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Germany 9 July 1997 Appellate Court München [7 U 2246/97] (Fitness equipment case) [translation available]
[Cite as: http://cisgw3.law.pace.edu/cases/970709g2.html]

Primary source(s) for case presentation: Case text

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Case identification

DATE OF DECISIONS: 19970709 (9 July 1997)


TRIBUNAL: OLG München (OLG = Oberlandesgericht = Provincial Court of Appeal]

JUDGE(S): Unavailable


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

CASE HISTORY: 1st instance LG München 9 December 1996 [partly reversed]

SELLER'S COUNTRY: Germany [plaintiff]

BUYER'S COUNTRY: France [defendant]

GOODS INVOLVED: Fitness equipment

Case abstract

GERMANY: Oberlandesgericht München 9 July 1997

Case law on UNCITRAL texts (CLOUT) abstract no. 287

Reproduced with permission from UNCITRAL

A German seller, plaintiff, and a French buyer, defendant, concluded a dealer agreement according to which the buyer was to act as the seller's appointed dealer in the sale of fitness equipment. Pursuant to that agreement, the buyer made several equipment purchases. When the seller sued for unpaid purchases, the buyer objected to the jurisdiction of the German court.

The appellate court confirmed the ruling of the court of first instance that, under article 5(1) of the European Communities Convention on Jurisdiction and Enforcement of Judgements in Civil and Commercial Matters, jurisdiction is based on the place of performance of the contract. Since both Germany and France were Contracting States to the CISG, and since the parties had agreed on the application of German law, the CISG was applicable to determine the place of performance. The court found that the parties had not agreed upon a place of payment other than at the seller's place of business (article 57(1)(a) CISG) and had not agreed on payment to be made against the handing over of goods or documents (article 57(1)(b) CISG). Neither the contractual clause requiring payment to be made by irrevocable letter of credit nor the contractual provisions altering the passing of risk had changed the place of performance. As this was the place where the seller had its business in Germany, the court held that it had jurisdiction.

The court found that the dealer agreement provided that the seller "sells" goods to the buyer; any subsequent contract entered into thereunder for the purchase of equipment was a contract of sale to which the Convention applied (article 1(1)(a) CISG). Although the buyer acted as an intermediary, application of the Convention was not excluded by article 3(2) of the CISG.

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Classification of issues present

APPLICATION OF CISG: Yes [Article 1(1)(a)]


Key CISG provisions at issues: Articles 4 ; 6 ; 57 [Also cited: Articles 3(2) ; 53 ; 78 ]

Classification of issues using UNCITRAL classification code numbers:

4A [Issues covered by Convention: separate sales under distributor agreement];

6B [Agreement to apply Convention (implied agreement): choice of law of Contracting State];

57A [Place for payment (in absence of agreement, payment at seller's place of business): stipulation of payment by letter of credit or by check held not a derogation from this requirement]

Descriptors: Applicability ; Scope of Convention ; Distributorship agreements ; Choice of law ; Payment, place of ; Jurisdiction

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Editorial remarks

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Citations to other abstracts, case texts and commentaries


English: Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=253&step=Abstract>; [1997] Forum des Internationalen Rechts/The International Legal Forum (English language edition) 105-106

German: [1998] Oberlandesgericht-Rechtsprechungsreport (OLGR) München 22


Original language (German): Forum des Internationalen Rechts/The International Legal Forum 2 (1977) 159-160 = Forum [English Language Edition] 2 (1997) 158-159 (German original); [1997] Die deutsche Rechtsprechung auf dem Gebiete des internationalen Privatrechts im Jahre (IPRspr) No. 153; Unilex database <http://www.unilex.info/case.cfm?pid=1&do=case&id=253&step=FullText>

Translation (English): Text presented below


English: K.P. [Pasternacki], Forum des Internationalen Rechts/The International Legal Forum [English Language Edition] 2 (1997) 159; Larry A. DiMatteo et al., 34 Northwestern Journal of International Law & Business (Winter 2004) 299-440 at n.442; 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]

German: K.P. [Pasternacki], Forum des Internationalen Rechts/The International Legal Forum [English Language Edition] 2 (1997) 160

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Case text (English translation) [second draft]

Queen Mary Case Translation Programme

Appellate Court (Oberlandesgericht) München

9 July 1997 [7 U 2070/97]

Translation [*] by Tobias Koppitz [**]



The [seller] sued the [buyer] for payment for delivery of goods.

On 1 January 1993, the parties concluded a dealer agreement (hereinafter DA) according to which the [buyer] was to act as the [seller]'s authorized retailer in France. The contract governs particulars for the purchase of goods by the [buyer]. Among others, clause 3 requires that payment normally had to be made by irrevocable letter of credit; however, the conditions were subject to variation ("... may be varied from time to time ...") in the form that payment was to be made by bank draft. The parties further agreed to subject their contractual relations to German law (clause 16 DA); this is referred to in enclosure K 29 of the contract.

