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Germany 6 April 2000 District Court München (Furniture case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/000406g1.html]

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

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Case identification

DATE OF DECISION: 20000406 (6 April 2000)


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

JUDGE(S): Unavailable


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

CASE HISTORY: Unavailable

SELLER'S COUNTRY: Italy (plaintiff)

BUYER'S COUNTRY: Germany (defendant)


Classification of issues present



Key CISG provisions at issue: Articles 4 ; 9 ; 18 ; 19 ; 25 ; 47 ; 49 ; 71 ; 74 ; 75 ; 76 ; 78 [Also cited: Articles 33 ; 35(1) ; 45(1)(b) ; 59 ; 81(1) ]

Classification of issues using UNCITRAL classification code numbers:

4B [Scope of Convention (issues excluded): limitation of actions];

9C [Practices established by the parties];

18A [Criteria for acceptance of offer];

19A1 [Reply containing additions or modifications: in general, constitutes rejection and counter-offer];

25B [Definition of fundamental breach: substantial deprivation of expectation, etc.];

47A [Buyer's right to fix additional final period for performance];

49A1 [Buyer's right to avoid contract (grounds for avoidance): fundamental breach of contract];

71A1 [Suspension of performance (grounds for suspension by other party): apparent that a party will not perform substantial part of obligations];

74A ; 74A1 [General rules for measuring damages: loss suffered as consequence of breach; Includes loss of profit];

75A [Damages established by substitute transaction after avoidance];

76B [Damages recoverable based on current price];

78B [Rate of interest]

Descriptors: Scope of Convention ; Statute of limitations ; Usages and practices ; Acceptance of offer ; Fundamental breach ; Avoidance ; Nachfrist ; Suspension of performance ; Damages ; Profits, loss of ; Cover transactions ; Proof of damages ; Interest ; Interest as element of damages

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Editorial remarks

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Citations to case abstracts, texts, and commentaries


(a) UNCITRAL abstract: Unavailable

(b) Other abstracts



Original language (German): cisg-online.ch website <http://www.cisg-online.ch/cisg/urteile/665.htm>

Translation (English): Text presented below


English: Liu Chengwei, Recovery of interest (November 2003) n.280; 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. 26 para. 13 Art. 45 para. 27 Art. 71 paras. 11, 38 Art. 74 paras. 16, 28 Art. 75 para. 11; CISG-AC advisory opinion on Calculation of Damages under CISG Article 74 [Spring 2006] n.80 (related cases cited in addendum to opinion)

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Case text (English translation)

Queen Mary Case Translation Programme

District Court (Landgericht) München

6 April 2000 [12 HKO 4174/99]

Translation [*] by Stefan Kuhm [**]

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


In consideration of the legal dispute arisen out of a claim for payment between the [seller] as Plaintiff v. [buyer] as Defendant, the 12th Commercial Chamber of the District Court (Landgericht) München I, Presiding Judge Dr. Bachmann and Commercial Judges Dr. Bauer and Saur, rules as follows with regard to the Court's hearing of 3 February 2000:

  1. The [buyer] is directed to pay [seller] the principal amount of DM [Deutsche Mark] 15,729.70 plus accrued interest of 5% since 27 February 1998.

  2. [Seller]'s claim is dismissed in all other respects.

  3. The costs of these legal proceedings shall be borne 2/5 by [seller] and 3/5 by [buyer].

  4. Claims by the [Seller] are preliminarily enforceable against the provision of DM 18,750 as security deposit. Claims by the [Buyer] are preliminarily enforceable without provision of a security deposit. [Seller] may prevent the commencement of enforcement proceedings by [buyer] against provision of DM 900 as security deposit, unless [buyer] provides for a security deposit in the same amount before she commences to enforce its claims under this judgment.


[Summary of undisputed facts]

[Seller] delivered to [buyer] furniture on several occasions between 1995 and 1998. [Seller] claims payment of the purchase price for delivered furniture as further specified in two invoices.

[Seller's pleading]

After [seller] has already reduced the amount claimed for in an amount of DM 2,000, it asks the Court to direct [buyer] to pay [seller] the principal amount of DM 24,572.18 and accrued interest of 12% on DM 2,900.30 since 19 December 1997 and on DM 21,671.88 since 23 December 1997.

[Buyer's pleading and submission]

[Buyer] asks the Court to dismiss [seller]'s action. Additionally, within this legal action, [buyer] sets-off against [seller]'s claim several claims for damages under separate sales contracts concerning the delivery of furniture.

