Switzerland 2 December 2004 District Court Zug (Dextrose case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/041202s1.html]
DATE OF DECISION:
CASE NUMBER/DOCKET NUMBER: A3 2004 30
CASE HISTORY: Unavailable
SELLER'S COUNTRY: Austria (plaintiff)
BUYER'S COUNTRY: Switzerland (defendant)
GOODS INVOLVED: Dextrose
Reproduced from Internationales Handelsrecht [4/2006] 158
"Regarding the conclusion of a contract when offers conflict."Go to Case Table of Contents
APPLICATION OF CISG: Yes [Article 1(1)(a)]
APPLICABLE CISG PROVISIONS AND ISSUES
Key CISG provisions at issue:
Classification of issues using UNCITRAL classification code numbers:
14A [Criteria for an offer (basic criterion): intention to be bound]; 18A21 [Acceptance of offer (conduct indicating assent): acts of performance]; 19C [Acceptance of offer with modifications: modifications that are material]; 78A [Interest on delay in receiving price or any other sum in arrears]
14A [Criteria for an offer (basic criterion): intention to be bound];
18A21 [Acceptance of offer (conduct indicating assent): acts of performance];
19C [Acceptance of offer with modifications: modifications that are material];
78A [Interest on delay in receiving price or any other sum in arrears]
CITATIONS TO ABSTRACTS OF DECISION
(a) UNCITRAL abstract: Unavailable
(b) Other abstracts
CITATIONS TO TEXT OF DECISION
Original language (German): CISG-online.ch website <http://www.cisg-online.ch/cisg/urteile/1194.pdf>; Internationales Handelsrecht (4/2006) 158-161
Translation (English): Text presented below
CITATIONS TO COMMENTS ON DECISION
UnavailableGo to Case Table of Contents
Queen Mary Case Translation Programme
2 December 2004 [A3 2004 30]
Translation [*] by Jacob Heidbrink [**]
Edited by Jan Henning Berg [***]
The Plaintiff (hereinafter: [Seller]) is a limited partnership, having its seat in [...] (Austria). Its objective is mainly the production of sugar and starch (Appendix to the Statement of Claim [App. C.]). These products are principally used and processed in the food and fodder industries. Due to having acquired the firm K. D... P... GmbH & Co. (App. C. 1), the [Seller] is the global successor in law to that firm. The Defendant (hereinafter: [Buyer]), a company having its seat in [...] (Switzerland), trades in as well as imports and exports all manner of goods (App. C. 2).
APPLICATIONS OF THE PARTIES
Applications of the [Seller]
1. The [Buyer] to be ordered to pay to the [Seller] the following amounts:
|-||CHF 4,009.20, plus interest of five percent since 31 October 2002
|-||CHF 4,009.20, plus interest of five percent since 22 November 2002
|-||CHF 4,009.20, plus interest of five percent since 6 December 2002, as well as
|-||CHF 100.00 for the costs of the debt collection order of 4 January 2004, plus interest of five percent since 19 February 2004|
2. The stay obtained by the [Buyer] of 7 January concerning the execution of the debt collection order No. 20034556 at the Bailiffs' Office [...] to be lifted as regards:
|-||CHF 4,009.20, plus interest of five percent since 31 October 2002
|-||CHF 4,009.20, plus interest of five percent since 22 November 2002
|-||CHF 4,009.20, plus interest of five percent since 6 December 2002|
3. The [Buyer] to bear costs and indemnities
Applications of the [Buyer]
1. The [Seller]'s action to be dismissed, with the claim rejected in its entirety.
2. The [Seller] to be ordered to have deleted the debt collection order No. 20034556 at the Bailiffs' Office [...].
3. The [Seller] to bear the costs of the proceedings in their entirety.
CIRCUMSTANCES OF THE CASE
1. The first business contact between K. D... P... GmbH & Co. (hereinafter: K. D...) and the [Buyer] took place in the middle of August 2002. Some time during this period, K... D..., the then senior sales manager of K. D..., had a telephone conversation with Thomas H..., the executive manager of the [Buyer]. Following this conversation, K. D..., on 20 August 2002, made an offer via e-mail to the [Buyer], concerning the delivery of food dextrose (App. C. 4). During the first telephone conversation, there was, as yet, no talk of any precise quantity to be delivered (Appendix 7, p. 2). The written offer by K. D... was based on a quantity to be delivered of 24 metric tons (which corresponds to one lorry consignment); the offer, however, was designated "non-committed". The calendar week of 42/02 was designated as the earliest possible date of delivery (App. C. 4). Subsequently, there were several other telephone conversations, during none of which, however, was any concrete agreement concluded (Appendix 7, p. 4).