The contract was executed by the parties as follows. In January 1995, the parties came to a supplementary agreement to the effect that the [seller] should have the right to deliver goods directly to the French company C; the [buyer] was to receive a commission of 10% of the amount that was charged to C's account (enclosure B 8). In the course of 1995, the [seller]'s manager also entered into contractual talks with the owner of company C, Mr. D., who is also the owner of the largest fitness-club-chain in France. Mr. D. showed interest in becoming an authorized retailer of [seller] in France. However, a corresponding frame contract was not concluded in the end.

On 27 April 1995, company L Atlantic BV Rotterdam, a daughter company of the [seller] (hereinafter BV), reported to the [buyer] that the export department of [seller] would henceforth coordinate the sales activities from Rotterdam (enclosure B 1).

Nevertheless, the transactions between [buyer] and [seller] were continued. Among others, the [buyer] ordered and received from [seller] the following goods, which the [seller] charged to the [buyer]'s account:

The [buyer] furthermore ordered several fitness devices on 28 August 1995 (cf. enclosures K 27, B 13 respectively); the [buyer] ordered supplementary two further "Lifecycles" (enclosure K 28) on 5 September 1995, as well as two further "Lifesteps" (cf. enclosure B 14) on 8 September 1995. The five "Lifesteps", which were delivered altogether, were invoiced separately by the [seller] in the amount of US $12,000 on 18 September 1995 (cf. enclosure K 23). The further devices were billed by the [seller] with invoice enclosure K 25; undisputedly due from this invoice are the positions of two "Liferides" 9500 HRE (billed by the [seller] at US $14,000), two "Liferowers" 9500 E (billed by the [seller] at US $6,500) and three "Lifecycles" 9500 REC HRE (billed by the [seller] at US $ 7,797).

It is undisputed that a credit in the amount of DM 106.82 dated 1 September 1995 has to be subtracted from the total amount due.

The [seller] terminated the "Dealer Agreement" by letter dated 12 December 1995 (enclosures K 32, B 11 respectively) effective immediately, and additionally, as a mere precaution, with a time-limit also until the end of February 1996.

The [seller] asserted further purchase-money claims in first instance (cf. statement of claim dated 13 February 1996, pp. 1-9 of the claim). The [seller] requested the Court of First Instance to order [buyer] to pay [seller] DM 328,537.40 plus 10% interest on DM 239,830.25 from 12 October 1995 onwards and on DM 88,707.15 from 13 December 1995 onwards.

[Buyer's position in first instance]

The [buyer] objected in advance to the local jurisdiction of the German court and otherwise requested the dismissal of the claim.

The [buyer] based the objection to the German court's jurisdiction on the legal opinion that the place of performance for the obligations in dispute was not to be determined by the CISG because the [seller] asserted its claims to payment out of an authorized dealer contract which assigns to the [buyer] the role of a commercial representative. Furthermore, the parties excluded the CISG through their choice of law. Nonetheless, at least the provision of Art. 57(1)(a) CISG was excluded. The contractually stipulated mode of payment through irrevocable letter of credit documented the parties' intention to determine the place of payment as that seat of the bank which presents the letter of credit. The [seller] also did not have the right of action. As a consequence of the note enclosure B 1, the [buyer] exclusively placed its orders in Rotterdam; [buyer]'s contractual partner became BV seated there. Accordingly, since spring 1995, the entire correspondence regarding the "Dealer Agreement" was conducted only by BV (cf. enclosures B 3, B 4) who, by letter of 1 June 1995, also sent the new price list for sales (enclosure B 2). BV's request to make payments out of the disputed contracts of sale to "its account" (cf. enclosure B 7) also shows that BV had become the owner of the claims. The ostensible existence of a legal situation evoked by the [seller]'s daughter company had to be attributed to the [seller], especially since in the course of the assumption of the export activities of the L-group, the daughter company also took over the respective claims in accordance with Section 25 HGB [*].

