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| A French seller and a Swiss buyer (a producer of plastic goods) entered into a number of contracts for the sale of granular plastic. Afterwards, the buyer was taken over by a Swiss company. However, the latter kept ordering granular plastic from the seller using the letterheads and stamps of the original buyer. After two invoices remained unpaid, the seller commenced legal action against the original buyer to obtain payment of the price with interest. The buyer argued that it was not bound to pay such invoices, because the relevant orders had not been made it.
The Court held that the sale contracts were governed by CISG, as the parties had their places of business in Contracting States (Art. 1(1)(a) CISG). As to the question whether the original buyer was bound by the contract and conseguently obligated to pay the purchase price, the Court held that it was a question of agency which is not expressly settled by CISG. While riaffirming the necessity ro interpret the Convention autonomously, i.e. within the system of the Convention itself, and to fill in gaps according to the general principles underlying the Convention and only absent such principles according to the otherwise applicable domestic law, the Court found that with respect to the question of agency Swiss law was applicable as the law where the seller had its place of business and hold the original buyer liable for the unpaid invoices. In reaching this result, the Court pointed out that, although the original buyer had not known of the conduct of the new company, it could have known of and prevented such conduct by exercising due care. The Court held that the buyer had to pay the purchase price pursuant to Art. 54 CISG and that according to Art. 62 CISG the seller could claim such payment because the buyer had failed to perform. The Court further observed that Art. 50 CISG would allow the buyer to reduce the price for non-conforming goods. However, in the case at hand, the Court found that the buyer could not avail itself of such remedy since it had failed to make a valid declaration thereof. The Court finally held that the seller was entitled to recover interests according to Art. 78 CISG. Since CISG does not determine the interest rate, the Court decided that the interest rate had to be determined in accordance with the applicable domestic law (Swiss law). |