Source: http://cisgw3.law.pace.edu/cases/950523g1.html
Timestamp: 2019-04-22 18:08:26+00:00

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An Italian manufacturer of shoes, plaintiff, sued a German buyer, defendant, for the outstanding purchase price. The buyer sought set-off with damages arising from non-performance by the seller. It argued, inter alia, that it had ordered 3,240 pairs of shoes instead of the delivered 2,700 pairs.
The court allowed the claim. It held that the buyer failed to prove that a contract for delivery of 3,240 pairs of shoes had been concluded. The buyer alleged that an order of that quantity constituted an offer according to article 14 CISG. Due to a lack of express acceptance of such offer by the seller, no contract for the delivery of such quantity was entered into. The court found that the delivery of 2,700 pairs amounted to an acceptance by performance according to article 18(3) CISG. The court held that the delivery of a different quantity of goods materially altered the terms of the offer under article 19(3) CISG. Accordingly, the seller's delivery had to be interpreted as a rejection of the offer by the buyer and constituted a counter-offer under article 19(1) CISG. Therefore, the court held that a contract was concluded only with regard to the quantity delivered by the seller.
The court further held that, even if the buyer had complained about the missing quantity, the seller would not have had the obligation to effect a further delivery, as at no time it had accepted any delivery of a higher quantity of shoes.
299. See OLG Saarbrücken 1 U 69/92, Jan. 13, 1993 (F.R.G.), available at <http://cisgw3.law.pace.edu/cases/930113g1.html>.
301. OLG München 7 U 4427/97, Mar. 11, 1998 (F.R.G.), available at <http://cisgw3.law.pace.edu/cases/930113g1.html>.
303. OLG Frankfurt/M 5 U 209/94, May 23, 1995 (F.R.G.), available at <http://cisgw3.law.pace.edu/cases/950523g1.html> [English translation by Ruth M. Janal, translation edited by Camilla Baasch Andersen].
304. See Claudia, No. 96 CIV. 8052, 1998 U.S. Dist. LEXIS 4586, at *18 (S.D.N.Y. Apr. 6, 1998) [available at <http://cisgw3.law.pace.edu/cases/980406u1.html> ].
306. The court refers to Article 19 only in a footnote, but evidently considered alteration of a delivery term to be a material modification and thus a counteroffer, not an acceptance. Id., at *25, n.7.
The [seller], a company under Italian law, is suing the [buyer] for payment of the purchase price for two deliveries of shoes at an overall price of Italian Lira [It�] 144,148,790. In the proceedings before the Court of First Instance, the [buyer] argued that the delivered shoes were defective. The [buyer] further pleaded that the [seller]'s delivery was 540 pairs of shoes short, and that the [buyer] had suffered a loss of profit in the (converted) amount of It� 8,100,000 for that reason. Moreover, Mr. [�], who in the meantime was appointed as the [buyer]'s manager, allegedly assigned to the [buyer] a claim against the [seller] for compensation arising out of a commercial agency. The [buyer] declared a set-off with this claim.
For the details of the pleadings before the Court of First Instance, the Appellate Court refers to the statements of facts in the appealed decision.
The Court of First Instance granted the [seller]'s claim in its entirety. The Court of First Instance could not find that the [buyer] gave a notice specifying the alleged lack of conformity within reasonable time. Regarding the [buyer]'s claim for damages, the Court of First Instance considered that the documentary evidence regarding the quantity of the order was not presented. The Court of First Instance denied its international jurisdiction to make a decision on the [buyer]'s set-off with the alleged compensation claim arising out of the commercial agency.
On 6 September 1994, the [buyer] appealed the decision of the Court of First Instance (which had been served on [buyer] on 12 August 1994). After being granted an additional period of time to substantiate the appeal until 5 November 1994, the [buyer] handed in the brief arguing its appeal on that day.
The [buyer] submits that the first delivery of goods arrived at its place on 28 or 29 September 1992 and the second delivery on 17 or 18 November 1992. The shoes had glue or spray rims on the side, the toe-caps were folded, and the shoe flap did not bear the [buyer]'s logo. One day respectively after arrival of the delivery, Mr. [�] in the name of the [buyer] complained of the defect to the [seller], talking to Mr. [�] and Mrs. [�]. [Buyer] submits that the lack of conformity justifies a reduction in price by a quarter.
[Buyer] further argues that the delivery was short by 540 pairs of shoes (item no. 643), and that it gave notice to the [seller] complaining of the non-delivery of the shoes. [Buyer] claims damages for loss of profit in the amount of Deutsche Mark [DM] 8,100 (converted: It� 8,100,000). [Buyer] would have been able to resell the shoes with an average profit of DM 15 per pair.