[References made by the Court]

As to all other respects, the Court refers to the parties' submissions, particulars and their schedules.


[Seller]'s legal action is admissible and mainly justified. The parties are in dispute as to the basis and amount of [seller]'s claim for payment of the purchase price. [Buyer] is entitled to claim damages in an overall amount of DM 8,842.48. Therefore, [seller]'s claim has been reduced to DM 15,729.70 due to [buyer]'s declared set-off with its claimed damages.

[Jurisdiction of the Court over buyer's set-off claims]

It is irrelevant that the declared set-off by [buyer] does not stem from the same sales contract and is not based on the equivalent circumstances as [seller]'s claim within these proceedings. This fact does not lead to the lack of jurisdiction and competence of the Court to hear this action. The provisions set out in the EuGVÜ [*] have only enshrined the principle of necessary connection with regard to a defendant's counterclaim. The set-off declared by [buyer] is not directly regulated pursuant to any provision as to the question whether a German court or any foreign court may have jurisdiction to hear these proceedings. Italian law is applicable in relation to this set-off (Art. 32 Par. 1 No. 4 EGBGB [*]) because [seller]'s claim for payment of the purchase price is also governed by Italian law (Art. 28 Par. 1, 2 EGBGB [*]).

All pre-requisites under Art. 1243 Par. 1 Cc [*] are complied with, hence the Court has the power to decide upon the counterclaim too. [Seller] has not objected to the facts underlying the counterclaim by bringing forward as necessary [seller]'s own submission of facts. [Seller] only raised legal objections.

[Specification of buyer's counterclaim as set-off]

[Buyer] has a counterclaim for damages against the [seller], because [seller] did not deliver the furniture at the date specified in the sales contract and such a non-performance is deemed a fundamental breach of contract (Art. 49 CISG). For this reason, the [buyer] was entitled to declare the avoidance of the sales contract here in question (see Arts. 33a, 49(1)(a), 74, 75 CISG). The [seller] was not entitled to suspend the delivery of the sold furniture (Art. 71 CISG). After the parties had entered into their sales contract, there were no indications brought forward that [buyer] would not fulfil its duty to pay the purchase price (Art. 71(1) CISG). Although [buyer] actually had its cheque stopped, [seller] was not entitled to reschedule the delivery of the furniture.

[Reason for buyer's right to suspend payment]

[Buyer] had the right to stop payment of its cheque and to temporarily refuse the payment of the purchase price (Art. 71(1)(b) CISG), because [seller] did not deliver furniture in a material mix and combination in compliance with the terms set out in their sales contract. Therefore, [seller] did not meet its duty to deliver fully compliant goods (Art. 35(1) CISG).

[Parties' agreement as to a reduction of the purchase price]

Thereafter, the parties agreed to a reduction of the purchase price. As a result, [buyer] proceeded to perform its duty to pay the purchase price pursuant to Art. 71(3) second clause, in that it had a cheque delivered to [seller] drawn upon an amount reflecting the reduced purchase price. [Seller], however, was not entitled to postpone the delivery of the sold furniture unilaterally until that cheque was credited to its bank account. It was the customary practice of the parties that, on the one side, [buyer] had always discharged its payment liability in advance by providing the respective carrier of the goods with a cheque. On the other side, [seller] usually delivered the sold furniture prior to the crediting of that cheque. [Seller] was not empowered to unilaterally alter such a trading practice between the parties by declaring the delivery of the furniture dependent on the successful crediting of the cheque to its account. Further, [buyer] was not even in default with regard to its payment duty. Particularly, there were not any additional caveats as to the [buyer]'s creditworthiness, which might have justified such an extraordinary alteration of their trading practice. There was no indication whatsoever that the [buyer] lacked financial standing.

[Claim for damages due to buyer's loss through buyer's replacement transaction]

Since [buyer] bought furniture in replacement of the originally sold goods after [buyer]'s declaration of avoidance of the sales contract, [buyer] has the right to claim damages. The compensation for the damages [buyer] suffered encompasses the difference between the purchase price under the sales contract concluded with the [seller] and the purchase price that [buyer] had to pay under the second sales contract for replacement of the furniture. Thereby, it is paramount that [buyer] was not in arrears to pay the purchase price under the sales contract here in question (Art. 75 CISG). This pecuniary difference amounts to DM 6,762 in damages.

