|
||||||||||||||||||
| Abstract | ||||||||||||||||||
| ||||||||||||||||||
| A Belgian seller and a German buyer entered into a contract for the supply of construction materials. The contract was exclusively regulated by the seller's standard terms. According to those terms, the goods should have been delivered in “November, December 1999 and January 2000”. The contract also provided for payment “cash against documents (B/L)”. Since the buyer accepted and paid only for some of the shipments, the seller announced to the buyer that it would resell the goods within seven days but failed to do so. Nearly six months later, after granting the buyer a final period of time in which to perform, the seller invoked avoidance of part of the contract according to Art. 64(1)(b) CISG, entered into a cover sale and claimed damages. On its part, the buyer invoked breach of contract by the seller in many respects.
The First Instance Court decided in favor of the seller, but denied it part of the damages it had claimed. Then the buyer appealed and the seller brought an incidental appeal to recover all the damages sought. The Second Instance Court confirmed the lower Court’s decision. As to the applicable law, the Second Instance Court held that CISG had to be applied, since the seller’s standard terms, which had been accepted by the buyer, designated the law of a Contracting State (i.e. Belgian law) as the one governing the contract. As to the merits, the Court found that the buyer was not entitled to consider the contract avoided on the basis of Art. 49(1)(a) CISG, since no contractual breach by the seller was proven. First of all, regarding late delivery, the Court found that no period of time for delivery had been agreed upon by the parties, "November, December 1999 and January 2000" merely being expected dates for shipment. Consequently, contrary to what the buyer argued, Art. 33(b) CISG could not be deemed violated. The Court also excluded that partial delivery by the seller amounted to a breach of Art. 35 CISG, since partial deliveries were not only allowed under the contract, but had also been accepted by the buyer, who had made no complaints in that connection. With respect to delivery without original documents, the Court affirmed that Art. 34 CISG had not been breached since the buyer had paid for several deliveries without objecting to the fact that documents had not been handed over. Furthermore, since the buyer had requested to take delivery of only part of the goods, the seller could do nothing else but hand over a delivery order instead of the bill of lading (B/L), as provided for by the contract. Finally, lacking any evidence thereof, the Court rejected the buyer’s claim that the goods were not of the quality contractually agreed upon (Art. 35(1) CISG). As to the seller’s claim for damages, the Court found that the seller had failed to meet his duty to mitigate damages under Art. 77 CISG. Although the seller had notified the buyer of its intention to enter into a cover sale in April, the resale did not take place within a reasonable time thereafter (in the opinion of the Court, three months) but only six months later. Nevertheless, the Court held the seller entitled to recover the difference between the unpaid invoices and the income from the resale (Art. 75 CISG), the buyer having failed to demonstrate that a higher price could have been obtained if the resale had been timely. In the opinion of the Court, the seller also had the right to recover insurance fees and costs for storage under Art. 85 CISG, but not for the period exceeding the three months within which the cover sale should have been concluded. Furthermore, according to Art. 78 CISG, the seller was awarded interest in the amount provided for in the seller’s standard terms (i.e. 9%) starting from the date of payment of the resale. Finally, the Court rejected the seller’s claim both for complementary damages (e.g. administrative and management costs) and for compound interest. In doing so, the Court pointed out that under CISG complementary damages can only be recovered if the party demonstrates that damages are higher than the interest accorded, while compound interest can only be awarded if the party gives evidence of being entitled to it (e.g. because it had to pay extra interest on account of the fact that it had not received the sums owed to it). |