Reproduced with permission from the Cornell Review of the Convention on Contracts for the International Sale of Goods (1995) 51-94
Martin Karollus [*]
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[Intent of the parties]
The CISG does not address agency issues [LG Hamburg 26 September 1990; KG Berlin 24 January 1994], and this gap has to be filled according to Article 7(2). Practically, this will lead to the application of national law. However, the LG Hamburg noted that, while agency is not determinable under the CISG, the subjective intent of the contracting parties is a matter of interpretation and therefore governed by Article 8 [LG Hamburg 26 September 1990]. The other requirements of agency, namely the authority to represent, are not governed by the CISG.Go to entire text of Karollus commentary
* Professor of Law at the University of Bonn, Germany, from 1992 to February 1995. Currently, Professor of Law at the University of Linz, Austria. Address: Institut für Handels-und Wertpapierrecht, Universität Linz, A-4040 Linz-Auhof, Austria, Europe.
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101. See Judgment of Sept. 26, 1990, LG Hamburg, 1991 IPRax at 401; Judgment of Jan. 24, 1994, KG Berlin, 1994 RIW at 683; Honnold, supra note 1, § 66 ("The Convention does not address the complex issues that underlie questions of agency and authority.").
102. Judgment of Sept. 26, 1990, LG Hamburg, 1991 IPRax at 401.
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[Termination or modification of the contract by agreement]
Article 29 governs the termination or modification of the contract by mere agreement of the parties, such as a mutual respite in payment [LG Hamburg 26 September 1990]  or a settlement agreement [LG Aachen 14 May 1993]. Although Article 29 is in Part III of the CISG, the rules of Part II apply to the formation of agreements that modify or terminate a contract [LG Hamburg 26 September 1990; OLG Köln 22 February 1994]. Therefore, under Article 18(1), mere silence or inactivity does not amount to acceptance of an offer to terminate the contract. Nevertheless, the OLG Köln found an acceptance where the other party had not enforced the contract despite the receipt of non-conforming goods [OLG Köln 22 February 1994].Go to entire text of Karollus commentary
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137. Judgment of Sept. 26, 1990, LG Hamburg, 1991 IPRax at 402.
138. Judgment of May 14, 1993, LG Aachen, 1993 RIW at 761.
139. Judgment of Sept. 26, 1990, LG Hamburg, 1990 IPRax at 402; Judgment of Feb. 22, 1994, OLG Köln, 1994 RIW at 973.
140. Judgment of Feb. 22, 1994, OLG Köln, 1994 RIW at 973.
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[Damages issues in this case and in other German cases]
Article 74 allows only monetary damages for breach of contract; compensation in kind is not permitted. Nevertheless, the OLG Düsseldorf held that a buyer of defective goods who became liable to a second buyer could demand discharge from his liability as a seller of defective goods to the second buyer from the original seller [OLG Düsseldorf 2 July 1993]. Although this holding is arguably incorrect, I agree. As soon as the first buyer paid damages to the second buyer, he could recover the sum paid from the original seller. There is no reason why the original seller should not pay directly the second buyer.
The recovery of interest under CISG Article 78 is only a minimum, allowed "without prejudice to any claim for damages." For example, the seller can recover damages if his sales are prefinanced and he has to pay interest for any delay in payment [LG Aachen 3 April 1990], or if he has to pay interest for other credit obtained as a necessary consequence of a delayed payment [OLG Koblenz 17 September 1993]. However, the courts do not agree on the showing required for such consequential damages. Two decisions have held that the seller has to specify and prove his loss exactly, and that it is not sufficient for the seller to declare generally that he is working on credit as a consequence of delayed payment [LG Frankfurt 16 September 1991; OLG Frankfurt 18 January 1994]. In another decision, however, the court tried to moderate these burdens [LG Hamburg 26 September 1990]. Although the seller did not prove that he had to obtain credit because of payment delay, the court granted damages based on the discount rate in the seller's country.
According to the second sentence of Article 74, damages suffered as a consequence of a breach of contract are recoverable only if such damages were foreseeable to the party in breach at the time the contract was concluded. No German court has yet barred a claim for damages because of this provision. A court has held that the buyer's liability to third parties was foreseeable when the goods were not timely delivered [LG Aachen 14 May 1993], and in another case that the buyer could foresee that non-payment would force the seller to obtain credit [OLG Koblenz 17 September 1993].Go to entire text of Karollus commentary
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213. See Victor Knapp, Article 74, in Commentary on the International Sales Law 538, 540 (C.M. Bianca & M.J. Bonell eds., 1987); Hans Stoll, Art. 74: Umfang des Schadenersatzes, in Kommentar zum Einheitlichen UN-Kaufrecht 623, 635-36 (Ernst von Caemmerer & Peter Schlechtriem eds., 2d ed. 1995); Enderlein et al., supra note 14, at 235; Karollus, supra note 20, at 213.
214. Judgment of July 2, 1993, OLG Düsseldorf, 1993 RIW at 845-46.
215. See Peter Schlechtriem, Kurzkommentar, 1993 EWiR 1075 (1993).
216. See also Stoll, supra note 213, at 635-36 (arguing that a party who has suffered damages from the other party's breach should be discharged from liability under the contract when the extent of damages is not calculable).