[Failure to establish claim for damages due to loss of profit]

Nevertheless, [buyer] cannot claim compensation for loss of profit because it did not incur such a loss. The damages that occurred merely comprise the price of the substitute furniture which was more expensive than under the parties' original sales contract. This difference in the price level was mainly caused by the higher acquisition and production costs to get the equivalent furniture in replacement of the goods originally purchased from the [seller]. [Buyer] was particularly obliged to seek such a replacement in order to meet [buyer]'s delivery duties under re-sale contracts with [buyer]'s customer. [Buyer]'s customer paid the whole purchase price agreed to, so that [buyer] did not suffer any loss of profit. If [seller] paid damages as claimed for in an amount of DM 10,962, [buyer] would receive an aggregate amount of DM 21,700 including the additionally received purchase price under its re-sale contract of DM 10,378 with the aforementioned customer. This amount might then be opposed to production costs of DM 13,300. Thereby, [buyer] would attain a profit of DM 8,400 although it would have only made a profit of DM 4,200 if the sales contract in question had been satisfactorily performed by [seller]. In consideration of this difference, one has to appreciate that the [buyer]'s claim for damages is inflated in an amount of DM 4,200.

[Buyer's right to set off with another counterclaim for damages]

[Buyer] is authorized to set-off another outstanding claim against the [seller]'s claim in an amount of DM 595. This amount is based on the direct delivery of a defective wardrobe to [buyer]'s customer, i.e., the firm Katharina Rausch Interior Decoration.

[Buyer's notice of lack of compliance of the goods]

[Buyer] gave notice of the lack of compliance of the delivered goods within reasonable time (Art. 49(1) CISG). In this case, there was a defect of fabrication or material which went fundamentally beyond the defect initially reprimanded by [buyer]'s customer, i.e., protrusion of an edge of the respective furniture. For this reason, this material or production failure cannot be deemed a pure consequence of the aforementioned protrusion. In its note of 27 June 1997, [Buyer] gave timely notice to [seller] about the lack of conformity. It has not been disputed by the parties that the wardrobe had been already been previously collected from the [buyer]'s customer by a forwarding agent acting on behalf of [seller]. [Buyer] notified [seller] in [buyer]'s letter of 27 June 1997 that [buyer] was not able to repair this wardrobe on its own. Thereafter, a handwritten note was added restating the notification of the successful repair of this piece of furniture by a repairer acting on [buyer]'s order and behalf. The Court concludes from that note the fact that [buyer] and [seller] entered into a corresponding agreement about a subsequent repair of that wardrobe; a matter of fact to which [seller] has not objected during the proceeding.

[Buyer's claim for costs of repair]

Under Art. 45(1)(b) CISG, [buyer] is at least entitled to claim compensation for [buyer]'s expenses to have that wardrobe repaired, since this is one of the admissible positions of claimed damages. In particular, [buyer] could have declared the avoidance of the sales contract or demanded repair of the defect by the [seller], which could have been more of a hardship for the [seller]. In fact, the subsequent recovery of their sales contract might then have led to much higher costs for [seller] than the reparation of the wardrobe at the place of delivery.

[Buyer's right to set off with buyer's claim under a debiting note]

[Buyer] has additionally the right to set-off a claim of DM 1,485.48 under [buyer]'s debiting note of 5 July 1995 against [seller]'s claim for payment of the purchase price. [Seller] has denied neither the existence nor the amount of [buyer]'s claim, but solely argues that [seller] had credited [buyer]'s account with the respective amount and assigned the sum. However, the [seller] failed to submit facts to prove this assertion; in particular, [seller] has not submitted any receipt for such a transfer of this amount of money. [Seller] would all the more have been obliged to give such details and facts, because [seller] submitted crediting note states differing amounts and "Com. No." in comparison to [buyer]'s debiting note.

