Source: http://cisgw3.law.pace.edu/cases/080214g1.html
Timestamp: 2019-04-25 08:07:46+00:00

Document:
"1. Article 82(1) and 82(2)(c) CISG are not to be applied analogously so as to deprive the seller of the right o avoid the contract according to Article 64(1) CISG because the buyer has sold on the good prior to breaching his obligation to pay the contract price.
"2. If the payment period set by the seller is too short a reasonable additional respite in accordance with Article 63(1) starts to run.
"3. If the seller avoids the contract based on Article 64(1) CISG he may demand the buyer's net proceeds drom the on-sale in analogous application of Article 84(2)(b) CISG."
(a) The [Buyer] has to pay a further EUR 26,500 plus 5% interest above the base interest rate since 2 May 2006.
(b) The [Seller]'s claim is dismissed for the remainder.
(2) The appeal is dismissed for the remainder.
(3) The [Seller] has to bear 32% and the [Buyer] has to bear 68% of the costs of the proceedings in the Court of First Instance. The [Buyer] has to bear the costs of the appellate proceedings.
(4) The judgment is provisionally enforceable. The [Buyer] is entitled to prevent the enforcement of the judgment against payment of security in the amount of 1.2 times the amount of the enforceable amount, as long as the [Seller] does not provide a respective security payment.
(5) Further appeal (Revision) is inadmissible.
The [Seller] sold an antique sports car, Jaguar C-type model 1953, for EUR 170,000 to the [Buyer], who trades in used cars. The [Seller]'s request for payment of this sum was dismissed by the Court of First Instance. The [Seller] renews its request for payment in the appellate proceedings and seeks the payment of a further EUR 28,500 in accordance with Article 84(2)(b) CISG, analogous to or, in the alternative, in accordance with Article 76(1) CISG.
The [Buyer] resold the car on 14 February 2006 for a total price of EUR 198,500.00. After the [Buyer] had paid EUR 70,000, it informed the [Seller] on 28 March 2006 that it would currently not be willing to pay the remaining EUR 100,000.
By letter dated 13 April 2006, the [Seller]'s attorney requested the payment of the remaining purchase price and set a deadline until 20 April 2006. On 2 May 2005, the [Seller] declared the contract avoided.
For the remainder, reference is made to the facts as established by the Court of First Instance.
The Court of First Instance ordered the [Buyer] to pay EUR 100,000, but dismissed the [Seller]'s claim for the remainder. It held that the [Seller] was not entitled to declare the contract avoided according to Article 81 CISG. This could be derived from an analogous interpretation of Article 82(2)(c) CISG. According to Article 82(1) CISG, the buyer loses the right to declare the contract avoided or to require the seller to deliver substitute goods if it is impossible for him to make restitution of the goods substantially in the condition in which he received them. This would not apply -- as set out in Article 82(2)(c) CISG -- if the goods or part of the goods have been sold in the normal course of business by the buyer before he discovered or ought to have discovered the lack of conformity. In this case, the buyer is privileged. The CISG does not contain explicit provisions in respect to the present case, namely, where the seller avoids the contract due to a breach of contract by the buyer. Thus, an analogous application of Article 82(2)(c) CISG could be assumed due to comparable interests and the general rule of the CISG, that a party acting in a bona fide manner has to be privileged.
Thus, the right of a seller to avoid a contract would not be barred by the fact that it is impossible for the buyer to make restitution of the goods in an undamaged condition except for the case when the buyer can rely on Article 82(2) CISG. The distribution of the risk, according to Article 82(2) CISG, could at least be applied to those cases where the goods are resold before the lack of conformity is discovered or ought have been discovered. This was due to the fact that the buyer had not acted in breach of contract at that point in time.
- Such a claim could only be based on the additional requirements of Article 76(1) CISG.
- This Article, however, requires the avoidance of the contract, which in the present case had not been possible as shown above.
The [Seller] alleges in its appeal that the Court of First Instance erroneously assumed that its claim according to Article 64(1) CISG would be barred according to Article 82(2)(c) CISG. There was no legal justification to apply the latter provision analogously. Furthermore, the [Buyer] had not acted in bona fide manner at the time it resold the car. Hence, the [Buyer], as a surrogate, should be obliged to hand over the money it received.
The [Seller] requests the Appellate Court to partially reverse the judgment of the District Court (Landgericht) Konstanz (5 O 229/06 M) of 24 January 2007 and to order the [Buyer] to pay a further EUR 28,500 plus 5% interest above the base interest rate since 2 May 2006.
The [Buyer], in turn, requests dismissal of the [Seller]'s appeal. The [Buyer] defends the judgment of the District Court (Landgericht) Konstanz (5 O 229/06 M) of 24 January 2007 and alleges that further appeal (Revision) should be allowed. However, it failed to substantiate the expenses it has incurred in the course of the resale of the car.