On 16 September 2002, the [Buyer] ordered from K. D... 15,000 kilograms of food dextrose via telefax, to be received by a customer of the [Buyer], H... AG, prior to calendar week 40 (App. C. 5). According to statements by the [Buyer], both the delivery date mentioned above, and the quantity indicated, had earlier been agreed upon in a telephone conversation with an employee of K. D..., a Ms M... (Appendix 7, p. 5). The telefax of 16 September 2002 was, however, returned on the same day, carrying on its face the answer of K. D... that, at present, only the delivery of five metric tons could be confirmed, with the date for picking up the goods set at 17 October 2002. The remaining ten metric tons would be delivered as soon as possible (App. C. 5). The first partial delivery took place on 16 October 2002 (App. C. 6), the subsequent deliveries on 7 and 20 November 2002 (App. C. 9 and 12). K. D... issued to the [Buyer] invoices of the respective amount of €2,600 (App. C. 7, 10, and 13). The [Buyer] refused to pay the invoices, stating that it had incurred additional costs, and lost profit, as the goods had not been delivered on one single occasion, and, moreover, had been delivered too late (App. C. 14). The [Seller] applied to the Bailiffs' Office for the enforcement of K. D...'s claim for the purchase price; this claim had, in the meantime, passed to the [Seller]. The [Buyer] obtained a stay of the debt collection order regarding the invoices (App. C. 18).
2. The [Seller], on 19 April 2004, at the Cantonal Court (hereinafter: District Court) of Zug, requested that proceedings be issued against the [Buyer] concerning claims mentioned in the introduction to this judgment. The claims that are the object of these proceedings, and which have been converted into the local currency, corresponding each to CHF 4,009.20, are based on the invoices relating to the delivery of three times five metric tons of food dextrose during the autumn of 2002; these invoices remain unpaid.
3. In its response of 28 May 2004, the [Buyer], in essence, requested the dismissal of the claim, alleging that the [Buyer] was entitled to set-off claims which exceed the claims that are the subject of these proceedings. Due to excessive ado about the deliveries in question, the [Buyer] had incurred costs (telephone conversations of long duration, excessive correspondence) of about CHF 2,000. The delivery of the goods in three installments, instead of one single delivery, caused additional costs for freight of about CHF 900. Finally, the delays in delivery led to the loss of an important customer, engendering an annual loss of expected profit of CHF 5,000, i.e., a loss of CHF 10,000 over two years.
4. In the rejoinder of 2 July, and the counter-rejoinder of 3 September 2004, both parties maintained their claims. The [Seller] rejected the set-off claims of the [Buyer], stating that K. D... had not been guilty of any breach of contract, and had delivered the goods in accordance with the agreement. The [Buyer] countered that K. D... had been fully aware of its flawed performance, as it would otherwise not have offered to bear the additional freight.
5. The evidence in court was limited to the personal interrogation of K. D... and Thomas H... on 4 November 2004. During the subsequent trial, both parties insisted on their positions. Their arguments will, to the extent necessary, be discussed below in the Reasons section of this opinion.
1. The parties have their seats in different States that are party to the Lugano Convention. According to Art. 2(1) of this Convention, persons having their domicile in the territory of a Contracting State can be sued in the courts of that State. This provision, however, only relates to the international jurisdiction of the court. The local jurisdiction of the District Court of Zug follows from Art. 2 of the Private International Law Act, whereas its substantial jurisdiction follows from sec. 9(1) and sec. 10 of the Courts Act.
The parties, moreover, have their seats in different States that are party to the United Nations Convention on Contracts of the International Sale of Goods (hereinafter: CISG). The present dispute, therefore, is to be adjudicated in accordance with the provisions of the said Convention (cf. Art. 1(1)(a) of the CISG).
