Source: http://cisgw3.law.pace.edu/cases/950512g1.html
Timestamp: 2019-04-22 18:07:03+00:00

Document:
A German buyer, the defendant, ordered through X, a self-employed sales agent, flagstones from an Italian seller, the plaintiff. The seller sent an invoice. X handed the stones over to the buyer and reduced the purchase price mentioned in the invoice. The buyer wrote out a cheque for X as recipient. Subsequently the cheque was cashed but the seller never received the purchase price. After sending a reminder through its Italian advocate the seller sued the buyer for the purchase price and for the expenses of the reminder. The buyer argued that it had paid the purchase price as reduced by X.
The Court held the CISG to be applicable by virtue of article 1(1) CISG because the parties had their places of business in different Contracting States and the exclusions of the articles 1(2) and 2 CISG did not apply.
The Court held the claim to be justified under article 53 CISG. It found that CISG did not rule the question of agency. Pursuant to Article 7(2) CISG the issue of agency was governed by German law applicable under the rules of international private law of the forum. According to German law, X had no representative authority for the seller. Consequently its reduction of the purchase price was ineffective.
The Court held that the buyer had not fulfilled its obligation to pay the purchase price. Neither did the buyer pay the purchase price to the seller at the seller's place of business (article 57(1)(a) CISG) nor did it pay the purchase price to the seller at the place where the handing over of the stones took place (article 57(1)(a) CISG). However, as the seller never received the purchase price, handing over the cheque to X did not amount to payment. If the buyer commissioned X to transmit the purchase price to the seller, it had to bear the risk of this transmission (article 79 CISG). Also X was no authorized collecting agent of the seller. As the buyer wrote out a cheque for X as recipient, it had to bear the risk for X cashing the cheque without handing over the purchase price to the seller (article 79 CISG).
Concerning the costs for the reminder the Court dismissed the claim. It held that the seller had the possibility to entrust a German [advocate] with sending the reminder. When entrusting an Italian lawyer the seller failed to take measures to mitigate the loss by virtue to article 77 CISG.
The Court granted interest under article 78 CISG from the due date of the purchase price (articles 58 and 59 CISG). The court determined the rate of interest under Italian law applicable under the rules of German international private law (article 7 CISG). The court refused to grant a higher rate of interest under the articles 62 and 74 CISG because the seller failed to prove the recourse to bank credit.
[Seller] is a limited liability company seated in Italy. [Buyer], who is of Germany, operates a flagstone speciality store taken over from his father where he was also working before. On [Seller]'s behalf, there was a Mrs. (�) working either as sales representative - as [Seller] alleges - or as "marketing manager" which [Buyer] purports. [Buyer] met Mrs. (�) in January 1993 at a trade fair in Munich and ordered flagstones at the price of 1,575.00 DM [*] from [Seller]. [Seller] invoiced this amount on 5 March 1993 which will later be discussed in detail.
By reason of an agreement between [Buyer] and Mrs. (�), the latter delivered the flagstones to Gießen on 9 March 1994 where they were handed over to [Buyer]. Mrs. (�) insisted on immediate payment by means of a check drawn on her name which she - according to her explanation to [Buyer] - would then credit on [Seller]'s account in Germany. According to her further illustration, this was practical to avoid troubles with the customs. At their meeting on 9 March 1993, Mrs. (�) and [Buyer] agreed also on the granting of discount of 10 % on the amount invoiced and that flagstone samples amounting to 182.50 DM would be taken out of the calculation. In response to the request of Mrs. (�), [Buyer] drew a check in the amount of 1,235.00 DM which is to be discussed in detail. The amount of the check was debited from the drawer's account but did not arrive at an account of [Seller]. By way of credit of 30 June 1993, [Seller] granted a discount on the flagstones delivered in the amount of 230.00 DM.
In a writing on the following day, [Seller] urged the payment of the invoice of 5 March 1993 for the first time. By writing of [Seller]'s actual counsel with the address of his office in Italy, dated 27 June 1994, [Seller] urged the payment of the outstanding amount invoiced of 1,345.00 DM plus attorneys' fees in the amount of 119,000.00 Italian Lira. [Seller] claims that it continuously made use of a bank loan which was continuously charged with interest of at least 11,5 %.
[Seller] requests the Court to order [Buyer] to pay [Seller] 1,345.00 DM plus interest of 12 % since 6 April 1993 as well as 119,000.00 Italian Lira for attorneys' fees / dunning costs.
