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| Abstract | ||||||||||||||||||
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| The plaintiff, a German manufacturer, agreed to sell aluminum tent profiles and covers for some very large tents and other accessories to an Australian company, with a down payment and a series of instalments after the delivery of the goods to Australia. The seller delivered the goods but the buyer fell behind in payment of the instalments and, having encountered other financial difficulties, was placed in administration. The seller commenced legal action against the buyer and the administrator, alleging that the contract contained a retention of title or Romalpa clause, according to which the seller would retain the title on the goods sold until the purchase price had been paid in full, and demanded the declaration that the property in goods had remained with it, an order for delivering the goods and damages suffered because of breach of contract by the buyer and for wrongful detention of the goods. The defendants denied that the parties had agreed on a Romalpa clause.
The Court held that the contract was governed by CISG as at the time of its conclusion the parties had their places of business in two contracting States (Germany and Australia) (Art. 1(1)(a) CISG), pointing out that CISG, having become part of the municipal law of Australia, is not to be treated as a foreign law which requires proof as a fact, so that its meaning is a matter for the Court and not for expert evidence. The Court also stressed that when CISG is applicable, common law contractual concepts and remedies (such as, for instance, 'repudiation' and 'acceptance of the repudiation') are replaced by CISG relevant provisions. The Court applied CISG in order to determine whether a retention of title clause had been agreed between the parties and, if so, its content, while, in compliance with Arts. 4 and 7(2) CISG, the effects of the clause on the property in the goods were to be determined according to the law applicable by virtue of the rules of private international law. Taking into account all the relevant circumstances of the case - including negotiations between the parties, the content of the documents and correspondence exchanged in the course of such negotiations - as well as the facts as they were stated in the parties' affidavit, and in the light of the criteria and rules stated in Arts. 8, 11, 15, 18, and 29 CISG, the Court reached the conclusion that the parties had actually agreed on a retention of title clause whereby the property in goods would pass to the buyer only upon full payment of the contract price. As to the non-performance of the contract by the buyer, the Court found that the appointment of an administrator by the buyer - which could be evaluated as an acknowledgment by the buyer itself that it was insolvent - and the placement of the company under administration, in the light of the circumstances of the case, constituted a fundamental breach of contract within the meaning of Art. 25 CISG which would have justified the notification of a declaration of avoidance by the seller, since these facts resulted in such detriment to the other party as substantially to deprive it of what it was entitled to expect under the contract; so did the defendants' denial of the existence of the retention of title clause. The filing of the statement of the claim by the seller could be construed as a declaration of avoidance of the contract (Art. 26 CISG), since it made it clear that at that time the seller treated the contract as terminated. The seller was thus entitled to enforce the rights and obligations which arose on the avoidance of the contract under CISG, and particularly to seek damages (Arts. 74, 75, 76, 81 and 84 CISG), consisting in the loss suffered until the return of the goods. Moreover the Court stated that when the plaintiff claims damages on the ground of two different causes of action (in this case CISG and the tort of conversion for interfering with possessory rights) the total amount of damages awarded by the Court cannot exceed the plaintiff's full loss. |