Source: http://cisgw3.law.pace.edu/cases/950208g1.html
Timestamp: 2019-04-23 14:03:50+00:00

Document:
The plaintiff [buyer], an Italian trading company, and the defendant [seller], a German automobile marketing company, concluded a sales contract concerning eleven cars for the price of about DM 400.000, --. The contract provided that the [buyer] was to furnish a bank guarantee for the sales price. A bank guarantee in the amount of DM 55.000 was granted in favor of the [seller]. After the conclusion of the contract, the parties had some communications on the time of delivery and special features of the ordered cars. Five cars were finally ready for delivery in August, the remaining six in October. In October, the [buyer] informed the [seller] that, due to extreme exchange rate fluctuations between the Lira and the Mark, acceptance of delivery of the cars was impossible. The [buyer] asked the [seller] to try to defer delivery from the supplier. In the beginning of November, the [seller] cancelled all orders it had made with its suppliers and demanded payment of the bank guarantee which was paid out. The [buyer] claimed repayment of the guaranty sum and damages.
The appellate court found the [buyer] to have a repayment claim against the [seller]. It was held that, although the CISG will normally apply to German-Italian sales, it does not regulate the seller's rights concerning bank guaranties. The court, applying its rules of private international law, determined that German law was applicable.
The court found the [seller] to have been unjustifiedly enriched according to 812(1) 1 German Civil Code since the [seller] obtained the payment of the bank guarantee without legal grounds. The court held that the bank guarantee was agreed upon to cover an obligation to pay and dismissed the [seller's] argument that the bank guaranty should serve as a penalty for not taking delivery by the [buyer].
Furthermore the court found that the [seller] had not taken the appropriate legal measures to mitigate its loss (article 77 CISG). By giving notice that the cars were ready to be picked up, the [seller] had in fact fulfilled its contractual obligations (article 31 CISG) and the [buyer] committed a breach of contract by not taking delivery of the cars (article 53 CISG). The [seller], therefore, was entitled to the remedies provided by articles 61(1)(b) and 74 CISG. But, as the [seller] never avoided the contract, it had disregarded its duty to mitigate its loss and could not claim damages. Therefore, the [seller] was not entitled to the guaranty sum.
However, the court dismissed the [buyer's] claim for damages against the [seller] according to articles 45(1)(b), 45(2), 49(1)(a) and 25 CISG. Since the parties had not agreed on the precise date of delivery, the [seller's] readiness to deliver in August and October was no breach of contract, let alone a fundamental one. Thus, the right to declare the contract avoided because of the non-delivery of the cars was lost by the [buyer]. To allow the [buyer] now, i.e., 2 1/2 years later, to declare the contract avoided would violate the principle of good faith (article 7(1) CISG).
The court held that the [buyer] was entitled to interest according to article 84 CISG. Even though the claim for repayment was based on article 812 German Civil Code, the claim for interest derived from the CISG, because the repayment was a refund of the price. As the CISG does not regulate the interest rate, German Law was applicable. In view of the fact that both parties were merchants, the interest rate of 5% applied (article 352 German Commercial Code).
(ii) indemnify the [buyer] against any damages suffered, i.e., loss of profits.
On 9 March 1992, the [buyer] and the [seller], a German automobile distribution company, entered into a contract for the sale and delivery of eleven automobiles of the German brand BMW Series 3. The parties agreed that the price for the goods should be DM [*] 419,587.69. According to the provisions as set forth in the sales contract, the [buyer] was obliged to provide a bank guarantee in favor of the [seller]. The existence of further agreements, oral or in writing, which the parties have made regarding the sales contract, is in dispute between the parties.
On 18 March 1992, Banco di Napoli [an Italian Bank] granted a bank guarantee up to an amount of DM [*] 55,000 in favor of the [seller]. With regard to any request by the [seller] for the payment under the Guarantee, the Guarantee sets out the following: "... The guarantor [i.e., Banco di Napoli] is obliged to pay out the guaranteed amount upon the first written demand from the [seller] as beneficiary. Such a demand has to comprise the confirmation and notification in writing that the [buyer] has not met its payment duties in compliance with the provisions of the sales contract. If the [seller] as beneficiary made a request for the guaranteed amount, it would be obliged to have this request forwarded by its bank to the guarantor. This forwarded request for payment under the Guarantee has to be accompanied by a copy of the unpaid invoice under the sales contract ..." (Attachment P 10).
At the beginning of the Guarantee, there was fixed the common agreement between the guarantor [Banco di Napoli] and the [seller] that the Guarantee shall secure the payment of the purchase price for the sold goods under the sales contract up to an amount of DM [*] 55,000.
According to the text of the Guarantee, it should expire on 15 November 1992.
The [seller] informed the [buyer] in detail of the automobiles sold and the details of the performance under the sales contract. In particular, the [seller], in its letter dated 14 April 1992, listed the configuration and price for each of the eleven BMW Series 3. According to that letter, the automobiles shall be delivered "... during July, August, September or October ..." Furthermore, that letter refers to the Guarantee which was granted by Banco di Napoli by virtue of the request of one of the [seller]'s shareholders (Attachment D 11).
