the parties did not agree otherwise, the seller had to hand over the goods to the first carrier (article 31(a) CISG). The seller handed over the goods accordingly and therefore the risk passed to the buyer pursuant to article 36 and article 66 CISG. The Court left open whether the goods had been defective at this moment or not. As the buyer accepted the goods without objecting to its quality, it had to prove that the goods did not conform to the contract when the risk passed; however, the buyer failed to do so. The Court also left open the issue of whether the buyer lost his right to rely on a lack of conformity because of its failure to give notice within reasonable time (article 39 and 40 CISG).

The Court granted interest pursuant to article 78 CISG and established the rate of interest under German law.

As to the lateness of payment, the Court held that the buyer was entitled to claim damages under article 74 CISG. The Court was of the opinion that CISG does not govern the period of time for payment. Thus, the Court established it according to the rules of private international law under German law according to which the payment had been delayed in an inadmissible way.

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Classification of issues present

APPLICATION OF CISG: Yes

APPLICABLE CISG PROVISIONS AND ISSUES

Key CISG provisions at issue: Articles: 31(a) ; 36 ; 50 ; 57 ; 58 ; 66 ; 74 ; 78 [Also cited: Articles: 39 ; 40 ; 53 ]

Classification of issues using UNCITRAL classification code numbers:

31A1 [Place for delivery (contracts involving carriage of goods): obligation to hand goods to first carrier];

36A [Time for assessing conformity of goods (as of time when risk passes to buyer): burden on buyer to prove lack of conformity existed at that time];

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

66A [Passing of risk: conformity of goods determined at time risk passes];

74A [Damages for late payment: court held that covered by Article 74, but the determination of when such a delay is relevant is left to the applicable domestic law];

78B [Rate of interest: determined according to rules of private international law]

Descriptors: Jurisdiction ; Payment, place of ; Delivery ; Conformity of goods ; Burden of proof ; Reduction of price, remedy of ; Price ; Passage of risk ; Damages ; Interest

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Editorial remarks

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Citations to case abstracts, texts, and commentaries

CITATIONS TO ABSTRACTS OF DECISION

(a) UNCITRAL abstract: Unavailable

(b) Other abstracts

English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=930&step=Abstract>

CITATIONS TO TEXT OF DECISION

Original language (German): cisg-online.ch database <http://www.cisg-online.ch/cisg/urteile/719.htm>; see also Internationales Handelsrecht (5/2001) 202; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=930&step=FullText>

Translation (English): Text presented below

CITATIONS TO COMMENTS ON DECISION

English: Liu Chengwei, Recovery of interest (November 2003) n.97; Larry A. DiMatteo et al., 34 Northwestern Journal of International Law & Business (Winter 2004) 299-440 at n.608; 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. 31 para. 18 Art. 50 para. 15

French: Witz, Dalloz (2000), n. 42, 435-437

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Case text (English translation)

Queen Mary Case Translation Programme

Landgericht Flensburg 24 March 1999

Translation [*] by Ruth M. Janal [**]

Edited by Jan Henning Berg [***]

FACTS OF THE CASE

Plaintiff [Seller] maintains an independent subsidiary in Husum [Germany], which is responsible for the sale of its slaughter products, that is, beef and lamb. Defendant [Buyer] is a corporation under French law which trades in meat products.

In March of 1998, [Buyer] bought from [Seller] meat products and innards for a total amount of 34,296.22 DM [Deutsche Mark]. According to invoice issued on 30 March 1998, [Buyer] bought additional meat products for DM 5,850.85. [Seller] demanded payment of the purchase price after the deliveries had been made. Despite repeated requests for payment in April and May of 1998, [Buyer] initially failed to pay the purchase price with respect to a sum of 37,923.22 DM.

[Seller] filed a claim for the remainder of the purchase price on 9 July 1998. At the end of July 1998, in the time period between [Seller]'s filing of the statement of claim and the delivery of its legal brief to [Buyer], [Buyer] sent [Seller] a check for the amount of 34,296.22 DM, which was cashed by [Seller]. Thereupon, [Seller] withdrew its claim with respect to this amount and now claims reimbursement of costs accrued due to the withdrawal of the claim (in the amount of DM 3,260.-). [Seller] further demands payment of the unpaid residual purchase price of DM 3,627.- from the invoice of 30 March 1998. [Seller] submits that it performed its obligation under the contract by handing over the conforming goods to a carrier for transmission to [Buyer] on 27 July 1998. The consignment note issued on the very day undisputedly documents this. [Seller] further submits that [Buyer] is obliged to pay interest on the purchase price for delay in payment.