In other respects, the purchase-money claims asserted by the [seller] should be broadly denied. Insofar as purchase-money claims have to be granted on the merits of the reasons given above (cf. above), they have been extinguished by way of set-off. To begin with, the [buyer] made a claim of commission for a delivery to company C through the [seller], which is available for set-off. The [buyer]'s claim out of the agreement enclosure B 8 is not accessory to the continuance of the "Dealer Agreement" and has to be calculated based on the market price of the delivered goods (f [French francs] 334,925). The commission of the [buyer] thus amounts to f 33,492.50 = DM 9,712.82. However, in any case, the [buyer] has a claim to a commission in the amount of 10% of the "friendly price" granted by the [seller] to company C in the amount of US $35,000, i.e., DM 5,285. A claim against the [seller] for payment of advertising costs allowance for the year 1995 in the amount of DM 14,000 was furthermore made available for set-off by the [buyer]. A corresponding allowance was promised by the [seller] (cf. enclosure B 15), but has never been paid. Also made available for set-off is a claim for damages of the [buyer] out of an intentional breach of the "Dealer Agreement". The [seller] has tried to "weaken" the [buyer]. The [seller]'s first step in that direction was the agreement to make delivery to company C. Added to that, were delays in the promise of the allowance for advertising costs, conversions in the supply of spare parts, delayed deliveries, as well as the conversations with Mr. D. in which the [buyer] had not been involved. As a consequence of the negotiations with Mr. D., the [buyer] had lost both the fitness clubs of Mr. D., [buyer]'s largest customer up until then, and ten other customers. In the second half of 1995, the [buyer] had suffered a loss of almost 40% of [buyer]'s turnover. In consideration of its own costs (50%), this means the loss of a net margin in the amount of approximately f 150,000. The [buyer] suffered further damage through the unjustified termination [of the agreement] by the [seller]. The termination was not effective formally yet, since it was not addressed to the [buyer], but to [buyer]'s manager personally. Besides, there was no reason for the termination. The [buyer] rightfully had not made any payment on the invoices in dispute. The [seller] could not rely on the non-compliance with agreed sales quota, as the [seller] itself was responsible for the slow sales (e.g., inscription and operating instruction of the devices only in English language, insufficient support in marketing measures), especially since the agreed quota had been economically completely unrealistic from the beginning. Due to the termination [of the agreement], the [buyer] had to terminate its activity for the [seller] two years earlier than contractually scheduled. At an average annual net margin of about f 1 million, this led to a lost profit of at least DM 600,000. Finally, a right of the [buyer] to demand compensation of the authorized retailer is made available for set-off. The [buyer] had been involved in the [seller]'s organization of the sales. The [buyer] had been obliged to further the sales of the [seller]'s products, run advertisements, participate in fairs and exhibitions, deliver customer services as well as inform the [seller] about the sales and market position of [seller]'s products under specification of customer relations. Due to this information it was then also possible for the [seller] to inform the customers of the [buyer] about the "new structures of sale" of its products after the notice of termination. For the calculation of the compensation of the commercial agent for loss of clientele, the [buyer] takes as a basis an average annual turnover of f 4,618,000. With respect to a commission of 10%, which has to be regarded as reasonable, this results in an average "annual commission" of DM 159,241.

[Seller's position in first instance]

The [seller] regards the claim it raised as admissible. A purchase-money claim is being invoked, to which the CISG is applicable. A diverging agreement concerning the place of payment has not been made; when payment is made by letter of credit, the place of payment is regularly at the bank advising the credit or a confirming second bank in the country of the seller. In the case at issue, this is the Bayerische Vereinsbank in Munich. Even as far as the "Dealer Agreement" opens the possibility of payment by bank draft, no agreement about the change of the place of payment has been sought. Even after the reorganization of its export activities, the [seller] remained the contractual partner of the [buyer]. Only since February 1996 onwards, did BV appear as the contractual partner [of the buyer]. However, the contracts with the [buyer] that are in dispute were not effected by that anymore. It should be especially pointed out, that the [buyer] addressed all orders of sale in dispute directly to the [seller]. The orders have also been confirmed by the [seller]. Furthermore, the [seller] did not assign any of its claims to BV. The request for payment (enclosure B 7) was made by BV as "coordinator".

The [buyer]'s claims made available for set-off are non-existent. A claim for commission of the [buyer] in the matter [of company] C did not arise. At first, only "demonstration-devices" had been set up at company C. Only after the termination of the contract with the [buyer], in the second half of December 1995, did the owner of company C decide to accept the devices at a price of US $35,000. The seller [in that transaction] was not the Plaintiff, but BV, who was not affected by the commission agreement. The promise for share of costs for advertising measures asserted by [buyer] is contested by [seller]. The [seller] did not breach the "Dealer Agreement" in any other way. The "sales on credit" were unanimously fixed; it was thereby known that the "displays" of the devices were in the English language.

The conversations with Mr. D. took place under the participation of the manager of the [buyer]; a cooperation between Mr. D., the [seller] and the [buyer] had been the issue. The conversations had been led confidentially and did not result in an insecurity of the market. The damage alleged by the [buyer] is not understandable. The termination of the "Dealer Agreement" is effective. Under no circumstances can the [buyer] rely on a compensatory claim of the commercial agent for loss of clientele. The claim already fails because the [buyer] had not been involved in the sales organization of the [seller]. In particular, the [buyer] did not have a duty to give information comparable to the requirements of Section 86(2) HGB [*]. Furthermore, the [buyer] was not subject to directions or interference by the [seller]. Reports of business calls have never been demanded. Furthermore, the [buyer] was not obliged to provide [buyer]'s customer data to the [seller]. In fact, the regular customers of the [buyer] remained unknown to the [seller], with the exception of the few customers who had been directly supplied by the [seller] after the arrangement with the [buyer].