The [seller], in its letter of 14 April 1992, required from the [buyer] that beneath the [seller]'s signature the [buyer] should confirm and firmly agree on the conditions set forth in that letter. Pursuant to this request, the [buyer] sent back the original of that letter, whereby the [buyer] signed and sealed the provisions of this letter as requested. However, it is worth noting that the [buyer] had made some handwritten amendments to the text in respect of the [seller]'s proposals therein (Attachment P 9). In contrast with the delivery period as proposed by the [seller], the [buyer] amended the text of the aforementioned letter so that "... the [seller] is to deliver all automobiles during July, August (120 days shall be adequate) - and irrevocably by 15 August at the latest... " The [seller] should herewith be allowed to "... deliver the urgently needed automobiles in July ..." In respect of six automobiles, listed in the [seller]'s letter of 14 April 1992, the [buyer] mentioned its wish to have their type, equipment and configuration altered. The [seller] offered to the [buyer] suitable automobiles on 13 August and on 20 July and set out the conditions for their delivery in August/September (D 6) and on 30 September 1992 (D 7).
The [seller], in a letter dated 18 August 1992, gave notice to the [buyer] that altogether five automobiles were ready to be delivered to the [buyer]. This notice was in compliance with the provisions as set out in the [seller]'s letter of 14 April 1992.
With reference to the [seller]'s letter of 18 August 1992 and its offers of 13 August and 20 July 1992, the [buyer] in its reply letter requested that the [seller] made the aforementioned automobiles available to a transport company taking delivery of the automobiles on behalf of the [buyer]. This response of the [buyer] dealt overall with ten automobiles, BMW Series 3, as listed in the [seller]'s earlier letters (D 3).
(ii) the remaining part of the automobiles ordered by the [buyer] would be available for delivery in the next few days.
In the same letter, the [seller] requested from the [buyer] detailed information about the exact date when the [buyer] would send its transport company to take delivery of the automobiles because the [seller] would be obliged to prepare the appropriate documents in due course before the prospective delivery date (D 4).
In response to the letter of 8 October 1992, the [buyer] informed the [seller] of substantial fluctuations in the exchange rate between the Italian currency (Italian Lira) and the German currency (Deutsche Mark). Consequently, the [buyer] "... could not accept and take delivery of the sold automobiles at that time ..." In the same letter, the [buyer] asked the [seller] "... to enter into negotiations with its supplier for the postponing of the delivery of the automobiles, because of the [buyer]'s expectations that the disadvantageous exchange rate situation would return to normal in due time. ..."
The [seller] requested the payment of the guaranteed amount from Banco di Napoli via Dresdner Bank on 2 November 1992. Thereby, the [seller] presented eleven invoices dated 15 October 1992, pursuant to the provisions of the Guarantee. At the beginning of November 1992, the [seller] cancelled all of its orders with its suppliers in respect of the sold automobiles.
On 8 September 1993, the [seller]'s lawyer demanded from the [buyer] payment of the sum due and payable under the sales contract and threatened to take legal action against the [buyer] in the case of non-payment.
While the [seller] sued the [buyer] for payment of the sum due and payable under the Guarantee, the guarantor Banco di Napoli did not pay the guaranteed amount. The [seller] informed the [buyer] of the request for payment of the guaranteed amount under the Guarantee on 5 January 1994.
(ii) the [buyer] to not pay the purchase price despite having received the aforementioned proof of the facts that the [seller] had possession of the automobiles in question and that those automobiles were ready for delivery.
According to the letter of 14 April 1992, the parties have determined the delivery date of the automobiles in question as "irrevocably by 15 August at the latest." The [seller] did not provide evidence that it was actually able to deliver the automobiles in question in compliance with the agreed formal requirements under the sales contract and under any supplementary letters. In fact, the automobiles were never in stock at the [seller]'s warehouse and particularly not at the latest delivery date determined. For this reason, the [buyer] no longer had any liability and duty to take delivery and accept the automobiles after the lapse of 15 August 1992.
The invoices presented to Banco di Napoli were only sham invoices and the [seller] had presented them in a fraudulent manner, merely for the purpose of receiving unjustified financial advantages.
The [seller] had acted abusively concerning its rights under the Guarantee. Banco di Napoli refused to pay any amount under the Guarantee, which is governed by Italian law due to the absence of any contractual agreement between the parties. However, Banco di Napoli requested the [buyer] to provide the guaranteed amount in favor of the bank on 8 September 1993 by virtue of the [buyer]'s threat to take legal actions against the bank. The pending preliminary legal action taken in Italy should not have any adverse effect on the claimed injunctive relief in the pending legal proceeding in Germany.
The [seller] should be made to omit any request to the guarantor Banco di Napoli, branch in Fondi, for any payment under the Guarantee of 18 March 1992 in the amount of DM [*] 55,000. If the [seller] does not obey and act in compliance with the aforementioned omission obligation pursuant to Section 890 ZPO [*], the [seller] should be obliged to pay a fine between DM [*] 5 and DM [*] 500,000. If the ordered fine is not paid by the [seller], court should direct that the [seller]'s managing director(s) may be imprisoned for a period of up to six months.
The [buyer]'s lawsuit should be dismissed.
The [seller] has raised the plea of a pending separate legal action in respect of the pending lawsuit in Italy brought before the Italian court by the [buyer]. The [seller] has argued that the parties to the legal proceedings in Germany and in Italy are identical.
