Source: http://cisgw3.law.pace.edu/cases/020913s1.html
Timestamp: 2019-04-21 04:58:10+00:00

Document:
PARTICULARS. Civil Part. Ruling by way of ordinary procedure between Defendant-Appellant [Buyer], a company having its headquarters at 75, rue de Lyon, 1203 Geneva, appealing from a judgment rendered by the 9th Part of the Trial Court of this Canton of 24 January 2002, appearing by Guy Stanislas, Esq., barrister, rue Bellot 2, 1206 Geneva in the office which it elects as domicile, vs. Plaintiff-Appellee [Seller], a company having its headquarters at quai G�n�ral Sarrail, 10402 Nogent-sur-Seine (France), appearing by Charles Andr� Junod, Esq. barrister, rue Toepffer 17, 1206 Geneva in the office which it elects as domicile.
A. By judgment of 24 January 2002 sent to the parties on 29 January, the Trial Court ordered the [Buyer] to pay to the [Seller] the sum of U.S. $78,920.80, with interest at 5% from 13 August 1998, and 2,206.98 FF [French francs], that is, 336.45 Euros, with interest at 5% from 6 July 1999, and to pay costs comprising a reimbursement of court costs of 8,000 Sfr [Swiss francs] as [Seller]�s attorney�s fees. It denied the parties any other relief.
In order to base his decision, the trial court judge held the existence of a contract formed orally by the parties, whose tenor had been confirmed by two subsequent letters. He maintained that these latter well reflect the contents of the conversation and bear the essential elements of the transaction, specifying the kind of the goods, their quantity and their price.
B. By notice sent on 1 March 2002 to the Clerk of the Court of Justice, [Buyer] appeals from that ruling, which it demands be set aside, seeking a remand of the case before the trial court judge in order to proceed to the examination of the parties and to testimonial evidence sought by the parties, and to deny [Seller] any further relief, ordering it to pay the costs of the trial and of the appeal.
The [Buyer] imputes to the trial court judge a violation of the right to proof for not having proceeded to a hearing of the interested parties, so as to clarify the circumstances and the unfolding of the pre-contractual negotiations, and for having based his ruling on an unproven allegation which bears on a relevant and disputed fact. [Buyer] alleges that, contrary to what the trial court judge held, the [Seller] only made an offer. That offer had not been accepted by the [Buyer], who did not confirm it in writing as [Seller] required. With reference to the text of the contract relating to a previous transaction, the addition of that demand for written confirmation will prove that the [Buyer] does not have to consider itself bound before having accepted in writing the offer made by [Seller]. Finally, the [Buyer] contests the claims for damages asserted by [Seller].
C. [Seller] seeks affirmance of the challenged judgment and an order for [Buyer] to pay the costs.
a) The [Buyer], whose headquarters is in Geneva, is principally engaged in commerce and clearing-house transactions of raw materials and grains. The [Seller], having its headquarters at Nogent-sur-Seine (France), specializes in the export of grains.
b) On 13 November 1997, following a telephone transaction, [Seller] confirmed by telex to [Buyer] the sale of 8,000 tons of bulk European miller�s wheat at a price of US $179 per ton, deliverable at the port of Nouakchott, Mauritania, payable by letter of credit opened at the latest on 18 November 1997. The following day, the UBS bank issued a documentary credit dated 14 November 1997 and bearing on the said transaction, of which it had sent a signed copy to [Seller]. Among the documents required in order to proceed to the payment of the agreed sum, a full set of the maritime bill of lading drawn up to the order of the National Bank of Mauritania dispatched to Etablissements Abdellahi Ould Noueygued Fr�res, the latter being the clients of [Buyer]. The contract having been properly performed, the UBS proceeded to pay the US $1,539,811.70 to [Seller] by notice on 24 December 1997.