[Decision of Court of First Instance]

The District Court of Munich [Court of First Instance] with decision of 19 December 1996, granted the [seller]'s claim in the amount of DM 271,418.18 as well as interest thereon. The claims raised are governed by the CISG because the subject matter is concerned with the settlement of contracts of sale. A differing agreement upon the place of payment has not been met; accordingly, the Court of First Instance has jurisdiction. The Court of First Instance held the claim only partly valid on the merits. The [seller] could demand payment of the invoices according to letters II.6, 7 and 12 of the statement of claim, as well as a partial amount of DM 40,040 out of the invoice according to letter II.13 of the statement of claim; the total amount sums up to DM 276,703.18. This amount is not disputed by the [buyer] on the merits. Further claims have not been substantiated sufficiently by the [seller]. The [seller]'s right of action regarding the claims granted already follows from the fact that the [buyer] charged the goods to the [seller] and not to BV. Explanations by BV regarding the "Dealer Agreement" have no legal relevance. The [buyer] can set-off the balance owed with a claim for commission in the amount of DM 5,285 out of a delivery to company C. It is decisive in that matter that the delivery is contractually associated with the [seller] as a measure governed by him, even if the sale took place through BV in the end. However, the commission is calculated only on the basis of the actually charged price of sale of US $35,000 - a higher "actual market price" of the goods delivered is of no relevance. The [buyer] cannot raise any further claims of set-off. It cannot be discovered how the [seller] could have breached the "Dealer Agreement" by holding negotiations with Mr. D. Also lacking is a substantiated report by the [buyer] regarding the matter, in what amount did [buyer] suffer a correspondingly caused damage. The mentioning of turnover figures does not suffice for that, even more so, as the [seller] was contractually permitted to act in the [buyer]'s business area. The same applies to the [buyer]'s claim of damages for the alleged unlawful termination of the "Dealer Agreement". The [seller] was in the position to orderly terminate the "Dealer Agreement"; the [buyer] did not demonstrate why [buyer] was still entitled to such a claim of damages for the termination. The Court of First Instance could not "approach" the claim of allowance for advertising expenses relied upon by the [buyer], as it was pleaded for the first time in that regard in the memorandum of 11 November 1996, which is not diminished by that matter. This has a similar effect on the [buyer]'s alleged right to demand compensation of the authorized retailer. In that respect, details have also been mentioned for the first time in the memorandum of 11 November 1996. Furthermore, the new allegation itself is not substantiated sufficiently, neither regarding the ground of the claim nor the amount of the claim relied upon. For the closer presentation of facts, reference is made to the decision of the Court of First Instance, which was delivered to the [buyer] on 28 January 1997 and to the [seller] on 30 January 1997.

Against that decision, the [buyer] raised an appeal which was received by the Appellate Court on 25 February 1997 and substantiated by memorandum of 25 April 1997, as well as a follow-up appeal by the [seller], received and at the same time substantiated on 18 June 1997, partly revoked by memorandum of 19 June 1997.

[Buyer's position at appeal]