The [seller] has further argued that Banco di Napoli is obliged to pay the guaranteed amount pursuant to the provisions of the Guarantee, without any further right to research the facts affecting the legal relationship between the parties. Furthermore, the [seller] is the holder of a valid and mature claim to demand the guaranteed amount against the guarantor. The automobiles ordered by the [buyer] have been made available for delivery. The parties did not agree on a fixed date for delivery of the automobiles as "irrevocably by 15 August 1992 at the latest." With regard to the delivery dates, the [seller]'s letter of 14 April 1992 is the only relevant document because the changes made by the [buyer] in the [seller]'s original letter are irrelevant. The aforementioned letter of the [seller] should be regarded only as a confirmation of the [buyer]'s previous order or previous negotiations between the parties.
According to the [seller]'s fax of 18 August 1992 and its letter of 8 October 1992, the [seller] offered the [buyer] the delivery of the five ordered automobiles, whereby the [buyer] was obliged to collect those automobiles itself. The parties did not agree to provide any evidence with regard to the delivery of the automobiles by the presentation of a "pro forma" invoice accompanying the information about the vehicle identification numbers. The [buyer] did not collect the aforementioned five automobiles and the rest of the sold ones after the [seller]'s offers to do so although the [buyer] had given notice that the [buyer] had already instructed a transport company to collect on the [buyer]'s behalf the automobiles in question. Thereafter, the [buyer] had requested several times via phone and finally in a letter on 23 October 1992 the postponement of the delivery dates. The [seller] has informed the [buyer] without any delay after the receipt of this letter, that the aforementioned five automobiles and the rest of the sold automobiles had been made available for delivery and should be collected by the [buyer] without any further delay. The [buyer], however, refused to collect and accept the automobiles in question. In the light of this refusal to pay for and collect the automobiles, the [seller] was entitled to request the payment of the guaranteed amount because the [seller] had suffered a loss in the amount of DM [*] 55,000 at least. The loss was incurred because the [seller] was only in the position to sell all the automobiles in question by granting a large partial discount to other relevant purchasers.
The Court of First Instance [Germany 8 November 1993 Landgericht (District Court) München] dismissed the [buyer]'s legal action as illegitimate. The Court of First Instance based its decision on the grounds that there were two pending legal proceedings with regard to the [buyer]'s legal action, in Italy and in Germany at the same time. Therefore there might be the possibility of an inconsistency in the judgments, where the same matter is in dispute in both pending lawsuits. Hence, the Italian preliminary legal action could be changed into a main legal proceeding at any time.
The [buyer] appealed against the aforementioned dismissal of its lawsuit by the Court of First Instance.
In the light of the payment under the Guarantee by Banco di Napoli and subsequently to the final settlement of the injunctive relief as requested initially, the [buyer] requests from the [seller] the repayment of the amount paid out of DM [*] 55,000 plus accrued interest due to the unjust enrichment of the [buyer]'s claim. The [buyer] justifies making the aforementioned claim by referring to the arguments [buyer] brought before the Court of First Instance.
The [buyer] alleges that [seller] did not have any legal right to request any payment of the guaranteed amount. Consequently, the payment under the Guarantee was made without any legal justification.
The [buyer] is of the opinion that the [buyer]'s initial lawsuit concerning an injunctive relief was legitimate. The Court of First Instance made a mistake in respect of the assessment of whether or not there is a separate legal proceeding pending. In the meantime, the legal proceeding for a preliminary legal action in Italy was filed and completed on 27 September 1993.
Furthermore, the injunctive relief was also justified. In the light of the injunctive relief, only the legal relationship between the parties was relevant and important. The [buyer] was entitled to request the omission of any payment under the Guarantee because the [seller] had breached the sales contract.
The [buyer] upon appeal makes a further claim of damages in the amount of DM [*] 62,044. The [buyer] justifies its further claim of damages by arguing that the [seller] has committed a fundamental breach of contract. The [seller] did not deliver the ordered automobiles on 15 August 1992, and then delayed the delivery in an unreasonable manner. As a result, the [buyer] was entitled to terminate the sales contract due to the aforementioned fundamental breach of contract. The [buyer] herewith declares the termination of the sales contract (pleading dated 17 February 1994). As a resulting of the non-performance of the contract, the [buyer] suffered the aforementioned loss of profit. That loss of profit should be calculated on the basis of the purchase price for the eleven automobiles in question, for which the [buyer] entered into eleven individual purchase agreements with its customers, less the [buyer]'s paid purchase price, transport and licensing costs. For further detailed information about this calculation, the Appellate Court refers to page 64 of the Court of Appeal's files of this appellate proceeding.
I. The judgement of the Court of First Instance be quashed.
II. The [seller] be held liable to pay to the [buyer] the amount of DM [*] 130,284 plus 18% accrued interest on DM [*] 58.240 since 5 January 1994 and on DM [*] 62,044, since the date of the pending legal action.
II. Alternatively, the appeal be dismissed. The [seller] is of the opinion that the appeal itself is also not legitimate.
Due to the fact that the main issue has been settled before the [buyer] appealed to the Appellate Court, the [buyer] no longer has one necessary prerequisite for an appeal, i.e., the gravamen in this case.
The appeal violates Section 99 Par. 1 ZPO [*].