POSITION OF THE PARTIES

[Seller]'s claim

[Seller] requests the Court to order [Buyer] to pay [Seller] an amount of 3,627,- DM with interest of 12% from 20 April 1998 as well as 12% interest:

-   on DM 2,193.26 from 30 March 1998
-   on DM 7,639.20 from 30 March 1998
-   on DM 4,117.04 from 31 March 1998
-   on DM 6,952.08 from 31 March 1998
-   on DM 7,982.92 from 6 April 1998; and
-   on DM 5,411.72 from 6 April 1998.

[Seller] further requests that the Court order [Buyer] to pay [Seller] an amount of DM 3,260.- as reimbursement for the partial withdrawal of the claim.

[Buyer]'s response to the claim

[Buyer] requests the Court to dismiss [Seller]'s claim and order [Seller] to bear the cost of the proceedings with respect to the partial withdrawal of claim.

[Buyer] objects to the local jurisdiction of the Landgericht (District Court) Flensburg. [Buyer] is of the opinion that it was not in arrears with the payment of the purchase price. [Buyer] submits that it had already sent [Seller] a check for DM 34,296.22 on 24 March 1998. After this check had inexplicably been returned to [Buyer], it sent a second check on 6 April 1998. Afterward it emerged that [Seller] had not cashed this check for reasons unknown, but had sent [Buyer] a request for payment instead. By fax dated 24 June 1998, [Buyer] undisputedly agreed to make out and send a new check. [Buyer]'s consent was given under the condition that [Seller] declared that it would not to cash the check sent in April of 1998, should that check turn up. Shortly afterward. [Buyer] received the respective declaration, [Seller] had filed the claim without waiting for the receipt of the announced check. After the check made out on 6 April 1998 had been stopped, [Buyer] sent [Seller] a new check at the end of July 1998. This check has undisputedly been cashed.

[Buyer] furthermore submits that it is entitled to a reduction of the purchase price in the amount of DM 3,267.- with respect to the invoice of 30 March 1998. The goods delivered on 26 March 1998 did not conform to the contract -- a fact that had not been apparent when taking delivery. The goods were delivered to [Buyer]'s customer on the same day and refused by the customer as non-conforming with letter of 9 April 1998. [Buyer] alleges that the goods were expertly and sufficiently cooled after they had been handed over to carrier. Thus, they must have been treated inadequately prior to that point in time and consequently were already non-conforming before the risk passed to [Buyer]. All of the spoiled goods had been destroyed in the meantime.

With respect to the further submissions of the parties, the Court refers to the content of the memoranda.

REASONING OF THE COURT

I.    [Seller]'s claim is admissible. Apart from the fact that [Buyer] did not object to the Court's jurisdiction during the hearing (§ 39 ZPO [*]), the Court possesses jurisdiction under Art. 5 no. 1 of the Brussels Convention.[*] The place of performance for [Buyer]'s obligation to pay the purchase price was [Seller]'s place of business following Art. 57(1)(a) of the United Nations Convention on Contracts for the International Sale of Goods (CISG), which is the law governing the contract. [Buyer]'s submission that, following Art. 57(1)(b), it was bound to pay the price at the place where the handing over of the goods took place, is incorrect. Undisputedly, [Seller]'s delivery constituted an advance performance; payment was thus not to be made against the handing over of the goods or of documents.

II.   [Seller]'s claim is predominantly justified. [Seller] is entitled to payment of the remainder of the purchase price in the amount of DM 3,627.-. Payment is due following Art. 58 CISG.

The purchase price is not to be reduced under Art. 50 CISG, as it cannot be ascertained that the goods were non-conforming at the decisive point in time.

Under the contract, the seller was not bound to deliver the goods at any particular place; the sale is therefore to be considered a contract involving the carriage of goods under Art. 31(a) CISG. [Seller] fulfilled its obligation to deliver the goods by handing them over to the carrier for transmission to the buyer. According to Arts. 66, 36 CISG, [Seller] is not liable for any lack of conformity or destruction of the goods which occurs after the passing of risk, unless this is due to an act or omission on its part.

