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| Abstract | ||||||||||||||||||
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| A German producer of hydraulic engines concluded a distributorship agreement with an Italian company, according to which the latter was granted the exclusive right to distribute the products in Italy, being entitled to a percentage in the case of direct sale by the German producer. Notice of termination of the distributorship agreement was to be given within a certain period of time and not before a certain date.
Further to the distributorship agreement the German producer (the seller) made several deliveries of engines to the Italian company (the buyer). The buyer, however, did not pay the full contract price. The seller commenced an action claiming full payment, to which the buyer counterclaimed set-off with damages allegedly deriving from a seller's breach of the distributorship contract. The Court held that while CISG is not applicable to a distributorship agreement - when agency aspects prevail - it does cover each separate contract of sale concluded under a distributorship agreement. The Court held the seller to be entitled to payment of the full purchase price (Art. 53 CISG). In addition, it awarded the seller damages (Art. 74 CISG), including attorney's fees for a pre-trial demand for payment and interest at the rate actually charged by the seller's bank. As for the buyer's alleged right to set-off the seller's claim with damages deriving from the seller's breach of the distributorship agreement, the Court observed that set-off is a matter excluded from CISG and governed by the applicable domestic law. The set-off rules, however, did not come to application in the case at hand because the buyer failed to provide sufficient evidence of the alleged breach and of damages deriving thereof. |