The lawsuit in respect of an injunctive relief also was not legitimate. The exception of a separate pending action is satisfied in respect of the Italian preliminary legal action. Furthermore, the lawsuit in respect of an injunctive relief was unjustified. All of the prerequisites for the request of payment under the Guarantee had been complied with.
The present claim of repayment or damages may be deemed an illegitimate amendment of the lawsuit by the [buyer].
The [seller] is of the opinion that the [buyer]'s claim based on unjust enrichment of the [buyer]'s claim is not justified under the governing German law.
On 9 March 1992, the parties had agreed upon the delivery and acceptance period from July to October 1992 at the latest. This was the date when the parties entered into the sales contract. However, the parties had further agreed that the [buyer] may be obliged to pay a contractual fine of DM [*] 5,000 if the [buyer] had not collected and accepted the sold automobiles in October 1992 at the latest. The [buyer] confirmed the time for delivery and acceptance again in its letter of 14 April 1992.
The aforementioned contractual fine of DM [*] 5,000 reflects the profit that the [seller] could have made under the resale of the goods to the [buyer], including any ancillary costs. The parties had further agreed that the [seller] is not obliged to provide any evidence about the actual level of the fine. The Guarantee also provided security for any claim under the aforementioned contractual fine. The [seller]'s claim under the fine became due and payable immediately when the [buyer], by letter of 23 October 1992, refused to collect and accept the sold automobiles.
The [seller] pleads additionally that it has also suffered a loss, i.e., unrealized profit, in the amount of DM [*] 54,109.30 (net sum) due to the aforementioned refusal of acceptance. After the [buyer] had refused to accept and collect the sold automobiles, the [seller] cancelled any legally binding contract of their purchase from its suppliers at the beginning of November 1992. Since the [seller] had already ordered those automobiles from its suppliers after the parties entered into the sales contract, the unrealized profit which is claimed presently by the [seller], should be calculated as the difference between the purchase price under the sales contract and the purchase price which the [seller] was obliged to pay under the purchase agreements with its suppliers.
The [buyer] may not make any claims of damages because the parties have not agreed upon any fixed delivery date for the sold automobiles. At least, the [buyer] did not care about the compliance with any fixed delivery date.
The [buyer] also does not have any right to terminate the sales contract. Hence, the [buyer] did not fix a period of grace of reasonable length in favor of the [seller] so that it could comply with any delivery dates.
Furthermore, the [seller] denies the level of the damages, i.e., loss of profit, claimed by the [buyer]. The [seller], as a precaution, applies for the defense of predictability.
The [buyer]'s appeal is legitimate.
1. A prerequisite for the legitimacy of an appeal is a concurrent legal complaint of the appellant, i.e., the [buyer]. One has to realize, however, that there is a distinction between the [buyer]'s pleadings in the First Instance and the decision made by the Court of First Instance against which the [buyer] has appealed. Furthermore, the purely formal prerequisite of a legal complaint does not disappear if the main issue of the legal action has already been settled (Thomas-Putzo, Commentary on the ZPO [*], 10th edition, Section 91a No. 28; BGH [*] in NJW-RR [*] 1992, pages 1032 et seq.; Gottwald in NJW [*], pages 2250 et seq.).
The [buyer] has claimed the aforementioned legal complaint its appeal. The [buyer] argued that the injunctive relief was legitimate and justified, which is in sharp opposition to the view of the Court of First Instance.
Section 99 ZPO is not applicable because the [buyer] still has the necessary legal complaint (Thomas-Putzo, op. cit.).
2. The legitimacy of the appeal cannot be deemed to be null simply because the [buyer] has claimed repayment, by virtue of unjust enrichment of its claim, after Banco di Napoli has paid the guaranteed amount under the Guarantee.
(a) According to Section 264 No. 3 ZPO [*], the [buyer] as plaintiff is entitled to adapt its pleadings in the event of any changes in facts or other circumstances. In particular, the [buyer] as plaintiff is entitled to change its former pleadings insofar as the [buyer] requests any further consequential claims by virtue of the changes in circumstances.
(b) In the light of the injunctive relief initially claimed by the [buyer], the (possible) claim of repayment of the (possibly) not owed amount is the consequential claim of the aforementioned injunctive relief. The injunctive relief is simply a claim due to the [buyer]'s right to request from the [seller], beneficiary under the Guarantee, the release of the bank from any payment obligations under the Guarantee. This is so provided that the claim secured by the Guarantee does not exist any more and will not come into existence at any time in the future. Consequently, there is not, in any event, any justification for payment under the Guarantee.
The initial lawsuit initiated by the [buyer] is also legitimate.
1. In opposition to the opinion of the Court of First Instance, which dismissed the [buyer]'s lawsuit purely on procedural grounds, the preliminary legal proceeding applied for by the [buyer] at the Tribunale Civile in Latina, Italy, pursuant to Section 700 C.p.c. [*], on 19 March 1993, is not an obstacle to the legitimacy of the present legal proceeding in Germany.