[No claim for loss of profits with regard to another re-sale contract]

The [buyer] may not recover damages from the sales contract regarding the goods to be delivered to [buyer]'s customer XXX & Partner. The delivery date named in the [buyer]'s order, namely the end of the 27th calendar week, was not agreed between the [buyer] and the [seller]. The contract was not formed -- according to trade usage and the parties' practices -- before the confirmation of order was sent to the [buyer]. Any prior confirmations of the delivery time stipulated by the [buyer]'s offer are consequently not to be considered binding. The confirmation of order, however, named 20 September 1997 as the date of dispatch and therefore materially differed from the [buyer]'s offer. [Seller] thus made a new offer [counter-offer] as to the terms of entering into a sales contract (see Sec. 150 Par. 2 BGB [*]), which [buyer] did not object to, but solely asked [seller] for a confirmation of 3 July 1997 as the agreed date of taking delivery of the goods. However, [buyer] did not have the right to ask for such a confirmation, as no contract had as yet been concluded. By holding on to the order and continuously requesting the [seller] to effect an expeditious delivery, the [buyer] concurrently and implicitly accepted the [seller]'s offer. For this reason, [buyer] accepted in particular to enter into a sales contract based on distinguished terms concerning the date for delivery of the goods. [Buyer] bore the duty to refuse [seller]'s new offer after [seller] had not confirmed the prior date for the delivery of the goods which [buyer] requested. Since the [buyer] held on to [seller]'s delivery obligation, the contract was formed with the content of [seller]'s confirmation of order. Hence, [seller] was not under any duty to effect delivery of the goods before 20 September 1997.

[No claims for damages due to lack of declaration of avoidance of contract]

With regard to the order for [buyer]'s customer Interior Decoration Store XXX, [buyer] also cannot claim damages. [Buyer] claims compensation for loss of profit. This is a loss caused by culpable delay; that is not "ancillary damage", but damages for non-performance. [Buyer] suffered a loss of profit because its customer cancelled a contract with the [buyer]. However, [buyer] was only in the position to claim compensation for such a loss incurred after [buyer] had declared the avoidance of its sales contract with [seller]. But, [buyer] has yet not declared the avoidance of that sales contract. [Buyer] is not entitled to claim restitution of the already paid purchase price as well as compensation for an incurred loss of profit in respect of a non-performed re-sale of the acquired goods solely based on Art. 45(1)(b) CISG. [Buyer] was obliged to first declare the avoidance of the sales contract (see Schlechtriem/Kober [*], Art. 45, Note 41a). Otherwise, all provisions of the CISG dealing with the pre-requisites for a declaration of the avoidance of a sales contract thereunder would be superfluous (Art. 49(1) CISG). The same applies to Arts. 75 and 76 CISG which also require the avoidance of contract for the compensation of damages for non-performance. Art. 74 CISG only contains a definition of what can be demanded in cases in which the basis for a damages claim is provided.

[Buyer failed to declare avoidance of contract within a reasonable time]

Even if the declaration of a set-off against claims for damages may be interpreted as an implicit declaration of the avoidance of the underlying sales contract, [buyer] did not declare it within a reasonable period of time after the actual delivery of the goods. For this reason, [buyer] has lost its right to declare the sales contract avoided (Art. 49(2)(a) CISG).

[Time-barred forfeiture of buyer's warranty claim in respect of another re-sale contract]

In contemplation of the delivery of a dining table to the [buyer]'s customer XXX & XXX GmbH [*], [buyer] cannot claim compensation for any suffered loss of profits. Such a claim has been forfeited and is time-barred. [Buyer]'s claim does not qualify as a claim coming into existence after the actual exercise of the unilateral right to alter the legal relationship between a buyer and the seller, i.e., the declaration of avoidance. Henceforth, [buyer]'s claim is not concerned with the restitution of the sales contract (Art. 81(2) CISG). In opposition, one may claim compensation for any loss of profits incurred through the delivery of non-complying goods, independently from a declaration of avoidance of the sales contract (Art. 45(1)(b) CISG). Such a claim is not a "warranty claim". The CISG does not contain any provisions dealing with prescription or a statute of limitations. Italian law is the governing law as to this legal issue (Art. 28 Par. 1 and 2 EGBGB [*]). According to Art. 1495(2) Cc [*], the period is one year when a right is deemed forfeited, i.e., time-barred. This period commences at the physical and actual delivery and hand-over of the respective goods. In this case, the actual delivery took place in June 1995 and thus any rights under this sales contracted have been forfeited.