c) On 19 January 1998, following a new telephone discussion with [Buyer], [Seller] sent a telex of a tenor similar to the 13 November 1997 telex, in which Appellant is likewise indicated as the Buyer, confirming to it the sale of 8,000 tons of soft European wheat in bulk for the price of US $156 per ton, payable by letter of credit, opened at the latest on 26 January 1998 and deliverable at the port of Nouakchott, cost, freight and unloading of the sacks included. That confirmation contains the same conditions as the previous 13 November 1997 telex, notably a clause fixing the cut-off date for opening the letter of credit (point 9, 2nd para.): "The letter of credit will have to conform to the contract terms and be opened at the latest on the 26 January 1998"; a clause (point 9, 4th para.) specifying "Should the letter of credit not be opened before 18 November, the Seller reserves the right to cancel or renegotiate the price and the conditions of the contract" and a clause reserving the right to arbitration and incorporating by reference, for the rest of the terms and conditions, the Incograin no 12 CAF Maritime contract latest edition (point 12).
The cut-off date for opening the letter of credit must thus be inserted twice in the contract, namely in the second and in the fourth paragraph of Point 9.
d) On 21 January 1998, [Seller] sent to [Buyer] a "confirmation of the 19/01/98 contract" having a tenor identical to the 19 January 1998 telex, with the exception of the correction of the fourth paragraph of point 9, the cancellation or renegotiation clause. The date of 18 November is marked and modified by hand to 26 January, corresponding thus to the cut-off date for opening the letter of credit mentioned above, in the second paragraph. [Seller] added in that second confirmation letter, a last paragraph asking to have a duly signed copy of the latter returned to it.
e) [Buyer] did not acknowledge receipt of this second letter and did not return it signed to [Seller].
f) By telex on 4 February 1998, [Seller] informed [Buyer] that "the Soci�t� G�n�rale has still not been informed of the opening of a letter of credit in our favor, via the National Bank of Mauritania" and asked that it contact the final purchaser so that everything necessary be done from now until 6 February at the latest, so as to ship on time.
"Following our different follow-ups concerning late opening of the letter of credit, due to, firstly, your various promises to open [a letter of credit], and, secondly your astonishing change in attitude after some weeks, we ask you to urgently tell us within 24 hours of receipt of this letter if/when the contract will be performed. We hereby inform you that you are in breach of contract since 26 January 1998. It is purely as a business and exceptional measure that we grant you a new extension of time. Absent a response within that extension of time, we will bill you our difference in market price, as well as our damages: purchase and marking of the sacks, financing of the goods, storage, etc. In the case of non-payment, we will demand arbitration before the Arbitration Chamber of Paris according to the Incograin no 12 contract."
h) By fax of 11 March 1998, [Buyer] wrote the following: "Following your fax of today, please find attached, the fax of our client the Etablissements Abdellahi Ould Noueygued et Fr�res, which is self-explanatory."
"We are truly surprised at the content of your fax, given that since our telephone conversation on the 20 January 1998, we clearly indicated to you that our client "les Etablissements Noueygued" did not need our financing this time and consequently it will open the letter of credit directly in your name at the Soci�t� G�n�rale in Paris. Furthermore, Mr. ___, confirmed the same to us when you had contacted them several times. Unfortunately, the situation at the level of the Central Bank of Mauritania is blocked for everyone. With regard to that, we will keep you informed of developments".
Attached, a fax from the said client indicating that all the demands for the opening of the letters of credit were blocked by the new Director of the Central Bank and that [Seller] will be immediately informed as soon as the situation is cleared up.
i) By telex on 6 April 1998, [Seller] reminded [Buyer] that it had given [Buyer] notice that its 11 March 1998 response was not acceptable, placed [Buyer] on notice to indicate in a firm and definitive manner if/when [Buyer] intended to perform the contract and granted a final extension of time until 8 April 1998 at 5:00 pm. [Seller] reserved the right to raise breach of contract, to bill for the price difference and to arbitration.
j) By fax of 8 April 1998, [Buyer] declared it was maintaining its position according to its fax of 11 March 1998 and stated that its client would be absent until 14 April 1998. By telex of the same day, [Seller] informed [Buyer] that [Seller] considered [Buyer] "in breach according to Incograin 12" and that [Seller] would bill [Buyer] the difference in market price, the right to arbitration being reserved.