According to Art. 21 EuGVÜ [*], any court which should decide upon an issue in the second hearing forum is to renounce its competency to hear the lawsuit, if legal proceedings are pending between the identical parties and identical legal claims in courts of different Member States. In this case, it is doubtful whether or not there are really identical parties in the legal proceedings in Germany and Italy as the [seller] asserts. However, it is not necessary to make a decision upon this issue; the pending preliminary legal proceeding in Italy pursuant to Section 700 C.p.c. [*] could not be an obstacle to the legitimacy of the current German legal proceeding under all circumstances pursuant to Art. 21 EuGVÜ [*]. Article 21 et seq. EuGVÜ [*] shall prevent contrary judgements with regard to the main issue of a legal proceeding. Those articles have not been designed, however, to prevent preliminary measures (see Kropholler, European Civil Law, 4th edition, Art. 24 No. 7). Consequently, those articles of the EuGVÜ are not applicable in respect of any court decisions within preliminary legal proceedings.
According to Art. 700 in connection with Arts. 669 and 163 C.p.c. [*], a lawsuit is pending only after the relevant plaintiff has sent its writ to the court and, nonetheless, there is a pending legal proceeding regarding a preliminary order from the court. For this reason, the question upon any impediment to another legal proceeding would arise only when the other legal proceeding had already begun. In this case, there is currently no pending legal proceeding concerning the main issue in Italy and this fact is not in dispute between the parties.
The [buyer] is the holder of a claim against the [seller] for the repayment of any received payments under the Guarantee, plus accrued interest due to unjust enrichment of the [buyer]'s claim.
German law is the governing law for the decision regarding the claim for repayment. In fact, the parties entered into the sales contract for the delivery of automobiles from Germany to Italy. The sales contract might indeed be within the scope of the CISG [*] (see III. 2. b) aa) infra). However, any security for the [seller]'s rights under a bank guarantee and their actual enforcement concern only questions that have not been mentioned in the CISG. Therefore, the answers to all of the aforementioned questions shall be governed by the relevant substantive law. The substantive law shall be decided in compliance with the applicable law which has to be determined pursuant to the relevant international private law (see v. Caemmerer/Schlechtriem, Commentary on the CISG [*], 2nd edition, Art. 4 No. 6).
The parties did not expressly choose the governing law in the sales contract. Consequently, according to Art. 28 EGBGB [*], the law of that State where the party has its main establishment or incorporation that provides the "characteristic services" under the contract, shall be applicable. The [seller] has its main establishment in Germany. According to Art. 28 Par. 2 EGBGB [*] in connection with Art. 32 EGBGB [*], the sales contract shall be governed by German law. This governing law for the contract is also applicable to the re-execution of the sales contract due to unjust enrichment (Art. 32 Par. 1 No. 5 EGBG [*]; see Palandt [*], 54th edition, Art. 28 No. 8 EGBGB).
The [seller] is unjustly enriched by virtue of the payment under the Guarantee from the Italian bank at the expense of the [buyer] (Section 812 Par.1 S. 1 Alt. 1 BGB [*].
(a) The [seller] received the payment under the Guarantee at the expense of the [buyer]. The bank had, in fact, the obligation to pay "upon first demand" the guaranteed amount in favor of the [seller]. In the light of the granting of the Guarantee, the bank acted solely in the [buyer]'s interest and on the [buyer]'s orders. In reality, the [buyer] requested the granting of this security and the [buyer] shall now indemnify the bank for the amount paid under the Guarantee as debtor.
(b) The [seller] did not have a claim for the request of payment under the Guarantee. The [seller] was neither the holder of the asserted claim for a contractual fine nor for damages or any suffered losses, i.e., unrealized profits, which should have been secured by the Guarantee when the [seller] requested the payment under the Guarantee. Furthermore, such aforementioned claims have not come into existence at any time thereafter.
(aa) The agreed provisions of the sales contract solely decide the question of whether or not the [seller] was entitled to request the payment under the Guarantee. Furthermore, the provisions of the CISG determine whether or not the [seller] is the holder of any claims for performance, indemnification or remedies. The parties entered into the sales contract in question and had their main places of business in Germany and Italy, i.e., Contracting States to the CISG, at the time of entering into the sales contract in March 1992.
In opposition to any claims for performance or damages, the claim for the payment of a contractual fine is not governed by the CISG. Therefore, this claim must be decided in accordance with German law pursuant to Art. 28 Par. 2 EGBGB [*] in connection with Art. 32 EGBGB [*] (see v. Caemmerer/Schlechtriem, op. cit., Art. 79 No. 15).
(bb) Also, there was no claim for a contractual fine that could justify the request for the payment under the Guarantee on 2 November 1992.
The [seller] bears the onus of proof (factual and evidentiary) regarding the existence and the maturity of the claim against the [buyer] and secured by the Guarantee. The allocation of the onus of proof is important in this case, because the [seller] rejects the [buyer]'s claim due to unjust enrichment pursuant to Section 812 BGB [*] (BGH [*] in NJW [*] 1989, p. 1607).
The [seller] did not provide the proof aforementioned.
(ii) the Guarantee would secure any claims of the [seller] with regard to the aforementioned contractual fine.
Witness C., who was one of the [seller]'s secretaries at the time, gave evidence in her own statement that the parties spoke about the payment of DM [*] 5,000 while they were negotiating the sales contract on 9 March 1992. In the light of that discussion, the [buyer] should be obliged to pay the amount of DM [*] 5,000 in the event that it does not accept and collect the automobiles by October 1992. This amount should be deducted from the purchase price due and payable under the sales contract. This would be common practice between the parties for such a prepayment. The [seller] requested such a prepayment as security because it had ordered the automobiles in question, following the [buyer]'s special wishes for their equipment and configuration. With regard to the sales contract, the Guarantee granted by the bank was granted as the required security under the sales contract.