For the remainder, reference is made to the written submissions of the parties in the appellate proceedings.
The appeal of the [Seller] is admissible and generally justified. The [Seller] is entitled to claim the payment of a further EUR 26,500 according to Article 84(2)(b) CISG analogous. However the claim of a further EUR 2,000 is not justified.
The Court agrees with the Court of First Instance insofar as that the present case has to be assessed on the basis of the provisions of the CISG. The [Seller] rightfully states that Article 82(2)(c) CISG cannot be applied analogously in the present case. Thus the avoidance of the contract according to Article 64(1) CISG is not barred. The Supreme Court has not decided on an analogous application of Article 82(2)(c) CISG so far. The assumption of the Court of First Instance is contrary to the leading doctrine (cf. Staudinger-Magnus, CISG (2005), Art. 82 margin number 29; Honsell-Weber, Kommentar zum UN-Kaufrecht, Art. 82 margin number 4; MünchKomm-Huber, BGB [*], 5.A. (2008), Art. 82 margin number 2, MünchKomm-Benicke, HGB, 2.A. (2007), Art. 82 margin number 21; Schlechtriem/Schwenzer-Hornung, Kommentar zum UN-Kaufrecht, 4.A., Art. 82 margin number 8).The Appellate Court agrees with the leading doctrine.
Article 82(2)(c) CISG cannot be applied analogously in the present case as there is no comparability of interest.
According to Article 81(2) CISG, a party who has performed the contract either wholly or in part may claim restitution from the other party of whatever the first party has supplied or paid under the contract. According to Article 82(1) CISG, the buyer has to make restitution of the goods substantially in the condition in which he received them. The buyer loses the right to declare the contract avoided or to require the seller to deliver substitute goods if it is impossible for him to make restitution of the goods substantially in the condition in which he received them. Article 82(2) contains exceptions to this general rule. These exceptions solely provide for the case where it is impossible to make restitution of the goods. Article 82(2)(c) states that an exception is present if the goods or part of the goods have been sold in the normal course of business or have been consumed or transformed by the buyer in the course of normal use before he discovered or ought to have discovered the lack of conformity. The CISG, however, does not contain provisions in respect to a comparable situation of the seller (cf. Article 84(1) CISG which only refers to interest). An analogous application of Article 82 CISG is not necessary in respect to the refund of the purchase price. (cf. Staudinger/Magnus, loco citato, Art. 82 margin number 29; Schlechtriem/Schwenzer-Hornung, loco citato, margin number 8; MünchKommHGB-Benicke, loco citato, Art. 82 margin number 21; Soergel/Lüderitz/Dettmeier, CISG (2000), Art. 82 margin number 2). Consequently, the leading doctrine solely accepts an analogous application if it is impossible for the seller to make restitution of textiles, which have been made available by the buyer. (Staudinger/Magnus, loco citato, Art. 82 margin number 29; MünchKomm-Huber, loco citato, Art. 82 margin number 2). However, this is not the case here.
The Court of First Instance exceeded the sphere of application of an analogy by interpreting Article 82(2)(c) CISG as a "privilege to a party that effects a bona fide resale" which not only leads to the maintenance of the right of the buyer to declare the contract avoided but also bars the seller from declaring the contract avoided. Such an interpretation would require an unintended gap in the CISG. However, there is no such gap. The purpose of Article 82 CISG is not to combine the right of the seller to declare the contract avoided with the bona fides of the buyer, who is not able to make restitution of the goods substantially in the condition in which he received them. This in particular applies to a seller who has not acted in breach of contract and thus -- as in the present case -- did not cause the avoidance of the contract. In addition, the content and the systematology of Articles 82 to 84 CISG do not show any general principle which would cause the exclusion of the right of the seller to declare the contract avoided due to a just balance of the risk -- contrary to the assumption of the Court of First Instance. The hint of the Court of First Instance to the comment of Staudinger (loco citato, Article 82 margin number 30), which should justify the contrary assumption, is incorrect. Arguably, the wording of this comment is unclear. However, it cannot be interpreted in the sense that there is a confirmation by double-negation that the right of the seller to declare the contract avoided is affected by Article 82(2) CISG (cf. the clear wording of: Schlechtriem/Schwenzer-Hornung, loco citato, margin number 15; Soergel/Lüderitz/Dettmeier, loco citato, Art. 82 margin number 2).
The requirements of Article 64(1)(b) CISG are met. The [Buyer] acted in breach of its duty to pay the purchase price according to Article 62 CISG. In addition, the [Buyer] failed to pay the remaining purchase price within the additional period of time fixed by the [Seller] on 13 April 2006 (appendix K 10, Article 64(1)(b) CISG).
