Austria 7 March 2002 Appellate Court Graz (Pork case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/020307a3.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: 2 R 23/02y
CASE HISTORY: 1st instance LG Klagenfurt (Cg 158/00g-12) 19 November 2001
SELLER'S COUNTRY: Austria (defendant)
BUYER'S COUNTRY: Germany (plaintiff)
GOODS INVOLVED: Pork meat
AUSTRIA: Oberlandesgericht Graz 7 March 2002
Case law on UNCITRAL texts (CLOUT) abstract no. 537
Reproduced with permission from UNCITRAL
Abstract prepared by Martin Adensamer, National Correspondent
A German buyer ordered to an Austrian seller twenty tons of pork meat. The seller made the sale conditional to the acceptance of the buyer by the defendant's credit insurance, which did not occur. The buyer insisted by resubmitting by fax an offer to the seller, requesting the delivery of the meat in six days. The seller returned the fax on the next day with the remark that the goods could not be delivered. Additional efforts of the buyer to purchase the meat with a cheque payment were also fruitless. The buyer had to make a cover purchase at a higher price and sued to recover the extra price paid.
The Court of Appeal, confirming the first grade decision, applied articles 14 and 8(3) CISG and held that the contract had not been validly concluded, since the declaration of acceptance conditional to the acceptance by the credit insurance diverged from the original proposal, thus constituting a counter-offer. The Court added that the alleged silence or inactivity of the buyer could not be relevant for the conclusion of the contract under articles 18 and 19 CISG, and even more so since, after receiving the counter-offer, the buyer was requested to perform additional actions, i.e. to contact the credit insurance and to provide the VAT identification number. Finally, the Court of Appeal stated that from the oral negotiations between the parties it was clear for the buyer that the defendant would have entered into a contract only under condition that the buyer would be accepted by the seller's credit insurance.Go to Case Table of Contents
APPLICATION OF CISG: Yes
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
8A [Interpretation of party's statements or other conduct: intent of party making statement or engaging in conduct]; 9A [International usages: contracts or contract formation]; 11A [Writing or other formality for conclusion of contract: not required]; 14A [Criteria for an offer: definiteness of key conditions and intention to be bound]; 18A3 [Criterial for acceptance: sileance or inactivity in and of itself insufficient 19B ["Acceptance" of offer with immaterial modifications]
8A [Interpretation of party's statements or other conduct: intent of party making statement or engaging in conduct];
9A [International usages: contracts or contract formation];
11A [Writing or other formality for conclusion of contract: not required];
14A [Criteria for an offer: definiteness of key conditions and intention to be bound];
18A3 [Criterial for acceptance: sileance or inactivity in and of itself insufficient
19B ["Acceptance" of offer with immaterial modifications]
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CITATIONS TO OTHER ABSTRACTS OF DECISION
CITATIONS TO TEXT OF DECISION
Original language (German): CISG-online.ch website <http://www.cisg-online.ch/cisg/urteile/669.htm>
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
English:  Schlechtriem & Schwenzer ed., Commentary on UN Convention on International Sale of Goods, 2d (English) ed., Oxford University Press, Intro. 14-24 para. 4Go to Case Table of Contents
Queen Mary Case Translation Programme
7 March 2002 [2 R 23/02y]
Translation [*] by Veit Konrad [**]
Edited by Institut für ausländisches und Internationales
Privat- und Wirtshaftsrecht der Universität Heidelberg
Daniel Nagel, editor [***]
The appeal (Berufung) is not justified. Plaintiff [Buyer] is liable to reimburse Euro 1,178.92 including Euro 196.49 turnover taxes to Defendant [Seller], as costs spent in the appellate proceedings within fourteen days. A further appeal (Revision) cannot be brought under § 502(1) of the Code of Civil Procedure (Zivilprozessordnung; ZPO).
In a telephone call on 20 April 2000, [Buyer], seated in Germany, ordered twenty tons of Austrian pork meat from the [Seller], an Austrian company, for the price of 3,30 DM (Deutsche Mark) per kilogram. The meat was to be delivered directly to the German M. company Franco Fix on [Buyer]'s call within the eighteenth week of the year. Payment was due within twenty-one days after delivery. However, [Seller] did not deliver. To fulfill the contractual duties with respect to its customer, the M. company, [Buyer] purchased meat in replacement and spent ATS 133,514.09 (Austrian schillings) as additional costs for the substitute transaction.