The [buyer] mostly repeats its allegations at first instance for the statement of grounds. [Buyer] maintains its already stated opinion of law, that the Court of First Instance unlawfully assumed its international and local jurisdiction. The [seller]'s claim is also unfounded. The [seller] did not have a right of action. The Court of First Instance did not deal with the point that the [seller] assigned its export trade and with that its contractual relations with the [buyer] to BV in the beginning of 1995 (cf. especially enclosures B 1 and B 2). At least the claims relied upon were assigned to BV by the [seller]; this is exhibited in the communication enclosure B 7. Furthermore, the claims for payment granted by the Court of First Instance had ceased to exist by way of set-off. For the calculation of the [buyer]'s claim of commission resulting out of the delivery to company C, granted by the Court of First Instance, one had to rely on the market price of the delivered devices, not on the amount of the invoice; this is inferred from the interpretation of the supplementary agreement enclosure B 8, in which a charge of a "friendly price" was not contemplated. In the end, this results in a claim for commission in the amount of DM 9,712.82. Further consideration has to be given to the allowance of advertising expenses in the amount of DM 14,000 that was promised by the [seller]. In that respect, the Court of First Instance failed to notice that the relevant statement of the [buyer] contains a rejoinder of the statement of the [seller] in the memorandum of 30 September 1996, in which the [seller] denied its promise despite better knowledge. By way of set-off with the [seller], the [buyer] applied a claim of damages for intentional breach and unlawful termination of the "Dealer Agreement". This claim itself exceeds the claim of the [seller]. For no discernible reasons, the Court of First Instance left unconsidered the facts presented by the [buyer] on that issue. The reference by the Court of First Instance, that the [seller] had been permitted to act itself in the business area of the [buyer], is wrong. The negotiations between the [seller] and Mr. D. were not about the delivery of single devices, but about the conclusion of a contract of exclusive dealership. The statement of the Court of First Instance, that the [buyer] did not refute the [seller]'s right to orderly terminate the "Dealer Agreement", is also wrong. The [buyer] already denied explicitly, in the first instance, that the prerequisites of a termination without notice and/or of an orderly termination were met. The [buyer] also substantiated the amount of the damage [buyer] suffered. [Buyer] could restrict itself to presenting the probable profit which could have been expected in the normal course of events (Section 252 BGB [*]). Finally, the [buyer] is also still entitled to the right, upon which [buyer] has relied, to demand compensation of the authorized retailer. In the answer to the statement of claim, the [buyer] already presented all of the factual prerequisites of this claim. In the following, [buyer] repeats numerous facts which prove the incorporation into the [seller]'s sales organization. Among others, the [buyer] points out that the [seller] had decided in which fairs the [buyer] had to participate. The [seller] had also given binding directions to the [buyer] as to the shaping and the fittings of [buyer]'s fair stall. The [buyer] generally had to proceed according to the directions of the [seller] (cf. enclosure B 8). The [seller] set the marketing of the products in all detail and also made precise directions as to the fixing of the prices. In connection with the sale of the [seller]'s products [L.-products], the [buyer] had not even marked them with [buyer]'s own registered company, but with "L. France". [Buyer] also repeatedly had to report the sales of the [seller]'s products under the specification of [buyer]'s customer relations. A comparison of the reference list enclosure B 17, which contains the customers recruited by the [buyer], with enclosure B 18 also proves that the L.-group [seller's group] continued the business relations with the customers of the [buyer].

The [buyer] requests the review of the decision of 19 December 1996 by the Court of First Instance and the dismissal of the [seller]'s claim. [Buyer] also requests protection from execution (Section 712 ZPO [*]).

[Seller's position at appeal]

The [seller] requests the dismissal of the [buyer]'s appeal.

The Court of First Instance rightfully recognized its international jurisdiction. Munich is the place of performance of the purchase price claims in dispute. The [seller] also has the right of action. All orders in dispute were addressed by the [buyer] to the [seller] and have been confirmed by the [seller]. Also, the claims have not been assigned. With regard to the claim of commission for deliveries to company C, made available for set-off by the [buyer], the Court of First Instance rightfully recognized an invoice amount of US $35,000.

This was a "bargain price", as one wanted to win company C. as a customer. Still, the invoice amount is decisive. The [buyer] also does not have a claim to the requested allowance for advertising expenses. There has been no overall agreement as to a share of the costs. Rather, the parties had assumed that a sharing of the advertising costs of the [buyer] in the amount of DM 14,000 by the [seller] would arise only if the [buyer] kept [buyer]'s contractual obligations to sell the [seller]'s products and to take the required measures. Neither had happened. In other respects, the statement of the [buyer] on that issue had been rightfully dismissed by the Court of First Instance; also in the instance of appeal, the [buyer] is excluded from its set-off. The Court of First Instance rightfully denied the [buyer]'s claims of damages for alleged breaches of contract by the [seller]. The negotiations which were held between the manager of the [seller] and Mr. D. for the purpose of a possible collaboration in sales, had not been contrary to the contract. Also lacking is any substantiated statement of the [buyer] regarding this. It is disputed that the [buyer] had lost but one customer due to the negotiations questioned. The [seller] had effectively terminated the frame contract with the [buyer]. The [buyer] was in arrears with the payment, did not reach the contractually laid down minimum sales and breached the agreed contractual prohibition of competition. Finally, the [buyer] also cannot demand compensation. [Buyer] had not been incorporated into the [seller]'s organization of sales. The [seller] especially did not give any binding directions to the [buyer] regarding the sale of its products, with the exception of the sales quota. The [buyer] was also not obliged to give information; [buyer] was not obliged to provide data on [buyer]'s established clientele to the [seller]. The reference list presented as enclosure B 17 does not originate from the [seller], but from its new contractual partner who took over the list from the advertising leaflets of the [buyer]. The statement of the [buyer] regarding the amount of [buyer]'s alleged claim for compensation is not comprehendible. The basis for calculation is not the turnover, but the "discount core" equivalent to the compensatory claim of the commercial agent for loss of clientele. Furthermore, the [buyer] essentially profited by the suction effect of the brand L [seller's brand].

Reference is made in detail to the statement of grounds for appeal of 25 April 1997 and to the response to the appeal of 27 May 1997.

