Source: http://cisgw3.law.pace.edu/cases/981105s1.html
Timestamp: 2019-04-22 18:20:44+00:00

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"[The] court found that the sender was entitled to regard silence as acceptance to a letter of confirmation even where the letter modified payment terms. The court stated that good faith is the key to determining whether a sender may assume the recipient of the confirmation letter intended to consent to the terms of the letter. Although the court did not discuss prior practices or usage in this case, the recipient's conduct, accepting the first check that was attached to the letter of confirmation, was sufficient to support a conclusion that the recipient intended to be bound by the terms of the confirmation letter."
A claim in the total of [Deutsche Mark] DM 8,539 (converted at an exchange rate of Swiss francs [Sf] 82.80 for DM 100 - this amounts to Sf 7,070) plus 7% interest from 12 September 1997, plus damages for culpable default of payment in the amount of Sf 574, plus payment reminder and collection costs in the amount of Sf 70. On 13 January 1998, the [buyer] raised its objection.
"The [buyer] is to be ordered to pay to the [seller] DM 8,539 plus interest at a rate of 7% from 12 September 1997 and Sf 70 (cost of payment order no. 97/56,084 by the collection office Sissach, issued on 8 December 1997). Further, it is to be declared that the [seller], if the [buyer] fails to fulfill the named claim, is entitled to enforce Sf 7,070.30 (converted at a rate of DM 100 for Sf 82.80) plus 7% interest from 12 September 1997. The [buyer]'s objection to the above-mentioned enforcement is to be eliminated."
3. Regarding the grounds of its claim, [seller] submits that the amount results from several deliveries of textiles of a spring / summer collection from February to April 1997 as evidenced by the invoices of 25 February, 29 February, 6 March, 14 March, 25 March and 1 April, all in the year 1997.
4. The [buyer], in contrast, requested in the oral hearing of 3 September 1998 that the claim be dismissed in its entirety and that the [seller] be ordered to bear the cost of the proceedings.
[Buyer] pleads that the parties had formed a payment agreement regarding the settlement of the mature claims arising out of the textile delivery. Following this understanding, a payment by installments had been agreed, with the condition that the [seller] release for dispatch the ordered autumn / winter collection after the [buyer] had paid by check the first installment of DM 5,655.20. Under the agreement, the second and last installment of DM 8,539 was due at the end of August 1997. [Buyer] had confirmed the payment agreement in writing by letter of 21 August 1997 and had attached a check for the first installment. In doing so, the [buyer] had performed a part of the payment agreement. However, the [seller] did not live up the agreement, because [seller] informed the [buyer] by letter of 25 September 1997 that the ordered autumn / winter collection could no longer be delivered, as [seller] had already delivered the goods to a customer in the USA. The [buyer] submits that it suffered a loss in the amount of DM 13,909.70 as a result of the non-delivery. [Buyer] is setting off its alleged claim for damages against the [seller]'s claims.
6. In the oral hearing on 3 September 1998, the case was considered and the parties were informed that the decision would be made in writing.
1. The [seller], whose place of business is in Germany, claims from the [buyer], who lives in Sissach [Switzerland], the remaining purchase price for textile deliveries. Due to this international context, the Court first needs to examine its international jurisdiction.
Both Germany and Switzerland are Contracting States to the Lugano Convention [*], which applies to civil and commercial disputes, i.e., all suits that by their nature, judged by substantive criteria, belong to civil law, independent of the respective national jurisdiction (cf. Walter Gerhard, Internationales Zivilprozessrecht der Schweiz, 1995, p. 139-141). As the present case concerns a contractual claim, nothing stands in the way of applying the Lugano Convention. The basic principle of this Convention is that the respective Contracting State where the defendant is domiciled possesses jurisdiction (Art. 2(1) Lugano Convention). As the [buyer]'s domicile is in Sissach and a case of exclusive jurisdiction under Art. 16 Lugano Convention is not given, this Court possesses the local jurisdiction.
The international civil procedural law is essentially governed by the lex fori, i.e., each judge principally applies his or her own procedural law. The Lugano Convention solely determines the local jurisdiction. Therefore, both the functional competence and the jurisdiction over the subject matter are determined by the Code of Civil Procedure of the Canton Basel-Land (Walter Gerhard, op. cit., p. 49 and 71).
2. Under � 3 no. 22 ZPO [*], there is no instance of the justice of the peace in disputes where one party is domiciled in a foreign country and the disputed amount exceeds Sf 500. Therefore, the functional competence in the present case lies with the District Court.