2. It is undisputed that K. D..., the predecessor in law of the [Seller], delivered to the [Buyer], or to third parties indicated by the [Buyer], respectively, food dextrose in the amount of, in all, 15 metric tons. It is undisputed, too, that the purchase price asked was €2,600 per partial delivery of five tons. After all, the offer of K. D... of 20 August 2002 already contained a corresponding statement of the price, stating €52 per 100 kilograms (App. C. 4). The quality of the goods delivered is not in doubt. Thus, the only question in this dispute is whether the food dextrose has been delivered in due time, or whether the delivery was delayed, K. D... thereby breaching its contractual obligations, and inflicting damage on the [Buyer]. Whereas the [Buyer], in essence, claims to have been promised, during a telephone conversation on 15 or 16 September 2002 with Ms. M..., a former employee of K. D..., the delivery of 15 tons of dextrose, the [Seller] maintains that what had been agreed was delivery in installments of five tons each. Therefore, the content of the contract concluded between K. D... and the [Buyer] needs to be decided first.
3. A proposal for concluding a contract addressed to one or more specific persons constitutes an offer if it is sufficiently definite and indicates the intention of the offeror to be bound in case of acceptance. A proposal is sufficiently definite if it indicates the goods and expressly or implicitly fixes or makes provision for determining the quantity and the price (Art. 14(1) of the CISG).
3.1 The parties agree, that during the first telephone conversation between the [Buyer] and K. D... only the ability in principle of the latter to deliver was determined, but that there was no talk of any precise quantity (Appendix 7, p. 2 and 3). It follows that, at that time, there was yet no proposal from either side amounting to an offer according to Art. 14(1) of the CISG. The proposal contained in the e-mail by K. D... of 20 August 2002 (App. C. 4) was explicitly stated to be "non-committed". As stated, Art. 14(1) of the CISG, however, requires of an offer that may be accepted that it expresses the intention of the offeror to be bound if the offer indeed is accepted. The use of the term "non-committed" normally negates the intention of the offeror to be bound (Schlechtriem, Kommentar zum einheitlichen UN-Kaufrecht - CISG, 3rd edition, Munich 2000, Marginal Number 14 at Art. 14 CISG). One must, therefore, proceed from the understanding that the said proposal was not supported by any intention on the part of K. D... to be bound. The [Buyer] - who bears the burden of proof in this respect - has not proven, nor even relied on, any circumstances indicating the contrary, such as negotiations, or usages developed between K. D... and the [Buyer] (cf. Art. 8(3) of the CISG). Prior to the telephone conversation of mid-August 2002, there were no business contacts between K. D... and the [Buyer]; as already mentioned, and admitted by the [Buyer], there were no binding promises made during this telephone conversation. The lack on the part of K. D... of any intention to be bound must be viewed against the background of there apparently being a general shortage of dextrose during the summer of 2002, and of K. D... not wanting to endanger deliveries to its regular customers (Appendix 7, p. 4 to 7).
3.2 The [Buyer] bears the burden of proving that the then office clerk of K. D... during a telephone conversation on 16 September, or one day earlier, promised the delivery of 15 metric tons prior to calendar week 40/02 (Appendix 7, p. 5). Even within the sphere of application of the CISG, in analogy with Art. 8 of the Private Law Code, the person relying on a certain fact bears the burden of proving the existence of that fact (BGE 130 III 264 E. 5.3 with numerous references). The [Buyer] opened its written order of 16 September 2002 by stating that it was delighted to confirm in writing the order placed on the telephone (regarding the delivery of 15,000 kilograms of food dextrose prior to calendar week 40/02) (App. C. 5). This introductory statement, however, and contrary to the position of the [Buyer], cannot be taken as proof that K. D..., or its employee M..., really had agreed to the delivery date and the quantity stated in the order. The [Buyer] has not offered any other evidence supporting the correctness of its allegations. In particular, it has omitted to ask for the interrogation of Ms M... as a witness. It therefore has not shown that there has been any contract of sale concluded by telephone.
It may be said that the allegations of the [Buyer] do not appear to be credible. The agreement the [Buyer] alleges had been concluded during the telephone conversation would have run counter to the non-committed order of K. D... of 20 August 2002, as well as apparently all prior telephone conversations between 21 August and 15/16 September 2002. Any oral promise of delivery would also be contradicted by the fact that the [Seller] confirmed the written order of the [Buyer] of 16 September on the same day, but having changed the quantity and the date.