According to the evidence given by the witness, the Appellate Court is of the opinion that the [seller] - in compliance with the trading practice between the parties - generally wanted to safeguard the payment of the purchase price in full from the [buyer] for all the automobiles ordered by the [buyer]. These pre-payment obligations regarding the purchase price, however, will be the only liabilities that the Guarantee should secure if the [buyer] does not collect and accept the sold automobiles at the proposed date in October 1992.
Although witness C. gave evidence that the [seller] would be the beneficiary of the amount [of DM [*] 5,000 per automobile] in the case that the [buyer] did not collect the automobiles, this agreed obligation does not justify the assumption that the parties agreed upon a contractual fine. In the light of the overall contents of the evidence given by witness C., one can only interpret such a statement by the parties as being, according to the witness's comprehension, that the aforementioned amount shall remain with the [seller] only if the sales contract cannot be performed due to reasons which are solely at the [buyer]'s own risk. According to the clear and exact statement given by the witness, that the Guarantee should only secure the [buyer]'s pre-payment obligations for the purchase price, if the [buyer] does not accept and collect the automobiles, the [seller] has not brought forward the proof that the aforementioned amount should remain with the [seller] as a contractual fine, in the case that the [buyer] does not take delivery of the automobiles by October 1992.
Witness R. confirmed that the [buyer] was obliged to make a prepayment whereby the [buyer] should pay the remaining part of the purchase price at the time of the actual delivery of the automobiles. The content of the notarized deed and the pre-contractual correspondence also does not provide any evidence of any agreement of a contractual fine between the parties.
(ii) the prerequisites for the guarantor's liabilities to pay the guaranteed amount were only stipulated regarding non-payment.
The content of the [seller]'s letter of 14 April 1992 (Attachment D 2) supports the aforementioned conclusion, that the Guarantee shall secure only the [buyer]'s payment obligations under the sales contract. According to the "condizioni di pagamento" - without any doubt allocated to the prerequisites for any payment under the Guarantee - the bank shall grant a guarantee in the amount of DM 55,000 regarding the order by the [buyer]'s managing director and expiring in November 1992. There is not any consideration of a contractual fine in the Guarantee. Such a consideration could have been expected concerning the relevance of this matter to the [seller].
(c) The claim, asserted additionally by the [seller], that the Guarantee should have also secured the payment of the [seller]'s damages, is not justified.
The [seller] derives its claim of damages resulting from the breach of the [buyer]'s obligation to collect the automobiles pursuant to Art. 60 CISG [*]. In the light of such a breach of contract, the [seller] would have suffered a loss of profit in the amount of the difference between the purchase price and the sales price of the automobiles in question. The [seller] did not request any other damages due to the delay in the acceptance and collection of the sold automobiles - e.g., reimbursement for expenses, etc.
(aa) The [seller]'s claim of damages, i.e., loss of profit, pursuant to Art. 61(1)(b) and (2) CISG [*] in connection with Art. 74 et seq. CISG [*] is not justified.
The [seller] did not meet its obligation to take reasonable and proper measures to mitigate any loss resulting from the breach; therefore, the [seller] has lost its claim for compensation of suffered losses (Art. 77 CISG [*]).
Under Art. 53 CISG [*], the [buyer] had an obligation to collect and accept the automobiles in question, provided that the [seller] acts in compliance with the provisions as set forth in the sales contract. Under Art. 31 CISG, the [seller] had to provide the automobiles in Munich pursuant to the sales contract. Insofar as the [buyer] asserted that the [seller] had a further contractual obligation to provide for "pro-forma" invoices, including the vehicle identification numbers of the automobiles made available, the [buyer] did not offer any proof for this suggestion, although the [seller] expressly denied such an agreement existed between the parties. The [buyer], however, bears the onus of proof for this fact. Furthermore, it is impossible to hear the [buyer]'s managing director as witness in court since the [seller] has not given its approval for such a hearing at the Appellate Court.
The [seller], in its letter dated 14 April 1992 (Attachment P 9), offered the [buyer] that the [buyer] shall accept and collect five of the automobiles. Those five aforementioned automobiles were available via the [seller]'s supplier. The [seller] asserted this fact which is not in dispute between the parties. After the [buyer] had requested further alterations in the configuration and type of the six remaining automobiles sold (see the letter of 14 September 1992, Attachment D 3), i.e., four BMW's 318i and one BMW 325i, the [seller] in its letter of 8 October 1992 (Attachment D 4) notified the [buyer] in due course that those automobiles were also available for delivery. Furthermore, the [seller] requested the [buyer] to inform [seller] of the exact date when the [buyer] would collect and accept those automobiles. All of the aforementioned facts are not in dispute between the parties.
The [seller] met all of its obligations under Art. 31 CISG [*] when it made the automobiles available at its place of established business. According to Art. 53 CISG [*], the [buyer] was obliged to collect and accept the automobiles and to pay the purchase price.
(bb) The [buyer] was not entitled to object any further to the obligation to accept and collect the automobiles due to the parties' agreement upon a fixed date for the delivery of the sold automobiles "irrevocably on 15 August 1992 at the latest."