3. The Court's jurisdiction over the subject matter results from � 4(1) ZPO.
4. The standing as a party in court and the capacity to sue and be sued is also determined by the lex fori. A party has standing in court if it possesses legal capacity (Staehlin/Sutter, Zivilprozessrecht, p. 77). As the legal capacity is governed by Swiss law following Art. 34 IPRG [*], the standing in court is also determined by Swiss law (Walter, op. cit., p. 225). All natural persons possess legal capacity under Swiss law (Art. 11 ZGB [*]). A party is capable to sue and be sued if it possesses capacity to act in the meaning of Art. 12 et seq. ZGB. The capacity to act is governed by the law of the place of domicile (Art. 35 IPRG); thus it is subject to Swiss law. In the present case, there is no doubt regarding the [buyer]'s standing in court and its capacity to be sued, which is why [buyer] may act as the defendant in the present trial.
The pleading party is a private limited company. Under Art. 155(c) IPRG [*], a company's legal capacity and entitlement to act, and therefore its standing in court and its capacity to sue (in the meaning of Art. 150 IPRG) is governed by the law applicable to the company. Following Art. 154 IPRG, companies are subject to the law of the State under whose rules they were organized, if they fulfill the requirements of registry and public disclosure provided by this law. As the [seller] is registered in the German commercial register, it fulfills the German provisions for public disclosure and registry. Therefore, German law is to be applied to the [seller]. Since German law acknowledges the standing in court and capacity to sue of a private limited company, the [seller] is entitled to be plaintiff in the present proceedings.
In order to determine the law applicable to the case, the Court needs to turn to the national provisions of the IPRG [*], unless international conventions take priority (Art. 1(2) IPRG).
Both Germany and Switzerland are Contracting States to the United Nations Convention on Contracts for the International Sale of Goods of 11 April 1980 (CISG). The CISG contains provisions of substantive law. Following Art. 1 CISG, the Convention finds application if the parties have their places of business in different Contracting States. In terms of subject matter, the Convention applies to contracts for the pure international sale of goods, which provide for the delivery and transfer of property of goods for remuneration. It is decisive for the applicability that the good is sold or supposed to be delivered as a movable good (Keller/Siehr, Kaufrecht, p. 156 et seq.). In the present case there is no doubt about the applicability of the CISG, as the parties' domiciles are in different Contracting States and the delivery of textiles against remuneration was agreed in the contract at hand. Within its sphere of application, the CISG supersedes the IPRG [*]. The IPRG only finds application where the Convention leaves a gap that cannot be filled by the general principles on which the CISG is based.
2.1 The [seller] claims payment of the purchase price, in total DM 8,539 plus 7% interest from 12 September 1997.
The [buyer] does not dispute the existence of the claim in principle. [Buyer] does, however, submit a set-off claim in the amount of DM 13,909.70, because it allegedly suffered damages as a result of the non-delivery of the ordered autumn / winter collection 1997. [Buyer] pleads that the [seller] was obliged to deliver the goods despite the fact that [buyer] was in default of payment regarding an earlier delivery. Following the [buyer], the parties had formed a payment agreement regarding the outstanding claims, which the [buyer] confirmed to the [seller] in writing with letter of 21 August 1997. At the same time, the parties had agreed that the ordered collection for autumn and winter 1997 would be delivered after payment of the first installment.
The [seller], however, denies any agreements regarding the payment and raises the defense of a non-performed contract. Due to the [buyer]'s obligation to effect advance payment, [seller] holds that it was entitled to refuse delivery until the price for the delivered textiles of the autumn / winter collection had been paid.
2.2 Payment agreements aim at a modification of the contractual obligation, more specifically the payment arrangements, and necessarily lead to a corresponding modification of the contract. As Art. 29 CISG provides for a modification of contract by mere agreement between the parties, nothing stands in the way of a payment agreement.
2.3 The [buyer]'s letter to the [seller] must be qualified as a so-called commercial letter of confirmation. Such a communication serves to confirm contracts formed orally, respectively oral modifications of contract. It is also possible that a letter of confirmation confirms agreements that have not been formed, respectively that the confirmed content deviates from the consented arrangement (Gauch/Schlujep, Obligationenrecht Allgemeiner Teil, n. 1160). The [buyer] submits that a payment agreement was formed and subsequently confirmed in writing. This, however, is disputed by the [seller]. The Court must therefore examine whether the payment arrangements were modified by agreement, respectively whether the [seller] silently agreed to a contract modification, when it failed to react to the letter of confirmation whose content had possibly not been agreed upon.
2.4 Art. 18(1) CISG provides that silence to an offer does not amount to acceptance. This, however, does not mean that any silence is without effect. Despite Art. 18 CISG, an implicit acceptance can always be assumed, if the parties have settled upon special arrangements or if the trade usages applicable to them attach meaning to the silence (Keller/Siehr, Kaufrecht, p. 181). Art. 18 merely specifies the principle of good faith, which is also one of the general principles of the CISG.
