An Italian seller and a German buyer, who had been in business relations for years, concluded several contracts for the sale of different types of thermal insulation material. The seller granted the buyer a credit line up to the amount of DM 300.000 without any time limit. After three years the parties entered into a new agreement, according to which from thereon the buyer had to pay upon delivery. Two years later, after the buyer's refusal to pay the price for a new delivery, the seller brought an action for the payment not only of this price but also of the outstanding sums due under the previous agreement. The buyer objected to the request for payment of the latter sums, alleging that the line of credit agreement was still effective.
The lower Court decided in favor of the seller. The appellate Court confirmed the first instance decision.
The appellate Court found that the seller, by granting initially deferment of payment for an indefinite period of time, had derogated from the principle laid down in Art. 58(1) CISG, according to which payment should occur upon delivery of the goods and documents. However, since this original agreement was subsequently terminated, the buyer's refusal to pay for a new delivery gave the seller the right to request payment also of the outstanding sums under the previous agreement, without any need for request of payment or compliance with any formality on the side of the seller (Art. 59 CISG). |