[Failure to establish an additional counterclaim for damages due to not timely declaration of avoidance]

[Buyer] does also not have the right to claim damages with regard to [buyer]'s submission that [seller] did not take delivery of a chair being in its possession for subsequent removal of defects. This is again a claim for damages due to [seller]'s non-performance of its duties. Then, [buyer] seeks (i) for restitution of their sales contract, i.e., redemption of the already paid purchase price, and (ii) for compensation of [buyer]'s loss of profits. The establishment of such an action required [buyer]'s declaration of avoidance of the sales contract as mentioned above. However, [buyer] has not made such a necessary declaration. Insofar as such a declaration has been implicitly made through [buyer]'s declaration of a set off, [buyer] cannot make a case for [buyer]'s claimed damages on that ground. The sole non-delivery of a chair is not a fundamental breach of contract (Art. 25 CISG). [Buyer] reprimanded [seller] for the last time to have this repaired chair recovered in [buyer]'s letter of 27 June 1996. Consequently, [seller] could assume from that moment that [buyer] might lose any advantages under their sales contract, if it did not act in accordance with his liabilities thereunder. For this reason, [buyer] would have been obliged to fix an additional and final period of grace (Art. 49(1)(b) and Art. 47(1) CISG). Only after the lapse of that additional period of grace, would [buyer] have been entitled to declare the avoidance of this sales contract.

[Succession of seller's legal action in contemplation of buyer's counterclaims]

In consideration of all aforementioned [buyer]'s counterclaims, [seller]'s legal action succeeded and was founded in an amount of DM 15,729.70. [Buyer] has been in arrears with regard to this claim since 27 February 1998 (Art. 59 CISG). On that day, [buyer] stopped payment on [buyer]'s cheque drawn in favor of the [seller] to pay the purchase price in an amount of DM 24,572.18. Therewith, [buyer] made it quite obvious that it was not willing to pay the purchase price anymore. Nevertheless, [buyer] was not in default at the moment when it received [seller]'s invoices. As explained above, [buyer] was at that time entitled to suspend its payment by cheque (Art. 71 CISG).

[Rate of interest owed by the buyer]

The rate of interest on the sum in arrears comes to 5% p.a. (Art. 78 CISG, Art. 1284 Cc [*]). A claim for compensation of interest for drawn credit would require that the [seller] conduct its business with an ongoing bank credit which exceeds the sum claimed during the time the payment was in arrears. Furthermore - and this is decisive - the credit has to be repaid by all of the payments received by the [seller] unless such payments must be used immediately for the interest owed on the credit. It is only in such a case that a loss in the meaning of Art. 74 CISG, which exceeds the legal damage for delay, exists. The [seller] did not submit any facts demonstrating such a loss.

[Seller] could only claim for payment of an overdraft interest rate if it had established to conduct its business while permanently using an overdraft facility. Further, this overdraft had to extend its claim within these proceedings while [buyer] was in default. And most importantly, this overdraft would have had to be repaid with all incoming cash flow under his trade receivables, unless those cash flows were appropriated to redeem any accrued interest. Only if that were the case, might one establish a claim for compensation of damages beyond the statutory default interest rate pursuant to Art. 74 CISG. [Seller] has not, however, demonstrated any facts as to the aforementioned ingredients to establish such a claim beyond the statutory default interest rate.

[Ancillary decisions held by the Court]

The Court's decision on the costs for these legal proceedings is based on Secs. 92 Par. 1, 263 Par. 3 ZPO [*]. The decision on the preliminary enforcement ensues from Sec. 709 and Sec. 708 No. 11 ZPO [*].

Dr. Bachmann, Dr. Bauer, Saur



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

Translator's note on other abbreviations: BGB = Bürgerliches Gesetzbuch [German Civil Code]; BGBl. = Bundesgesetzblatt [German Federal Law Gazette]; C.c. = Codice civile Italiano [Italian Civil Code]; EGBGB = Einführungsgesetzbuch zum Bürgerlichen Gesetzbuche [German Code on Private International Law]; EuGVÜ = Europäisches Gerichtsstands- und Vollstreckungsübereinkommen, 1968 [Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgements in Civil and Commercial Matters, succeded by the Council Regulation on Jurisdiction and the Recognition of Judgements in Civil and Commercial Matters [44/2001/EC]; GmbH = Limited Liability Company; Schlechtriem = Kommentar zum einheitlichen UN-Kaufrecht, München 1990 [German Commentary on the CISG, Munich 1990]; ZPO = Zivilprozessordnung [German Civil Procedure Act].

** Stefan Kuhm is a Member of the Bar Association, Frankfurt a.M., and a Ph.D. candidate at Eberhard-Karls-Universität, Tübingen.

*** Ruth M. Janal, LL.M. (UNSW), a Ph.D. candidate at Albert-Ludwigs-Universität Freiburg, has been an active participant in the CISG online database of the University of Freiburg.

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