3.3 As the [Buyer] thus has not proven the conclusion of any agreement during the telephone conversation of 15 or 16 September, the content of the telefax of 16 September 2002 and of the reply thereto by K. D... (App. C. 5) are decisive. The order of the [Buyer] must be understood to constitute an offer according to Art. 14(1) of the CISG. It expresses the intention to receive certain goods of a certain amount at an indicated date. The purchase price had already been fixed in the non-committed offer, or rather proposal, of K. D... (cf. App. C. 14); apparently, it was not necessary to discuss this particular issue further. The reply by K. D... to the order of the [Buyer] must be deemed to constitute a counter-offer, as there were, compared to the order of the [Buyer], changes in the quantity to be delivered and in the dates of delivery. These changes must be deemed to have been material (cf. Art. 19 of the CISG). The [Buyer] did not explicitly accept the counter-offer of K. D... for the delivery of five tons of food dextrose prior to calendar week 40/02; it did so, however, impliedly by conduct. The partial delivery of 16 October 2002, in accordance with the stipulations of the counter-offer, was accepted without any objection on the part of the [Buyer]. The [Buyer] apparently did not object to the terms of delivery stipulated in the counter-offer, either.
According to doctrinal teaching and court practice relating to Art. 18(1) of the CISG, the receipt of goods which are the object of a contract of sale constitutes a form of behavior by which the recipient indicates the acceptance of an offer to purchase (Schlechtriem, op. cit., Marginal Number 7 at Art. 18 of the CISG). The [Buyer], by way of telefax messages on 28 October (App. C. 8) and 12 November 2002 (App. C. 11), explicitly accepted the delivery of the remaining ten metric tons of food dextrose which the counter-offer had indicated as possible but did not promise for any certain date. It cannot be decisive that the [Buyer] finally only reluctantly accepted the partial deliveries of 7 and 20 November 2002, and that it initially had hoped to receive earlier deliveries, as K. D... had not firmly committed itself to any earlier date of delivery.
3.4 In summary, it can be said that between K. D... and the [Buyer] a contract of sale of the following content had been concluded: delivery of, in all, 15 metric tons of food dextrose at a purchase price of €52 per 100 kilograms, to be delivered in three installments of five tons each, one during the calendar week 40/02 (App. C. 5), one on 7 November (App. C. 8), and one on 21 November 2002 (App. C. 11). The agreed delivery dates were met by K. D... (App. C. 6, 9, and 12). K. D... cannot therefore be said to have committed any breach of contract. The fact that K. D... would have been prepared to settle this case amicably does not alter the assessment. Such behavior does not amount to any admittance of guilt.
4. The claim of damages on the part of the [Buyer] therefore fails because no breach of contract by K. D... can be proven. With this result, it is not necessary to decide whether the amount of damage the [Buyer] has alleged in relation to excessive costs of correspondence and its loss of profit have been conclusively proven. On the other hand, the demand for payment by K. D... against the [Buyer] concerning its claim for the purchase price of, in all, €7,800 (3 x €2,600) has been substantiated. If converted at the rate on the day these proceedings were initiated on 18 December 2004, the individual claims for payment of the purchase price would amount to CHF 4,045.35 each (1.5559 x CHF 2,600). This comprises the claims presented.
5. It is also possible to accept in its entirety the requested interest of five percent relating to each of the claims for the purchase price, running since 31 October, 22 November, and 6 December 2002, respectively. According to the CISG, it is primarily the contract which stipulates when payment is due (Schlechtriem, op. cit., Marginal Number 2 at Art. 59 of the CISG). The term "Payment after Receipt of Invoice" is deemed to constitute a contract as to the due date of the purchase price, as the date for payment in these cases relates to the receipt of the invoice, and not to the receipt of the goods (Schnyder/Straub, Kommentar zum UN-Kaufrecht, Berlin/Heidelberg 1997, Marginal Number 41 at Art. 58 of the CISG). The same must apply to the term "14 days net" (meaning 14 days after the issue of the invoice), which term was brought to the notice of the [Buyer] in the non-committed offer of K. D... of 20 August 2002 (App. C. 4), and which was not altered in the subsequent agreement. If the purchaser does not fulfil its obligation to pay at the agreed due date, the legal consequences of non-performance ensue without any reminder being necessary, i.e., the vendor, in accordance with Art. 78 of the CISG, may immediately demand interest (Schlechtriem, op. cit., Marginal Note 2 at Art. 59 of the CISG). The rate of interest is subject to the domestic law of the State whose law is applicable to the contract according to the rules of private international law (Magnus, Kommentar zum UN-Kaufrecht, Berlin/Heidelberg 1997, Marginal Note 12 at Art. 78 of the CISG with numerous references). The rate of interest in the present case, thus, is five percent (cf. Art. 117 of the Private International Law Act together with sec. 352 of the Austrian Code of Mercantile Law). The amounts of the invoices of 16 October, 17, and 21 November 2002 (App. C. 7, 10, and 13), respectively, fell due 14 days after the issue of the invoice, i.e., on 30 October, 21 November, and 5 December 2002, and interest, therefore, began running on these dates.