The additional period of time -- fixed until 20 April 2006 -- has been too short; it, however, initiated the start of a reasonable additional period of time of two weeks. (vgl. Staudinger/Magnus, loco citato Art. 63 margin number 16, Schlechtriem/Schwenzer-Hager, loco citato, Art. 63 margin number 3; Bamberger/Roth/Saenger, BGB [*], 2nd edition, Art. 63 CISG, margin number 4; Soergel/Lüderitz/Budzikiewicz, loco citato, Art. 63 margin number 4; deviating opinion: Honsell/Schnyder/Straub, loco citato Art. 63 margin number 20; making distinctions: MünchKomm-Huber, loco citato, Art. 63 margin number 10).
If the buyer fails to perform within this additional period of time, the seller is entitled to declare the contract avoided. The [Seller] has declared the avoidance of the contract within the period of time as set out by Article 64(2)(b)(ii) CISG. The passing of one week between the declaration of avoidance on 2 May 2006 and the point in time when the additional period of time had expired does not bar the right (cf. Staudinger-Magnus, loco citato, Art. 64 margin number 47, Art. 49 margin number 38, with further references).
A declaration of avoidance, according to Article 64(1)(b) CISG, leads to a reverse transaction (Articles 81 et seq. CISG). The claim is based on an analogy to Article 84(2)(b) CISG. It is not possible to directly apply Article 84(2)(b) CISG in the present case, as this article requires that the buyer has declared the contract avoided or required the seller to deliver substitute goods. The leading doctrine accepts an analogy (cf. Staudinger-Magnus, loco citato, Art. 84 margin number 25; Honsell-Weber, loco citato, Art. 84 margin number 6; Brunner, UN-Kaufrecht-CISG, (2004), Art 84 margin number 10; Karollus, UN-Kaufrecht (1991), p. 154; MünchKomm-BGB/Huber, loco citato, Art. 84 margin number 20, MünchKomm-HGB/Benicke, loco citato, Art. 82 margin number 21). It is generally accepted that each party generally has to restitute any benefits it received due to the performance of the other party. The seller would be unreasonably disadvantaged if he would only be entitled to claim damages according to Article 86 CISG in case he declares the contract avoided himself, which in turn would represent the result of the refusal to analogously apply Article 84(2)(b) CISG. He, e.g., could not request the [Buyer] to hand over the sum insured in case of an extinction of the goods due to force majeure. Hence, the Appellate Court agrees with the leading doctrine in respect to the acceptance of an analogy.
The sales revenue of the goods in the case of a resale represents a benefit in the sense of Article 84(2)(b) CISG, which the buyer has to hand over. The net benefit is decisive (cf. Staudinger-Magnus, loco citato, Art. 84 margin number 24; Honsell-Weber, loco citato, Art. 84 margin number 22; MünchKomm-BGB/Huber, loco citato, Art. 84 margin number 16, 18).
The [Buyer] does not deny this. It, however, failed to substantiate any expenses it might have incurred in the course of the resale. It is true that the [Buyer] alleged a commission of 5% for the employee who resold the car, however, solely subject to a further scrutiny. It failed to submit the result of this scrutiny or to prove its allegation. It is, however, obvious that such a resale entails expenses. This has not been contested by the [Seller] during the oral proceedings. The Appellate Court estimates these costs according to � 287 ZPO [*] at EUR 2,000.
The claim for interest since 2 May 2006 is based on Article 78 CISG in conjunction with � 288 I BGB [*] in respect to the amount. (cf. Staudinger-Magnus, loco citato, Art. 78 margin number 12, with further references).
The decision on costs and on provisional enforceability is based on �� 92 Abs.1, 2, 97; 708 No.10, 711 ZPO [*]. The unjustified part of the [Seller]'s claim is insignificant and has not caused any additional costs.
The requirement for the admissibility of further appeal (Revision) according to � 543(2) ZPO is not met. The case is neither of fundamental importance, nor is a decision of the Supreme Court necessary in order to ensure a uniform jurisdiction. This judgment neither deviates from preceding jurisdiction nor from the leading doctrine.
* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Plaintiff-Appellant is referred to as [Seller] and the Defendant-Appellee is referred to as [Buyer]. Amounts in the uniform European currency (Euro) are indicated as [EUR].

References: Art. 82
 Art. 82
 Art. 82
 Art. 82
 Art. 82
 Art. 82
 Art. 82
 Art. 82
 Art. 82
 Art. 82
 Art. 82
 Art. 63
 Art. 63
 Art. 63
 Art. 63
 Art. 63
 Art. 63
 Art. 64
 Art. 49
 Art. 84
 Art. 84
 Art 84
 Art. 84
 Art. 82
 Art. 84
 Art. 84
 Art. 84
 Art. 78