In its follow-up appeal, the [seller] requests the review of the appealed decision with the measure to hold the [buyer] liable to pay [seller] DM 287,150.33 plus 5% interest on DM 225,830.25 from 12 October 1995 onwards, and on DM 61,320.08 from 13 December 1995 onwards.

[Buyer's response to seller's follow-up appeal]

The [buyer] requests the dismissal of the [seller]'s follow-up appeal.

The [seller] states in the argumentation of its request that the Court of First Instance incorrectly reduced the [seller]'s purchase price claim from the invoice of 26 September 1995 (para. II.13 of the statement of claim) by a total of DM 10,447.15. On the one hand, alongside the sporting equipment considered by the Court of First Instance, two further Lifecycles 9500 REC HRE had been ordered (cf. order enclosure K 28; delivery note K 26). On the other hand, the order had to be transacted on the basis of the rightly invoiced export-traders-prices. This results in a total price of DM 50,487.15 for the order. Additionally, the Court of First Instance incorrectly considered the [buyer]'s claim for commission out of the transaction with company C. The contract of sale of the devices concerned had been concluded - on an offer by BV - only after the termination of the dealer contract. The parties agreed at all times that a commission would certainly be owed only if the sale ensues during the time the dealer contract existed.

The [buyer] refers to the correct, in that respect, considerations of the Court of First Instance. [Buyer] did indeed order two further Lifecycles 9500 REC HRE. However, in delivery note K 26, it can be seen clearly that only three of the devices were delivered. Furthermore, the "Dealer Agreement" does not provide the currency in which the [buyer] had to pay the purchase price. Thus, each respective order of the [buyer], which the [seller] accepted by delivery of the devices, is decisive. The subsequent invoicing could not effect a change of the contracts of sale. The Court of First Instance correctly regarded as substantiated the [buyer]'s set-off with the claim of commission from C. Enclosure K 41 proves that an agreement over the purchase of the devices in question had already been met during the term of the "Dealer Agreement"; only the amount of the purchase price had not been specifically fixed. In other respects, the [buyer] is also entitled to a claim of commission in accordance with Section 87(3) No. 1 HGB [*], even for a deal that has been concluded after the termination of the "Dealer Agreement", as it is obvious that the [seller] knowingly delayed the invoicing of the purchase price.



The admissible appeal by [buyer] as well as the admissible follow-up appeal by [seller] are only partly successful.

I.  1. The claim is admissible. The local jurisdiction of the Court of First Instance does not have to be examined in the second instance, Section 512(a) ZPO [*].

     2. The international jurisdiction derives from Art. 5 No. 1 EuGVÜ [European Communities Convention on Jurisdiction and Enforcement of Judgements in Civil and Commercial Matters], in connection with Art. 57(1)(a) CISG. In that respect, the Appellate Court follows the true reasons of the decision appealed. For matters of elucidation, the following shall be emphasized:

   a) The place of performance in the sense of Art. 5 No. 1 EuGVÜ [*] is determined by the statute of the contract, which is to be determined by the IPR [*] of the forum. This is valid, even if according to Art. 3(2) EGBGB [*] the place of performance is determined by the CISG (EuGH NJW [*] 95, 183; cf. also von Caemmerer/Schlechtriem, CISG, 2nd ed., Art. 57, No. 10 and 11).

   b) In the case at hand, the parties subjected their contractual relations to German law (cf. No. 16 DA enclosure K 29). In so doing, the parties had neither expressly nor by conduct excluded the application of the CISG, so that the CISG, as a part of the German system of law, can generally find application (cf. von Caemmerer/Schlechtriem, CISG, 2nd ed., Art. 6, No. 16).

   c) The material prerequisites for the application of the CISG are met in the present case. It is especially to be noted, that the [seller] - regardless of the more detailed judicial qualification of the underlying frame contract enclosure K 29 - pleads for purchase-money claims (cf. only No. 2 DA: "... the price of goods sold to the DEALER ..."). The parties have their places of business in different Contracting States to the CISG. A case of Art. 3(2) CISG is recognizably not met (regarding the main scope of application of the provision, cf. von Caemmerer/Schlechtriem, CISG, 2nd ed., Art. 3, No. 8 and 9).

   d) A place of payment, derogating from Art. 57(1)(a) CISG, has not been agreed upon by the parties. Especially, the parties had not agreed on payment to be made against the handing over of goods or documents.

       aa) In No. 6 DA, the parties agreed on a provision of the passing of risk to the detriment of the [seller]. This provision, however, does not alter the place of payment; in particular, Art. 57(1)(b) CISG is not applicable to cases of sale by delivery to a place other than the place of performance (cf. von Caemmerer/Schlechtriem, CISG, 2nd ed., Art. 57, No. 16 with further references).