[Buyer] declares - in the following order - a set-off with two claims which the [buyer]'s manager was supposed to have possessed against the [seller] from its activity as a commercial agent. It is no longer disputed that [buyer]'s manager assigned those claims to the [buyer] with written declaration of 20 April 1994. [Buyer] submits that its manager possessed a compensation claim as the [seller]'s agent in the amount of It� 127,050,570 and a claim for damages for loss of commissions in the amount of It� 30,658,303. The Appellate Court refers to the [buyer]'s brief of 6 May 1994 for the [buyer]'s submissions regarding the existence of a commercial agency and the calculation of the compensation claim. The [buyer] pleads that its manager agreed with the [seller] at the beginning of the commercial agency that Italian law applied to their legal relationship. In any case, the choice of law resulted from the fact that both [buyer]'s manager and the [seller] had relied on Italian law during an oral hearing on 10 July 1994 before the Labor Court in Italy.
The [buyer] requests that the appealed decision be reversed and the [seller]'s claim be dismissed.
The [seller] requests that the appeal be denied.
The [seller] contends that the commercial agency is subject to German law. The submissions to the Italian court had constituted only an exchange of views and there were no other agreements concerning the applicable law. The Court of First Instance therefore lacked the international jurisdiction necessary for the decision regarding the [buyer]'s set-off claims. The [seller] disputes that the existence of the claims assigned to the [buyer] by its manager.
The [buyer]'s appeal is admissible, but unsuccessful.
The amount of the [seller]'s claims for payment of the purchase price regarding invoices no. 197, dated 25 September 1992, and no. 232, dated 16 November 1992, for a total sum of It� 144,148,790 is not disputed. The [buyer]'s main objection to the [seller]'s claims is the alleged lack of conformity of the goods.
It is disputed between the parties whether these non-conformities existed. The Court of First Instance held that the [buyer]'s objection was insignificant if only because the [seller] denied that a proper and timely notice of non-conformity had been given. Before the Court of First Instance, the [buyer] did not substantiate at what point in time the goods were delivered, when the notice of non-conformity via the telephone was supposed to have occurred, and which person partook in the telephone conversation on the [seller]'s side. In the appellate brief, the [buyer] substantiated its submissions, specified the day on which the deliveries arrived and named the witness [�] for the telephonic notice of non-conformity. The [seller] disputes also these more detailed submissions of the [buyer].
Witness [�] was summoned according to � 273 ZPO [*]. However, during the oral hearing it transpired that this witness had in the meantime been appointed as the [buyer]'s manager. As such, it is considered a party to the dispute and could only be heard under the prerequisites of �� 445 to 448 ZPO. These preconditions are not met. The [seller] has not agreed to a hearing of the [buyer]'s manager, nor has there been any certain initial proof of the [buyer]'s allegation. It is therefore not admissible to hear the [buyer]'s manager. The [buyer] has still failed to provide proof that it gave a timely notice specifying the lack of conformity of the goods. The decision of the Court of First Instance is insofar upheld.
The [buyer] is further unable to set-off against the [seller]'s claims a claim for damages in the amount of It� 8,100,000. This amount constitutes the alleged loss of profit - converted into It� - which the [buyer] supposedly would have been able to make from 540 pairs of shoes not delivered. The prerequisites of Art. 74 CISG are not met.
The [buyer] alleges that it ordered 3,240 pairs of the shoes (item no. 643). It is undisputed that [buyer] received 2,700 pairs.
The [seller] denies that the [buyer] made an order for the alleged quantity. During the proceedings before the Court of First Instance, the [buyer] initially relied on the "presentation of the sales contract" and subsequently on a submission of the written order. The Court of First Instance considered the [buyer]'s contention as unfounded as the [buyer] produced neither of those two documents.
During the appellate proceedings, the [buyer] relies for proof of the order on the testimony of its manager as well as the written order, which - while described as attachment B1 to [buyer]'s brief - has not been submitted.
The [buyer] has failed to make sufficient submissions regarding its alleged claim in a way that would lead the Appellate Court to conclude that the [seller] was obliged to deliver more than 2,700 pair of shoes. It can only be gathered from the [buyer]'s pleadings that it allegedly placed an order for 3,240 pairs of shoes. It does not follow from [buyer]'s submissions how the [seller] is supposed to have accepted this order.
The [buyer]'s alleged order would constitute an offer in the meaning of Arts. 14 and 15 CISG. The [seller]'s delivery of 2,700 pairs of shoes would then indicate an assent to the offer in the meaning of Art. 18(3) CISG. As the delivery did not relate to the entire quantity allegedly ordered, it would have constituted a material modification of the offer. Therefore, the [buyer]'s offer would have to be considered rejected and the [seller]'s delivery seen as a counter-offer. Even if the [buyer] had then complained about the missing 540 pairs of shoes - a fact that is disputed between the parties - a sales contract was not formed and an obligation of the [seller] to deliver more shoes did not exist. After all, the [seller]'s acceptance regarding the disputed quantity was still missing.
Independent of this matter, the [buyer]'s claim for damages also fails because the [seller] denies that a loss of profit in the amount of 8,100 DM, (respectively, It� 8,100,000) was incurred. Again, the [buyer]'s manager cannot be heard as a witness for the amount of damage incurred.