The parties, on 9 March 1992, entered into the sales contract concerning the delivery of eleven BMW Series 3 automobiles. In this agreement, the parties firmly agreed (i) the overall quantity of the automobiles that should be delivered, (ii) the purchase price and (iii) the provision of a bank Guarantee. According to the evidence given by witness C., the delivery period was rescheduled to October 1992.
The [seller] in its letter of 14 April 1992 (Attachment P 9) gave a detailed specification of the automobiles (Art. 65 CISG [*]) and the information about their delivery "... in approximately July/August/September/October 1992 ... " These specifications and the further information are a legitimate supplement to the agreement pursuant to Art. 29 CISG, whereupon the acceptance by the [buyer] of this supplement was necessary pursuant to Art. 18 et seq. CISG. Insofar as the [buyer] amended again the delivery dates, the [buyer] expressly rejected the [seller]'s offer of the supplement which was accompanied by a new offer by the [buyer] regarding the exact delivery dates. The [buyer]'s new offer must be distinguished from the [seller]'s former offer. Both declarations of the parties are different in their material terms. In the light of the [buyer]'s new offer, the further acceptance of the [seller] was necessary (Art. 19 CISG). The [seller], however, never accepted the amended delivery dates as proposed by the [buyer].
(cc) The non-acceptance of the automobiles by the [buyer] within a reasonable period of time after the [seller] had made available the sold automobiles in compliance with its contractual obligations was a breach of the [buyer]'s own obligations. Such a breach of obligations would generally entitle the [seller] to a claim of damages, i.e., any loss suffered, pursuant to Art. 61(1)(b) CISG [*] in connection with Art. 74 CISG.
Despite the general liability of the [buyer] to indemnify the [seller] for any loss or damages suffered, the [buyer] is not obliged to indemnify the [seller] any more because the [seller] omitted to take reasonable measures to mitigate the loss of profit suffered.
One such mitigating measure is the enforcement of certain contractual rights (see v. Caemmerer/Schlechtriem, op. cit., Art. 77 No. 5), provided that such an enforcement is reasonable with regard to the interests of the parties. The [seller] violated this obligation to mitigate the loss of profits suffered because the [seller] did not execute its rights vis-à-vis the [buyer] pursuant to Art. 61(1)(a) CISG after the receipt of the letter dated 23 October 1992 [in which the [buyer] had expressed its general willingness to collect the automobiles].
The fact that the [seller] omitted to exercise any of the aforementioned rights is not in dispute between the parties. The exercise of the [seller]'s aforementioned legal remedy - termination of the contract after the expiration of a period of grace - was reasonable because the [buyer], in its letter of 23 October 1992, had expressed its general willingness to accept and collect the automobiles. That general willingness was confirmed throughout this appeal. The letter of 23 October 1992 does not contain an explicit refusal or denial of the acceptance of the sold automobiles as the [seller] has argued. Furthermore, the [seller] had the right to claim reimbursement of its expenses by virtue of the delayed acceptance and collection of the automobiles by the [buyer] (Art. 61(1)(b) and (2) CISG). In the light of those circumstances, the [seller] had to take the opportunity to grant and fix a period of grace in order to enforce the performance and completion of the sales contract and the consequential realization of the expected profit. However, it was not entitled to claim compensation for the entire non-performance under the sales contract after the [seller] had already cancelled the order of the automobiles with its supplier. The [seller] was not obliged, though, to realize those legal remedies in fact. In the light of the calculation of the loss suffered, the [seller] should have taken such measures which are reasonable with regard to a wise holder of a claim for damages. Reasonableness will thereby be determined in accordance with the principle of good faith (see v. Caemmerer/Schlechtriem, op. cit., Art. 77 No. 9). In this case, the [seller] must be considered to be in the same position, it would have been, if the sales contract of 9 March 1992 had been performed in full, i.e., fully performed by both parties. Furthermore, as the [seller] should be considered in such a way, the asserted claim for damages, i.e., any loss of profits, would not exist.
The [buyer] does not have any claim of damages, i.e., loss of profits, in an amount of DM [*] 62,040. In the light of this claim for damages, the [buyer]'s appeal has to be dismissed.
The prerequisites of Art. 45(1)(b) and (2) CISG [*] in connection with Arts. 49(1)(a) and 25 CISG have not been met.
There are no fundamental breaches of the sales contract by the [seller] as the [buyer] has argued concerning the firmly agreed delivery dates ("irrevocably by 15 August 1992 at the latest") and an unreasonable over-delay of the delivery respectively. The [buyer] does not have the right to claim (i) termination of the sales contract and (ii) damages, i.e., losses of profit suffered, by virtue of the [seller]'s non-performance of the sales contract.
The [buyer] cannot even argue that the [seller] did not meet the delivery date - "irrevocably by 15 August 1992 at the latest" - because the parties did not agree upon such a fixed delivery date as already mentioned above (under III, supra.). Furthermore, it would be doubtful whether or not such a non-performance could be deemed to be a fundamental breach of contract pursuant to Art. 25 CISG. Since the [buyer] gave significant indications afterwards that the compliance of this delivery date was not that important to [buyer]. Henceforth, the [buyer]'s interest upon the sales contract did not "stand or fall down" with the expiration of the final delivery date (see v. Caemmerer/Schlechtriem, op. cit., Art. 49 No. 5).