k) On 28 April 1998, [Seller] sent to [Buyer] a charge note of US $78,920.80, corresponding to the price agreed on 19 January 1998 (US $1,248,000), less the value of the goods on 26 January 1998 (US $912,000 at US $114 per ton), of the value of the cargo to that date (US $224,000 at US $28 per ton) and the value of the sacks (US $33,079.20), as well as a bill for 2,206.98 FF corresponding to the cost of the affidavit issued by a sworn agent and giving currency to the goods to 26 January 1998.
l) [Buyer] did not pay these invoices and informed [Seller] by fax on 12 June 1998, that it still maintained its position according to its 11 March 1998 fax.
m) On 24 July 1998, [Seller] telexed [Buyer] a reminder of its invoices. [Seller] indicated to [Buyer], by telex on 10 August 1998, that it demanded arbitration at the Arbitration Chamber of Paris for non-payment the sums due. On the same day, [Buyer] responded that it maintained its 11 March 1998 position.
n) On 19 August 1998, the Arbitration Chamber of Paris accepted the case. The latter issued a preliminary award on 10 March 1999, holding entirely in favor of [Seller] and ordering [Buyer] to pay the sums sought (US $78,920.80 and 2,206.98 FF) and to pay damages and costs amounting to 10,000 FF (as damages and interest for abuse of process), 3,000 FF and 23,071 FF, this in spite of the fact that [Buyer] contested the jurisdiction of the Arbitration Chamber in the absence of a contract or an arbitral clause signed by it. By letters on 22 and 27 April 1999, the Arbitration Chamber indicated that its preliminary award had become a definitive award and that each party could demand its enforcement [exequatur].
o) The order to pay, sent to [Buyer] on 13 August 1999, for the sums of 124,486 Sfr and 9,367 Sfr with interest at 5% from 26 July 1999, was stopped. [Seller] was denied its demand for replevin on appeal by judgment of the 29 August 2000, the court could not enforce the 10 March 1999 arbitral award, because of the absence of the signature to an arbitration clause by the [Seller], a formal condition required by Art. 2(2) of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards concluded in New York on 10 June 1958 (hereinafter: the New York Convention).
p) By its complaint filed on 28 May 2001 with the clerk of the trial Court, [Seller] sued [Buyer] for the payment of US $78,920.80 with interest at 5% from 13 August 1998, and 38,278 FF with interest at 5% from 6 July 1999, indicating that the sacks purchased could have been used for another sale. In response to that argument, [Buyer] stated that its silence was not to be interpreted as an acceptance of the contract, neither on its behalf nor on behalf of another. Secondarily, [Buyer] contested the tenor and the impartiality of the documents produced by [Seller] to prove its damages and seeks a court ordered expert examination.
q) At the hearing on the briefs on 28 May 2002, the [Buyer] maintained its position, without clarifying on what points the demanded investigations should focus.
1. Having been timely filed (art. 296 LPC) and in the proper form (art. 300 LPC), the present appeal will be heard.
2. The present suit has [Seller], a French company, whose claims based on non-performance of an international sales contract are contested by [Buyer], a Swiss company for the reason that the said contract was never formed, [Seller]�s offer never having been signed by [Buyer].
2.1 In the presence of an element of foreign status, the Court must refer to the Swiss Federal Law on International Private Law (LDIP), whose art. 1(2) preserves the primacy of international treaties. In the sphere of international sales between France and Switzerland, the countries in which the parties have their principal places of business, the United Nations Convention on Contracts for the International Sale of Goods of 11 April 1980 (hereinafter CISG) is applicable (art. 1(1)). The application of the CISG is exhaustive and governs the whole of the contract, that is to say, its formation as well as the rights and obligations of the parties, just as the consequences of non-performance. In principle, the auxiliary application of national law is excluded. (SJ 2001 I 304). According to Art. 11 CISG, the sales contract does not have to be concluded in or evidenced by writing and is not subject to any other requirement as to form.
According to Art. 18(2) CISG, an oral offer must be accepted immediately unless the circumstances indicate otherwise. An offer is sufficiently definite if it indicates the goods and expressly or implicitly fixes the quantity and the price or makes provision for determining it (Art. 14(1) CISG). The notion of an oral offer, before being in principle accepted immediately, includes conversations face-to-face, by telephone or any other technical or electronic means of communication allowing immediate oral contact, but not statements captured in a material medium such as, notably a fax.