[Buyer] requests the Court to dismiss the claim. He alleges that he has fulfilled his payment obligation towards [Seller] by handing over the check to Mrs. (�) even if the money was not forwarded to [Seller]. This results from an authority of Mrs. (�) to collect on behalf of [Seller] which is to be assumed according to the principles of agency by estoppel or apparent authority.
Concerning the main issue, the [Seller['s claim is entirely justified; concerning the further charges, the claim is only partly justified.
[Buyer] is obliged to pay [Seller] the purchase price for the flagstones delivered in the amount of 1,345.00 DM, Art. 53 CISG. The contract concluded by the parties is governed by the CISG as the parties to the sales contract are both seated in Contracting States of the UN Convention on Contracts for the International Sale of Goods (CISG). This also results from the fact that both Italy and Germany were signatory States at the time of the conclusion of the contract and deposited accordant certificates, Art. 3(2) EGBGB [*], Art. 1(1) CISG. The parties did not bring forward circumstances leading to the exclusion clauses of Art. 1(2), Art. 2 CISG.
[Buyer]'s obligation to pay the purchase price is in accord with Art. 53 CISG. Pursuant to this provision, [Seller] was initially allowed to claim payment of 1,575.00 DM. [Buyer] did not submit a lower purchase price or circumstances leading to a lower purchase price according to Art. 55 CISG. Later, the purchase price was reduced by crediting of [Seller] to 1,345.00 DM.
[Buyer] cannot refer to a further reduction of the purchase price to 1,235.00 DM. [Buyer] indeed agreed on such a reduction in price with Mrs. (�). However, Mrs. (�) was not authorized to enter into such an agreement on behalf of [Seller] It is of no relevance whether Mrs. (�) was [Seller]'s sales representative or "marketing manager". The result is the same in both cases. After the contract was concluded, a subsequent amendment of the contract at the expense of [Seller] could only have been validly agreed upon by Mrs. (�) if she had been validly authorized for that. However, this was not the case.
An express authorization for this was disputed by [Seller] and not submitted by [Buyer]. Neither as sales representative nor as "marketing manager" would Mrs. (�) have been authorized to a subsequent amendment of the sales contract.
In this respect, German law is to be applied concerning Mrs (�)'s authority since the validity of an authority is governed by the law of the place where the authority is performed (Palandt-Heldrich, annex to Art. 32 EGBGB, para 3). The German law on sales representatives does not contain an authority for the subsequent amendment of a contract, �� 55(2), 91 HGB [*]. Had Mrs. (�) been [Seller]'s "marketing manager", an authority comes at best into consideration as clerk which, however, also does not authorize a subsequent amendment of the contract, Art. 55(2) HBG.
Nor was a subsequent amendment of the contract by Mrs. (�) appowed ex post by [Seller]. This results from the issuing of the credit of 30 June 1993 in which the agreements reached with Mrs. (�) where not confirmed.
Finally, the principles of agency by estoppel or apparent authority do not apply in favor of [Buyer]. In the first case, [Seller]'s positive knowledge of the agreements reached by Mrs. (�) and [Buyer] would be required which is, however, not brought forward. In the second case of an apparent authority, a repeated accordant performance would be required and no informative basis is provided for that.
For lack of further subsequent alteration of the agreement concerning the price, [Buyer] remains obliged to payment of the purchase price reduced by the credit resulting in an amount of 1,345.00 DM.
The CISG does not apply in this connection as it does not regulate questions concerning authority, Art. 7(2) CISG. An application of Italian law which - possibly - is more favorable for [Buyer] is neither reached via Art. 28 EGBGB as its provisions are not applicable for questions concerning authority, Art. 37 EGBGB. In this respect, the general provisions of the conflict of laws and therefore, the general rules and regulations concerning authority are to be applied.
[Buyer] did not fulfill his obligation to pay [Seller] the purchase price. The performance of the sales contract is again governed by the provisions of the CISG. [Seller] did neither completely nor partly receive payment of the purchase price. The purchase price was to be paid to [Seller] either at the place of [Seller]'s office in Italy, Art. 57(1)(a) CISG or at the place were the handing over of the flagstones took place, Art. 57(1)(b) CISG. None of these options happened.