If the recipient of a commercial letter of confirmation accepts the communication without objection, the recipient must account for the content of the letter, and the contract is assumed to be implicitly modified according to the letter's content, so long as the sender was entitled under good faith to regard the silence as an acceptance (Gauch/Schluep, OR AT n. 1159-1163). The [buyer] was entitled to assume that the [seller] consented to the content confirmed in the letter, because (a) [seller] accepted the attached check, which amounted to the first installment of the payment agreement, and because (b) [seller] did not object to [buyer]'s letter of confirmation within reasonable time. For this reason, the contract was modified with the confirmed content by virtue of the [seller]'s silence, with the effect that the maturity of the obligation owed was pushed back.
The [seller] furthermore put on record in the oral proceedings that there was no payment agreement, but that [seller]'s concession was simply based on kindness. In the Court's opinion, the [seller] thereby implicitly concedes that it silently agreed to such an arrangement. Whether the motive was kindness or some other reason does not have an effect on the binding nature of such agreements.
The [seller] raises the defense of non-performance of the contract. [Seller] refused its performance obligation regarding the second delivery of textiles, because, in its opinion, it owed delivery only after payment of the outstanding amount. It is irrelevant in the present case whether the defense results from the CISG or from the substantive law applicable by virtue of the rules of private international law, as the defense is not admissible. This is because the defense of non-performance of the contract requires that performance of the obligation be due. However, the [seller]'s silent acceptance of the payment arrangement pushed back the maturity of its claim. As the preconditions for the admissibility of [seller]'s defense are not met, the defense is dismissed.
The [buyer] claims set-off of damages in the total of DM 13,909.70, which it allegedly suffered from the non-delivery of the textiles. The [seller] denies that damages arose. Principally, the law of evidence is determined by the lex fori, as the law of evidence belongs to the procedural law. Therefore, each Court applies its own law of evidence (Walter Gerhard, IZPR, p. 253). Consequently, [Swiss] federal law applies in the present case. Under Art. 8 ZGB [*], the burden of proof for a possible loss is borne by the [buyer]. However, the [buyer] was unable to prove losses in the alleged amount, as it did not submit any evidence at all which would reveal damages to its property. Insofar, [buyer]'s claim for damages remains unproven, which is why the [buyer]'s defense of a set-off is unfounded.
Consequently, the [seller]'s claim is justified and is granted, as [buyer] did not dispute the existence of the claim and because [buyer]'s defense of a set-off was dismissed in its entirety.
The costs are allocated according to the outcome of the proceedings. As the [seller]'s claim was granted in its entirety, it is justified to burden the [buyer] with all ordinary and extra-judicial costs of the proceedings. The Court considers the professional fee submitted by the [seller]'s representative in the oral hearing of 3 September 1998 in the amount of Sf 1,725.50 as reasonable and therefore grants the [seller] compensation to that extent.
[Seller]'s claim is granted and [buyer] is ordered to pay to the [seller] an amount of DM 8,539 plus 7% interest from 12 September 1997.
It is determined that the enforcement no. 97/56,084 of the collection office Sissach for an amount of Sf 7,070.30 plus 7% interest from 12 September 1997 and for the enforcement costs in the amount of Sf 70 may proceed.
The [buyer] is burdened with the Court costs in the amount of Sf 400 (including fees). The [buyer] also bears the extra-judicial costs, thus [buyer] is to reimburse the [seller] for Sf 1,725.50 (including expenses and VAT).
Handed down in written form, with a period for appeal of 10 days after the decision is served. In case of a declaration of appeal, a cost advance in the amount of Sf 800 must be paid within the same period, otherwise the appeal will not be heard.
* All translations should be verified by cross-checking against the original text. For purpose of this presentation, Plaintiff of Germany is referred to as [seller]; Defendant of Switzerland is referred to as [buyer]. Amounts in Swiss currency (Swiss francs) are indicated by [Sf] and amounts in German currency (Deutsche Mark) are indicated by [DM].
Translator's note on other abbreviations: IPRG = Bundesgesetz über das Internationale Privatrecht [Swiss Code on the Conflict of Laws]; Lugano Convention = EC EFTA Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters - Lugano, 16 September 1988; ZGB = Zivilgesetzbuch [Swiss Civil Code]; ZPO = Zivilprozessordnung [Swiss Code on Civil Procedure].

References: Art. 16
 Art. 34
 Art. 12
 Art. 155
 Art. 150
 Art. 154
 Art. 1
 Art. 29
 Art. 18
 Art. 18
 Art. 18
 Art. 8