Unless there are particular contrary circumstances, the CISG provides that the offer does not survive a telephone conversation. A confirmation letter may serve as proof of the content of the oral agreement of the parties, as it creates the appearance of mutual assent on the term it contains (Neumayer/Ming, Commentaire de la convention de Vienne sur les contrats de vente internationale de marchandises, CEDIDAC, 1993, p. 169 and 172).
In the case at bar, the [Buyer] does not challenge that the [Seller] orally formulated an offer during the telephone conversation on 19 January 1998, but it argues that that offer would have had to have been confirmed in writing, nevertheless without indicating how the circumstances were particular. Moreover, the [Buyer] does not allege that the circumstances between the parties were different from those prevailing at the time of their previous transaction whose orally concluded contract of the 13 November 1997 had been properly performed. The [Buyer] argues only that the last paragraph added to the second confirmation letter of the 19 January 1998 telex would be sufficient to nullify the oral formation of the said contract.
That argument does not bear scrutiny. Chronologically the procedure of the formation of the 19 January 1998 sales contract was absolutely similar to the 13 November 1997 contract. The offer to sell had been made orally by telephone on the 19 January 1998 and consequently could be only accepted immediately. Moreover, there is no doubt that it was, all the later correspondence referring, formally or implicitly to the contract concluded verbally on 19 January 1999. The confirmation of the telephone conversation of the same day bore on the essential elements of the disputed contract, namely the goods, their quantity and their price. The oral offer appears then to have been immediately accepted verbally by the [Buyer], who does not advance the least hint of proof to the contrary, basing its protestations only on the text of the second confirmation of the contract.
The [Buyer] has neither reserved its later acceptance, nor contested the tenor of the telex confirming the contract which occurred on the same day, either immediately upon receipt of the confirmations of the oral contract or during the exchange or correspondence that followed, which related only to the lateness of the issuance of the letter of credit. The [Buyer], moreover, has never contested the formation of the contract nor any of its essential elements or the caption "confirmation of contract" (which today it argues was erroneous). Also, the commitment undertaken orally on 19 January 1998 is likewise demonstrated by [Buyer]�s conclusive actions� namely its 11 March 1998 fax: "... our client does not need our financing this time and consequently it will open the letter of credit directly in your favor through the Soci�t� G�n�rale of Paris. [It] has confirmed to us likewise [...] unfortunately the situation at the level of the Bank of Mauritania [sic] is blocked for everyone". It cannot be deduced from any of the correspondence exchanged that the formation of the contract would have been subject to the Buyer�s final acceptance, conduct which would moreover be altogether unusual in the sphere of grain transactions, and even more so, by invoking a period of time for acceptance which would have lasted several months.
Thus, pursuant to Art. 18(2) of the CISG, a contract had been orally formed between the parties on the 19 January 1998.
2.2 Art. 18(1) of the CISG provides that a statement made by or other conduct of the offeree indicating assent to an offer is an acceptance. Silence or inactivity does not in itself amount to acceptance.
The documentary credit is the undertaking of a bank to pay a given sum to the supplier of goods or a performance, against tender, within a fixed period of time of the certified conforming copies proving that the goods have been shipped or the or the performance effectuated. The documentary credit is thus an instrument of payment (Manuel des op�rations documentaires dans le commerce ext�rieur, UBS, 1985, p. 14). According to the Incograin no 12 - CAF Maritime form, which provides under its heading VIII, payment conditions, whatever the means of payment laid out in the particular terms of the contract, the seller may at any moment during the time period for performance, and at the earliest fifteen days before the beginning of the said period, require the opening, at the buyer�s expense, of an irrevocable documentary credit confirmed by the bank the seller indicates in its demand. When it is envisioned that the payment will be made by using a documentary credit, the latter must be irrevocable and confirmed by the seller�s bank, which must receive notification of its opening at the latest five work-days before the first day of the period of shipping. In the case at bar, the time period for performance was set to be between the 1st and the 15th of February 1998 (written by mistake as 1997).