[Buyer] indeed drew a check in the amount of 1,235.00 DM and handed it over to Mrs. (�) whereupon the sum was later debited. However, the sum of the check did never reach [Seller]. Therefore, [Buyer] remains obliged to pay [Seller] the purchase price.
[Buyer] cannot invoke that he remunerated [Seller] via Mrs. (�) and that Mrs. (�) could be considered as a courier used by [Buyer]. In this case, [Buyer] bears the risk of the money's arrival at [Seller] according to Art. 79 CISG. For lack of an accordant submission, an authority to collect by Mrs. (�) on behalf of [Seller] remains also out of consideration, Arts. 55, 91 HGB.
The principles of agency by estoppel or apparent authority cannot be applied in favor of [Buyer] for the same reasons. Additionally, [Buyer] drew the check on another addressee as agreed upon in the contract concluded with [Seller]. According to the designation of the check, it was addressed to Mrs. (�) and not to [Seller]. [Buyer] took consciously took the risk that Mrs. (�) would credit this check drawn on her address to her own account without forwarding the money to [Seller]. If [Buyer] took this risk consciously, he has to bear the consequences. In this respect, the distribution of risks according to Art. 79 CISG applies as well.
[Seller] is not entitled to dunning costs in the amount of 119,000.00 Italian Lira from [Buyer]. [Seller] indeed incurred these attorneys' fees and according to Italian law, they may possibly not be charged to the fees which was incurred by [Seller] retaining counsel for this legal dispute. However, this is of no relevance. By incurring these attorneys' fees [Seller] violates its obligation to mitigate the damages according to Art. 77 CISG. [Seller] was not entitled to claim attorneys' fees for dunning [Buyer] besides the procedural fees of her counsel if she mandated a lawyer seated in Germany. In the instant case, this would have been well possible as her actual counsel which prepared the dunning letter of 27 June 1994 operates an office in Stuttgart as well. In his office in Stuttgart, he also prepared the statement of claim and all further written submissions of this dispute. The preparation of extrajudicial dunning letters in the office in Stuttgart would have been reasonable for [Seller] as well as for her actual counsel.
[Seller] is entitled to interest of only 10 % on the principal claim. According to Art. 78 CISG, the buyer owes interest if he fails to pay the price. The punctuality of the payment goes by Arts. 58, 59 CISG in connection with the sales contract concluded by the parties. According to the content of the sales contract, the purchase price was to be paid net at the latest within 30 days. This results from the invoice of 5 March 1993. The parties did not submit another agreement concerning the payment date. The interest rate is governed by Italian law as it is not regulated in the CISG, Art. 7 CISG, Art. 28 EGBGB. Since 1990, the compulsory interest rate in Italy is 10 % (Kindler, RIW [*] 1991, 304), Art. 1284 Codice civile.
[Seller] cannot claim a higher rate of interest by taking into consideration damages for breach of contract by non-payment of the purchase price, Arts. 62, 74 CISG. This is because [Seller] has proven the continuous availment of bank loan as claimed. Particularly, the statements of account submitted by [Seller] are not suitable evidence. For one thing, these statements do not contain the period of time decisive in the instant case, for another thing, they report -- as far as the decisive period is concerned -- predominantly positive account balances for [Seller]'s account. At least, nothing else can be inferred from the Italian documents submitted by [Seller]. [Buyer] has to bear the costs of the proceeding as he is defeated, � 91 ZPO [*].
The claim concerning the preliminary enforceability results from � 708 No. 11 ZPO.
It could be refrained from ordering exemption from judicial execution since there will undoubtedly be no appeal against this decision, � 713 ZPO.
* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff of Italy is referred to as [Seller] and Defendant of Germany is referred to as [Buyer].
Translator's note on other abbreviations: DM = Deutsche Mark [former German currency]; EGBGB = Einführungsgesetz zum Bürgerlichen Gesetzbuche [German Code on Private International Law]; HGB = Handelsgesetzbuch [German Commercial Code]; RIW = Recht der Internationalen Wirtschaft [German law journal]; ZPO = Zivilprozeßordnung [German Civil Procedure Code].

References: Art. 53
 Art. 3
 Art. 1
 Art. 1
 Art. 2
 Art. 53
 Art. 55
 Art. 32
 Art. 55
 Art. 7
 Art. 28
 Art. 37
 Art. 57
 Art. 57
 Art. 79
 Art. 79
 Art. 77
 Art. 78
 Art. 7
 Art. 28
 Art. 1284