[Buyer] claims for restitution of its additional costs for the substitute transaction. [Buyer] argues that [Seller] failed to comply with its contractual obligation to deliver the meat on [Buyer]'s call within the fixed range of time before Mother's Day. In a fax dated 3 May 2000, [Buyer] called for delivery on 9 May 2000. In a fax of 4 May 2000, [Seller] responded that the requested goods were "out of stock". To comply with its own contractual duties toward its customer M., [Buyer] was forced to spend an additional amount of DM 18,977.20 on substitute transactions, for which it now holds [Seller] liable under the CISG. According to [Buyer], [Seller] mentioned problems with its loan insurance for the first time following a phone call on 4 May 2000. In turn, [Buyer] immediately offered payment through a check and prepared for a quick money transfer which, however, could not be executed because [Seller] refused to provide [Buyer] with its bank details and with a bill in advance, which [Buyer] on several occasions had asked for. [Buyer] denies that the loan insurance company did not accept it as a debtor. [Buyer] suspects that the true reason for [Seller]'s refusal to deliver to be a considerable rise in the price of pork meat, which also caused its additional costs in the substitute transaction.
In its response, [Seller] submits that it did not enter into a valid sales contract with [Buyer]. Throughout the negotiations, its representative, Mr. M, always insisted on the condition that the loan insurance company would accept [Buyer] as a debtor which, however, had not been the case. [Seller] claims that [Buyer]'s substitute transactions were unnecessary. But even if they had been needed, it would have been possible for [Buyer] to avoid purchasing for a higher price. Only after several set deadlines had expired, [Buyer]'s director offered immediate payment after delivery which, however, was unacceptable, taking into account that [Buyer] was not able to provide any securities. Payment in advance, was refused by [Buyer] on 4 May 2000. [Seller] argues that the difference between the price at the time of the negotiations and the price for [Buyer]'s substitute purchase would have ranged at the most between ATS 1.50 and 2.00.
[JUDGMENT OF THE COURT OF FIRST INSTANCE]
The Court of First Instance (Judgment of District Court (Landesgericht) Klagenfurt of 19 November 2001, 26 Cg 158/00g-12) dismissed [Buyer]'s claim for damages. It concluded that delivery was agreed upon on the condition that [Buyer] was accepted by [Seller]'s loan insurance company, which however refused it as a debtor about one week after the contract had been concluded. In a phone call, [Seller]'s representative M. notified [Buyer]'s director, Mr. F., that, under the given circumstances, delivery was not possible. In turn, [Buyer] offered immediate payment after delivery, but [Seller] insisted on payment in advance. Nevertheless, in a fax dated 3 May 2000 [Buyer] called for "delivery on Tuesday, 9 May 2000" hoping that [Seller] would be willing to deliver despite its objections. However, [Seller] clearly refused delivery. According to the Court, [Buyer]'s submission that on 4 May 2000 it had offered payment in advance through a quick money transfer including a 1% discount on a pro forma bill, had not been substantiated.
Based on these assumptions, the Court of First Instance held that CISG provisions were applicable, which generally provide for the validity of informal sales agreements. The validity of the agreement between [Buyer] and [Seller], however, was void as it was dependent on the acceptance of [Buyer] by [Seller]'s loan insurance company, which the insurance company refused to give.
In its appeal (Berufung), [Buyer] claims that the ruling suffers from a misinterpretation of evidence as well as of the law. [Buyer] seeks an overruling decision by the Appellate Court, granting the damages it claimed. Alternatively, [Buyer] seeks to have the judgment set aside and the case referred back to the Court of First Instance for retrial.
[Seller] denies [Buyer]'s claim for damages and that [Buyer]'s appeal is justified.
CONCLUSION AND REASONING OF THE APPELLATE COURT
[Buyer]'s appeal (Berufung) is not justified.
To the extent that [Buyer]'s appeal concerns the evaluation of evidence, it cannot be concluded that the trustworthiness of [Buyer]'s director F. prevails over that of witnesses M. and P. due to their close relation to [Seller]. F's submission that he first heard of the problems with [Seller]'s loan insurance fourteen days after it had ordered the meat must be doubted. Witnesses M. and P. both remember that the insurance company had been contacted as soon as they had received the relevant details from [Buyer]. [Seller]'s inquiry immediately after [Buyer]'s order is confirmed by the testimony of F.'s wife. [Buyer]'s fax dated 8 May 2000, which it now submits as supporting evidence, actually lays doubt on its version of the facts: The fax does not mention the refusal of [Buyer] by [Seller]'s loan insurance company, just as [Seller]'s response of 4 May 2000 does not; it merely declares the goods to be "out of stock ". That can only be interpreted in the way that [Seller] informed [Buyer] of the insurance company's refusal immediately after [Seller] itself had been notified, just as witnesses M. and P. have said. As in their subsequent negotiations the parties have not reached an agreement, [Seller] -- before 3 May 2000 -- sold the meat elsewhere. Based on this version of the facts, the Court of First Instance did not misinterpret the evidence taken. Hence the [Buyer]'s appeal is unjustified. In accordance with § 489 Code of Civil Procedure (Zivilprozessordnung; ZPO), the Appellate Court adopts the Court of First Instance's insight on the facts of the case.