Finally, the [buyer] tries in vain to declare a set-off with two claims that the [buyer]'s manager allegedly possessed against the [seller] and which it assigned to the [buyer] on 20 April 1994. One of the claims is a compensation claim in the alleged amount of It� 127,050,570 and the other is the so-called "damages claim Riva" in the amount of It� 30,658,503. The [buyer] declared a set-off with the claims in the above order.
The "damages claim Riva" concerns the loss of commissions. The [seller] supposedly refused to provide Mr. [�] with further samples after Mr. [�] had handed in its notice on 30 November 1992, even though the contractual relationship was ended with effect of 31 May 1993. [Buyer] submits that this was the reason why Mr. [�] was unable to commission new orders for the [seller].
The [buyer]'s set-off is not admissible.
3.1 The [seller] pleads that the [buyer]'s claims cannot be used for a set-off and decision in the present proceedings, as the Appellate Court does not possess international jurisdiction. The Court of First Instance reached the correct decision on the matter of the set-off following the facts submitted during the proceedings of the first instance.
The BGH [*] (NJW [*] 1993, 2753) decided in a similar case (the assigned claims of a commercial agent set-off against the claim for payment of the purchase price of an Italian seller) that the decision regarding the set-off of a claim in the course of the proceedings requires the international jurisdiction of the trial court for the claim against which the set-off is declared. The international jurisdiction resulted from the Brussels Convention [*]. As in the present case, the place of business of the debtor of the claim was in Italy, so that Italian Courts possessed jurisdiction under Art. 2 Brussels Convention.
A different outcome may result from the application of Art. 5 no. 1 Brussels Convention, if the place of performance of the obligation in question is in Germany. The place of performance in the meaning of Art. 5 no. 1 Brussels Convention needs to be determined by virtue of the rules of private international law of the forum (cf. the ECJ [*] precedent cited in the decision BGH NJW 1993, 2754). If the parties to the commercial agency contract have not formed an agreement regarding the applicable law in the meaning of Art. 27 EGBGB [*], the applicability of German law follows from Art. 28 EGBGB. In this case, the place of business of the Italian merchant is the place of performance for its obligations.
3.2 In the present case, the Appellate Court reaches the conclusion that the decisive parties regarding the claims at issue (i.e., for the set-off) have formed a choice of law agreement in the meaning of Art. 27 EGBGB that leads to the application of Italian law.
3.3 Ultimately, the application of Italian law does not help the [buyer]. According to Art. 1182(3) C.c., [*] the place of performance is the place of business of the creditor, that is, Germany for the claims of the commercial agent, Mr. [�]. Thus, the international jurisdiction of the trial court is given under Art. 5 no. 1 Brussels Convention. The set-off is not prevented by a lack of international jurisdiction of the German courts.
However, even upon the basis that the place of performance under Art. 1182(3) C.c. is in Germany and the trial court possesses international jurisdiction, the set-off is still precluded by the requirements for a set-off under Italian law.
The claim for payment of the purchase price of an Italian seller is governed - insofar as matters are not settled by the CISG - by Italian law, which is the law applicable by virtue of Art. 28 EGBGB [*]. Whether a claim may be set-off against the claim for payment of the purchase price needs to be determined under Italian law.
The requirements for a set-off according to Art. 1243(1) C.c. [*] are met neither with respect to the compensation claim resulting from the commercial agency, nor with respect to the claim for damages.
The [buyer] did not appeal the interest of 10% granted to the [seller] by the Court of First Instance in accordance with Art. 1284 C.c. and law no. 253 of 16 November 1990.
The decisions on costs and preliminary enforcement follow from �� 97(1), 708 no. 10, 711, 108, 546(2) sent.1 ZPO [*].
* All translations should be verified by cross-checking against the original text. For purposes of this translation, the Plaintiff-Appellee of Italy is referred to as [seller]; the Defendant-Appellant of Germany as [buyer]. Amounts in the currency of Italy (Italian Lira) are indicated as [It�]; amounts in German currency (Deutsche Mark) are indicated as [DM].
Translator's note on other abbreviations: BGH = Bundesgerichtshof [Federal Court of Justice, the highest German Court in civil and criminal matters]; Brussels Convention = Convention of 27 September 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters; C.c. = Codice civile [Italian Civil Code]; ECJ = European Court of Justice; EGBGB = Einführungsgesetzbuch zum Bürgerlichen Gesetzbuche [German Code on the Conflict of Laws]; NJW = Neue Juristische Wochenschrift [pre-eminent German Law Journal]; ZPO = Zivilprozeßordnung [German Code on Civil Procedure].
** Ruth M. Janal, LL.M. (UNSW), a PhD candidate at Albert-Ludwigs-Universität Freiburg, has been an active participant in the CISG-online website of the University of Freiburg. The second-iteration redaction of this translation was by Dr. John Felemegas of Australia.

References: Art. 74
 Art. 18
 Art. 2
 Art. 5
 Art. 5
 Art. 27
 Art. 28
 Art. 27
 Art. 1182
 Art. 5
 Art. 1182
 Art. 28
 Art. 1243
 Art. 1284