217. Judgment of Apr. 3, 1990, LG Aachen, 1990 RIW at 492.
218. Judgment of Sept. 17, 1993, OLG Koblenz, 1993 RIW at 936-37.
219. Judgment of Sept. 16, 1991, LG Frankfurt am Main, 1991 RIW at 954; Judgment of Jan. 18, 1994, OLG Frankfurt am Main, 1994 RIW at 241.
220. Judgment of Sept. 26, 1990, LG Hamburg, 1991 IPRax at 403 (referring to Herbert Asam & Peter Kindler, Ersatz des Zins-und Geldentwertungsschadens nach dem Wiener Kaufrechtsübereinkommen vom 11.4.1980 bei deutsch-italienischen Kaufverträgen, 1989 RIW 841, 844-45 (1989)).
221. Judgment of May 14, 1993, LG Aachen, 1993 RIW at 761.
222. Judgment of Sept. 17, 1993, OLG Koblenz, 1993 RIW at 937.
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[Interest issues in this case and in other German cases]
Article 78 allows for the collection of interest on any monetary arrearage, without prejudice to damages recoverable under Article 74. Unfortunately, Article 78 does not provide for the calculation of an appropriate interest rate. Accordingly, the allowed interest rate must be calculated under national law. The issue is which national law is applicable to determine the interest rate. Most authors  and courts [LG Hamburg 26 September 1990; OLG Frankfurt 13 June 1991; OLG Frankfurt 18 January 1994; OLG München 2 March 1994; OLG Koblenz 17 September 1993; OLG Düsseldorf (6 U 119/93) 10 February 1994]  have generally agreed that the law applicable to the issue of interest is the Vertragsstatut (the law that governs the contract apart from CISG); in the absence of a choice of law provision in the contract, the applicable law would be the seller's law [OLG Koblenz 17 September 1993; OLG Düsseldorf (6 U 119/93) 10 February 1994]. At least one court decided that the creditor's law was applicable [LG Frankfurt 16 September 1991; see also LG Stuttgart 31 August 1989 and KG Berlin 24 January 1994 (Neither decision making clear whether interest was granted according to Article 78 or damages according to Article 74)]  and another court did not decide on the question because the results did not differ. In addition, some authors have proposed other solutions, such as application of the law of the debtor's country or of the country which issued the currency specified in the contract. These solutions have not been adopted by the courts. The problem is of considerable importance since interest rates are rather low in some states (four or five percent in Austria and Germany) but much higher in others (ten percent in Italy and more than fifty percent in Bulgaria). The contracting parties should avoid these uncertainties by agreeing on an interest rate or by choosing the applicable law.Go to entire text of Karollus commentary
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223. CISG, supra note 4, art. 7(2). Article 7(2) also -- and primarily -- provides for a gap-filling according to general principles. But, in the present case, that does not seem to be possible because the Vienna Conference failed to agree on any principles.
224. See Gert Reinhart, Fälligheitszinsen und UN-Kaufrecht, 1991 IPRax 376 (1991); Herber & Czerwenka, supra note 16, at 347; Karollus, supra note 20, at 227; Piltz, supra note 21, at 280-82; Hermann Eberstein & Klaus Bacher, Art. 78: Zinsen, in Kommentar zum Einheitlichen UN-Kaufrecht 665, 672-73 (Ernst van Caemmerer & Peter Schlechtriem eds., 2d ed. 1995)
225. See Judgment of Sept. 26, 1990, LG Hamburg, 1990 RIW at 1019; Judgment of June 13, 1991, OLG Frankfurt am Main, 1991 RIW at 591-92; Judgment of Jan. 18, 1994, OLG Frankfurt am Main, 1994 RIW at 241; Judgment of Mar. 2, 1994, OLG München, 1994 RIW at 596-97. See generally Judgment of Sept. 17, 1993, OLG Koblenz, 1993 RIW at 938; Judgment of Feb. 10, 1994, OLG Düsseldorf, 1994 RIW at 1051.
226. See Judgment of Sept. 17, 1993, OLG Koblenz, 1993 RIW at 938; Judgment of Feb. 10, 1994, OLG Düsseldorf, 1994 RIW at 1051.
227. Judgment of Sept. 16, 1991, LG Frankfurt am Main, 1991 RIW at 954. See Hans Stall, Inhalt und Grenzen der Schadensersatzpflicht sowie Befreiung con der Haftung im UN-Kaufrecht, im Vergleich zu EKG und BGB, in Einheitlichen UN-Kaufrecht und nationales Obligationenrecht 257, 279-80 (Peter Schlechtriem ed., 1987). See also Judgment of Aug. 31, 1989, LG Stuttgart, 1990 IPRax at 317-18; Judgment of Jan. 24, 1994, KG Berlin, 1994 RIW at 683-84 (neither decision making clear whether interest was granted according to Article 78 or damages according to Article 74).
228. Judgment of June 13, 1991, OLG Frankfurt am Main, 1991 RIW at 591-92.
229. See Hans Stoll, Internationalprivatrechtliche Fragen bei der landesrechtlichen Ergänzung des Einheitlichen Kaufrechts, in Festschrift für Murad Ferid 495, 509-10 (Andreas Heldrich et al. eds., 1988).
230. See Wolfgang Grunsky, Anwendbares Recht und gesetzlicher Zinssatz, in Festschrift für Franz Merz 147, 147-57 (Walter Gerhardt et al. eds., 1992).
231. Perez, supra note 21, at 281-82.
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