It is unclear in the present dispute whether the goods conformed to the contract at the time when the risk passed to [Buyer], or whether a non-conformity which was due to a breach of [Seller]'s obligations occurred after this point in time. This uncertainty goes to the disadvantage of [Buyer]. After [Buyer] accepted the goods without giving notice under Art. 39 CISG, it bears the burden of proof for the non-conformity of the goods at the time of the passing of risk (cf. v. Caemmerer/Schlechtriem, Art. 35 n. 49). It cannot be ruled out that the goods were spoiled during transport or due to improper treatment after [Buyer] delivered the goods to its customer on 27 March 1998. The latter possibility in particular cannot be excluded, as [Buyer]'s customer queried the goods on 9 April 1998, even though it had already received the goods on 27 March 1998. The Court informed [Buyer] during the hearing on 10 March 1999 that it did not sufficiently substantiate whether the goods were properly treated during that period of time. Insofar as [Buyer] relies on the unnamed witness N.N. for a correct treatment of the goods both during transport and after delivery to [Buyer]'s customer, this is an insufficient and therefore irrelevant offer of proof. [Buyer] was at least held to submit why it was unable at that time to provide the Court with the name and address of the witness (cf. Zöller/Greger, § 356 ZPO [*] n. 4).

In view of the above, the Court does not need to discuss whether [Buyer] lost the right to rely on the non-conformity under Arts. 39 and 40 CISG (quite possible, as [Buyer] failed to discover and notify [Seller] of the defect immediately after [Buyer] received the goods on 26 March 1998, but sent such a notification only with fax of 10 April 1998).

[Seller] is entitled to interest on the purchase price under Art. 78 CISG in connection with § 352 HGB.[*] Under Art. 78 CISG, [Seller] has a right to interest on the purchase price in arrears without sending a request for payment. After [Buyer] had received the goods, it was bound to pay the purchase price at the time stipulated in the invoices (Art. 58 CISG). As the CISG does not settle the rate of interest, national law, that is § 352 HGB, applies (cf. v. Caemmerer/Schlechtriem, Art. 78 n. 27 and 32). [Seller]'s claim for interest is thus legitimate with respect to 5%, whereas [Seller] did not prove that it suffered a higher damage.

[Seller] is further entitled to damages in the amount of the costs accrued with respect to the claim it has withdrawn. Art. 74 CISG grants damages for any breach of contract, including delay of payment (cf. Art. 78 and v. Caemmerer/Schlechtriem, Art. 74 n. 16). The CISG does not settle at what point in time a delay in payment is to be considered culpable. Therefore, the matter is to be settled under German law, which is the law governing the contract in the absence of the CISG (see Art. 28 EGBGB [*]).

By the latest, [Buyer] was in culpable delay of payment when it received the request for payment by [Seller]'s attorney dated 25 May 1998. This is the case even if [Buyer]'s submission that it sent [Seller] a check in the amount of 34,296.22 DM on 8 April 1998 was correct. Admittedly, the alleged payment would have cured any culpable delay already in existence. However, the delay can again be considered culpable after [Seller]'s further requests for payment on 14 April, 20 April and 27 April 1994 and -- by the latest -- after [Buyer] received the letter by [Seller]'s attorney dated 25 May 1998. It should have been evident to [Buyer] that the check for the amount of 34,296.22 DM had obviously not reached [Seller] and would not suffice to perform its obligation to pay the purchase price.

The action brought by [Seller] on 9 July 1998 was a suitable measure to pursue its rights. [Seller] was entitled to expect that [Buyer] -- who had been in default of payment since at least the end of May -- would immediately issue and send a replacement check after [Seller] had assured [Buyer] on 1 July that the missing check would not be cashed by it. [Buyer], however, did not issue the check until the end of July 1998. In view of these circumstances, it cannot be said that [Seller] itself -- by commencing a premature action -- is responsible for the additional costs. [Buyer] is therefore obliged to reimburse [Seller] for the costs in the amount of 3,360 DM caused by [Buyer]'s delay in payment.


FOOTNOTES

* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Plaintiff of Germany is referred to as [Seller]; the Defendant of France is referred to as [Buyer]. Amounts in German currency (Deutsche Mark) are indicated as [DM].

Translator's note on other abbreviations: Brussels Convention = Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters; EGBGB = Einführungsgesetzbuch zum Bürgerlichen Gesetzbuche [German Code on the Conflict of Laws]; HGB = Handelsgesetzbuch [German Commercial Code]; ZPO = Zivilprozeßordnung [German Civil Procedure Code].

** Ruth M. Janal, LL.M. (UNSW) is a PhD candidate at Albert-Ludwigs-Universität Freiburg.

*** 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.

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Pace Law School Institute of International Commercial Law - Last updated October 30, 2007
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