It should be noted that the tenor of the letter of the 11 March 1998, drafted by the [Buyer] confirms the existence of the 19 January 1998 contract, inasmuch as it declared to the [Seller] "to have clearly indicated [at the time of our 20 January 1998 telephone conversation] that our client itself will obtain the required letter of credit in your favor through the Soci�t� G�n�rale in Paris" (...) "Unfortunately, the situation at the level of the Central Bank of Mauritania is blocked for everyone". It thus clearly follows from this communication that only the obligation of payment caused a problem, the transaction with the instrument being hindered by reason of a blockage at the level of the Bank of Mauritania. By this payment obligation, the said communication makes an implicit reference to the formed contract. It reserved neither a later acceptance nor the modification of the terms of the contract. Furthermore, [Buyer] persisted in the meaning of that letter in all of its subsequent letters including the last one dated 11 August 1998, a position limiting itself to refer to the situation blocked at the level of the Bank of Mauritania.
By sending that correspondence to its co-contracting party, the [Buyer] did not remain silent nor inactive and consequently will have to perform its undertaking.
Finally, according to the terms used by that same piece of correspondence, it clearly appears that the parties are the [Seller] and the [Buyer], the latter making reference to the telephone conversation which they had between them. The title heading "import of wheat ordered for Mauritania" can only mean the final customer of the [Buyer]. Furthermore, it expressly cites Mohamed Salem Ould Noueygued as being its own client, who having no need of the financing of the [Buyer], "will open the letter of credit directly in your favor", that is, in favor of the [Seller]. This totally contradicts the allegations of the [Buyer] related to the asserted solicitation of an offer on behalf of its Mauritanian client. Given that, by its behavior, the [Buyer] has clearly given its assent to the transaction, the formation of the contract likewise emerging through conclusive acts, it is obvious [Buyer] is bound to the [Seller] by the 19 January 1998 contract.
2.3 Could the last paragraph of [Seller]�s second confirmation letter, dated 21 January 1998, requesting the return of a document signed by the [Buyer] affect this finding? All of the [Buyer]�s argumentation is based in effect on that supplementary paragraph. It maintains that this addition makes the document not a contract, but a simple offer, which was not accepted, given the lack of a signature.
In the first place, from a chronological point of view and as was seen above, this second document intervenes while the contract had already been orally formed by telephone and confirmed in writing two days before. Moreover, according to its caption heading, it was the "confirmation of the contract of the 19/01/98" bearing on the sale of wheat. This document does not modify any of the terms of the first confirmation dated 19 January 1998, with the exception of the fourth paragraph of Point 9, and adds a last paragraph requiring the sending back of a signed copy. The [Buyer] itself recognizes that the two documents are similar. Although it did not return this signed document, its later conduct nonetheless indicates, by conclusive acts, that it had accepted the [Seller]�s offer and had formed the contract. Moreover, it must be noted that this argument was only invoked by the [Buyer] starting with the commencement of judicial proceedings, which may prompt some doubts as to its good faith.
Finally, it is clear that the second confirmation only seeks the correction of a manifestly erroneous date: 26 January in place of 18 November. On one hand, the date of 26 January already appeared in the second paragraph of Point 9 relating to the cut-off time for opening the letter of credit, that is, some lines above the correction. On the other hand, it is glaringly obvious that the date to be corrected was erroneous, because it had already passed. The manner of proceeding to the correction evidences the erasure of the erroneous date and the correct date by manual insertion. This is sufficient proof that one is dealing with a manifest error, in the presence of which the [Seller], in order to put its files in good order, proceeded to a new confirmation of the contract by requesting a signed copy in return. That request has no effect on the contract concluded between the parties on 19 January 1998.
As was already noted above, the 19 January 1998 contract was indeed formed between the parties, who must thereupon assume the respective obligations which stem from it.
2.4 Pursuant to Art. 197 LPC, the judge is free to order or not to order provisonal measures. Case-law amply recognizes that the judge is free to assess the desirability of questioning of the parties when they have had the opportunity of setting forth in writing the facts upon which they rely. (SJ 1966 p. 16).