Concerning the claimed misinterpretation of the law, [Buyer] correctly argues that under certain circumstances the inactivity of a party must be interpreted as tacit consent to an agreement. According to a widespread opinion in German jurisprudence, remaining silent to a letter of confirmation diverging from the original offer, following common law and trade custom, must be interpreted as acceptance of the new modified offer implied in the letter of confirmation (see Kramer in: Straube, HGB-Kommentar 1, § 346 note 46). Yet, according to Austrian jurisprudence this only applies to letters of confirmation that clarify and amend an offer, but not for those that confirm a contract which actually has not yet been validly concluded (see Kramer ibidem note 48, 49). After receiving the acknowledgment, [Buyer] was asked to communicate its turnover tax registration number, and thus the parties did not remain inactive at all. Both parties confirm an orally concluded agreement to be common practice within their field of business. As Germany was meant to be the place of delivery, both parties correctly claim their agreement is governed by the CISG. According to Arts. 14-25 CISG, a contract becomes effective through a binding offer and its acceptance. It does not need to be concluded in or evidenced by writing and is not subject to any other requirement as to form (Art. 11 CISG). In accordance with Art. 14(1) CISG, a proposal constitutes an offer to enter into a sales contract, if it is sufficiently definite to indicate the goods and expressly or implicitly fixes or makes provision for determining their quantity and the purchase price (Art. 14(1) sentence two CISG), and if it indicates the offeror's intention to be bound in case of acceptance (Art. 14(1) sentence one CISG). In determining the intent of a party, due consideration is to be given to the negotiations, any practices the parties have established between themselves, usages and any subsequent conduct of the parties (Art. 8(3) CISG). Art 18(1) sentence two CISG points out that silence or inactivity does not itself amount to an acceptance of an offer. Art. 19(2) CISG provides that a diverging reply can constitute an acceptance, if the offeror does not, without undue delay, object orally to the discrepancy or dispatch a notice to that effect. In the event it fails to do so, the terms of the contract are the terms of its offer with the modifications contained in the acceptance.
[Seller]'s inquiry for details relevant to its loan insurance after it had received the fax of acknowledgement cannot be interpreted as implicit unconditioned consent to the sales contract as offered by [Buyer]. The intentions a party uttered during negotiations -- even if not explicitly mentioned in the agreement -- may be considered as usages under Art. 9 CISG impliedly applicable to the contract, provided that the other party knew or could not have been unaware of that condition (Art. 8(1) CISG).
[Buyer] admitted that in all of its own sale transactions it requires its customers to be accepted by its loan insurance company. In a phone call during their negotiations, [Seller] pointed out that their agreement would depend on that condition. After the faxed acknowledgment of the offer, [Seller] again asked for details relevant to its insurance. It must be assumed that the acceptance of the loan insurance had become a condition of which [Buyer] could not reasonably claim to have been unaware (Art. 8(1) CISG). Thus, it became impliedly applicable to the sales contract.
As [Seller]'s insurance company did refuse to accept [Buyer], the Court of First Instance correctly held that a contract had not been validly concluded. The appeal does not concern a possible claim for damages due to culpa in contrahendo or due to a shortcoming on [Seller]'s side regarding its inquiry to the insurance company. So there is no need to investigate further into the reasons for the insurance company's refusal of [Buyer] or into [Seller]'s submissions concerning the developments of the meat price rates. Moreover, it could not be sustained that [Buyer] had not been notified immediately of [Seller]'s insurance company's non-acceptance. Based on the testimony of witnesses M. and P., the Court of First Instance correctly assumed an immediate notification. The dismissal of [Buyer]'s claim for damages was therefore justified.
As regards the costs, §§ 41 and 50 of the Code of Civil Procedure (Zivilprozeßordnung; ZPO) apply. Following § 502 of the Code of Civil Procedure, a further appeal (Revision) is not admissible. The case does not touch upon a legal question of paramount significance but mainly upon issues regarding evidence.
* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Plaintiff-Appellant of Germany is referred to as [Buyer]; Defendant-Appellee of Austria is referred to as [Seller].
** 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.
*** Daniel Nagel has been a law student at Heidelberg University since October 2002 and an exchange student at Leeds University in 2004/2005.Go to Case Table of Contents