       bb) The agreement that payment had to be made by irrevocable letter of credit (No. 3 DA) did not have any influence on the place of payment, either. From its content, the provision regarding the letter of credit, already leaves the place of performance untouched (Canaris in Staub, HGB-Großkommentar, 4th ed., Bankvertragsrecht, No. 1056). At most, the provision can be understood in the sense that the place of payment is agreed as the place where the letter of credit is made payable; this is regularly the place of the second bank in the seller's country (advising or confirming bank); cf. von Caemmerer/Schlechtriem, CISG, 2nd ed., Art. 57, No. 22. Following the insofar-undisputed statement of the [seller], this is the Bayerische Vereinsbank in Munich in the case at hand.

       cc) As far as the [buyer] was contractually allowed to pay invoices by bank draft ("... payment by bankers cheque on 30 days net"), this also does not contain a derogating agreement regarding the place of payment. The term "bank draft" is not even defined clearly (cf. BGH [*] WM 85, 736/8). Already in that respect there is no reason for the assumption that the parties wanted to agree on the place of payment, through the use of this term, in the formulation of an alternative mode of payment. In case of doubt, it is also valid here that, according to German law, bank drafts are accepted performance as conditional payment; the original claim for payment remains open (cf. Palandt [*], BGB, 56th ed., Par. 364, No. 6 and 10).

  e) Decisive for the place of payment, therefore, is the place of business of the seller. According to Art. 5 No. 1 EuGVÜ [*] this is the place where the obligation relied upon - should one exist - would have to be fulfilled, i.e., the question of the [seller]'s right of action is already not a prerequisite for the admissibility of its claim. However, it would be decisive, if the [seller] changed its place of business and thus established a different legal domicile (cf. von Caemmerer/Schlechtriem, CISG, 2nd ed., Art. 57, No. 11). But even the [buyer] did not assert that the [seller] abandoned its place of business in Unterschleißheim and moved it to Rotterdam. The argumentation of the [buyer] that [buyer]'s contractual partner is the Life Fitness Atlantic BV in Rotterdam must, therefore, be traced only in the examination of the substantiation of the claim (see below).

II. The claim, as far as it still is subject to a decision in second instance, is mostly substantiated. The legal basis is Art. 53 CISG.

      1. The contracts of sale still in dispute have been concluded between the parties; the contractual partner of the [buyer] is the [seller]. Regardless of the communication of 27 April 1995 by BV, that it overtook the "coordination" of the sales activities of Life Fitness (enclosure B 1), as well as all further communications by BV, it must be stated that the orders still in dispute - of 12 May 1995 (enclosure K 8), 15 June 1995 (enclosure K 12) and 28 August 1995 (enclosures K 27 and B 13 respectively) - as well as the additional orders of 5 September 1995 and 8 September 1995 (enclosures K 28 and B 14), all have been addressed by the [buyer] to the [seller]. All orders have been either confirmed by the [seller] (cf. enclosures K 9 and K 13) or fulfilled (cf. enclosures K 10, K 14, K 24 and K 26). In this light, the explanations by BV can not be granted significance decisive for the conclusion of the contract.

      2. Despite corresponding delivery, it is undisputed that the invoices enclosure K 11 in the amount of DM 163,472.-, enclosure K 15 in the amount of US $ 39,398.-, enclosure K 23 in the amount of US $ 12,000 as well as a partial amount of invoice enclosure K 25 in the amount of DM 40,040 have not been paid. In dispute is the delivery (and therefore the purchase-money claim) of two further devices "Lifecycle 9500 REC HRE" from order enclosure K 28 as well as the price fixing in invoice enclosure K 25 (account on the basis of the prices specified in the order or explained in the invoice).

  a) The [buyer] denies having received the two additional "Lifecycles", mainly under reference to the delivery note enclosure K 26. The order as such is undisputed, and in other respects proven by enclosure K 28. The Appellate Court is convinced that both devices had been delivered. This is evidenced in just the delivery note enclosure K 26, cited by the [buyer], which - set under a remark of technical content - explains exactly these two additional "Lifecycles", the account of which is presently at issue. It is obviously an "oversight" (in the true meaning of the word) on behalf of the [buyer]. As the [buyer] also refers to the delivery note to underline [buyer]'s presentation, the Appellate Court sees no reason to doubt the content of the delivery note as such. To that extent, the follow-up appeal of the [seller] is successful.

  b) Regarding the decisive prices, the Appellate Court is not able to follow the argumentation of the [seller]. Irrespective of the frame agreement No. 2 DA ("... the price of goods ... shall be export dealer price ..."), the [buyer] proposed to the [seller] a definite offer with [buyer]'s order enclosures K 27, K 28 and B 14, to the price of the goods ordered. The [seller] accepted the offer by conduct through the delivery of the goods. [Seller] was not allowed to calculate higher prices afterwards; the prices in DM explained in the offers are valid.

