Data

Date:: 21-03-2023
Country:: Netherlands
Number:: 200.292.817/01
Court:: Gerechtshof Arnhem-Leeuwarden (Court of Appeal)
Parties:: Raiffeisenbank Emsland-Mitte eG v. De Eendracht U.A.

Keywords

INCORPORATION OF STANDARD TERMS - THE OTHER PARTY MUST HAVE A REASONABLE OPPORTUNITY TO BECOME AWARE OF THOSE TERMS - REFERENCE THAT INVOICES INDICATING THE TERMS WERE AVAILABLE AT THE SELLER'S OFFICE INSUFFICIENT

SELLER'S FAILURE TO DELIVER ORGANIC GOODS AS PROVIDED BY THE CONTRACT - AMOUNTING TO LACK OF CONFORMITY (ART. 35 CISG)

BUYER'S RIGHT TO CLAIM FOR DAMAGES UNDER ART. 74 CISG

Abstract

[CLOUT CASE no. 2297. Abstract prepared by Jan Smits, National Correspondent, and Steven Debie]

A company based in the Kingdom of the Netherlands (the seller) sold organic compound feed for laying hens to a company based in Germany (the buyer) under several purchase contracts, who then resold the goods to several poultry farmers in Germany. Due to contamination of the goods with pesticides, the German authorities prohibited the poultry farmers from selling the eggs laid by their chickens as organic
for several weeks. These poultry farmers held the buyer liable for the damages they incurred. The buyer and its insurer compensated the poultry farmers for their losses and sought to recover the amounts paid, including interest and costs, from the seller, arguing that the goods sold by the seller did not conform to the parties’ contracts. The District Court of Overijssel (the “District Court”) ruled in favour of the buyer, but the
seller filed an appeal before the Court of Appeal of Arnhem-Leeuwarden (the “Court of Appeal”). The buyer also appealed the decision, seeking to have its claims – which consisted in an increased amount – granted.
The seller raised the exception of the limitation period, contending that the buyer’s claim was time-barred under the one-year limitation period stipulated in the seller’s general terms and conditions, which stated that liability for any legal claim regarding compensation for (among others) delivered goods expired one year after delivery.
Before addressing the merits of the seller’s exception of limitation period, the Court of Appeal first determined whether the seller’s general terms and conditions formed part of the contract, a question governed by the CISG. A mere reference to the terms, the seller’s own use of general terms, or their joint use is insufficient for applicability under the CISG as established by the Dutch Supreme Court; the parties must have agreed to the terms at the time of contract formation, and the buyer must have been given a reasonable opportunity to become aware of these terms. The seller failed to provide evidence that the parties had negotiated or agreed on the applicability of its general terms prior to the contracts in question, nor did it show that the buyer had accepted them. The reference to invoices indicating that the terms were available at the seller’s office was deemed insufficient. Additionally, the court noted that the reference was vague, not specifying which terms applied or whether they were available in the German language. The Court of Appeal therefore ruled that the seller did not establish sufficient facts or circumstances to prove the applicability of its general terms.

The core issue in the seller’s appeal was the District Court’s rejection of its arguments concerning the buyer’s obligations under articles 38 and 39 of the CISG, particularly the obligation to examine the goods and to notify the seller of defects. The seller claimed that the buyer should have examined the goods upon delivery and, by failing to do so, did not fulfil its notification obligation. The District Court, however,
confirmed that failure to examine does not carry an independent penalty but only affects the starting point of the notification period under article 39(1) CISG. The Court of Appeal supported the District Court’s ruling, stating that no examination was required given the long-standing commercial relationship, the seller’s certifications, and the absence of concrete evidence suggesting contamination at the time. The Court
of Appeal also rejected the seller’s argument that the buyer should have conducted laboratory tests earlier, as there was no reason to suspect contamination until later.

Moreover, the goods delivered by the seller were found to be non-conforming under article 35 of the CISG due to the presence of pesticides, which disqualified them from being considered organic. Although the seller contested this, it failed to provide sufficient evidence to disprove the contamination. The buyer, on the other hand, presented detailed evidence, including findings from German authorities confirming
the contamination. The seller’s argument that the German authorities’ reports did not clearly trace the contamination back to the seller, held little weight, especially since the seller itself had provided the German authorities with the names of the affected farmers and the decisions of the German authorities clearly linked the contamination to the seller. The Court of Appeal, like the District Court, concluded that the goods supplied by the seller were contaminated. Due to the insufficient substantiation of the
seller’s defence and the lack of evidence pointing to another cause of the contamination, the buyer successfully demonstrated that the goods did not conform to the contract under Article 35 of the CISG.

The Court of Appeal further applied article 74 of the CISG, noting that the seller could have foreseen that the damage could occur if it supplied goods that did not meet the applicable requirements. The dispute also involved article 77 of the CISG regarding the buyer’s duty to mitigate losses. The Court of Appeal held that the seller failed to prove that the buyer or the poultry farmers did not take sufficient steps to mitigate
damages, including challenging the German authorities ban through legal remedies.

The Court of Appeal also rejected the seller’s argument that the buyer failed to invoke clauses contained in the buyer’s terms and conditions on limitation of liability, among others, due to lack of evidence that these terms applied.

Consequently, the Court of Appeal determined that the seller had breached its contractual obligations, making the seller liable for damages.

Fulltext

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Source

Original in Dutch:
- available at: www.rechtspraak.nl}}