6. As the claim of the [Seller] is accepted, the [Buyer] is to be ordered to pay to the [Seller] the sum of CHF 12,027.60 (3 x CHF 4,009.20) plus interest of five percent of CHF 4,009.20 since 31 October, 22 November, and 6 December, respectively.
Furthermore, the [Buyer] is to be ordered to reimburse the [Seller] for the proven cost of CHF 100 for the debt collection order (App. C. 18) (cf. Art 68 of the Debt Execution and Insolvency Act). On application of the [Seller], it is also to be confirmed that the [Seller] is allowed to continue the debt collection order no. 20034556 of the Bailiffs' Office [...], amounting to CHF 12,027.60 plus interest of five percent of CHF 4,009.20 since 31 October, 22 November, and 6 December 2002, respectively (cf. Art. 79 of the Debt Execution and Insolvency Act).
7. Given this result, the [Buyer] is to bear the costs of the court proceedings, and, to a reasonable extent, to indemnify the [Seller] for its procedural efforts (sec. 38(1) and 40(1) of the Civil Procedure Code). The basic fee for a dispute worth CHF 12,027.60 is CHF 2,243.30 (sec. 3(1) of the Advocates' Fees Act). It would not be justified to increase the basic fee on the basis of sec. 3(3) of the Advocates' Fees Act. For the second round of filings, however, an increase of 50 percent is to be granted (sec. 5(1) Advocates' Fees Act). This results, with regard being had to expenses, in a reasonable indemnity of CHF 3,629.65. As the [Seller] has its seat abroad, no VAT is due.
1. The [Buyer] is ordered to pay to the [Seller] CHF 12,027.60 plus interest of five per cent. of CHF 4,009.20 since 31 October, 22 November, and 6 December 2002, respectively, as well as the costs of CHF 100 for the debt collection order. It is declared that the debt collection order no. 20034556 of the Bailiffs' Office [...] in the amount of CHF 12,027.65 plus interest of five percent of CHF 4,009.20 since 31 October, 22 November, and 6 December 2002, respectively, may be continued.
2. The court's fees are
|CHF 1,200||Court's fees|
|CHF 30||Administrative fees|
3. The [Buyer] to reimburse the [Seller] for its procedural efforts to the amount of CHF 3,629.65.
4. This decision may be appealed against by filing of a written and reasoned request in two items for leave to appeal, addressed to the Supreme Court of the Canton of Zug in accordance with sec. 201 of the Civil Procedure Code.
5. If the actual judgment is not appealed against, and provided the costs and indemnities exceed CHF 500, the decision as to costs and indemnities may be appealed against within ten days by filing of a written and reasoned request in two items at the Judiciary Commission of the Supreme Court of the Canton of Zug.
6. Message to the parties, as well as for filing in the court register.
FOR THE COURT
The Court's Clerk
["Final (leave to appeal not granted by Supreme Court on 27 September 2005)"]
* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Plaintiff of Austria is referred to as [Seller], and the Defendant of Switzerland is referred to as [Buyer]. Amounts in the currency of Switzerland (Swiss francs) are indicated as [CHF]. Amounts in the uniform European currency (EURO) are indicated as [€]
** Jacob Heidbrink, LL.D., M.Jur. (OXON), Lecturer in Law at Jonköping International Business School.
*** Jan Henning Berg is a law student at the University of Osnabrück, Germany and participated in the 13th Willem C. Vis Moot with the team of the University of Osnabrück.Go to Case Table of Contents