As a result, it has to be charged:

Invoice enclosure K 11: DM 163,472
Invoice enclosure K 15: US $ 39,398 = DM 55,551.18 (undisputed)
Invoice enclosure K 23: US $ 12,000 = DM 17,640.00 (undisputed) as well as from
Invoice enclosure K 25: DM 46,840 (DM 40,040 + DM 6,800 for the additional Lifecycles delivered)
Total amount: DM 283,503.18.

As far as further invoices expressed in US $ exceeding enclosure K 25 have to be taken into account, the DM-amounts relied upon by the [seller] stay below the prices specified by the [buyer] in [buyer]'s orders. The [buyer] did not object to this form of accounting; it is therefore also binding for the Appellate Court.

      3. From the above total amount, an undisputed credit in the amount of DM 106.82 has to be deducted. The remaining sum amounts to DM 283,396.36.

      4. The [seller] has not lost the claim explained [above] by way of assignment to BV or by way of assignment of a claim by operation of law. The [seller] denied the assignment alleged by the [buyer]. The [buyer] did not provide evidence for [buyer]'s allegation. The letter by BV of 6 October 1995 presented as enclosure B 7, in which BV speaks of a payment "to our account in Germany", is not sufficient proof for the assignment of a claim, especially since in the letter enclosure B 1 it becomes evident that BV had to exercise coordinating tasks. The [buyer] did not state anything substantiated regarding the prerequisites of the assignment of a right according to Section 25(1) sent. 2 HGB [*]; an assignment of a firm cannot be ascertained.

The [buyer] can set-off against the [seller]'s purchase-money claim still due with a claim for commission against the [seller] out of a delivery to company C. in the amount of DM 5,285. The Appellate Court follows also in this regard the true reasons of the decision appealed. The appeal as well as the follow-up appeal was without success in that respect.

      5. [...]

      6. The [buyer] can furthermore set-off with a counterclaim in the amount of DM 14,000 against the [seller]'s claim. The legal basis is the promise for allowance of advertising expenses in the specified amount by the [seller]. The [buyer] was successful with [buyer]'s appeal in that respect.


      7. Counterclaims for the breach of the "Dealer Agreement" by the [seller] during the execution of the effective contract (until its termination) cannot be raised by the [buyer]. The appeal was not successful in that respect.


      8. The [buyer] was also not successful with [buyer]'s claim of damages for breach of the contract through the termination of the "Dealer Agreement". The termination of the contract by the [seller] is effective.


      9. Finally, the [buyer] has no right to demand compensation of the authorized retailer. [Buyer]'s set-off with such a compensatory claim runs idle.


III. [Interest]

The [seller]'s claim of interest follows from Art. 78 CISG in connection with Section 352 HGB [*]. In correspondence with it being due, the [buyer]'s claim of the allowance for advertising expenses had to be deducted already from the first claim relied upon. However, the [buyer]'s claim for commission from the C-deal had only become due on 31 January 1996; Section 87(a)(4) in connection with Section 87(c)(1) HGB [*]. The set-off with this claim could therefore only extinguish the corresponding part of the [seller]'s claim from 31 January 1996 onwards, Section 389 BGB [*]. Thus, for the period from 13 December 1995 to 30 January 1996, additional interest on DM 5,285 had to be paid.



* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Plaintiff/Appellee of Italy is referred to as [seller]; the Defendant/Appellant of Germany is referred to as [buyer]. Amounts in German currency [Deutsche Mark] are indicated as [DM]; amounts in the currency of France [French francs] are indicated by [f].

Translator's note on other abbreviations: BGB = Bürgerliches Gesetzbuch [German Civil Code]; BGH = Bundesgerichtshof [German Federal Supreme Court of Justice]; EGBGB = Einführungsgesetzbuch zum Bürgerlichen Gesetzbuche [German Code on Private International Law]; EuGVÜ = [European Communities Convention on Jurisdiction and Enforcement of Judgements in Civil and Commercial Matters]; HGB = Handelsgesetzbuch [the German Commercial Code]; IPR = Rules of conflict of laws; NJW = Neue Juristische Wochenschrift [a well-known German Law Journal]; Palandt [well-known and influential commentary to the German Civil Code]; ZPO = Zivilprozessordnung [German Code on Civil Procedure].

** Tobias Koppitz is a student at law at Humboldt University Berlin, preparing for his State examination. With the team of Humboldt University Berlin, he won the Frédéric Eisemann Award for third place in the 8th Willem C. Vis International Commercial Arbitration Moot 2000/2001. He was coach to the team of Humboldt University Berlin in the 9th Willem C. Vis Moot 2001/2002. The second-iteration redaction of this translation was by Dr. John Felemegas of Australia.

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