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| An Italian seller and a German buyer entered into two contracts for the sale of cars. The buyer paid part of the purchase price for the first contract by check, which was protested later on. Due to the buyer’s inability to deliver cars, the second contract was cancelled and the seller refunded the buyer of the advance payment that the latter had already performed by another check. Since also this second check was dishonoured by the buyer, the seller brought an action against the buyer asking for both the outstanding price as to the first contract, and the restitution of the refunded sums relating to the advance payment in the second contract, as well as damages for protesting. The buyer, on its part, claimed for set-off, alleging its right to obtain payment by the seller under a previous contract of sale.
The First Instance Court granted the seller’s claims. On appeal, the Court confirmed the first instance judgement but based it on a reasoning different in part. Firstly, the Court of Appeal held the buyer entitled to obtain the remaining purchase price as to the first contract in accordance with Art. 53 CISG. Contrary to the first instance decision, on appeal the Court stated that the seller had no right to restitution of the refunded price under Art. 81(2) CISG. In reaching this conclusion, the Court pointed out that Art. 81(2) CISG only allows restitution of what has been paid or supplied under the contract. In the case at hand, since the check drawn for the second contract of sale had been dishonoured, it followed that the seller never received payment. Thus, the reimbursement made by the seller to the buyer was founded on an non-existing obligation under CISG. However, the Court held the seller entitled to reimbursement under Italian law, which had to be applied by virtue of German private international law rules for matters not governed by the Convention (Art. 4 CISG). Moreover the Court of Appeal dismissed the buyer’s claim as to set-off. In order to reach this conclusion, as set-off is a matter not covered by the CISG (Art. 4 CISG), the Court applied Italian law, whereby the right of set-off is excluded when it has been previously waived. In the Court’s opinion, the agreement on effecting payment by check implicitly amounted to a waiver of set-off. The seller was also awarded interest on the remaining price (Art. 78 CISG) at the rate determined by the applicable Italian law. Finally, the Court entitled the buyer to recover costs for protesting pursuant to Arts. 61 and 74 CISG. |