Furthermore, the [buyer] cannot argue that the [seller] delayed the delivery of the sold automobiles so that one is obliged to assume that this is a fundamental breach of contract which would grant the [buyer] the rights as set forth in Art. 49(1)(a) CISG [*].
With reference to the [seller]'s letter of 18 August 1992 (Attachment D 2), one has to note that five of the sold automobiles were made available for delivery as already mentioned. The [seller] notified the [buyer] in respect of the six further automobiles sold, that they were made available on 8 October 1992, after the [buyer] had requested further alterations to the automobiles via mail not before July or August 1992. This time period of further requests by the [buyer] is (i) not in dispute between the parties and (ii) has been proved by the letter of 14 September 1992 (Attachment D 3). Consequently, there is neither any delay of the delivery nor any fundamental breach of contract for which the [seller] could be blamed.
In the light of the non-delivery of the automobiles, which is also not in dispute between the parties, the [buyer] does have the right to terminate the sales contract so that all payments under the sales contract would have to be reimbursed to the [buyer] (Art. 81(2) CISG). Notwithstanding the aforementioned [buyer]'s right, the [buyer] is not entitled to a claim of damages, i.e., suffered loss of profit, by virtue of non-performance of the contract.
(ii) notwithstanding the cancellation of their order, that the [seller] was not able to make the automobiles available to the [buyer] within a reasonable time.
In the light of such situation, it would be against the principles of good faith if the [buyer] were entitled to claim any rights with regard to the non-performance of the sales contract. Since the [buyer] itself first affected the non-performance and waited approximately 2 � years before it claimed termination of the contract. According to an analogous application of the legal theory of Art. 80 CISG [*], any claim of damages, i.e., suffered loss of profits, has been forfeited under all circumstances (see v. Caemmerer/Schlechtriem, op. cit., Art. 49 No. 35).
The [buyer]'s claim for any accrued interest has to be settled in accordance with Art. 84 CISG. The [buyer], in fact, relied upon Section 812 BGB [*] regarding the interest claim which would be governed by German law. However, the ground for such a claim is a [buyer]'s claim concerning the repayment of the purchase price already paid in favor of the [seller]. In the light of the claimed accrued interest, only the place of the [seller]'s incorporation is relevant (see v. Caemmerer/Schlechtriem, op. cit., Art. 84 No. 13). Consequently, accrued interest must be granted to the [buyer] at the interest rate of 5% since the receipt of the payment by the [seller] pursuant to Section 352 HGB [*]. Art. 1284 Par. 1 C.c. [*] (interest rate of 10%) is not applicable under those circumstances. The [buyer] did not substantiate an interest rate of 18% which the [seller] expressly denied.
The ancillary decisions of the Appellate Court are based on Sections 91, 708 No. 10, 711, 546(2) ZPO [*].
* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Plaintiff/Appellant of Italy is referred to as [buyer]; the Defendant/Respondent of Germany as [seller]. Amounts in German currency (Deutsche Mark) are indicated as [DM].
BGB = Bürgerliches Gesetzbuch [German Civil Code]; BGH = Bundesgerichtshof [Federal Court of Justice, the highest German Court in civil and criminal matters]; BGHZ = Entscheidungen des Bundesgerichtshofes in Zivilsachen [Official Reporter of Decisions of the German Federal Supreme Court for Civil Matters]; C.c. = Codice Civile Italiano [Italian Civil Code]; C.p.c. = Codice di Procedura Civile Italiano [Italian Code on Civil Procedure]; EGBGB = Einführungsgesetzbuch zum Bürgerlichen Gesetzbuche [German Code on Private International Law]; EuGVÜ = Europäisches Gerichtsstands- und Vollstreckungsübereinkommen, 1968 [Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgements in Civil and Commercial Matters, succeeded by the Council Regulation on Jurisdiction and the Recognition of Judgments in Civil and Commercial Matters [44/2001/EC]; HGB = Handelsgesetzbuch [the German Commercial Code]; NJW = Neue Juristische Wochenschrift [a well-known German Law Journal]; NJW-RR = Neue Juristische Wochenschrift - Rechtsprechungs-Report [Report on important and recent decisions by German courts] Palandt [the most renowned and influential commentary to the German Civil Code]; CISG = Übereinkommen der Vereinten Nationen über Verträge über den internationalen Warenkauf (BGBI. 1989 II S. 588) U. N. Convention on Contracts for the International Sales of Goods, 1980; ZPO = Zivilprozessordnung [German Code on Civil Procedure].
** Stefan Kuhm is a Member of the Bar Association, Frankfurt a.M., and a PhD candidate at Eberhard-Karls-Universität Tübingen. The second-iteration redaction of this translation was by Dr. John Felemegas of Australia.

References: Art. 21
 Art. 21
 Art. 24
 Art. 700
 v. 
 Art. 4
 Art. 28
 Art. 28
 Art. 32
 Art. 28
 Art. 28
 Art. 32
 v. 
 Art. 79
 Art. 60
 Art. 61
 Art. 74
 Art. 53
 Art. 31
 Art. 31
 Art. 53
 Art. 29
 Art. 18
 Art. 61
 Art. 74
 v. 
 Art. 77
 Art. 61
 v. 
 Art. 77
 Art. 45
 Art. 25
 v. 
 Art. 49
 Art. 49
 Art. 80
 v. 
 Art. 49
 Art. 84
 v. 
 Art. 84
 Art. 1284