In the case at bar, the [Buyer] expressed itself in writing in response to the [Seller]�s complaint and in its appeal. It furnished a set of three items, consisting of two pieces of correspondence and its reply brief which it sent to the Arbitral Chamber of Paris, taking up its argumentation. None of those pieces of evidence is contradictory to those which appear in the file of its opponent. The [Buyer] does not allege that those pieces of evidence are false. It asked for some evidentiary measures, without nevertheless alleging either how or by which means it intended to prove -- other than by the evidence produced -- that the disputed contract had not been formed on 19 January 1998. Therefore, the opening of inquiries proved unnecessary. It is thus rightly, pursuant to the principle of procedural economy, that the trial court judge ruled without preliminary investigation on the question of the formation of the contract. It is the same, for the reasons which will follow, with regard to the question of the amount of damages.
3. If the buyer does not perform any of its obligations under the sales contract, the seller may avoid the contract and claim damages corresponding to the loss which the party suffered. (Arts. 61(1) and 74, sentence one, CISG). The measure of damages is the value which the party owed the obligation would have obtained if conforming performance had been effectuated or if the performance had been correctly effectuated, as well as foreseeable indirect damages. The evaluation of the harm suffered is left to the assessment of the judge who is seized of the suit, who rules pursuant to the rules and principles of civil procedure, which likewise determine the relevant time for assessing damages (Neumayer/Ming, op. cit. p. 489).
The [Buyer] contests the [Seller]�s assertions, without however indicating in what regard they are erroneous, limiting itself to the request of an expert examination to verify the validity of affidavits produced. The difference in the market price of the goods arises from an affidavit of a broker sworn in before the Court of Appeals of Aix-en-Provence, legally recognized as qualified in its capacity to provide affidavits of the price which indicate, under its responsibility, the going price for goods at a given date in a given place. Its affidavit will not be called into doubt without alleging serious reasons. No deficiency in the calculations is demonstrated. The amount of the damages, as established by the Arbitral Chamber of Paris, could have been even greater than what the [Seller] claimed, if it had based its claims on the rates in effect on 8 April 1998, the date of the breach held by that tribunal. In these circumstances, we must defer to the decision of the trial court judge for the amount of damages to which the [Seller] is entitled.
Redundantly, both Art. 5 LDIP and Art. 2(2) of the New York Convention, recognize an arbitration clause inserted in a contract, whether signed by the parties, or contained in an exchange of letters or telegrams. In the case at bar, the existence of the 19 January 1998 contract having been also acknowledged by this latter means, it appears all the more appropriate to defer to the said arbitral award.
The Court will thus adopt the determination of damages set by the trial court judge.
4. The challenged judgment is affirmed and the [Buyer], as the unsuccessful party, is ordered to pay the costs of the suit, including reimbursement of procedural costs of 4,000 Sfr for [Seller]�s attorneys� fees. (Arts. 176 and 181 LPC).
- Orders [Buyer] to pay the costs of the appeal, which shall include a reimbursement of 4,000 Sfr to be applied to [Seller]�s attorneys� fees.
* All translations should be verified by cross-checking against the original text. For purposes of this translation, Plaintiff-Appellee of France is referred to as [Seller] and Defendant-Appellant of Switzerland is referred to as [Buyer]. Amounts in the currency of the United States (dollars) are indicated as [U.S. $]; amounts in the currency of France (French francs) are indicated as [FF]; amounts in the currency of Switzerland (Swiss francs) are indicated as [Sfr].
** Charles Sant 'Elia has a B.A. in Political Science and Italian Literature from New York University and studied Political Science at the Universit� degli Studi di Firenze. He received his J.D from Pace University School of Law and is admitted to the Bar of the States of New York and Connecticut.
*** James Nolan received his B.A. with honors in French from the University of California in 1973, following studies at U.S. Berkeley and the Sorbonne, and earned a graduate diploma in translation, with courses in law and legal translation, from the University of Geneva (1976). In 1992, he received his J.D. degree from New York Law School where he earned the Woodrow Wilson award in Constitutional Law.

References: Art. 2
 art. 1
 Art. 11
 Art. 18
 Art. 18
 Art. 18
 Art. 197
 Art. 5
 Art. 2